Lenovo Retains Most of its Employees During Transition
the merger of IBM's Personal Computing Division (PCD) with the assets of Lenovo, announced in
December 2004 and consummated last quarter, only 123 people had resigned out of an
employee base of approximately 10,000. That's an attrition rate of 1%. He noted that this figure
was less than comparable year-ago figures for PCD and, indeed, IBM as a whole. I take this as a
good sign.
Some years ago, I was involved in a management buyout of a division of the now-defunct
consulting firm Arthur D. Little. We took Decision Resources, the publishing branch, out with a
combination of cash and debt forgiveness. At the time, we understood clearly the stakes. Arthur
D. Little had the brand equity, not we, and we knew we had to hold onto three critical
constituencies: our customers, our suppliers, and our employees. In the event, the buyout was a
resounding success. Our customers seemed to realize that we were the same people we had
always been. We helped that viewpoint by keeping our product's look and feel constant
throughout the transition. Our suppliers stayed with us, and, in fact, we were able to broaden our
base because we were no longer restricted to working with the Arthur D. Little scientists and
could seek as partners best-of-breed authors throughout the world. Finally, with the exception of
one or two people who wanted to stay with the mother ship, every employee took the gamble,
including many who bought stock.
Lenovo is relying heavily on the ThinkPad and the Think brand to get it through the transition,
much as Decision Resources relied on its publishing format to project continuity to its
customers. For employees, leaving a big, stable company like IBM can be scary, but it's also
exhilarating. Lenovo offers upside that IBM could not. Instead of being an underperforming
division of a company focused on enterprise computing, Lenovo is now a true PC company, able
to focus on the competitive imperatives of its core business. Where IBM had a conflict of interest
in both processors (x86 vs. Power) and operating systems (Windows vs. Linux), Lenovo's
strategy is unified (x86 and Windows).
Thus, the wind is propitious for the new company to take to the high seas. Of course, there are
storms out there — not the least of which is Dell — but at least the new, smaller, more tightly
rigged boat is setting sail with a seasoned crew and high morale.
