Bill Amelio: The boss who's breaking free of a Big Blue shadow

Bill Amelio, the boss of the Chinese computer company Lenovo (owner of the former IBM PC division), styles himself as a "new world" chief executive. "We have merged companies from the East and the West to make a new world, new thinking kind of company".

It is a grand statement to describe a more prosaic reality: selling computers. Lenovo started out in China in 1984 with just $25,000 of capital and a business making punch card readers. In 2005 it bought IBM's troubled PC division. Today it has annual revenues of $13bn (£6.6bn) and is listed on the Hong Kong stock exchange.

But Amelio, who has been chief executive for just over a year, concedes that there is still much to do if Lenovo is to become a global technology brand to match IBM, Dell, Apple or Toshiba.

When Lenovo bought the IBM division, it bought expertise and the well-known and popular ThinkPad laptops. But consumers still largely associate ThinkPad with IBM, not with its relatively unknown but ambitious owner.

"Lenovo is a relatively new name," says Amelio from the company's modest European head office on a crossroads in Courbevoie, a Paris suburb. "IBM has been around for a long time and has a lot of brand equity."

Nonetheless, he has taken bold steps such as removing the IBM logo from ThinkPad laptops and holding a Lenovo Pride Day, which he describes as a "coming out experience" for the company's staff.

And Amelio has been spending Lenovo's marketing dollars at a fair lick: deals include sponsorship of last year's Winter Olympics in Turin; providing IT for the 2008 Beijing games; an advertising deal with the Brazil and Barcelona football player Ronaldinho (pictured); and sponsorship of the AT&T Williams Formula One racing team.

Nor is Amelio content to be just a PC maker. In China, Lenovo sells everything from MP3 players and mobile phones to high-performance, scientific computers. He wants to do the same elsewhere in the world.

But Amelio and his company still have work to do in the PC division before they can tackle consumer electronics. In the US, for example, Lenovo made an operating loss in the last quarter, despite making job cuts, mainly because of falling sales.

The IBM acquisition that created today's Lenovo was not without controversy. The Chinese government, through the Academy of Sciences, holds 15 per cent of the shares and an employee shareholder organisation a further 28 per cent. Other shareholders include IBM and private equity groups Newbridge Capital, General Atlantic and Texas Pacific Group.

Amelio denies that the ownership structure, especially the Chinese government share, puts off potential customers. Some Western buyers were wary of buying from this kind of Chinese company when they had previously dealt with firms such as IBM. "There were some discussions early on, but the majority of these are behind us," says Amelio.

Besides, he adds: "We are really positioned as a multinational company: we have seven American citizens, a Briton and the four [Chinese] founders on the board."

He also says that he wants to run the company along rather different lines to an IBM or a Dell. Amelio intends it to be "collegiate rather than dictatorial", with each region responsible for its own profits and losses.

"The days have gone of a command-and-control strategy. It is difficult to run a far-flung organisation that is global in that way. Unfortunately it creates a travel burden - I don't travel with an entourage - but I make sure I do a lot of face time."

Lenovo's sales, as well as Amelio's travel itinerary, offer a snapshot of global economic trends. India, his next stop after Paris, is doing "fantastically well", he says.

Unsurprisingly, business in China is growing strongly, with sales up 17 per cent in the last quarter of 2006. Europe showed a modest 3 per cent increase but sales in the US are down 4 per cent. Analysts attribute some of the American problems to Lenovo products being sold in fewer shops than those from competitors such as HP.

Nonetheless, the trend in the IT industry is heading Lenovo's way. "In mature markets, 94 per cent of computer sales will be laptops by 2010," says Amelio. He suggests that globalisation, outsourcing and the rise in the West of the mobile "knowledge worker" - such as travelling businessmen - are the reasons.

Globally, just under half of Lenovo's sales are of portable computers, including the ThinkPad range of laptops and the Lenovo 3000 small business PCs. Competitors such as Apple sell a smaller proportion of laptops compared to Lenovo.

Most of the remaining sales are of desktop PCs. Some companies, such as banks and retailers, will still want low-cost, easy-to-manage desktop computers. But outside such specialist environments, the higher cost of laptops is the only real remaining barrier, he says.

Amelio faces dual challenges. The first is to make Lenovo's worldwide PC business as efficient as it is in China. Constant price pressure means turning a profit on desktop PCs is notoriously hard, as even the supremely capable Dell has found. The second task is to sell more laptops, particularly the ThinkPad, with their more generous margins.

That depends on running efficient factories and an efficient supply chain. When Amelio took over at Lenovo, one of his first moves was to make more than 1,000 staff redundant, both in the US and, more surprisingly, China.

He maintains that the company's Chinese operations are as good as any, but concedes there is still work to be done in his operations around the rest of the world. In China, Lenovo can deliver 94 per cent of its domestic orders in eight days. Elsewhere, it is just 60 per cent.

Improving supply-chain efficiency outside China is one of Lenovo's four strategic objectives, along with moving away from IBM's business model of selling mostly to large corporations; cutting prices and improving performance in PC manufacturing outside China; and lastly, building a Lenovo brand that is not in IBM's shadow.

But if you expect insights into the differences between Eastern and Western philosophies from this well-travelled American who still has his home in Singapore, you will be disappointed.

Ask Amelio what he has learnt from heading a company that merges cultures from thousands of miles apart, and he answers: "What you need is a sound business management system, with the right measurements and metrics." Proof - if any were needed - that management speak, like many Chinese companies, has gone global.

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