.Worldsourcing

A few colleagues and I recently took Wall Street Journal reporter Loretta Chao on a tour of a Tier 5 city – for a closer look at our Rural PC Program.  Cities in this tier have populations of around 500,000.   With nearly half the population of China in rural areas such as the city we visited in Hebei province, and with comprehensive infrastructure in place – the Tier 4 – 6 cities are the next frontier for strong growth.  

 Our trip was focused on finding examples of the government subsidy program in action – specifically the impact on the PC market.  (A $586 billion government subsidy program is aimed at stimulating growth in rural areas.) The program provides residents of rural markets a 13% rebate on purchases of products such as PC’s, TV’s, washing machines and refrigerators. 

We visited one of the 700 new rural Lenovo stores where the manager spoke to us about the strong demand generated by the subsidy program.   He also outlined some the marketing programs used in this area. For example, unique promotions specifically aimed at brides work well in this rural market.  Weddings are one of the biggest triggers for PC purchases in the area – and the bigger the actual PC shipping box, the better. So desktop sales are doing very well.  

Signs and banners around the city touted the rebate program – and some were more targeted:  “Buy a Lenovo PC, Be a Happy Bride.”  The young sales people in the Lenovo stores also served as “walking billboards” with Lenovo t-shirts that touted the 13% rebate.

Lenovo has worked in China’s rural areas for years, with programs such as the “Yuanmeng” (Dreams come true) Project and the Olympic 1,000 County Roadshow.  While these efforts are obviously aimed at boosting sales, they also address the “digital divide” between urban and rural regions and create a positive association for our brand in helping bootstrap the dreams and ambitions of the millions of consumers aspiring to join China’s burgeoning middle class.

Further reading

Marketing to China’s 4th-6th Tier Cities

 A recent article in Financial Times discusses China’s “sea turtle” phenomenon. “Sea turtle” is a term used to describe individuals who return to work in China after studying or working overseas after an extended absence. Click here for full article 

Lenovo, with its origins in China, has long been one of the leading examples of the “Sea Turtle” phenomenon.  Several members of Lenovo’s executive team are in fact “sea turtles.”

But there’s more at play here than merely the notion of “returning home.”  In fact, its just one facet of a much larger trend at Lenovo based upon our Worldsourcing strategy and its Borderless Markets management model that moves from a traditional regional market focus to a global focus based on customer need.  As a result, Lenovo’s flattened organizational structure bisects the world on the basis of emerging and developed market economies which enables the company to leverage the best practices and people regardless of geography. 

In this model, our Emerging Markets, for example, extends around the globe from China to Russia to India to Turkey and Brazil. And the team essentially operates in the world time zone of “now.” 

This fluid movement of our leadership team requires essential cross-cultural interpersonal skills, so its all the more reason for our “Sea Turtles” to traverse the world’s oceans before settling back home.

Here is a new article about worldsourcing:

With the global economy in upheaval, traditional distinctions between consumer and producer nations, and between developed and emerging markets has blurred, creating promise and peril for multinationals as the early “shoots” of economic recovery take root.

1. Brazil, Russia, India and China are evolving into vast market economies, and many smaller economies are making similar progress. China has emerged as today’s third largest economy and is poised to surpass the United States in GDP before mid-century, with countries like India and Brazil not far behind.

2. Demographics and education levels are changing. The population of the Western world is growing older relative to that of the East. Brazil, Russia, India, and China have a high and growing percentage of college educated adults; now approaching 20% – second only to the United States.

3. Widespread use of information and communication technology is changing the world. The PC, the internet, and inter-operable software have made real instantaneous communication on a global scale. This development has forever altered all facets of our economic, political and social lives.

The PC has been a key enabler of evolution to world sourcing. Lenovo, partly because of its origins, has pioneered its use in the PC industry. Its world sourcing approach to business has created a platform for success and leadership. A new kind of company that blends the best thinking of East and West is emerging to meet the needs of a changing world.

What did it take for us to be a world sourced company? World sourcing meant locating resources strategically to serve key markets globally. That meant having the most talented and innovative people, the strongest infrastructure, the deepest language proficiency, the finest technology capabilities, the most efficient operations and  facilities, wherever they are best available to sell wherever profitable markets exist. Easy to say…

Our World sourcing addresses 3 key challenges in getting closer to customers.  First, competition has no borders: you can’t hide from high-value, low-cost offerings.  Second, customer service is critical, but it is harder to deliver well because it demands increased knowledge of local markets, cultures and business practices including underserved consumers in developing market economies. Third, in a world with essentially one time zone, we have to source materials, innovation, talent, logistics, infrastructure, and production wherever they are best available.  And we sell wherever a profitable market exists, anywhere in the world.

In today’s economic climate, companies must world source or perish. It is that simple…

“Language should never become a barrier for children using computers”   Ramprasad Lakshminarayan- VP,  Lenovo India

Lenovo launched a new program in India this week called The Matrubhasha project.  It’s a grassroots level initiative designed to help children gain computer literacy and provide them with opportunities that would have otherwise been restricted to those fluent in English. 

The program launch includes the donation of 150 computers with software which allows children to learn computing programs in Hindi, Bengali, Urdu, Tamil, Kannada, Gujarati, Marathi, Telugu, Malayalam, Konkani and Punjabi. The children can also use other applications like chat, word processing, power point, E-mails and browse the Web using the language of their choice.

Computing in one’s mother toungue will open the door to the digital world to more than 20,000 children in Bangalore.  The school libraries with the new computers will go live today.  Our employees in India will also offer 3-5 volunteer hours per month to train the librarians in these schools.

We launched a new product this week – Lenovo ConstantConnect –  in partnership with Research In Motion (RIM), the owners of BlackBerry®  – great for the worldsourced exec on the go.  Available initially in the US,  the product will be rolled out in other regions.  ConstantConnect keeps you linked to e-mail at all times.  It allows enterprise e-mail on a user’s BlackBerry to be automatically synchronized via Bluetooth® onto the your ThinkPad – even if the ThinkPad is off – without the user having to take any additional steps.

“That means that when the ThinkPad boots up, new e-mail will already be loaded. There’s no need to establish a secure Internet connection to the employer’s servers.  The user will also be able to send e-mail from the ThinkPad through the BlackBerry without an additional Internet connection.” – Associated Press

“Lenovo Constant Connect also serves as an alternative to 3G wireless services from Verizon and other companies, and — for e-mail only — can be faster and more efficient than instant-on solutions such as Phoenix Hyperspace and Splashtop, which still face problems related to Wi-Fi availability.” – Computerworld

A recent article in Mint, the business daily published by Hindustan Times in collaboration with the Wall Street Journal, discusses Lenovo’s worldsourcing marketing model:

 Creating synergy: Lenovo’s Rahul Agarwal (left) and O&M’s Poran Malani. Hemant Mishra / Mint

In the last eight months, an Ogilvy and Mather, or O&M, team of 80 advertising professionals, in partnership with the Bangalore-based global marketing hub of computer maker Lenovo Group Ltd, has created six television commercials and 5,000 print advertisements for the multinational computer maker—these have been aired across the world. These commercials and print campaigns include the Ideas Everywhere series as well as the Lenovo brand campaign that ran during the 2008 Beijing Olympics. “We are putting a face on Indian talent,” says Malani.

Click here for full article

What is your outlook for the global economy over the coming 5 years?
This is an unprecedented time for the global economy. We face an incredibly difficult and serious challenge, the most significant economic event since the worldwide depression of the 1930s. There has been nothing like it in most of our lifetimes. What’s different about this is that we live in what I call the Global 2.0” economy, where thanks to technology and the rise of the middle class in the developing world, we are all inextricably interconnected. So, while it’s hard to say how long and how severe this downturn will be, I believe we will emerge from this by working together, and by working on restoring the lost trust and transparency that led to this crisis. Even within the downturn, we think there will be areas of growth, areas of the developing world in particular where people are now emerging into the middle class in significant numbers. Technology like Lenovo’s will play a significant role in that emergence, and we’re excited about the role we’ll play both in the coming year and in the years to come.

What ethical and moral concerns need to be addressed to avoid a greater backlash to market capitalism?
When we merged Lenovo’s Chinese roots with the IBM Personal Computer Division, we learned some valuable lessons about the need for a company to be inclusive and respectful of different cultures – not to try and create one artificial company culture, but to create a set of shared goals and values that respected and built on the strengths of each culture. What made that work was developing trust in an atmosphere of  transparency. That same approach applies to the global economy. We can see how tightly we are all interconnected, how what happens in one part of the world or one industry can spread rapidly to all other parts of the world and other industries. So we need to absolutely avoid things that fuel distrust, like isolationism and protectionism. It’s also important for companies to be good corporate citizens, to respect the communities where they do business and the environment we all inhabit. Finally, we need to look for ways to make individuals in the developing world part of the larger global economy, to create ways in which they can rise out of poverty the way millions have done in China, India and Brazil. There’s still a long way to go, but the key is to keep moving forward.

Click here for the full interivew transcript.

Even with more than 600,000 words, English at times can’t communicate a simple but vital idea like “Gemba.”

It stems from the Japanese word Gembutsu meaning “real thing.” Gemba roughly translates as the place where the truth can be found (Japanese detectives use it to describe a crime scene), or the value proposition. Gemba is a commonly used term in the quality program – Lean. In that sense, it means where the action is. So to walk the Gemba is to literally set foot on the plant floor where the PC is made.

I walked one of our plant floors today with Lenovo CEO Bill Amelio. All around us was evidence that people were intensely focused on the action and on their individual roles in getting things right.

It was a real reminder of how important it is for a worldsourced company to focus on Gemba. A true worldsourced company or individual is one who understands that the changes that matter occur where the action is — the frontlines and in the field.

It can be messy and difficult; there will be challenges and even setbacks. But that is just part of the process. Companies on the frontlines understand the rapidly shifting demographics, the changing requirements of businesses and consumers  - and they adapt to those changes quickly. They observe changes at the scene, not from a distant corporate office or recycled third-party research.

The idea behind Gemba is to understand customer problems and opportunities from direct observation, using all senses. You can’t do that if you don’t get your hands dirty. Any company where the executives aren’t doing that don’t understand Gemba – and aren’t likely to do well in our rapidly changing, worldsourced economy.

At the recently concluded World Economic Forum “Summer Davos” held in Tianjin, China, Lenovo Chairman Yang Yuanqing addressed a gathering of world leaders and shared his views on worldsourcing as the catalyst for creating a new “Digital Silk Road” shaping the future of the Global 2.0 economy.

This second “Summer Davos” brought together what the organizers refer to as the New Champions of the Community of Global Growth Companies — “fast-growing companies destined to join the ranks of global multinationals in the next 5 to 10 years.”

In an opinion article adapted from his prepared remarks published in China Daily, Yuanqing argued that with the arrival of Global 2.0, we are witnessing the creation of a new Digital Silk Road that is “creating a single economic web that is interconnected, instantaneous, interdependent and infinite in its implications for growth, prosperity and global inclusion.”

“While our modern roads move goods, the Digital Silk Road’s trade is in ideas and information. We’ve replaced pack animals with packets of data. Ideas are really the capital of the 21st century, and unlike raw materials such as silk, iron, tea or oil, no nation has or ever will have a monopoly on them.”

Yuanging explained that it is the exchange of these ideas, and the innovations that come from them that are the real basis of global trade today. “They are the raw materials from which we forge growth. Ideas are what lead to innovative new processes, products, services and to innovative new business models like the worldsourcing model we use at Lenovo.”

The Digital Silk Road will play a key role in supporting the growth of developing economies and the continued rise of the middle class, according to Yuanqing.  “We will continue to lift millions more out of poverty, improve their lives and create prosperity in the farthest corners of the world, all thanks to the New Digital Silk Road.”