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LENOVO'S DEVELOPMENT AND SUN TZU'S ART OF WAR

Reference No. 17/003 Publication Year 2017
Author(s) Lo W H, Ailie K Y Tang, Chan Wing Wah
Company Lenovo
Industry Technology Product Manufacture
Geographic setting Hong Kong
Functional Area Strategy/ General Management; Innovation/ Entrepreneurship; Drucker's Management; Chinese Culture

Synopsis

“To succeed like Lenovo, companies must “love to battle, know how to battle, and conduct campaigns with order” ” Liu Chuanzhi (“Liu”), founder and Honorary Chairman of Lenovo Group Limited once said during a press interview. Not only does Liu’s choice of words reminds people of Sun Tzu’s Art of War—the highly regarded oriental book on military strategy written by the famous Chinese General Sun Tzu more than two thousand years ago, writers on Sun Tzu’s military treatise and commentators on the oriental markets and practices have compared Liu’s leadership style to those of Sun Tzu’s accomplished generals. Some consider the acquisition of IBM’s personal computer business, the stepping stone that allowed Lenovo to become an international brand and business, is consistent with a major principle on how to win battles and wars that is preached by Sun Tzu: “… to take intact a battalion, a company or a five-man squad is better than to destroy them”.

To what extent has Sun Tzu’s Art of War helped to shape Lenovo’s past? As the world’s largest PC maker enters the smart Internet era (see section on this topic), it said in a statement at the beginning of 2017 that “Lenovo faced sizeable challenges in its three main lines of business, namely data centre, mobile devices, and PCs, and smart devices”. Will this Chinese leading technology hardware company find its way to success through the strategic principles and tactics of Sun Tzu’s Art of War?

Learning Objective

Sun Tzu’s Art of War states the principles, rules, strategies, and tactics that can bring victories to those generals who follow and practice them. It is widely acknowledged that these principles are equally applicable to the business world, covering wide array of management disciplines such as strategy formulations, effective leaders and leadership, sales and marketing management, and human resources management. This case explores how the principles and strategies of Sun Tzu’s Art of War has helped Lenovo to grow from a seed funding of around US$30,000 from the Chinese Academy of Sciences to its current size of annual revenue US$43 billion (according to its latest annual report 2016/17). The case also illustrates the new challenges faced by Lenovo as demands for PC decreases in the Internet era. As the company struggles to maintain its relevance in the smartphone market, there are troubling signs that the CEO’s directives may be losing steam amongst his senior associates as well as the board.


This business case is mainly written for postgraduate class discussion, especially for students with business and management experience. It provides a context for them to critically evaluate, consolidate, and extend the principles, rules, strategies, and tactics discussed and illustrated in the highly regarded Sun Tzu’s Art of War. They are expected to extend their knowledge, experiences, and thinking in applying this seminal military treatise to deal with the complex issues faced by Lenovo and its CEO.

The core objectives of this case are:

1. To introduce Sun Tzu’s Art of War to postgraduate students, if they have not already familiarized themselves with the masterpiece.

2. To enable postgraduates to internalize the principles and strategies preached in Sun Tzu’s Art of War. For students with business and management experience, the case provides a context for them to conjoin their experience with the strategies and tactics. For students planning to join the “battlefield” after their graduation, they should synthesize learnt management theories with Sun Tzu’s teachings.

3. To critically evaluate, from a business perspective, how Sun Tzu’s Art of War can be applied to enable Lenovo to win battles in the marketplaces of the Internet era.

4. To apply Sun Tzu’s Art of War to help top executives in managing themselves so as to be able to consistently make better and winning decisions.

Suggested Questions:

1. Critically evaluate any one chapter of Sun Tzu’s Art of War, and their implications to “strategic thinking in management”.

2. Pick an area (such as an operation, a function, or market of Lenovo), discuss how insights gained through Sun Tzu’s Art of War may be used to formulate recommendations for Lenovo to develop competitive advantage in the long-run.

3. “Sun Tzu’s Art of War is about managing oneself in order to secure victories”. Critically discuss how relevant this statement is to senior executives, and with special reference to Lenovo’s CEO.

4. Assume the role of one of the following of the PC, the Mobile, or the Data Centre Business
a) The Sales Director
b) The Marketing Director
c) The Product Development Director
d) The Finance Director who looks after the funding needs and reporting needs of either business
e) The Human Resources Director

Write a pitch to the CEO of Lenovo on the next twelve months’ priority areas under your functional directive. Formulate such in accordance to the teachings of Sun Tzu, and state why.