Lenovo: a chinese innovation pioneer?
Lenovo’s innovation lies in its technology, products, business model and cultural management, according to Liu Chuanzhi, founder of the Lenovo Group and president of Legend Holdings Ltd., and Yang Yuanqing, CEO of Lenovo.
International acquisitions fueling global innovation
Referring to Lenovo’s innovation history, people tend to indulge in the story of Lenovo’s buying IBM’s PC business in 2004. “At that time, Lenovo didn’t expect to become the global leader of PC industry”, said Yang Yuanqing with emotions.
To date, Lenovo’s Innovation Triangle Teams in the USA, Japan, and China collaborate have been fusing together different cultures of different countries and collaborating in a 24-hour non-stop manner to ensure leading position of Lenovo’s innovation in the world.
After successfully absorbing IBM’s PC business, Lenovo’s international acquisitions have been unstoppable. Lenovo’s international mergers, from single business like PC and server to comprehensive business like cloud computing, serve not only as effective strategies for Lenovo to strengthen its operation volume and optimize market distribution, but also a way for Lenovo to bring in talented people from different fields and fill its innovation teams with new blood.
At present, Lenovo owns about 11,000 patents globally, about 2/3 of them coming from China and 1/3 from oversea teams. According to Zhang Dekui, director of Lenovo’s Innovation division, Lenovo spends USD500 million on R&D every year, and has 5,000 product developers, including engineers, researchers, and designers, and more than 100 advanced labs around the globe. These constitute Lenovo’s unique innovation and quality guarantee system.
Complete industry chain supporting innovations on multiple levels
Liu Chuanzhi has said that “Lenovo’s first innovation is to combine technology with the high-tech industry”. In 2012, when sales of Lenovo’s PCs were thriving across the world, Lenovo keenly grasped the new trend of the mobile internet and started its PC+ strategy, beginning to increase investment in mobile internet terminals like smartphones, tablet computers, and smart TVs in the meantime of consolidating its advantages in the PC industry.
Today, the fall of some traditional PC manufacturers and the achievement of Lenovo in the PC+ area have proved that Lenovo has made a right decision. In the Q2 of the 2013 fiscal year, the global market share of Lenovo’s smartphone increased to 5.1 percent, behind only Apple and Samsung, and the growth of its tablet computers was even higher. Also, sales of Lenovo’s tablet computer and smartphones had exceeded that of its PCs for two quarters in a row, their revenue accounting for 15 percent of total revenue of the company and profit margin steadily on the rise.
In Lenovo’s Innovation Center, Lenovo’s employees, from system design engineer to software application researcher, from part technology R&D director to product design director, demonstrated Lenovo’s innovation industry chain to the reporter. Lenovo has set up technologies in four major fields to bolster the entire Lenovo business innovation endeavor, including part technology and system innovation, natural interaction technology, cloud service and big data technology, and new materials and design innovation. These make up Lenovo’s core R&D innovation strategy, dubbed “one cloud and multiple screens”, and they are also the source of Lenovo’s business innovation.
Independent manufacture and protection of innovation achievements
In October 2013, Lenovo’s industry base in Wuhan was completed and put into operation. This is a comprehensive industry base that integrates R&D, production, and sales of mobile internet terminals, with a total investment of more than RMB5 billion Yuan. “In this base, a product will need to go through dozens of labs before it is finally put onto the market, and it will be examined and checked repeatedly during production. This is the advantage of independent production and development. It can protect our innovations”, said Yang Yuanqing.
There used to be doubt that Lenovo was a computer assembler and not a core technology innovator. For this, in 2011 Lenovo began to shift its focus onto parts and components, striving to achieve breakthroughs in component technologies and walk ahead of competitors in terms of system innovation. This requires Lenovo to attach more importance to working with upstream manufacturers, extensively consolidate upstream and downstream technologies, and provide parts for system innovation. Lenovo’s independent manufacturing enables it to communicate directly with upstream manufacturers, which would increase its leverage for innovation.
10 years ago, Lenovo introduced a relation-type business model that targeted at corporate customers and government customers, to go along with its consumption business model that targeted consumers. That was a business model innovation. Now, Lenovo again introduced a new-era dual business models, with one online model and one offline model, and its marketing campaign is moving from traditional advertising to internet marketing, digital marketing, and micro-blogging marketing, etc.
In 2012, Lenovo added “Pioneer” to its 4P corporate culture, showing its intention to be a pioneer of the time. Internally, Lenovo has its unique innovation mechanism, including CEO innovation discussion, ideas management, etc, so as to promote the realization of technology and product R&D.