Out of Control Policy Blog

Outsourcing Execs

In April, China's Lenovo purchased IBM's personal computer division - home of the Think line of notebooks, desktops, and monitors - for $1.8 billion. Wired offers an interesting glimpse into this tale of globalization:

    Yet there's more afoot here than the sale of an American icon to Chinese owners. The purchase creates the first truly globalized - as opposed to global - corporation. This will not be simply a business with far-flung, disparate operations. Success depends on a truly transnational approach to everything from merging cultures to the making and selling of computers, one that brings together worldwide talent and resources and combines them to pursue a larger goal. It's a confluence of forces - innovation, technology, and free markets - that makes this moment possible. Isn't this exactly the kind of IBM Thomas Watson Sr., who in the 1930s pitched "world peace through world trade," would have wanted for the 21st century? Is this what globalization hath wrought?

    ...

    What's astounding is the methodical way that Lenovo is carrying out this transition. The company recognizes its executives don't yet have the experience or strategic chops to lead Lenovo to this new world. So it's buying the one thing from IBM that can't be commoditized, that China can't produce more cheaply and more efficiently: superior management.

    "We were simply finding a boss for ourselves," says Lenovo CFO Mary Ma, who played a principal role in the acquisition. Indeed, though the new company has more employees in China than anywhere else, Lenovo chose to make American IBMer Steve Ward its CEO and to move headquarters from Beijing to a new location in Purchase, New York, just a few miles from IBM's venerable home in Armonk.

    Lenovo's plan suggests that the next great US export could be corporate executives. Call it the harbinger of a giant outsourcing boomerang. As borders become less relevant and the international marketplace gets more efficient, every country will do what it does best, and for the best value. The US will no doubt continue to outsource manufacturing and technical jobs overseas. In turn, those overseas nations will seek the experience and know-how of US managers and decide to outsource their leadership here. A concurrent example: Sony this year named Howard Stringer as its first non-Japanese chair and CEO of Sony Corp.

Whole thing here.

Ted Balaker is Producer


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