Lenovo to focus on niche products in smartphone, PC markets: Rahul Agarwal

Lenovo India CEO & MD talks about the challenges PC makers are facing

Rahul Agarwal talks to Sangeeta Tanwar about the challenges PC makers are facing and why his company wants to drop the Lenovo brand from some products.

Travelling from Vasant Kunj to Gurgaon on the outskirts of Delhi is a tricky proposition even on an uneventful day. Things can get particularly bad if it starts raining without a warning. As I stare at a defunct traffic signal in the middle of Sohna Road, I worry that I would be late for my appointment with Lenovo India Chief Executive Officer and Managing Director Rahul Agarwal.

When I reach Vatika Tower — which houses the office of Chinese smartphone maker Lenovo — I am almost relieved to note that Agarwal is also caught up in traffic. I make my way into a meeting room and catch my breath. As I wait for my guest, a square paperweight on the table catches my attention. I pick it up to read the one-liners — too many ninjas spoil the plot — just as Agarwal saunters into the room juggling his laptop bag and a jacket in one hand.

The traffic situation in any Indian city is a great conversation starter, I realise. As we settle down we exchange notes on the city’s notorious traffic snarls. After a short exchange of pleasantries, I decide to shoot my questions — I have been told Agarwal has back-to-back meetings so we have to settle for tea, rather than a leisurely lunch that I was looking forward to.

I begin with an easy question: How would the work culture in a Chinese company be different from another multinational company? “We are a good mix of the east and the west. We work like a multinational company but the Lenovo culture reflects eastern sensibilities — like the fact that we have a strong focus on nurturing people,” says Agarwal. He points out that Lenovo doesn’t have any expats at the helm; the fact that the top brass is entirely from India has helped fashion a culture that is close to that of any other dyed-in-the-wool Indian company.

Lenovo, which markets Motorola phones, has slipped to the fifth spot, with seven per cent market share in the April-June 2017 quarter. Which would be worrying Agarwal because it was the number two player in the Indian market in the July-September 2016 quarter, with 9.6 per cent market share, as data from IDC show. The company seems to have been outsmarted by Chinese counterparts such as Xiaomi, Vivo and Oppo. Indeed, China-based mobile phone vendors, with their huge marketing spends and rapid channel expansion, accounted for a 54 per cent share of the April-June quarter shipment. Agarwal says Lenovo has been written off several times earlier also and that he is confident it will bounce back to the top three if the company plans are executed well.

An office help appears quietly and places a tray with a cup of tea and a cup of coffee before us. I go for the ginger tea and Agarwal takes the coffee, which came from Lenovo’s in-house pantry. We help ourselves to the crackers.

What exactly are the brand’s comeback plans? Agarwal says the company will continue to bet on product innovation, cost-efficient devices and running a lean organisation. The crux of Lenovo’s comeback strategy would be to launch niche products in both the smartphone and the personal computer (PC) markets. He cites the examples of products such as a new series of Yoga PCs, slated to hit the Indian market during the festive season. While the company is yet to announce the launch date and price for the Indian market, it has already launched the Yoga 920 and Yoga 720 convertibles as well as the new Moto X4 smartphone last week at the IFA, Europe’s biggest annual electronics trade show.

Apart from its product line-up, the company has also been working towards tightening its global supply chain. Lenovo is today capable of fulfilling an order book of 100 desktops in a week’s time from its factory in  Puducherry. Pointing out the complexities in manufacturing, Agarwal says that an average PC has 72 components. To be able to market and service a large number of models and different variants of every model, the company has adopted an intelligent stocking-backed supply chain to kick in efficiencies. “To be successful, an organisation has to get the SOP framework right. Essentially, strategy, operations and people are key to keeping a company in good shape,” he says as I wonder if he has been reading too many management books of late.

Lenovo’s India strategy has another interesting leg: Thus far it has followed a dual branding strategy in smartphones, hawking two brands, Lenovo and Moto. In keeping with the mandate from its China headquarters, the company is thinking of dropping the Lenovo brand and selling Moto only. “We will have a more simplified brand strategy. Moto is a stronger and more powerful brand globally. Eventually, in India too, the plan is to push Moto as our only smartphone brand. To this end, we have been amplifying the noise around Moto for quite some time now.”

The company is giving finishing touches to its plans to discontinue the brand without much damage to its market share position. It is working closely with its offline and online trade partners for the big change ahead. But killing a strong brand like Lenovo will not be easy —several other marketers have found that out at a great cost. Agarwal knows it won’t be a cakewalk, but says it is not impossible either.

Lenovo has another big challenge on its hands. Like scores of other players, the company is staring at a slowing PC market. What is the way out of the mess?

Agarwal is optimistic. He admits that India has certainly missed out on the PC revolution. Countries such as China, Brazil, Russia and Malayasia have, on an average, a 35 per cent PC penetration. India will grow differently. The future PC market will leap on the back of increasing internet penetration, the government’s digital push in schools by exposing children to PCs, which in turn will bring more of these devices into people’s homes, he explains. That apart, Lenovo is investing heavily in artificial intelligence and virtual reality. “That’s the only way to become future ready.”

Agarwal has been a Lenovo loyalist, having worked with the company for a little more than a decade now. Before he was appointed India CEO, he headed the company’s commercial business.
 

With a glint in his eyes, he says his is a classic case of an organisation choosing an employee rather than the other way round. He refers to the acquisition of IBM’s PC business by Lenovo in 2004. Following the move, he, along with 32 of his colleagues, became part of Lenovo. Agarwal recalls how back then the news of a relatively unknown Chinese company acquiring part of behemoth IBM came as a shock to many. He had no idea what lay ahead. He remembers discussing with some of his colleagues how IBM’s acquisition by PC giant HP would have made more sense.

From that uncertain future, Agarwal has surely come a long way. He says the reason he didn’t look for opportunities outside Lenovo was that every three to four years, new and exciting opportunities within the company have come his way.

Work consumes a large chunk of his day, but Agarwal would not miss his gym routine for the world. A fan of weight training, he works out 90 minutes every day. He likes reading non-fiction and... you guessed it... devours new literature on team management and leadership.

As Agarwal offers me another cup of tea, I ask him what is the most stressful part about being a leader.

Pat comes the reply: “As a leader, you are constantly being watched by your team. It’s stressful to be under scrutiny constantly. One has to be careful about what one says at all the times. And this clearly is not fun.”