National culture plays a significant role in the way people behave. The Lenovo team had to adjust to differences in the way Chinese and Americans workers interact among themselves and with each other. American employees tend to be more concerned with themselves while Chinese employees try to put the collective good of the organization first. They also have dissimilar belief systems and approach confrontation differently. Additionally, the combined company had to learn to adjust to the way meetings are organized and conducted.
Individualism vs. Collectivism. On the scales of individualism and collectivism, the U.S. and China are on direct opposite sides. This is thought to be due at least in part to political influence: “The Chinese Communist Party has especially upheld collectivism for the last several decades and the advocacy of communist morality encourages people to devote themselves to the state and society.” Although this collectivistic mindset is still the dominant tone in the country, it should be noted that individualistic tendencies are becoming slightly more common as China has recently experienced political and social changes over the last few years.
Chinese Lenovo employees complained about Westerners’ “less human” approach with its process-based, individualistic focus, while Westerners viewed traditional Eastern leadership as too stiff and not allowing for individual empowerment. With the help of external advisors, Lenovo implemented a model called, “My Self—My People—My Business.” This model was used to develop understanding and collaboration between the opposing mindsets. Chinese leaders were encouraged to see the value of certain individualistic attributes in the way they could strengthen employees and enable leaders. On the other hand, U.S. leaders were taught to think beyond individual achievement to consider the greater company context, in this way acknowledging a beneficial collectivistic viewpoint.
On a different note, collectivism impacts not only employee interactions, but also consumer behaviors. Research suggests that collectivistic cultures are more sensitive to social value of brands. Consumers from a developing country like China would likely be more positively drawn to products from economically developed countries like the U.S. because of admiration for the social status and lifestyle. This would be in Lenovo’s favor within the Chinese market since the acquisition of IBM added to Chinese products the appeal of the relatively higher U.S. social status.
Masculinity vs. Femininity. Both China and the U.S. are considered relatively masculine societies: “…Chinese business community is driven by profitability and productivity, the vocabularies which are consistent with a highly masculine culture. Security of employment which is highly valued by feminine cultures, is not [the] predominate situation in China now.” Feeding off the energy of both masculine, achievement-oriented cultures, Lenovo’s mindset is typically quite aggressive, as written by Yolanda Lee Conyers, the Chief Diversity Officer: “Being number one isn’t enough. [We] continue to seek new pillars of growth.” The company tends to be very focused on visible measures of success, a reflection of the masculinity of both national cultures.
Belief Systems. The theories of ancient Chinese philosopher Confucius still influence many East Asian societies today. Among other things, Confucianism defines the proper “ranks” within certain relationships. It is considered critical for one to know their relative rank and to behave accordingly. For instance, in the relationships Emperor to Subject, Father to Son, Husband to Wife, Older Brother to Younger Brother, and Senior Friends to Junior Friends, the first individual of each pair is expected to demonstrate protection, care, and obligation, and the second to offer loyalty, respect, and trust in return. Without a basic understanding of Confucian principles, a foreign businessperson could misunderstand—or even offend—a Chinese employee. These Confucian ideals were ingrained in the way that many Chinese Lenovo employees respected leadership, communicated with co-workers, and approached decision-making.
Rather than focusing on belief system differences, Lenovo took the approach of finding a unified identity that could be used to create a belief connection between the national cultures. Lenovo management analyzed the values and visions of the two firms and found a common ground of integrity and responsibility, which were eventually embodied in the firm’s statement, “We do what we say and we own what we do.” Compatible goals and a shared passion for intelligent growth helped unite workers from all cultural backgrounds. Former CEO Steve Ward spoke of this connection, saying, “How can you walk into a place that’s clearly in a different land, yet feel so much like you belong here? This may sound corny, but it feels like home.” Lenovo used these shared values to strengthen the company, capitalizing on a unified belief system.
Strong Uncertainty Avoidance vs. Weak Uncertainty Avoidance. The U.S. and China are both considered societies of weak uncertainty avoidance. Both tend to accept ambiguous situations and unknowable outcomes. This makes sense when considering the bold approach of both companies towards the M&A transaction. Chuan Zhi Liu, the original founder of Legend (Lenovo in its preliminary form), described the acquisition as “a snake swallowing an elephant,” which caught on with the media. This is a useful metaphor for what truly was a nearly insurmountable task that required quick adaptation and stretching. However, in this case, both sides accepted the risk.
Task-based vs. Relationship-based. The Chinese do business in the mindset of “friends now, business partners later,” while Americans tend to be exactly the opposite. “The Chinese generally value relationships that demonstrate mutual respect, an aversion to conflict, and the maintenance of proper demeanor, and these beliefs extend into the business world as well.” It is often impossible to break into the market without a proper introduction from a person of status.
Cultural trainings and activities were held to develop relationships among the employees and expose them to their counterpart culture. A middle manager indicated that leaders at the Chinese headquarters would, “…frequently invite foreign managers to China for training and team building… such as climbing the Great Wall… these activities are very useful… because culture exchanging is very hard to be improved in the conference room, but it is easier to get additional and deep understanding through team building and team work.” Such planned experiences can be helpful “…to broaden their outlooks as well as help nonnatives to familiarize themselves with unwritten as well as written rules — and to help establish connections across the two groups.” This met the social needs of the Chinese employees and encouraged the U.S. workers to take the time to build relationships with their counterparts.
Confrontational vs. Avoids Confrontation. The U.S. tends to be in the middle range between confrontational and confrontation avoidant, while the Chinese are much more likely to avoid conflicts. However, “avoids confrontation” is not to be understood as synonymous with weakly disciplined. As a middle manager pointed out, “…the discipline of Chinese firms is very strong, just like military administration. And there is no room for negotiation at all.” The Chinese workers tended to avoid conflict by remaining silent even if they disagreed with ideas of their U.S. counterparts, which resulted in dominance of Western decisions. It took Lenovo a while to address these differences in order to get more open, balanced feedback. However, as previously mentioned, once the Chinese began speaking up, there was once again a distortion of translation and their words came across “a little too direct.” This required more adjustment, including establishing rules that conflicts would remain between leadership members only in an effort to quell rumors of management discordance.
Linear Time vs. Flexible Time. Global Road Warrior, a cultural research database, offers this insight into the Chinese culture: “Meetings will typically last all day, and you should expect interruptions and delays. Visitors who are accustomed to following agendas to the letter should be aware that in China, agendas are simply starting points for long discussions that include many speeches and presentations.”
This value could be extrapolated to analyze the expected speed of the acquisition process itself. In contrast, Chinese companies tend to require a longer preparatory stage through the M&A auction process. According to J.P. Morgan, the majority of Asian businesses say they would need six months for the initial M&A processes, in contrast with the one or two months that is common for U.S. companies.
However, it appears that Lenovo was stricter with time than the typical Chinese company, which may have made the transition easier. Before the M&A, Lenovo employees had been trained in the habit that “people who arrived late to meetings had to stand in front of the group to demonstrate the importance of being on time.” There is also no indication that the Chinese took any longer to prepare for the acquisition than their American counterparts.
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