In 1984, when Liu Chuanzhi started up a tiny computer company with only 11 employees, nobody can imagine that twenty years later, it stunned the world by acquiring the personal computing business of none other than IBM, the granddaddy of the PC.

At the time of our conversation in August 2010, Liu had returned about a year earlier to the chairmanship of Lenovo. He had retired as chairman in 2005, following the completion of the IBM deal. But when Lenovo, his brainchild, suffered a decline in sales and profitability due to the financial crisis and a reduction in orders from its largest customers, Liu took on the mission to get the company back on track. He was successful, and Lenovo returned to profitability in 2010.

The Lenovo Way

Over the years, as Lianxiang became Lenovo, and the company grew into the largest
computer manufacturer in China and then in all of Asia, one of the constants has been its culture, which Liu refers to as the “Lenovo Way.” From the beginning, Liu established a culture in which he and the team were united in the pursuit of common goals. “People tend to seek their own self interests.

Instead, they should seek their own interests after the interests of the enterprise,” Liu said. “The corporate culture of Lenovo is to put the interests of the enterprise first.” Lenovo instilled this culture by the way it hires, promotes, and compensates employees, so that when the company does well people are rewarded. “The development of the enterprise should be consistent with everyone’s pursuits,” Liu explained. “If we run the business successfully, it will be more profitable which will be good for the staff.”

The culture is also people-oriented, recognizing the contribution of each individual toward the achievement of the organization’s goals. Throughout our discussion, Liu emphasized the importance of developing the team, which he sees as the primary responsibility of the leader.

He has used an interesting metaphor to describe the people who have come to Lenovo, comparing them to pearls. “Some people are like pearls,” Liu has said. “And some are not—they can’t glow with their own beauty.” 3

Tellingly, Liu does not describe himself as a pearl, but rather as the string—the one who knows how to assemble the pearls into a necklace. His observation is congruent with a point made by other leaders: that leadership is not about the person at the top, but rather about the organization, and what can be achieved when a talented team is brought together, united by a common purpose, and directed by a leader with vision.

Another element of the Lenovo’s culture is to “seek the truth,” Liu continued. “Actually, this has two meanings: my subordinate cannot cheat me and vice versa. For example, the monthly budget statement cannot contain something false. Furthermore, our external commitment must be credible. We cannot promise something that we cannot accomplish. Hence, ‘so said is so done’ is paramount at Lenovo.” This is a challenge for many leaders, to move beyond what people say they can or will do to what is actually accomplished. 

The objective is a “say/do ratio” of one-to-one—what is promised is actually delivered. One of the promises Liu made over the years was to reward employees by giving them an ownership stake. The problem, however, is that doing so would be nothing short of criminal since the company held what were considered public assets. 

Through an arrangement Liu devised with the Chinese Academy of Sciences, a portion of the profits were allocated into a fund in the name of company employees. Capital was accumulated until 2001 when, with a favorable change in government policies, the stock was purchased outright from the government and distributed to employees.

The next challenge was to figure out how to distribute the shares. Fortunately, Liu had already developed a plan back in 1993, even though the stock would not be purchased for another eight years. Liu’s foresight as a leader had paid off. “In 1993, when we made the plan, nobody cared about it because they never thought it would come true,” Liu added. Liu, himself, only received 2% of the stock, which he believed was a good example of the fairness of the plan.

A Sense of Purpose

With all that has been accomplished at Lenovo, there is no doubt that Liu has a strong competitive spirit. He has showed that quality in another way: his passion for football or soccer as it’s known in the United States. “I was crazy about playing football in my college,” Liu recalled.

As he talked about his enthusiasm for the game, Liu made several observations about what he saw as the ideal coach: one who has “strong willpower” and who “refuses to concede defeat,” but who also has a “big heart” to understand his players. The coach must be able to pick the star players while also developing the team, with rules that apply equally to all, which speaks to Liu’s rather egalitarian leadership approach. He recognizes and rewards individuals, but the whole of the organization is what matters the most.

During a visit to the company’s headquarters, the sense of team spirit was strong at Lenovo, with its nine-person leadership group. Four of the group members were Chinese and the rest were from other countries. “They represent all the important positions in the company, and together can give a complete understanding the industry and the overall economic and political situation, and then make decisions together,” Liu said. “We hold many meetings to eliminate misunderstandings and to analyze the current situations, so that much more information can be incorporated into our decision-making.”

In its two-and-a-half decades of existence, the company now known as Lenovo has achieved significant milestones, from making its first computer under its own brand to the IBMPC deal. For all Lenovo has achieved, Liu’s greatest accomplishment as an entrepreneur has been the sense of purpose he has established for himself and for others.

“There are some people who are happy because of their wealth—a big home, lot of possessions. Others will be happy because of making great contributions to society, like Warren Buffett and Bill Gates, who are virtuous as philanthropists. As for me, I will be happy if my colleagues and subordinates get better development and opportunities,” Liu observed. “They will grow the business, and through that make great contribution to society. It is my pursuit in life. This is what makes me happy.”

For Liu, who had to persevere through so many personal and professional hardships to realize his goal, determining one’s own purpose and providing opportunities for others is a greater reward than any other.

1. Ling Zhijun, The Lenovo Affair: The growth of China’s computer giant and its takeover of IBM-PC, (translated by Martha Avery), 2006, John Wiley & Sons
2. Barboza, David, “An Unknown Giant Flexes Its Muscles,” The New York Times, December 4, 2004,
http://www.nytimes.com/2004/12/04/business/worldbusiness/04asia.html

3. Ling Zhijun
 
(From：《No Fear of Failure》, Gary Burnison)