Lenovo announces major business rejig

No centralised HQ and no outsourcing

Iain Thomson, vnunet.com 26 Feb 2008

The European president of Lenovo has outlined radical plans to cope with the changing technology environment and to push his company into the "number one or two slot" in the industry.

Chief among these is the abandonment of a global company headquarters. Executives will instead stay in their areas of responsibility and meet up on an as-needed basis.

"Headquarters drive the kind of behaviour where people wait for a decision before they move, and we do not want that," said Milko van Duijl, president of Lenovo EMEA.

"We call it world-sourcing. It lets us accumulate the right skills at the right cost and makes us more responsive."

As an example, van Duijl pointed out that he is Dutch and living in Paris, the chief executive is an American living in Singapore and that Lenovo's chairman is from China and lives in North America.

Van Duijl also surprised many by announcing that Lenovo is ending the outsourcing of its desktop manufacturing in Europe and bringing it all in-house. This will make the company much faster to respond to changing designs, he believes.

Around 10 per cent of Lenovo's laptop parts are outsourced but much more of the desktop production is built by third parties.

The bulk of Lenovo's manufacturing is in China and the Far East, but the company has a manufacturing centre in Poland. This facility will be able to produce five million desktop PCs per year and employ 1,000 locals.

Van Duijl told vnunet.com that the facility could also be converted to make laptops if transport costs rise.

The European region is growing fast and is now on a similar level to the US in revenue importance, according to van Duijl, growing 21 per cent last quarter and generating $1.1bn in sales.

"For a company without a consumer business, and that has not invested as much as we will in emerging markets, it is very exciting," he added.

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