Project Management Improves Strategy Execution and Core Competitiveness Case Study
of Lenovo
I. Background
In recent years, the personal computer (PC) industry has been developing by leaps and
bounds. Global sales of PCs totaled 230 million units in 2006, representing a 9 percent increase
over the previous year. Lenovo has a product line that includes everything from servers and
storage devices to printers, printer supplies, projectors, digital products, computing accessories,
computing services and mobile handsets, all in addition to its primary PC business, which made
up 96 percent of the company’s turnover as of the second quarter of 2007.
Since its acquisition of IBM’s Personal Computing Division in May 2005, Lenovo has been
accelerating its business expansion into overseas markets. The company transferred its
corporate headquarters from Beijing, China to Raleigh, North Carolina, USA. Today, the group
has branch offices in 66 countries around the globe. It conducts business in 166 countries and
employs over 25,000 people worldwide. Lenovo is organized into four geographical units:
Greater China, America, Asia-Pacific, Europe, and the Middle East and Africa (EMEA). Within
each unit there are functional departments that include production, transportation, supply
chain management, marketing and sales. Sales outside of Greater China compromised 59
percent of the company’s total turnover in the second quarter of 2007.
II. Challenges
Before 2004, multinational PC makers like Dell and HP were experiencing difficulties
localizing their business in the Chinese market and thus did not pose a serious competitive
threat to Lenovo. However, their operations began to have a major impact on Lenovo market
share in 2004, particularly among key accounts–mandating better execution and core
competitiveness in order to increase market share and improve business performance.
III. Solutions
In order to address these challenges, Lenovo proposed substantial changes to its business
model and strategy in 2004, employing a project-focused approach to develop its corporate
strategy. Specific steps taken were:
Implementing project management as the tool for executing corporate strategy.
1. After confirming the company’s overall corporate strategy, Lenovo set about organizing
priority tasks that required multi-department cooperation into projects, referred to as strategic
projects. Strategic projects differ from R&D projects in that time and cost cannot be used as
yardsticks for success. Such projects may be about expanding into new markets, solving
underlying problems, enhancing organizational efficiency, integrating strategic resources or
improving employee satisfaction or capabilities. In the past, some strategic planning had not
been followed up on sufficiently but the application of strategic project management solved
this problem; strategic projects began to actually be executed and generated results.
2. Lenovo also established a Project Management Office (PMO) to coordinate strategic
projects. Beginning in 2004 and early 2005, Lenovo put in place the processes and
the organizational structure for its PMO. It also formalized the relationships between strategic
leaders and the PMO and budgeted resources for the office. Subsequently, all of Lenovo’s other
departmental regulations needed to conform to PMO regulations, with detailed regulations
being outlined by specific business departments. However, Lenovo’s PMO did not interfere with
projects administratively; rather it offered training and established standardized procedures.
Lenovo employees see the PMO as a kind of resource rather than an administrative facility.
Designating a PMO as an administrative facility is one of several things that have doomed such
offices in the past, but Lenovo’s office has thrived, winning the company’s excellent team
award. The company believes that certain conditions must exist in order to successfully utilize
project management: First, a company must face a challenge (i.e. an external factor that
demands it to do so); second, the office must be prioritized by the company leadership; third,
the office must be led by a professional team in order to guarantee that company-specific
systems are developed; and finally, it must conform with the company’s organizational
culture and be appreciated. Otherwise it’s hard to execute.
3. Lenovo also earmarked money for strategic implementation. Previously,
completed strategic plans were not financially supported. But with the strategic shift, the
leadership set aside additional money to execute projects outside of the original budget and to
provide bonuses for those involved–paving the way for the successful execution of strategic
plans.
Valuing project management professionals.
1. Lenovo sent its top talent in project management to take the PMP ® certification exam
and apply project management standards. PMP ® certification is developed and managed by
Project Management Institute (PMI) which is the largest professional project management
institute in the world. The PMP certification is the most authoritative and influential of its kind
and is the only certification genuinely recognized and accepted globally within the project
management discipline. PMP ® certification conforms to A Guide to the Project Management
Body of Knowledge (PMBOK ® Guide), the standards issued by PMI. The PMBOK ® Guide is also
recognized and accepted internationally by premier authorities in standards. After Lenovo’s
acquisition deal with IBM’s PC business, Lenovo project managers needed a shared platform to
communicate with and manage teams in different countries. As the de- facto global standard
for project management, the project management standards of PMI helped Lenovo standardize
its processes. Starting from its functional departments (e.g. R&D, supply chain management,
etc.) Lenovo selected a group of key professionals to receive training in project management
and sit for the PMP ® certification. The returning professionals catalyzed project management in
their respective functional departments and trained other team members.
2. A hierarchy of project management positions was introduced within the company, in
line with the position structure set up by the company’s human resources department. Lenovo
Corporate Research & Development introduced this position structure between 2000 and 2001.
Different levels for engineers included assistant engineer, deputy engineer in charge, engineer
in charge, managing engineer etc. Professionals were appraised by experts annually on two
fronts: First, based on their knowledge base, namely their background and relevant
understanding; second, based on their performance, for example their ingenuity in R&D. In
2006, Lenovo kicked-off a global reshuffling of its positions. As an example, the company’s sales
division is broken up into sequential levels such as assistant salesperson, sales manager and
consultant. Positions are associated with salaries, but company regulations limit the percentage
of employees at each level. For example, top-level positions can only occupy five percent of a
given team. Full-time project managers can advance within the company’s project management
hierarchy. There are over 100 full-time project managers in Lenovo, but nearly all staff of
lenovo have participated in some projects. The hierarchy builds a professional ladder for project
managers, serving as a channel for project management career development.
IV. Major Achievements
Lenovo’s experimentation in project management significantly advanced the
transformation in its corporate strategy and improved its business model. The company’s
project-oriented approach improved teamwork and leveled the playing field; team culture and
corporate culture have been promoted; an innovative spirit has been instilled; and international
integration has been improved. In terms of the market results, Lenovo’s adaptation of project
management has improved the company’s core competitiveness with improved delivery and
customer satisfaction. In turn, distinctive performance was delivered: In 2006, the company had
a market share of seven percent in the global PC market, led only by Dell and HP. Its total
turnover was USD 14.6 billion, a rise of 10 percent over the previous year.
