Online Extra: Turning Two Tech Teams into One

The folks in charge of melding IBM's PC unit with China's Lenovo Group are writing their own case study. Here's a look at their progress

When the 28-member transition team that's integrating China's Lenovo Group with IBM's (IBM ) PC division met in Las Vegas in March, they posed for a group photograph. It looks like a portrait from the U.N. The group included 14 Chinese, 10 Americans, and folks from Australia, Singapore, India, and the Netherlands. For this merger to work, though, the new Lenovoans will have to work together a lot better than the U.N. does.

It's the responsibility of the management team to make sure that happens -- and fast. They must coordinate a 19,000-person staff with outposts in more than 160 countries. It's a lot of stress. Even basic communications are difficult: While many of the Chinese leaders are polishing up their English, the Americans don't speak Mandarin. "Be on the lookout for mass defections of mid-level or high-level execs," says analyst Roger Kay of market researcher IDC. "If the team stays in place and blends together, things are going well."

It may be happening. While the merger talks moved ahead in fits and starts for more than a year, the action since the deal was announced on Dec. 7 has been fast and furious. Just 13 days later, two dozen people drawn from both sides met at IBM PC offices in Raleigh, N.C., to figure how to start working together. In those and subsequent meetings, they quickly drew up to-do lists and set priorities.


  Within two months, they had an org chart. Soon-to-be Chief Executive Steve Ward and soon-to-be Chairman Yang Yuanqing sketched out an organization that that was roughly half Lenovo and half IBM. The IBM-ers are running sales and marketing -- which is what they're good at. The Lenovo folks are running procurement and manufacturing. Mary Ma, who spearheaded the negotiations from the Lenovo side, remains CFO.

Since the deal was closed, both sides have worked at being accommodating. IBM sent a camera crew to each group so they could send video greetings to their counterparts halfway around the globe. At the PC company's operations center in Raleigh, call-center employees thought up the idea of videotaping each other throwing their IBM badges away. Getting rid of excess IBM baggage wasn't just symbolic. The transition team set about comparing how the two organizations did things in order to select the better way -- or come up with something brand new. To stimulate creative thinking at IBM, Fran O'Sullivan, who'll be chief operations officer of Lenovo International (the former IBM parts of the business), started a program called the "Trash Bin Project." She encourages staffers to submit examples of things that they did as part of IBM but don't want to do anymore. She plans to start making changes soon after the deal closes.


  Still, it's not easy to leave Big Blue's protective embrace. "From the IBM PC side, the fact that we no longer have the IBM safety net is simultaneously exhilarating and scary," says Deepak Advani, the new chief marketing officer.

Not everything has gone exactly as Lenovo's new leaders planned. Originally, the idea was that Yang would be a nonexecutive chairman -- helping out with strategy but not playing a day-to-day management role. But after watching Yang conduct a brainstorming session about how to improve the plant's performance during a joint visit to an IBM ThinkPad laptop factory in Shenzhen, Ward considered asking Yang to take charge of the company's supply-chain revamp.

Ward had some reservations. He had argued for a single headquarters in New York -- rather than dual headquarters in China and the U.S. -- in part because he wanted no confusion about who was the boss. Still, later that day, when the two were driving to a Lenovo plant in Huiyang, he went ahead and asked Yang to take on the job. Yang accepted.


  Some of the accommodation could lead to problems down the road. R&D is one area where steering the best course between the IBM Way and the Lenovo Way could be tricky. Lenovo's George He runs that company's 300-person basic-research operations and charts technology futures. IBM's Peter Hortensius runs product development. This spring, after a series of meetings between engineers from both sides, the Americans somewhat reluctantly agreed to adopt a Lenovo technology called IGRS that enables communications between PCs and home-entertainment gizmos. As of now, it's not used outside China.

Lenovo engineers explained the technology on Apr. 4 to Robert Huang, CEO of Fremont (Calif.)-based Synnex (SNX ), the world's third-largest tech distributor, when he was visiting Beijing. Huang was high on Lenovo's design and manufacturing prowess, but he was skeptical that IGRS will take hold outside of China. "If we [in the U.S.] don't come up with an idea, we won't adopt it," he says.

Both sides seem to be savvy enough to know when something isn't working. But will they spot it quickly and act fast enough to avoid big trouble -- and still remain friends afterwards? That'll be the key to knitting together the new Lenovo.

By Steve Hamm in New York, with Steve Wildstrom in Beijing

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