BUSINESS COMMUNICATION –III

PROJECT

-AYUSH SRIVASTAV
-80303180191

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 EXECUTIVE SUMMARY
The report deals with how Lenovo evolved from a small company to become one of the
greatest companies of the world .It also covers how Lenovo connects to it’s customers
through various social media channels and their campaign reached great heights.The
report also covers how Lenovo had it’s upswings and downturns throughout it’s journey
and also analyses various financuial aspects of the company.

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 Table of contents
1.ABOUT LENOVO

2.BRAND VALUE

3.SOCIAL MEDIA PRESENCE

4.LOGO

5.THE VISION AND MISSIO STATEMENTS

6.SUCCESSFUL PROJECTS

7.FAILURES

8.FINANCIAL HEALTH

9.INNOVATIONS

10.CRISIS COMMUNICATIONS

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 ABOUT LENOVO
 Lenovo is one of the world's largest personal technology companies,
specializing in desktop computers, laptops, tablets, mobile phones and
specialty equipment like supercomputers. It is also one of the newest of the
major technology companies and does not yet have the brand familiarity of
well-known technology firms like Apple, Dell and Samsung. Although founded
in 2004 in China, Lenovo has corporate roots dating back to the 1980's.

 Lenovo was originally named New Technology Developer Inc. and soon
changed its name to Legend Holdings. The firm was founded in China in 1984
by Liu Chuanzi and ten colleagues. Its first product was an add-on device to
provide computers with Chinese language capabilities.

 The Chinese Academy of Sciences provided $25,000 in funding to start the

company as part of the Chinese government's early experiments with
privately managed firms. The company incorporated in Hong Kong in 1988 as
Legend Hong Kong to help raise capital and gain experience in a more open
market.

FORMATIVE YEARS

 Legend began marketing its first branded computer, the Legend PC, in 1988
to its principle customer base in China. Sales grew quickly and by 1996, the
company became the market share leader for personal desktop computer
sales in China. That same year, Legend also introduced its first laptop
computer.

 By 1998, it had produced its millionth computer and in 1999 became the
largest PC vendor in the Asia-Pacific region. The company extended its
product line in 2002 with its first supercomputer, the DeepComp, marketed
as the fastest computer available in China for the civilian market. In 2003,
Legend introduced the Lenovo brand and logo for its products, in preparation
for the company's expansion into markets beyond the Asia-Pacific region.

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 GLOBAL EMERGENCE

 Legend formally changed its name to Lenovo in 2004 and emerged on the
world stage by partnering with the Olympics. But it was a surprise
announcement that same year that really put Lenovo in the global spotlight;
the company acquired the Personal Computing Division of IBM.

 IBM's popular ThinkPad laptops were rebranded as the Lenovo ThinkPad.

When the acquisition was completed in 2005, Lenovo became the world's
third-largest PC firm. Subsequent acquisitions and market expansions grew
Lenovo's product line to include smartphones and tablets and increased the
company's presence in Europe, South America and Japan.

LENOVO TODAY

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 In 2013, Lenovo became the largest PC company and the third largest
smartphone company in the world. It ranked that year as number 329 on
Fortune magazine's list of the 500 largest companies.

 The company reached sales in 2013 of $39 billion and 54,000 employees.
Jointly headquartered in Beijing, China and Morrisville, North Carolina,
Lenovo has operations in more than 60 countries, sponsors 46 technology
laboratories, owns more than 6,500 international patents.

BRAND VALUE

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 SOCIAL MEDIA PRESENCE

Proudly displayed on their Facebook page, Lenovo says:

“We power ideas that help shape the future. If you have a vision, we have the passion to
bring it to life. For us, Innovation Never Stands Still.”

In the year 2016, they did just that. Lenovo decided to take on a campaign to help a young
woman’s football team determined to break out of the stereotypes in their village in Hutup,

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Jharkhand. Towards the end of the campaign, that simple football team earned almost 5Mn
views on Facebook with the help of Lenovo’s use of real time marketing.

Lenovo’s Brand Image Problem

Lenovo has always been one of the go-to brands for electronics devices in India. However,
what the brand always struggled with was the what the brand stood for at the end of the
day. Most electronic brands at the time had a strong theme with a backing up campaign to
support it. Lenovo’s brand belief titled ‘FailForward’ ie taking failures and obstacles as part
of the journey, had no real backing.

To overcome this problem of brand image, Lenovo decided to tie up with YUWA:

A 501c3 California NGO whose mission was to promote a youth-driven approach to

community advancement in rural India.

Based out of Jharkhand, YUWA focuses on empowering young tribal girls with football.
Their prime area of concern being Hutup, a rural region in Jharkhand infamous for child
trafficking and child marriage.

In 2016, The YUWA team was invited to partake in the Donosti Cup. The world’s largest
youth soccer tournament. Lenovo saw this as a perfect opportunity to showcase one of its
core brand belief to the world by backing these girls and simultaneously provide some
clarity to consumers about what they stand for in their minds.

Lenovo’s Campaign Objectives

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1. Lenovo decided to create an online campaign that revolved around the team’s 2
week journey and achieve maximum online presence and engagement for it

2. Through the engagement, Lenovo wanted to raise awareness about the YUWA
girls cause, as well as invite people to sponsor building a school for these girls in
their hometown.

LENOVO’S INITIAL EXECUTION ERROR

 Lenovo decided to take a risk revolving the entire campaign on a story telling
approach. However, in order to promote the “Live-ness” of the campaign, they
had to ensure everything was unscripted to promote authenticity.

 Lenovo initially decided to focus more on the background story of the girls,
their plight and struggles initially. They expected the audience to be
captivated with just the struggles of the YUWA girls and come running to
them. Now from a goodwill standpoint it’s a good approach, however to
increase online engagement and improve brand awareness it was not the
right approach, as they expected the audience to be self motivated and come
to them and not vice versa.

 As a result the initial execution ended up with minimal audience interaction.

Lenovo decided then that the best way to get maximum engagement was to
make the audience experience and be a part of the football games along side
with the YUWA girls.

NEW CREATIVE STRATEGY:

 The creative challenge was to have the audience follow the girl’s journey
while keeping the underlying brand title always visible while the entire
campaign was live and unscripted.

 #FailFoward worked perfectly for this. Lenovo focused on the message

that whether the girls won or lost, they were still going ahead.

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  Ranbir Kapoor, Bollywood actor, co-owner of premier football club Mumbai FC
and brand ambassador of Lenovo played a huge role in this. While the entire
campaign was filmed, he played the role of a storyteller who followed the girls
journey through their high’s and low’s with their matches.

KEY MARKETING DECISIONS:

 Lenovo decided to break the entire journey into the form of episodes. Initially
leaking a teaser of Ranbir Kapoor, to his fan clubs to pique interest and grab
audience attention.

 When a significant reach was hit, the first episode was released through
Lenovo’s social channels and fan clubs. The release gained a massive amount of
engagement as the audience connected well with the story. Since the girls were
representing India and were coming from a simple lifestyle, an entire patriotic
audience segment emerged holding the girls as the India’s unsung heroes.

 After the success of the first episode, Lenovo decided to focus on their objective
of building a school for in the girls hometown. They launched a social UGC(User
Generated Content) campaign called ‘Kick For A Brick’.

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 Lenovo Education

Every time a ball was kicked on social media, tagging the campaign, Lenovo
responded by adding a brick to the YUWA girl’s school. This led to massive
amount of UGC ranging coming from students, mothers ,kids and even support
from educational institutions

 Once the girls landed in Spain, they were filmed during their practice sessions to
capture their individuality, hopes and fears. This added to the entire unscripted
nature of the campaign and helped the audience connect deeply with the girls
before the matches.

 As the tournament began, No one knew the outcome of the matches, the
suspense had been carefully placed in the audience’s hearts. However Lenovo
stuck strong to their #FailForward campaign ie Win or Loose, the YUWA girls will
always be winners in the hears of everyone and the audience picked up on it as
well

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 Lenovo Facebook Marketing

 To boost the authenticity of the campaign all the matches were broadcasted live
on Facebook and twitter using their live video features respectively. The matches
were even shown to the YUWA girl’s friends and family back home at Hutup.

 The Series aptly titled ‘Girls With Goals’ had their own website which housed all
the UGC as well used as an initiative to educate people on the girls journey with
daily updates. One could also contribute to the building of the YUWA girls
through the website.

 By breaking into an Episode based format, Lenovo could successfully retain their
followers by remarketing with teasers and upcoming episodes.

 The UGC with Kick For A Brick, had gone viral as it was the least amount of effort
required to help a cause. People felt encouraged to spread the campaign
themselves as it just required them to kick a football to aid building an entire
school.

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 Results

1. For the objective of gaining maximum online presence

Combining all the episodes, Including the live matches streamed on Facebook and the in
between footage, 10,000+ shares were received with more than 5Mn views and 800
genuine comments. The Live games gained an average 6000+unique viewers with each
match.

2. For the objective of receiving donation to build the YUWA girls school
The fundraising campaigns raised around 1.68 lakhs in 10 days itself. Urging the
audience to contribute themselves on the website or by simply kicking a ball. Lenovo
could ensure a steady supply of funds during the campaign.

LOGO

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In 2015,Lenovo introduced a new logo designed by Saatchi & Saatchi New York.The
company said “The cornerstone of our new identity is our new logo — a mark that is made
up of two key elements. First, there’s the word Lenovo, which we’ve designed in a more
contemporary way, making it more readable so there are no pronunciation issues around
the world. More importantly, this wordmark is housed in a containing shape, which is meant
to be more than just a design element. It acts as a window into culture and the world that
surrounds us, housing a range of images, colors and patterns.”

The previous logo wasn’t great. I want to put more praise on the unconventional “e” but it’s
really not that cool and the rest of the wordmark isn’t particularly interesting. Perhaps in

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the technology world it has some equity but as a consumer brand I doubt it has much
outside China, where its smartphones rule.

Between the video press conference and the quote above you would think the new logo
was a drastic departure from the previous logo and the most innovative execution in logo
design since flip phones.

It’s certainly “nicer” in that it’s more normal but that’s about it. The slanted “e” is as
exciting as the otherwise very normal wordmark goes. Placing it in a rectangle with colors
and imagery that changes doesn’t make it any better or more strategically relevant or a
window into a culture.

It’s now one of the oldest tricks in the book. And we all know there is no magic behind it
anymore.

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 The Vision and Mission statement

Lenovo’s Mission Statement:

“Our mission is to become one of the world’s great personal technology companies.
We will accomplish this through:

 Personal Computers:Lead in PCs and be respected for our product innovation and
quality.

 Convergence:Lead the industry with an ecosystem of devices, services, applications

and content for people to seamlessly connect to people and web content.
 Culture:Become recognized as one of the best, most trusted and most well-
respected companies to work for and do business with.

The mission of Lenovo is to become one of the world’s best personal technology companies
that it is going to accomplish through product innovation, and better management.

Lenovo has a product oriented mission statement. At its centre are the products and
services that Lenovo provides. Its mission is to become the market leader in Personal
computing. Apart from that, it aims to serve its customers better by providing them with an
array of products, services, applications and content that makes both personal and
professional computing easier for them.

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Lenovo also aims to be known as one of the most trusted and respected employers and
businesses. Technological leadership is the main aim of the brand which is explained in its
mission. A mission statement explains what a company exists for. Lenovo gives a detailed
glimpse of the kind of products and services it provides.

Apart from that it also explains its central focus of business. Mission statements also serve
to guide day to day decision making and action within the organization. However, the
mission does not include anything about the other areas like CSR, employee welfare, current
industry position of the brand etc. It is mainly clear about its central focus leaving other
things a bit unclear.

Vision Statement of Lenovo:

Our vision is that Lenovo will create personal devices more people are inspired to own, a
culture more people aspire to join and an enduring, trusted business that is well respected
around the world.

Lenovo’s vision is to create devices that are going to be loved by people and become a
company where people love to work and a brand name that inspires trust.

However, that is not something very specific. A vision is about the future a business is trying
to achieve for itself. Lenovo’s vision is not very clear about the future it is trying to build. It
does not talk of its financial challenges, how it will overcome them or its competitive
challenges. Its focus is on being a trusted and loved company. However, while that is a
desirable future position, still not a very clear one.

The vision statement does not explain what the company is doing to achieve its purpose or
how it is doing the task better than its competitors. It does not address concerns like
financial growth, CSR or its position in the industry.

So, the vision statement does not provide a clear course to Lenovo’s future. It at least needs
to be more specific to give a better and more understandable view of Lenovo’s vision of
future. It does not highlight things like its customer orientation or employee orientation
either. So, while the vision is short, it is also quite simple and a bit vague.

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 SUCCESSFUL PROJECTS, ACQUISITIONS AND MERGERS
Lenovo’s successful acquisition

 It was an acquisition that was so full of symbols that it is difficult to know where to
begin Lenovo purchase of IBM in 2005 was first seen as a sign of rapid growth and
expansion of the Chinese economy and its transformation away from the traditional
manufacturing base to more high tech areas. For doomsday merchants in the land of
uncle Sam it foretold the end of the world domination of the US economy.

 The two company could not have been more different. IBM could boast of nearly
100 years of existence created. In 1911, the company has grown rapidly throughout
the years particularly after the second world war .During the 1917 and 80s it was
consistently ranked as the largest company in the world by the market capitalisation.
Such was its domination in the mainframe market that in 1969, the American
government setup an anti-trust enquiry to investigate if it was abusing its Monopoly
power .Eventually the US government dropped the investigation in 1982, after a 13
year enquiry concluding that newcomer such as apple and Microsoft already eating
into their business

 In comparison to IBM, Lenovo was a toddler within the industry .The company was
set up in 1984 under the name of Legend by Liu Chuanzi and group of 10 engineers,
it was said that they had less than $25,000 with which to create business The same
year IBM had nearly 400000 employees and revenues in excess of 45 billion dollars
despite the difference in age and size the establishment of Beijing based from came
at the same time that another upstart, Apple, was challenging IBM’s domination of
the computing industry through the use of one of the most iconic and famous
advertisement that has ever been made using George Orwell chilling, futuristic novel
1984 as a source of inspiration.

 Notwithstanding its humble origins Lenovo grow rapidly over a period of two
decades to become the world's ninth largest manufacturer of microcompute.By
2005 it had revenues of 3 billion dollars and 30% market share in China but only 2.3

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 % worldwide despite the company's financial and market position. It’s
announcement in December 2004 that it is going to acquire the IBM PC division for a
total value of 1.75 million dollars still is something of a surprise .The potential
benefits of the agreement were numerous. A successful acquisition would give
Lenovo access to Ibm’s brand notoriety and worldwide recognition as well as an
efficient marketing and promotion system with a sales and distribution network
operating in 160 countries. IBM was reputed to have professional and highly
competent staff as well as a loyal customer base the deal would make Lenovo the
third largest PC supplier in the world.
CULTURAL DISTANCE
 From a cultural perspective view, few would question the huge gap that exists
between American and Chinese business practices.Hofstede contrast the two
culture on such aspects such as uncertainty avoidance, the collective nature of
Chinese society compared to the American prediction for individualism and the
considerable more restraint society within the middle Empire compared to the more
outgoing American society. This was summarised by Qiao Jian, vice president for HR
Lenovo when he stated that” Americans like to talk Chinese people like to listen”
 This lead to worry that many of the senior managers at IBM would leave the firm,
however Lenovo hands off approach to sting the senior managers in the USA with
the continued development of the firm meant that most of them stayed on, does
ensuring a smooth transition and stability within the organisation.
ADMINISTRATIVE AND POLITICAL DISTANCE
 Administrative and political distance also presented a great challenge. This was due
to the nature of Chinese company as well as relationship that the two had with the
respective government Ironically Lenovo was free to purchase ibms PC division,but
the reverse would have been possible given the fact that Chinese government
required a minority stake holding for any foreign company
 Lenovo managed to overcome the initial challenge to deal by the US government
worried about a Chinese company having access to US Technology, this was
especially delicate given that IBM had a contract with the government and a high
definition access to sensitive data Lenovo guarantees and showed that this problem
was overcome within a year which further ensured successful integration
GEOGRAPHICAL DISTANCE
 The geographical distance was also a major challenge. Lenovo was based in Beijing
where as the IBM PC division was based in North Carolina ,this was a 13 hour flight
and also spend across 12 timezone making it extremely difficult to engage in direct
communication with the normal working days since Lenovo skillfully avoided any
form of micro management of its new acquisitions communication between the two
firms could be dealt with them in an asynchronous fashion through email. More
complicated issues were then dealt with through teleconferencing, becoming a way
of life for the company. Typically, Americans called the Chinese colleagues at 6:00
a.m. or 11 p.m.
ECONOMIC DISTANCE
 Finally the economic distance between the two countries and the two forms was
also a challenge ,the Chinese economy was growing rapidly through income per

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 capita which was still very different. IBM was famous for its leading Technology so
its clients and cooperation partners are mostly at the high end of the market.
 Lenovo catered to more lower and Middle consumer. Equally the Lenovo brand was
virtually unknown ,however by paying of the notoriety of IBM and its products
along with taking a skillful approach to market segmentation. Lenovo was able to
successfully circumvent these challenges transforming itself into a leading PC
manufacturer within a decade.
CONCLUSION
 Few doubted the ambition of Yang Yuanging, CEO of Lenovo when the decision to
acquire IBM was announced in 2005.
 “In 5 years I want this Lenovo to be very famous PC brand with may be double the
growth of the industry. I want to have a very healthy profit margin and maybe some
other business beyond PCS worldwide”.
 Despite a considerable number of sceptics at the time, Lenovo was clearly up the
task search was the success of the acquisition that by 2015 Lenovo could claim to
have grown into the world's number one PC maker ,number 3 smartphone
manufactured and number 3 in the production of tablet computer. Indeed by 2014
the firm had enough confidence to add the IBM Server business to its portfolio this
time, however few analyst look the principles from behind their computer screen

FAILURES

(Motorola acquisition)

Since 2005, Lenovo has done very well. They acquired the ThinkPad brand of laptops from
IBM and that success apparently gave them a false sense of security. They thought they had
the secret sauce, but apparently they are not bulletproof. They acquired Motorola in 2014
hoping for the same result. However, to date that has failed. So, what can we expect going
forward?

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When Lenovo acquired ThinkPad, IBM had been successful with it for quite a while. It had a
strong brand name and it was still the leader in the laptop market. The future of this sector
had challenges with coming tablets and other issues, but ThinkPad was still a solid
acquisition. Lenovo would have had to completely mismanage things to screw it up. The
only question is how valuable could it be? Bottom line, they did a great job of maximizing
value.

Motorola and ThinkPad are different for Lenovo

However, Motorola is a different story. Motorola was dying when Lenovo acquired it, having
been the leader in the space for decades. They were the leader in wireless communication
before the cellular revolution started in the early 1980’s, and then hung onto their
leadership position through the mid 1990’s with their StarTac phone. Then things got rocky
for the company.

Motorola missed the switch from analog to digital technology in the 1990’s and suddenly
lost their way. Nokia quickly took over the No. 1 spot in handsets and kept it, along with
BlackBerry for smartphones. That lasted a decade until the first Apple iPhone and Google
Android-powered devices hit the market starting around 10 years ago.

That’s when the marketplace radically changed. Today Motorola, BlackBerry and Nokia are
having the hardest time remaining relevant in the smartphone market.

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Wireless marketplace radically reinvents itself every decade

Consider the app market. When BlackBerry and Palm led the market, there were only a few
hundred apps. After Apple Google entered, there was an explosion of apps. Today, there are
more than 1 million apps, and those apps are not just toys. Today, they help us with our
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health, finance, news, information and so on. We watch live television, movies, read books
and so many other things.

Today apps are valuable to us, and they are only going to continue to improve our lives. As
the world continued to change, Motorola fell further behind. They had the Razr for a few
years, but nothing followed it. That meant their growth wave rose briefly, but fell once again
and has not budged.

The growth wave rises, crests and falls

The growth wave has both built up and taken down many companies, including Motorola
who did not create the next wave. The once strong Motorola became the ugly duckling of
the wireless handset market. They split up and wondered in the desert for years.

Following a brief Google ownership, Lenovo acquired Motorola in 2014. We were all excited
to see how they were going to change the wireless marketplace, and we are still waiting.

Lenovo is a worldwide company with a strong brand and reputation. However, competing
against Apple and Google in the smartphone market has been a challenge. No one has
successfully competed with and won market share from Apple and Google since they took
leadership 10 years ago. Why Lenovo thought they could with Motorola, a company on the
falling side of the growth wave, is a complete mystery.

To be fair, Google’s Project Fi mobile virtual network operator service has a hard time
competing with Android devices on AT&T Mobility, Verizon Wireless, Sprint and T-Mobile
US. This is just the current state of today’s wireless marketplace.

Can smartphone leadership change?

So, the question is, will it always be this way in wireless? Believe it or not, I say not
necessarily. Yes, Apple and Google have helped to usher in a new wave of smartphone over
the last decade. However, every revolution in wireless has a lifespan. In wireless, the
lifespan is roughly 10 years.

So, it’s time for the next, big revolution in wireless. What will it look like? Traditional
wireless carriers are starting to answer this question. Sprint and T-Mobile US are growing for
the first time in a decade. They will continue to grow in the traditional wireless space. AT&T
Mobility and Verizon Wireless will also continue to compete in this space, but they are also
expanding far beyond traditional wireless.

Leadership in the handset space could go through a major shift. I am not saying it will
happen, but it could happen at any time.

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Expect smartphones to get smarter and start to use new technologies like artificial
intelligence, the cloud, internet of things, virtual reality and more. Smartphones are
becoming the remote control for our lives. After all you can use apps to open your doors
and set your alarms.

With that said, Lenovo Motorola should continue to innovate and advance the playing field.
Who knows what will capture the imagination of the marketplace next. Other handset
makers are also trying to jump to the top. Companies like Huawei, ZTE and Xiaomi, and
newer and lesser known smartphone makers are making waves including Oppo and Vivo.

So far, it looks like Huawei, Oppo and Vivo are positioning themselves for growth in 2017.
And they won’t be the only ones. This year is the 10-year anniversary of the iPhone and
Android, and I would say it’s time for the next big growth wave to transform the industry
and take us to the next level.

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 FINANCIAL HEALTH

SHARE PRICES(1 MONTH)

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 PROFITABILITY AND REVENUES

 Quarterly performance continues to validate Lenovo’s strategy with Q1 revenue up 19%

YOY to US$11.91 billion; second consecutive, double-digit quarterly growth and
profitability improvement across all business units

 Q1 PTI continues strong momentum, growing to US$113 million, up US$182 million from
last year’s Q1, and up US$76 million sequentially.

 Q1 profit attributable to equity holders grows to US$77 million, up US$149 million from
last year’s Q1.

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 INNOVATIONS

While other tech companies merely spit out iterations of existing products in 2016 —
waterproofing an identical phone or slimming down their laptops and tablets — Lenovo was
busy reinventing these categories with bold new gadgets in 2016.

 Yoga Book: A 2-in-1 sporting a completely flat keyboard that transforms into a writing
pad you can use with a real pen. Android and Windows versions are available now, and
Lenovo confirmed that a Chrome OS edition is on the way for 2017.
 Phab 2 Pro: The first true augmented-reality phone, which leverages Google's Tango
depth-sensing technology.
 Moto Z: A phone that lets you add mods (and new capabilities) via an intuitive magnetic
system.
"Lenovo is definitely innovating," said Avi Greengart, research director for consumer
platforms and devices at market research firm Current Analysis.
Jeff Meredith, general manager and vice president of Lenovo's Android and Chrome
Computing Business Group, knows that this trio of groundbreaking products isn't for
everyone. But he cited a quote by Amazon's Jeff Bezos: "If you never want to be criticized,
for goodness' sake, don't do anything new."

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 CRISIS COMMUNICATION
 Crisis Communication refers to a special wing which deals with the reputation of the
individuals as well as the organization. Crisis communication is an initiative which
aims at protecting the reputation of the organization and maintaining its public
image. Various factors such as criminal attacks, government investigations, media
enquiry can tarnish the image of an organization.
 Crisis Communication specialists fight against several challenges which tend to harm
the reputation and image of the organization.

Anatomy of a crisis: Lenovo and Superfish

 The Superfish issue at Lenovo is complicated both in terms of the technology involved and
the scale of operational reaction the company had to mount. The issue was not isolated to
any one product or market, and Lenovo had to bring many levels of management structure
to bear on the situation. But as far as handling a crisis from a communications point of view,
Shafer explained, the important thing is to stick is to principles and focus on communicating
clearly and honestly. Make those a priority, and you go a long way to allowing everything
else to fall into place.

 Perhaps because he originally found his first job at Lenovo via a job posting
in PRWeek, Shafer was willing to spend some time with us and talk about his recent
firsthand experience in crisis management. Over the past few weeks the company
had a hard time in the press as the story of Superfish—adware (or ‘bloatware’ as
even Shafer referred to it) installed on some of Lenovo’s products—led to a loss of
trust among consumers and even the filing of lawsuits.
 "We looked at it initially as being related to some fairly straightforward adware
issues," Shafer said. "It became clear quickly after that, that those assumptions
weren’t right, and it became more of a security- and privacy-related problem."

The timeline of events in some media accounts has Lenovo turning a blind eye to Superfish-
related complaints. In Shafer’s estimation that’s an unjust characterization, and he has a
point. For any company that produces products in the millions, especially a highly technical
mass-consumer product, there is bound to be a routine flow of technical issues, some of
which may be serious but most of which will be of low-level concern. Knowing which issues
to escalate gets into a much deeper operational conversation that goes well beyond the
communications department.
But having the facts straight is one of the key things Shafer emphasized for PR teams that
want to learn from the Superfish crisis.

"We have to look honestly at whether or not we understood things well enough at the very
beginning internally. We were dealing with an emerging situation. We had the information
we had; new information came along that significantly changed the story, and I think we
responded to that as quickly as we could."

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Shafer was frank that the company’s reaction may not have appeared to those on the
outside to be swift enough.

"Our understanding of the facts changed," he said. "Actually we did respond quickly and
recognized it was serious, but we did not have a full understanding of the issue. The lesson
really is that speed must be balanced with having good insight. We moved with the best info
we had available, but then things changed quickly."

Outside perspective

The thing for people on a comms team to note is how information coming into a company
can look very different to people (namely consumers) on the outside. How things can
escalate from complaint to crisis can, and will, take you by surprise.

"Unfortunately for Lenovo in the early stages the [negative] story really took hold, and
we’ve got to be candid about why. It touches a lot of nerves. There are technology elements
to it; and people use technology in very personal ways. There are security elements to it.
There are privacy elements to it. And we’re a large global company; so the expectations are,
and should be, high of a company like Lenovo."

In separate conversation on the subject, Bob Pickard, Asia-Pacific chairman at Huntsworth in

Singapore, commented that another dimension to look at is the brand’s origin. "Lenovo is a
Chinese multinational," he said, "and in global markets Chinese companies are subject to
considerable skepticism about their quality and trustworthiness. Fairly or unfairly, the bar is
set higher for Chinese products, and the last thing Lenovo should be doing is stoking new
fears stemming from old stereotypes."

In so many ways, Lenovo has been "surefooted in its march to become a mighty global
brand", and so this incident was surprising and attracted disproportionate attention, Pickard
said.

As a learning example, Shafer admitted that responding to the wrong problem in the initial
stages allowed the howls in mass media and the vitriol on social platforms to multiply. That
could be a particular point for tech brands to note. The routine with which they have to
respond to technical issues may breed a certain level of detachment or dispassion that may
look more like unresponsiveness to consumers or the press sitting outside the company.
When responding to a crisis it is crucial to look at it through the consumer’s eyes and not
the company’s.

At least initially, looking at the problem from the wrong perspective may have been the case
with Lenovo. Ultimately the problem was rooted in technology and the company addressed
it that way. But the issue seeped into so many other, more personal, areas for consumers;
therefore communication had to be stepped up from handling it at a tech support level.

"We really had to deal with it in a different way" Shafer acknowledged. "It wasn’t just a
technical issue. We had to have [consumers] understand that we were truly and deeply

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sorry for causing concerns and that we were working aggressively to, not just sort of fix a
problem, but to eliminate the problem, to eliminate the software proactively."

The company has done that, via posting removal tools and offering affected users a free six-
month subscription to McAfee’s LiveSafe service. It’s likely the cost associated with that
would far outweigh any profit made on the original Superfish deal, and it just goes to show
what a priceless commodity consumer trust really is.

Shafer said he believes that the tone of concern the company tried to convey eventually
started to resonate with consumers, but stressed for the sake of an education process, that
"there was an early lack of understanding on our part of what we were dealing with, and
we’ve had to be honest about that too. I would say that in looking back we have to deal
honestly with how we responded based on the information we had, and consider whether
we can improve in terms of ensuring we have all of the information we need as early as
possible."

For PR professionals in similar situations, he said, "at the end of the day, your principles are
to try to communicate clearly; try to communicate honestly; try to own whatever mistakes
you might make even within your communications. Try to stay focused on the fact that what
you are trying to do is help people to understand what is going on.

"You just have to prioritize what’s important. And what was important first was making sure
that we understood the issues so that we could solve them. And then we could
communicate that solution. And then we can deal with the stuff that comes after that, to try
and look forward and make sure it doesn’t happen again."

Lenovo has heard the message from consumers about wanting a ‘cleaner’ PC. And that’s
something that goes all the way to topline strategy. The comms VP reiterated the corporate
commitment to eliminating bloatware, saying he didn’t want to sound like he was making a
pitch, but believes this commitment will truly define future products.

Before PRWeek’s conversation with Shafer, Charles Lankester, senior vice-president of

reputation management at Ruder Finn Asia, likened the situation to when Nike had issues
with poor working conditions at contracted factories. Supply chain issues, which normally
are not part of the consumer equation, ended up causing considerable reputational damage
to the brand in the 1990s. The issue occasionally resurfaces and still nags at the company,
but with the firm repeatedly landing in the top 10 of Campaign Asia-Pacific’s Top 1000
Brands, it’s safe to say the footwear company has largely been able to move past the issue.
But staying on top of it internally is likely a component of that success. Expect the bloatware
issue to be a similar internal challenge for Lenovo going forward.

Broader lesson

"Superfish seems to have opened the lid on the worrying practice of ‘software supply chain’
issues," Lankester pointed out to PRWeek. "The Lenovo Superfish software was itself
outsourced. One Superfish lawsuit has already been filed. Quoting security guru Dan
Kampinsky in a recent CNET article "this signals to participants in the supply chain that if

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they intentionally put in software that makes machines vulnerable, they're going to be
taken to task for it".
"There may be an opportunity over time for Lenovo to turn their cautionary tale into a
teachable moment for the industry," Lankester said. "If Lenovo were to set these standards,
without stifling innovation, other companies may follow, and it would go far in rebuilding
Lenovo's reputation."

And it's true, at least from Shafer’s perspective, that from here on we are likely to see
Lenovo leading the charge to offer "safer, cleaner" PCs. Talking about the industry as a
whole, he explained that there is a lot of software that all manufacturers preload, and the
origin of that was to improve the customer experience and maybe gain a competitive
advantage. Some software is there, for example, to accelerate web page loading. But he also
accepted that financial deals have led to some of the software being included. This is a ‘win-
win’ when software venders pay to put enhancements on PCs, and Superfish was supposed
an example of that. Clearly that’s not how it turned out. And to be fair, Lenovo has not been
alone in the practice.

Some reports have said Lenovo may have made about US$250,000 for putting Superfish on
some of its products. PRWeek asked Shafer whether the fallout from the deal hurt all the
more, given the relatively small sum made off of it.
"I don't think that’s relevant to how much it hurts," he said. "What hurts is the fact that we
need to rebuild trust with users who we have spent a decade building trust with. A very
serious and important endeavor for us going forward is to make sure that we are clear and
honest about what has happened, and that we’re also very focused now on how to make
sure it doesn’t happen again and how to improve the experience."

Shafer contends the company has essentially gotten religion on the bloatware issue, and
there will be far less preloading at Lenovo and much more scrutiny of what is put there. And
just as importantly, much more transparency about what is there. From here on, he
reiterated, Lenovo will not only reduce preloading of software but will take pains to make it
known what is put on the PCs, including posting lists online.

Lankester also pointed out to PRWeek that the whole preloading of software issue "raises a
worrying trend that has parallels with nut allergies: you can't be sure what's inside; and
what's inside may hurt you. Or your bank account. The food industry dealt with this via
cautioning consumers that ‘this product may contain nuts’. It seems that PC manufacturers
may need a similar warning going forward—this PC contains bloatware".
Shafer’s reaction to that suggestion was a disarming chuckle, but he allowed that "it’s not a
bad analogy".

And he maintained that "if this [crisis] really puts a focus on that piece of thinking, about
what goes into the product that is put out there, then that is a positive outcome out of a
difficult situation for this particular company."

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From the computer-industry perspective, he added, the shift to shipping a ‘clean’ PC would
be a significant change, hinting that maybe only this kind of disaster could have brought
about such a sweeping course correction.

Pickard also observed that for Lenovo "It looks like someone was asleep at the switch, but
the good news is that they are turning on a dime to correct the situation and I expect this to
be a temporary setback."

"The company admitted ownership of the problem and undertook to make things right with
their customers. Lenovo didn’t try to point the finger and blame someone else like some
coward companies do when they lose their cool under similar circumstances. Lenovo
expressed their company’s feelings using candid and human language in taking
responsibility for what happened, with the same kind of refreshing candor which helps to
restore trust in a hurry. It was really a textbook case of the right way to say sorry."

For Lankester the conclusion is that "Lenovo did a good job of managing the issue at a very
superficial level, but it has thrown a slightly dubious industry practice wide open. Stay
tuned," he finished. "This story has many more chapters."

Shafer’s closing advice for PR professionals? "Generally speaking, comms people should be
as closely aligned with product teams and R&T [research and technology] and R&D teams as
humanly possible."

The comms function needs a strong understanding of the company and its products. At a
technology firm that may be even more of an issue because when a crisis comes up, there is
no time for a sudden learning curve. Preparation starts in the day-to-day, when there is no
crisis.

But when you do find yourself in the thick of a challenging situation, Shafer said, "Try to take
your job and your team and your people and your company personally. But you have to deal
with the problem in a way where it’s not so much about you. It’s about the customers and
the people who are out there, experiencing this thing from the outside. That’s who we try to
put first."

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