Chapter 4: Taiwan and Acer Corporation
4.1. Appointment of Gianfranco Lanci
The most high-profile appointment of a foreigner in Acer was the appointment of a foreigner
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as its top executive. In 2004, after Stan Shih retired, Gianfranco Lanci, an Italian Acer executive was appointed as the company’s CEO. This high profile appointment signalled Acer’s commitment to globalization. In the following passages I shall introduce some of the motives behind the appointment and its eventual failure.
In an interview to the CBS News Channel Stan Shih expressed his views on the need to integrate local and global needs. When asked how a company best can be successful in an era of globalization, Shih answered: “When globalizing, you always have limited resources of talent and capital. The best way to globalize is therefore to localize, to integrate the local resources of talent and capital and integrate it with the parent company. We think in terms of
"global brand, local touch," and try to for a group that leverages the size of the parent company but still draws on the experience of the local partners. You must have a common vision and a goal, but implementation must be based upon the local leaders' management style”
(James, 2009)
Shih attitude acknowledged the importance of involving foreign talent in Acer’s operations. In his book, “Millenium Transformation – Change Management for new Acer” shih writes:
” We can review the positioning of Taiwan from three aspects: people, money, and materials.
Taiwan has gathered many technical talents and needs to attract more international talents or multinationals to set up their regional offices in Taiwan… To create a high-value industry Taiwan needs more foreign talents. Before, we imported foreign labors to fulfill the developing industry needs. Now, we need only those with skills. Those people without skills may lose their jobs with the industry hollow-out.” (Shih, 2004, pp. 132-133)
Stan Shih even promoted the idea of attracting Indian talents to come to Taiwan.
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“My first target in attracting international talents is from India. The corporation between India and Taiwan will be a win-win situation. Taiwan needs the software development, which Indians are very good at. On the other hand, Taiwan can provide India the hardware manufacturing. The co-operation can integrate the resources of both China and India.
Based in Taiwan, one can integrate the human resources in China and India through outsourcing. Silicon Valley only focuses on the markets and resources in the U.S…. Of course, we need more international talents and shall not limit ourselves to only Indians for cooperative opportunities. Beijing and Shanghai may want to be the second Silicon Valley too.
There are many non-Chinese teams, coming from the U.S. and Europe, creating their businesses in Shanghai. These teams have the experiences in information technologies, communication and networking. They choose Shanghai as their base since it is close to the markets in China. Relatively, Taiwan has a better environment but needs to create the markets. Taiwan has to position itself as part of the Great China markets to gain the benefits.
It is not hard to find the opportunities for cooperation for Taiwan. We need a living environment to attract the foreigners to stay and base in Taiwan. Take India as an example.
I had proposed an Indian ambassador to build an Indian Village in Acer's Aspire Park. They expressed the initial interest. I wanted to test if we could build a living environment for the foreigners first in a smaller scale. Surely, Indians may prefer to stay in the U.S. However, the competition is much higher in the U.S. For them, Taiwan has plenty more room to develop since the future of IT applications is unlimited.” (Shih, 2004, p. 131)
It is perhaps this positive attitude that led Shih to nominate Gianfranco Lanci as his successor.
Lanci’s appointment was obviously not just because he was a foreigner; Lanci was Acer’s top performing executive.
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Lanci became an Acer Employee in 1997 when Acer acquired the notebook division of Texas Instruments. His first position was country manager for Italy. 3 years later he was promoted to the role of president for Acer Europe. He started building a strong European organization and became president of Acer EMEA in 2002. Gianfranco Lanci introduced his innovative channel-business model that successfully established record-making profits across Europe, Middle East, and the African markets. Lanci was then nominated as President of Acer Inc.
International Operation Business Group or OBG in 2003. His responsibility was to oversee all of Acer’s business through coordinating sales and marketing activities in the Middle East, Europe, and America (Business Insider). Under Lanci’s leadership, Acer's notebook PC sales-volume had jumped to the first position in the European market (Shih, 2004, p. 17)
Lanci and Acer Chairman JT Wang transformed Acer from a stronghold of Taiwanese management into one of the PC industry's most global company. While the top ranks at HP and Dell are dominated by Americans and Lenovo's leadership is largely Chinese, Acer's team included a French executive who oversees mobile phones, an Italian marketing chief, a German running China, an Austrian leading the U.S., and an American managing Brazil. "If you want to run a global company," Lanci said, "you need global talent." (Einhorn & Culpan, 2010)
However, Lanci’s reign was short relative to his predecessor, from 2005-2011. In March 2011 Lanci handed in his resignation. The press release issued by Acer stated the following:
” On the company’s future development, Lanci held different views from a majority of the board members, and could not reach a consensus following several months’ of dialog. They placed different levels of importance on scale, growth, customer value creation, brand position enhancement, and on resource allocation and methods of implementation. “ (Acer,
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2011)
The reasons for Lanci’s resignation were a cause of debate in the press. Was the departure the result of business disagreement? Or was it the result of cultural “miss-communication”?
Shortly after his resignation, Lanci gave an interview to the website “All Things Digital”, a Wall Street Journal blog, devoted to news, analysis and opinion on technology, the Internet and media. In this interview, Lanci claims that while he wanted to push for globalization of the company, the board feared his actions will “De-Taiwanize” it.
Lanci tells he was on the verge of making big changes to the way the company was organized when the company’s board decided to move in a different direction.
Lanci said he was pushing the company to become more mobile-focused and more global.
Acer, he said, needed to look beyond Taiwan as the world shifted to one in which Intel and Microsoft had less power and computer makers needed to do more work for themselves.
According to Lanci, the company needed to go from 300 or 400 engineers to 1,000 engineers, with a greater focus on software and hardware integration. The talent the company needed, according to Lanci, wasn’t present in Taiwan.
“The real major issue was doing that in Taiwan, this was not possible,” Lanci said. “We needed to go outside Taiwan, be it China or India or even the U.S. or Europe, wherever you can find software resources, software know-how.” Lanci said that the interests that control Acer were worried that his plan would lead to a de-Taiwanization of the company. Lanci was quoted as saying :”… it is not de-Taiwanization. It is just globalization. If we want to be
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in the top three (PC makers) in the next three to five years, we need to be a global company and we need to leverage resources wherever they are.” (Fried, 2011)
In response, Acer released a statement saying: "The accusation was unfounded. There has never been a so-called problem of de-Taiwanization because globalization has long been our development direction.What counts in corporate management and development is its leader's vision and foresight”. On Lanci's suggestion that Acer should become more mobile-focused and more global and needs to look beyond Taiwan to recruit more engineers and find software resources and software know-how, be it China or India or even the U.S. and Europe, Acer said it has been open to mergers and acquisitions. But it stressed that those deals should contribute to the company's sustainable development and financial health and should benefit its various stakeholders. (Central News Agency, 2011)
Industry Analysts in Taiwan tell a different story. According to some statements made in the press it was Lanci who wanted to focus on the sale of laptops and avoid investment in tablets and mobile phones. (Jennigns, 2011)
A week prior to Lanci’s interview, Acer chairman J.T. Wang said in an investors conference:
“Lanci was unshakeable in his view that maximizing shipment volumes was the correct approach, but we found that direction to be a departure from the right track,” Wang said. “The board had to make a decision to change the chief executive and then seek to restructure the company.” (Tan, 2011)
We can’t judge for sure what the cause of Lanci’s resignation was. Lanci was described as
“goal-oriented, aggressive and unshakeable on his own decisions.” (Tan, 2011) Perhaps this mind frame didn’t fit culturally with the Asian perspective of the board. On the other hand,
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Lanci has worked for Acer for 14 years, the last 6 of which as its top executive in Taiwan.
Clearly had there been problems they would have surfaced much earlier. Furthermore, Lanci’s next position was for Chinese pc maker Lenovo. If cross-cultural communication was indeed a problem, why work for another Asian firm? It seems to me that Lanci’s interview was a response to JT Wang’s comments a week earlier.
However, following Lanci’s resignation, all other top foreign executives also left the company.
Post-Lanci Acer is purely Taiwanese in management (Acer , 2012, p. 22). Even if fear of De-Taiwanization was not the reason for ousting Lanci, the result of that move was Acer’s Re-Taiwanization.
The lesson to be learned from Lanci’s experience in Acer is that appointing a foreign top executive is not enough. Employees should be integrated into the company at all levels. Only this way can true diversity be achieved.
Examining Acer vis-à-vis the inpatriation process model suggested by Harvey and mentioned in the previous chapter, we can see several differences.
Harvey recommends that companies pay special attention to the inpatriate candidate pool in order to minimize the risks stemming from too big of a culture gap. At face value, the appointment of Lanci, an outspoken and stubborn European might not have been the best fit for an Asian company like Acer. The allegations raised by Lanci that his dismissal was due to fear of “De-Taiwanizing” the company and the de-facto “Re-Taiwanizing” of the company after his departure show that cross-cultural miscommunication did play a role in Lanci’s departure from Acer. But, if we take into account Lanci’s long tenure with Acer prior to his resignation we can tell that he managed to communicate over the culture gap (and quite
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successfully, having been made CEO) for 14 years. We therefore can’t assign cultural gaps as the only reason to Lanci’s resignation.
The cases of Toshiba and Samsung supply us with 3 practical pieces of advice for successful inpatriation:
1. Instituting a mentoring program 2. Language training
3. Explore the option of returnees
Mentorship: Unlike Toshiba that goes to great lengths to integrate foreigners in the “front lines”, Acer relocated top executives only. These executives bring with them experience, different perspectives and have a lot of influence on the company due to their position.
However, their capacity to transfer tacit knowledge is limited and is applicable only to those who work closely with them.
Furthermore, due to their high rank, their accessibility to the “rank and file” employees is limited. If a Taiwanese mid-level manager is interested in learning something about the Italian market, he can’t approach the CEO. To allow better learning and sharing the company can inpatriate mid-level managers as well or institute a mentoring program.
Toshiba and Samsung have effective mentoring program aimed at assisting foreigners assimilate in their new place and also transfer their knowledge onwards. According to Reiche’s research mentioned in the previous chapter, this mentoring program is meant to encourage grass-roots information sharing by signalling to the organization that the new-comers knowledge is valuable and signalling to the new-comers that the organization has a high absorptive capacity and is interested in the knowledge the newcomer brings.
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Companies like Acer that inpatriate top executives should also institute a mentoring program that will assist these executives share their knowledge and let it seep into the organization.
Language: Toshiba has a made a great investment in language training. Common language is crucial in order to facilitate knowledge sharing and with it new ideas. A sound recommendation for any inpatriate will be to invest in acquiring language capabilities. This will be fruitful in 2 aspects: in his ability to speak and express ideas but also expose him to the local culture and norms as they are reflected in the language.
In my research I haven’t found any Chinese language programs conducted by Acer, but I have found that Acer conducts English training for its employees. Acer encourage employees to advance their English proficiency through online English learning system and has set
“Regulation for Subsidizing GlobalEnglish on-line learning”, a subsidized fund is provided to those staff with prominent learning progress (Acer, 2011, p. 51). This is a pragmatic approach as English is the current lingua franca of the business world and proves that better communication is on the management’s agenda.
Returnees: Similar to Korean companies, Taiwanese high tech companies rely heavily on the use of returnees as a candidate pool. It is those returnees that are behind Taiwan’s rise a high-tech power house. Interestingly, this is not the case of Acer. Stan Shih did not follow in the footsteps of other Taiwanese graduates and preferred to stay in Taiwan and eventually start his own company. As mentioned in the previous chapter, returnees are not a “silver bullet”.
Returnees can bring new view points and ideas based on their experience abroad. However just as equally important is diversity in the profile of the returnees, employing only returning engineers will not have the same effect as a combination of engineers, designers and marketers who have experience in foreign markets.
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The following chapter will include some conclusions, discussion and policy recommendations based on the 3 case studies of Acer, Samsung and Toshiba.
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