How EMC Turned Around Its Asia Business
Steve Leonard’s schedule for the next two weeks or so goes like this: Seoul, Tokyo, Hong Kong, Singapore, Mumbai, Bangalore, Singapore, London, Paris, London, Singapore, Australia. And for him, that’s not even that unusual—Leonard logs about 30,000 miles a month on airplanes, sleeping on a plane once or twice a week. “That’s part of being in APJ,” he explains with a smile.
“APJ” is shorthand for Asia Pacific and Japan. And Leonard ought to know something about the region. As an executive for EDS, Veritas, Symantec, and, now, EMC, he’s lived there for some nine years. In his eyes, there’s nowhere else to be than what he calls the most exciting, fastest-growing region on earth. As he puts it, “Where else can you be where you’re watching the evolution of, or the transformation of, a country?”
Leonard was named president of Hopkinton, MA-based EMC’s (NYSE:EMC) Asia Pacific & Japan operations two years ago, because, he says, “Joe [CEO Joe Tucci] and the executive leadership team said we’d like to change our trajectory in Asia.” And so far, so good. Last year, EMC’s APJ operations—which span some 17 nations, from India to The Philippines, Korea to New Zealand—enjoyed 24 percent growth over 2006—after just a 6 percent rise the year before that—accounting for about $1.5 billion in business, about 11 percent of the company’s total revenues. “We were the fastest growing part of EMC,” Leonard says. “We came from being the slowest growing part of EMC.” And things didn’t stop there. The first quarter of this year saw another 18 percent surge in revenues over the same period a year earlier, and, says Leonard, “you’ll be reading about Q2.” (The numbers aren’t due until late July, and he can’t talk about them now).
So how did it happen, and what’s in store for the region going forward? I asked these very questions when I sat down with Leonard in a corner of Cafe Fleuri when he was in Boston last Friday—before he embarked on the whirlwind itinerary outlined above.
Not surprisingly, the first question Leonard asked when he took the reins was, “What is the team?” “Some companies say it [APJ] would be a good place for Johnny to go get some experience, which would be the wrong approach,” he says. “Asia is the most complicated and difficult set of markets of anywhere in the world.” It’s a place, he adds, for people who already have lots of experience—the ones, he says, “with the most scars on their back.”
Leonard says his prime goal was to put in place key managers who understood the culture of different territories and who understood business markets—and that to that end he made a number of personnel changes, replacing some individuals, shifting the responsibilities of others, and bringing in others from outside EMC. Today, the head of Japan operations is Japanese, the head of China operations is Chinese, and so on. “I have no, zero, country managers that are not locals,” he says. “I’m the anomaly. I play in 17 countries. I would not add any value to be in one country.”
Leonard next started attacking obstacles to growth. This led to restructuring EMC’s partner programs—rethinking how the company measured, motivated, and rewarded partners, and who those partners were. He says this is not substantially different from what other companies have done. “If you don’t have a strong and trusting and long-term relationship with a partner in a market like Japan, you will not reach big segments of the market,” he says. One challenge, he says, is that building trust in partnerships can take time, especially if that trust has been violated in the past. “You can’t go to a partner and say, trust me,” he says. To show he is serious, he adds, “I have fired people from EMC who mistreated or broke a trust what we have with a partner after I had committed that we would be trustworthy.”
He also tackled the supply chain, which he believed to be an unacceptable obstacle to growth, with products moving too slowly, among other issues. He assigned a top leader to do nothing but concentrate on improving the supply chain, from point of manufacturing to delivery and installation. This involved establishing new hubs where products are inventoried and made ready for delivery, with local packing labels and installation guides, for instance. Leonard asserts that he was able to cut in half the number of days a product took to move through the supply chain. He says he can’t give specific numbers for competitive reasons, but that “we cut multiple weeks out of the process.”
Leonard’s third key aim was to “make sure our customers see us as an important partner to them in their efforts,” Leonard says. That meant sitting down with major customers and asking what was going well, and what needed fixing. The sessions, he says, led to changes around how EMC deals with major accounts, including assigning more businesses professionals who understand the drivers of the customer’s business.
His fourth step was to make EMC’s products more relevant to the markets they serve. Some content management software, for instance, wasn’t configured to search Korean character sets, he says. Now, everything is “CJK,” configured to work in Chinese, Japanese, or Korean.
And what about the future? For one thing, Leonard says the region is taking a bigger and bigger role in driving innovation inside EMC. “We have really looked at Asia much more as a source for innovation than ever before,” he says. “EMC generally as a company is in its highest innovation cycle ever. There’s more rejuvenation of products or development and release of new technologies than ever before, and that’s across everything we do. And a lot of that is occurring from Asia.”
Over the past roughly 18 months, EMC has invested some $1.7 billion in Asia, he says. “A lot of that was associated with our R&D, our engineering.” For instance, Leonard says, the company had no software engineers employed in APJ in June 2006. Today, he says, “we have more than 1,000, and we’re going to keep growing there.” What’s more, “Those teams are not customizing or localizing, they’re doing core IP development. They’re working on what EMC will have as its next-generation technologies for worldwide consumption from Asia.”
In the future, Leonard says he expects Asia Pacific & Japan to be an ever-more important economic engine for EMC, both in terms of generating revenue and profits and in terms of contributions to innovation. “I look at both of those as economic engines,” he says.
And pursuing that goal is what keeps him happily logging all those miles across the region. “It’s without a doubt the most exciting part of the world and the most exciting part of EMC. Every company, every company bar none, must either find a way to better succeed at what they’re already doing in Asia or must find a way to get into Asia,” he says. “Where else would you rather be than in market that everybody else has to figure out how to be in?”