China Business Post, "Ward Unveils Two Major Success Factors"


Ward Unveils Two Major Success Factors China Business PostChanghong Dong, staff reporter

Steve Ward, who has been a CEO at new Lenovo for 100 days, has complex feelings over the Q1 financial results that have exceeded expectations. He flatly accounted that the laptop business and exploitation of emerging markets are the two major drivers behind the initial success of the new Lenovo.

On August 12th, China Business Post gave him an exclusive interview. This is also the first time he has accepted an interview from the Chinese media.

Integration easier than anticipated

China Business Post: Lenovo’s Q1 financial statement after the integration is very encouraging. Did it reach what you had anticipated? What are your priorities in the integration of Lenovo and IBM?

Steve Ward: This is the initial stage of new Lenovo’s planned integration. It is true that the process of integration is faster than our expectations or than the preliminary plan. We outperformed our original plan in the profitability and cash flow metrics.

However, there are still many tasks to complete. For example, our structure of capital expenditure still needs further perfection and optimization, and we also need to recapture some lost shares in certain markets.

China Business Post: What are the major differences between your current duties as a CEO at Lenovo and your former role?

Steve Ward: The biggest difference is that Lenovo is currently a company that concentrates on PC/mobile R&D and marketing, while IBM originally possesses multiple product lines in a wide range of business areas. But for the new Lenovo, such focus and concentration is still very important.

The second difference is that Lenovo’s main focus is on consumers while IBM gives closer attention to corporate and business clients. The two companies therefore differ greatly on promotion and sales arrangements.

China Business Post: As Lenovo’s CEO, how do you allocate your business hours globally?

Steve Ward: As a CEO, the time allocation is in fact according to the company strategy. I spend half the time with clients, 25% on company’s key strategy formulation, and the rest on employees and operations. Of course, we have some others to do these jobs too!

China Business Post: At present, eight departments of the new Lenovo have completed the integration - the more intensive integration is under way. What are the major areas of integration in the near future and where are the challenges?

Steve Ward: The major challenge confronting us is the difference in organizational setup between both companies. Different functional departments follow varied workflows. We need to integrate and streamline these workflows otherwise this will be a simple combination rather than an integration.

The next challenge we have to address is that: we still have five key departments yet to be integrated, i.e. the supply chain, sales team, product line, service, and IT. The further integration in these five areas will ensure better service to customers at lower costs.

Taking procurement as an example, such as drivers and memory, each company has its own cost department. In the past, IBM PCD and Lenovo were working independently on their cost calculations to ensure optimum price from the best suppliers. Now, this process has been integrated. In other words, after the implementation of shared costing service, the workload has been halved.

Laptops and emerging markets create the needed momentum for business growth

China Business Post: What is the most valued experience you have gained from the integration? Which areas still need improvement?

Steve Ward: Lenovo’s PC promotion in Chinese T3~T6 cities is a valued experience that may be copied in other fledgling markets. In addition, Lenovo’s practice of offering innovative and highly cost-effective PC products to its customers by leveraging its highly efficient operation platform may also be copied in other markets.

Regarding the areas of potential improvement, I think we should enhance our understanding of varied demands of customers in different markets around the world and make our company more international. Fortunately, the former IBM PCD is very experienced in this area.

As CEO, I report to Yang Yuanqing, the chairman of the board. Yang understands very well the Chinese, Asian and emerging markets. Having formally worked at IBM as a senior executive, I understand the mature markets well. Such deep understanding is important because the areas complement each other, making our company more competitive.

China Business Post: Lenovo is now the No. 3 PC maker in the market after Dell and HP. Compared to these two companies, what do you perceive are the strengths and weaknesses of Lenovo? How will you address them in the future?

Steve Ward: People have found multiple innovations on many mobile phones and digital cameras whilst believing there is limited room for PC innovation. Fortunately, Lenovo does not think so. Neither do our business partners such as Intel, Microsoft, IBM, and Siemens. We have recently built an innovation center and, working closely with these partners, we believe there is still large room for innovation for PCs. Innovation is just where Lenovo’s core competence lies.

In addition, the laptop product line represents 50% of our total revenue. The laptop is the major drive of further growth of many mature markets, and we have the competence to exploit such growth potential.

Last but not least, w have a competitive advantage in emerging markets. markets, including China, Brazil, India and Russia. These four markets have created the needed momentum for growth of the global PC market, and Lenovo’s sales and marketing experience in the Chinese T3~T6 cities may well be copied in these markets.

China Business Post: Lenovo is always committed to strategy and powerful execution. Then how do you maintain your outstanding performance in these dimensions and what is your new strategic goal for the new Lenovo?

Steve Ward: We have defined six areas of focus for our future strategies. First, further enhance our cost control and our competitiveness in this regard. Striving for a cost saving of 200 million dollars each year, we are to improve our profitability by continuously optimizing our cost structure.

Second, further expand our product line. Now we are supplying products to 60% segments. In the future, we will increase the market coverage to 90%.

Third, enhance our branding work: We will increase Lenovo brand recognition around the globe while further improving consumers’ preference for the ‘Think’ brand.

Fourth, improve our sales models and accelerate our execution progress. We will promote our well-established sales models around the globe set the definite goals of account receivables for each region in which we are operating.

Fifth, further exploit the fledgling markets

Sixth, accelerate our integration process. We might not be able to thoroughly complete this task by the end of this year. But this is just what we need to do to make our company an integrated one in real sense.