This last week I was with Lenovo going over their server, storage, and networking strategy as they continue their pivot to become one of the last remaining hardware focused vendors in a market more often defined by change than focus these days. One of the things that strikes me as a huge competitive advantage is that unlike most technology companies that are based in either the US or Asia, Lenovo is pretty much evenly balanced between the US and China putting them closer to a future model of being more of a global company than one located in any one country.
Let’s explore that this week.
The Power Of A Truly Global Company
I think much of the problem that firms have internationally is that their brands, practices, and identities are tied to the country where they are headquartered and, as a result, they are helped or hurt by how well their country is perceived. In addition, and we have seen this with firms like Apple, Cisco, and a number of Chinese companies, when there is a major dispute between the country they are associated with and the country they are selling into they get blacklisted by the latter as a proxy for their home country.
A truly global company shouldn’t have to worry as much about this because they’d be a poor proxy from both a brand and effectiveness standpoint. Kind of like taking a shot at the United Nations because you were upset with Russia, it just wouldn’t be as effective as targeting a Russian organization.
This should allow the global company to avoid much of the pain that large firms typically experience and focus more on keeping their customers happy than on dodging politicians.
While initially Lenovo was seen as, and actually was, more of a Chinese company with the acquisition of two of IBM’s large businesses (PCs first then servers) and leaving the acquired management structure largely in place this bifurcated the company into Chinese and US units both serving both countries. Coupled with aggressive hiring of managers from around the world this created not only a mixed international culture but a truly mixed management team both in terms of backgrounds and in terms of working locations.
This has allowed Lenovo the ability to not only outperform their competitors in China but outperform the majority of them around the world. In addition, unlike most of their peers they have viable product lines that extend from servers to smartphones, a level of breadth not even Apple enjoys, and a level of revenue diversity that Apple likely envies.
While Lenovo has had issues selling into government organizations like defense these appear to be loosening particularly after their acquisition of the IBM server business and aggressive moves into High Performance Computing. This last allowed them to penetrate major Universities very successfully and these schools often to government research. Lenovo’s related service performance, lack of security problems, and related high customer satisfaction have helped them clear concerns and allowed them back into much of the US Government and they were never at any risk with Chinese Government bids and often remain the preferred vendor there.
Wrapping Up: The Model For The Future
Much like Dell and more recently EMC have showcased the benefits of going private Lenovo is showcasing the benefits of not being aligned with any one country. This is increasingly allowing them to float above politics and avoid being set upon by governments looking for an easier way to punish countries they are upset with.
In addition, this makes Lenovo one of the safest bets for large multi-national firms and that is likely whey Lenovo has moved to provide semi-custom IT offerings because these huge entities have very specific and often needs. These needs have forced firms like Apple and Amazon to largely build their own servers from parts. Lenovo can provide similar capabilities with regard to customization without the firm having to take on all of the design, manufacturing, parts sourcing, and delivery duties.
In the end Lenovo is likely another early indicator that firms need to shift to being global entities in order to avoid the increasing animosity going on between the countries they are from and those they sell to.