Fundamentals of Management, 8th ed

198

Part 3: Organizing

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LEADING THE WAY

Charting a “New” Old Course

Lenovo was started in Beijing by Liu Chuanzhi in

1984. Initially, Lenovo made computers for other

companies. In 1990, the firm launched its own

brand of PC and by 1997 Lenovo was the top-

selling PC in its home country. Unfortunately, how-

ever, the company was not successful in gaining

market share outside China. One reason for this

was the lack of brand recognition. Another was that

Lenovo simply did not have many top managers with

global experience. But that changed in 2005. When

IBM decided to sell its PC operation that year,

Lenovo was quick to jump on the opportunity and

bought IBM’s entire PC business for $1.75 billion.

Lenovo was allowed to continue using the IBM

name through 2007 but then started to brand all of

its PCs with the Lenovo name. Along with the PC

business itself, Lenovo also got a team of skilled

top managers well-versed in global PC markets.

Senior IBM executives were quickly integrated

throughout the top management structure, and one

of them, Stephen Ward, was appointed chief execu-

tive officer (CEO) of Lenovo. Liu Chuanzhi, mean-

while, moved into the background but remained a

director—he felt that Lenovo’s best opportunity for

the firm to gain international market share would be

under the leadership of a seasoned global manager

like Ward.

But almost from the start, problems began to sur-

face. Ward was extremely autocratic and believed

that Lenovo should function in a highly centralized,

command-and-control fashion. This alienated his

new Chinese colleagues who assumed that their

roles were being diminished because they spent

less time with the CEO. Chuanzhi, for instance, had

relied on a senior leadership team that worked

together to make decisions, whereas Ward made

Doug

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Im

ages

Lenovo is a leading Chinese technology products company best known for the

line of ThinkPad personal computers it purchased from IBM. For years, the

company has struggled with balancing traditional Chinese approaches to

management with contemporary management practices more widely practiced in

global businesses. Lenovo’s founder, Liu Chuanzhi, recently took back control of

the firm in an effort to improve its competitiveness.

(continued)