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LEADING ACROSS CULTURES
Such cross-border deals can be particularly challenging, difficult
to negotiate and execute. Differences in corporate culture,
social norms, political interests, regulatory regimes,
and currency values add layers of complexity. “Integration of
cross-border deals that bridge the developed and developing
worlds take longer, and you have to figure that into the agreement,”
says Jill S. Dailey, WG’98, an M&A partner with
consultant Accenture.
The Lenovo deal faced many such issues. Jean Manas,
vice chairman of M&A in the Americas at Deutsche Bank,
said that as a rule of thumb, cross-border deals “take twice
as much time to negotiate and are twice as hard to pull together.
When you are working with two companies from the
same country, they usually know how to value one another. That often isn’t the case with cross-border
transactions,” said Manas, who worked
on the Lenovo deal when he was a banker at
Goldman Sachs.
Integrating the combined companies was
similarly complex. “The number-one reason
why a merger succeeds or fails is culture,”
says Deepak Advani, WG’98, chief marketing
officer and senior vice president for e-
commerce at Lenovo’s North Carolina office.
“We had to tackle that issue head on. Many
people assume that there will be country culture
issues in such a deal. But people underestimate
the role of corporate culture, which
is also very powerful.”
To smooth the way, Lenovo senior management
emphasized a corporate culture
based on trust, respect, and compromise. A
global corporate exchange program was instituted,
with the idea of exposing people
to different cultures within the company.
Nonetheless, challenges arose.
Last year, a design meeting in Raleigh
brought on unexpected cultural differences.
Advani and 12 others from Lenovo design centers in Raleigh, Beijing, and Yamato, Japan were brought together to develop a unifying concept, such as the old ThinkPad brand, to give Lenovo computers a unique look and feel. But cultural differences were apparent as the twoday discussions got under way, Advani recalls.
“A lot of colleagues from the East, and from China in particular,
tend to think more and speak less. Our Chinese colleagues
tended to form a point of view before expressing it. A
lot of us in the West tend to think out loud. We tend to talk
through issues as we are thinking,” says Advani. The group
addressed the differences by resolving to gather input from
everyone at the table, one by one, and listening more.
Still, the meeting led to a misunderstanding. The Western-
based team said that the Lenovo product line should have a
consistent look and feel, or what it described as “a common
icon.” The design team from China disagreed. A debate went
on for several hours, and people became angry, Advani recalls.
In the end, the group realized that language was their
stumbling block. The Western team used the word “common”
as a synonym for universal, while the team from China
understood the word “common” as a synonym for ordinary.
The group eventually resolved the misunderstanding
and went on to develop the concept of the IdeaPad, a lower-
priced laptop that was launched earlier this year.
Despite such cultural glitches, Advani believes that, overall,
the Lenovo/IBM deal is a successful one. Lenovo has been
profitable, shown growth, and taken market share in all geographies
for four quarters straight, according to Advani. And the
stock, which debuted in Hong Kong at $2 a share, has risen
as high as $8.50 a share, although it has fallen back to $5.50 a share as global financial and economic concerns have increased.
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