Lenovo North America President On Rebuilding Trust With Partners And The Company's 'Fighting Spirit' For The PC Battle With HP And Dell

Zielinski On The Record

Trailing well behind HP Inc. and Dell in the North American PC market means that Lenovo is something of an underdog, according to Matthew Zielinski, the new president for Lenovo's North America PC and Smart Devices business. But the company has solutions primed for the commercial market, such as the well-regarded ThinkPad X1 series, and is "hungry" to steal share from competitors--with a goal of adding between a quarter and a half percentage point of market share per quarter for the foreseeable future, he said. "We're going to come swinging," said Zielinski, who joined the company in mid-February after 12 years with chip maker AMD.

Zielinski sat down with CRN during Lenovo's Accelerate partner conference in Las Vegas, where the company is seeking to deliver a message that the leadership has stabilized and it's time to begin the "trust rebuilding" process after pricing program changes by Lenovo last fall impacted profitability for many solution providers. Both Zielinski and Lenovo's North American channel chief for PC and Smart Devices, Rob Cato, are new to their roles following executive departures. "That volatility is behind us, and we have a much better recipe and a much better plan," Zielinski said.

What follows is a portion of the conversation with Zielinski.

Do you see this as a new chapter for Lenovo?

I'll even back up. I speak to this being Chapter 2 for me personally. This is 13 weeks [since starting]. What I would say is, everything in my last job was going wonderfully well. It was a company that I had wanted to work at since I was 13. And things were marvelous. Wonderful family -- wife and two kids in Austin, Texas -- kind of living the dream. But this opportunity came up, and it was just something I couldn't pass up. And the primary reason for that was just because, you saw the unbelievable potential that existed in the organization and the business. At 13.4 percent share, when you're No. 2 on a global basis, there are some things you can do to demonstrably change that. So we decided to make the leap. I had been a partner of Lenovo's, and what surprised me the most was just the inherent quality of the people was intense. It was profound. So the mission is really to unbridle all that potential that's already existed. We have this thing at Lenovo called "unleash the beast"--unleashing the full potential of what can be delivered. And we spent the last 13 weeks really diagnosing and dissecting the business, to really chart out a strategy that I believe is a winning one--that puts us in "beast mode" to keep that thing going.

What is your goal for growth?

Success for us looks like a quarter to a half a point of share growth [in North America], quarter after quarter after quarter, in a way that stands the test of time and isn't guardrail to guardrail. In terms of this chapter, I'm picking up my entire family on the 25th and moving them to North Carolina. We're jamming ourselves into an apartment for a year as we build a house. So this is more than just a year-long chapter for us personally. And I can tell you that the entire leadership team is rejuvenated and committed to really see this through. So this is going to be a very long chapter.

What is your strategy for getting to that sort of growth?

I would divide that into three different vectors. The first one is consumer--we're about 10 percent of the market in North America in consumer. We're 5 percent of the market in Canada. And I think we have a very solid business with a small handful of very good partners [in consumer], and we'll continue to nurture and grow that, but our aperture is not wide enough in the consumer space. So we will rapidly diversify to other places that we haven't been focused on. For our commercial strategy, that really is all about acquiring new customers with Think--I truly would argue that ThinkPad is one of the best, if not best, laptops on the planet. And we're going to utilize that to acquire more customers. I think we're under-indexed in education. Yes, we have an OK K-12 business, but we've got a lot of headroom in higher education. Our public sector share in North America is 9 percent. If done smartly, there's a recipe there to grow in a very rational sense.

How do you see the opportunity in SMB?

I think for SMB, how we grow there is purely a partner-driven strategy. With things done correctly around premium offerings and services, we can certainly grow our scale through the channel to make sure that we're much more meaningful in the SMB space.

For workstations, that business is going extremely well for us. I don't see that letting up. We clearly have some work to do in terms of premium services attach, and services attach in general. And that's really just a function of focus and how we bring that to market. Then we have other products we're focused on like our smart office solutions and AR/VR. But I think when you look at some very simple metrics underneath those three pillars, and if done correctly with an organization that is rallied and inspired and rewarded to deliver those things, along with a very robust channel program, some interesting things can happen.

What are the most profitable areas for partners right now?

One thing we've spent a lot of time on is, what is our value proposition to the channel? I think we have best-in-class products, not only from a client standpoint but from a data center standpoint as well. If you look beyond that, it's certainly about the right investments. And so to answer your question, where are we going to be investing? It's going to be using the very successful ThinkPad brand to go beyond just our large enterprise business. It's going to ensure that we keep the gas pedal to the floor on workstations. It's going to be to ensure that we're not just funding our products through the typical SMB spaces as we've done in the past, but that we're funding products for enterprise, corporate and public sector in a multitude of verticals, not just in SMB "top seller" focused strategy. And frankly, we'll invest in channel partners that are going to be disproportionately invested and committed to us. And just to round out the value prop, we've got to be a lot easier to do business with.

What are your advantages as a company in the North American PC market?

I think that one thing we've taken for granted is our nimble size. We should be using our nimble size wildly to our advantage versus our competitors. We don't need to go to the Supreme Court for decisions. We have enough horsepower in the region that we can accomplish that locally. And I think over time, whether it be through tool deployment, through coverage, we're going to be the partner that's going to be the "easy button" for the entire channel.

And then it's a trust rebuilding exercise. I know we did some things in the latter part of last year that have been discussed as I've come on board. Talk is cheap. And we want to make sure when we sit here at Accelerate next year, that we are truly the most trusted partner like we have been in the past. And I think that's just going to take a bit of time and a commitment and proof that we're going to do what we say we're going to do.

Are you still getting questions about those pricing changes from partners?

I haven't been to a partner that hasn't at least brought it up. But it's usually brought up in a sense of, we're kind of past that. And I wouldn't take that for granted. I'm sure that was a meaningful event, and I'm sure time is going to heal some wounds there. But I'm 100 percent confident in what we have currently deployed ... [It] represents a very viable strategy that will serve not only the channel well but our mutual business well. I would never take for granted that there isn't someone out there that we haven't directly met with that feels burned. And the way that I would repair that relationship is by making sure that we use my introduction as a bit of a rebirth, and show that there is no more volatility. That volatility is behind us, and we have a much better recipe and a much better plan. We're already executing on that plan.

Where do you believe Lenovo is stronger than HP or Dell on products?

I have the utmost respect for both HP and Dell. It is really difficult to poke a hole in anything that HP is doing strategically, with their products and their people, and the same goes for Dell. Very different styles, very different things happening, but there's a lot of respect there. But I think that having had my X1 Carbon in my hands for four weeks, and having used competitive systems for the past 10 years, it to me speaks for itself ... I grew up playing classical piano, and the best analogy I can say is, using my X1 Carbon is like playing a Steinway. It's just different. It's stable. The action makes you a better pianist. It's snappy. And I would say that's very similar if I use a ThinkPad versus something else.

For our competitors, we're in their backyard. We have 13.4 percent, and twice that is Dell, and HP is above that. As our business improves, and we return to growth where we can scale and deliver our technology to more users, then I believe there'll be a very natural snowball effect--of a migration to our very, very sound products.

What's one thing you don't feel is recognized or understood about Lenovo's PC and Smart Devices business?

Seventy-five percent of our business comes from outside of China. So we have a very meaningful business on a global scale. And I think what may or may not come out in North America specifically is that we're an underdog. But we're an underdog with significant means. And so I think that the difference locally for us, potentially versus others, is that we're hungry. We're not the domination shop in North America just yet. So I believe that's a differentiator for us. And I think if you marry that with just getting trust back to where it needs to be over time, when that recipe comes together with our very smartly designed strategy, it could get very interesting here very quickly.

What other changes can partners expect?

There are still things throughout the year that are going to be introduced. One very important item for us is making sure that we have some best-in-class tools. And we have work to do there, no doubt about it. And so in terms of our partner portal aspects, I think those are still some things that we are tweaking. That's an area that isn't an overnight fix that we will need to work on. We'll just need to be a little bit higher on the human touch, and then obviously over time be able to automate that. But still, given the size of the organization and the speed in which decisions can be made, that's something we can manage as our IT infrastructure of our own grows into something that can be best-in-class. That's something that is certainly a work in progress.

You've introduced some new models in your Tiny desktop line. Is that an area where you're seeing a lot of momentum?

Yes. Obviously, everybody has an opinion on the desktop market. But what I can tell you, from a momentum standpoint, is that there is a lot of interest on fixed computing that is upgradeable, and that fits perfectly with the value proposition of a Tiny desktop. It's a high horsepower, very compact package that can power multiple monitors. There is a definite customer interest around that part of our portfolio.

What other areas of innovation can we expect to see with Lenovo products?

There'll be constant innovations around the core portfolio. But obviously we're very bullish around the applications of AR/VR, from what we're doing with Google in the classroom--from [the concept of] bringing the field trip into the classroom. Everybody has their favorite flavor of what AR/VR can go accomplish. So that'll be constant innovation. And just because we have one smart office hub out today doesn't mean we're not going to innovate in that place--we'll continue to innovate there. And then it really gets down to, in which verticals are we going to be very maniacally focused on? Health care is something we spend a lot of time talking about in terms of where product innovation should take place.

Overall, what's your message to partners?

The message to partners is, rest assured that our partners are at the foundation of every growth vector that we've laid out and designed as a business. We know that we have work to do to be the best partner that we can be, but we're committed to doing it. And I have 100 percent confidence in the recipe and delivering on those commitments, to make this a very interesting business and to deliver very stable share growth that makes money for everybody.

Is there anything from your time at AMD that you think has set you up for being able to take on the challenges you're describing?

Absolutely. There is something that grizzles you working in an underdog for 13 years. There is no business challenge that you're not willing to muscle through. And it also really helps you understand how you get into the trenches, and you go to war, with partners and your teammates. If I was born and raised in a company that was in a leadership position 365 days a year, that mentality wouldn't be at my core. And I know that that same mentality sits with the vast majority of the organization at Lenovo. So that's the fighting spirit that I think is very unique to Lenovo, that I think will serve us all well as we're the underdog in a region in the competitors' backyard. And we're going to come swinging.