Mark Jones of The Scoop, a recently launched podcast series from the Australian Financial Review and MIS Magazine, recently interviewed Bill Amelio, CEO of PC manufacturer Lenovo (formerly the PC division of IBM), and myself in a discussion on global sourcing.
Amelio has been a strong proponent of what he calls “worldsourcing,” laying out the ideas in a recent article in Forbes titled Worldsource or Perish. Some have seen this stance as a way of diverting attention from the significant Chinese ownership of the company. A more relevant perspective is that Lenovo is a harbinger of the truly global corporations of the future, which will be very different animals from the companies of today. Currently almost all large companies have very distinct single national identities (primarily American) that are spread across many countries, despite the common rhetoric of global organizational cultures.
In the podcast Amelio discusses Lenovo’s perspective on sourcing design and products from wherever they’re best found around the planet, and Lenovo’s current challenges.
Some of the issues I raise in the interview include:
The rise of modularization. How business activities are becoming increasingly modular and location-independent, allowing the rise of the truly global corporation.
Collaboration and social networks in global organizations. The global corporation requires strong collaboration across many boundaries – organizational, disciplinary, and national. The social networks required to achieve this can never be fully functional in such large and complex organizations. This means that organizational design becomes a critical issue in global companies, to ensure that the most relevant social networks and collaborative connections are enabled.
The drive to commoditization. Dell innovated in creating highly efficient supply chains for PC manufacture, and Lenovo is imitating and potentially improving on the model through the shift of its center of gravity to Asia. As more companies improve supply chain efficiencies and flexibility and squeeze out costs, price competition increases in the marketplace, product differentiation becomes more fleeting, and margins are squeezed. The game to be played is in using the powerful market position and relationships of a key player in the PC industry as foundation to shift into more attractive segments.