Turnaround lessons and strategies from Acer

Know your foe and know yourself, and in 10 battles, you will have 100 victories. — Sun Tzu

One of the most exciting yet also daunting challenges for businesspeople and professionals is how to help the turnaround or recovery of an ailing enterprise or institution in our constantly changing world.

Taiwan’s Acer electronics giant was founded by the visionary Stan Shih and was once global No. 2 in computers. Still popular as a brand, this multinational is now the world’s fourth largest personal computer vendor. After three years of financial losses, Acer is now reviving under new president and CEO Jason Chen.  

The 2013 revenues of Acer reached 360.2 billion Taiwan dollars and its new celebrity endorser in the Philippines is actress/host Toni Gonzaga. Chen is a graduate of Taiwan’s National Cheng Kung University and earned his MBA degree from the University of Missouri in the US. He used to be a top executive in Taiwan and America of the world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Co. (TSMC), and also at Intel and IBM. I recently interviewed Jason Chen in English and Mandarin; here are excerpts:

THE PHILIPPINE STAR: After three years of net losses, your still world-famous firm Acer has finally returned to profitability in the first and second quarters of this year. How did you do it and how is the future?

JASON CHEN: (Smiles) It seems an easy question, but it’s not an easy answer. When I came to Acer, it was downtime. I was appointed the fourth CEO of the company in two months. I can understand the anxiety of people and how some are worried. Remove the anxiety whenever one gets into a complicated situation. We managed our operating expenses to strengthen sustainability and profitability. The future is good; we have multiple prospects from the strategy point of view, from our traditional PC business to tablets, our phones and even the wearables. We at Acer aim to bring value beyond people’s expectations.

What were your turnaround strategies?

We went back to the principles of the ancient strategist Sun Tzu in his book The Art of War. In the first chapter you can learn from his ideas. War is the biggest challenge for any nation and even for companies we face competition. We need five things: the first is vision, second is we need to understand the existing environment, third is what kind of ground, fourth is the need for the right kind of generals and fifth is the need for correct processes and procedures.

How did you change or boost the part on vision?

If we have vision, people in the company won’t worry too much about hardships and people would be more willing to even risk their lives (for our common goals). To achieve anything grand, we need belief. Others say it is “vision”; I call it “spirit.” We need to strengthen the spirit in our corporate organization that we all go up or down together.  In our vision of Acer as becoming both a hardware and software company, we will do our best in making products and services for people in the entry level as well as those for people on the top.

You earlier mentioned managing your operating expenses. How did you do that?

We reduced our operating expenses; we were willing to take some pains and hardships. I reviewed our financial forecasts every week for six months to understand our gross margins and in order to decide how much we could spend.

I prefer to focus on our operating income because that is the most important indication of a company’s true health, since non-operating income can come from sales of assets, etc. We’ve had good operating incomes this year.

How do you maintain or revive a good global brand like Acer?

We can do high-tech yet still very affordable products. Acer has a brand people can trust everywhere in the world, whether in mature markets or even in frontier markets. First, we have to keep creating great products, like for example, our phone called “Jade” has to be beautiful: it is thin, well-polished, only five inches and has open channels.

More important than just great products, a company should have great service. In the Philippines alone, we have over 100 authorized service centers. By the way, do you know that, of users of Acer products, whether laptops or smartphones, we discovered that 60 percent of their units actually had no trouble but they just don’t know how to use their gadgets? I visited the service center here in the Philippines to encourage the people for their good work. I told them their jobs are hard to do, because you also need emotional management even more. The word “complex” is bad for many of our competitors, but complexity is our friend (smiles). We will always try our best.

How did you feel when you became CEO of a then troubled giant company; weren’t you intimidated?

When I came to Acer, this good company had gone through ups and downs, and I came in during a downtime. When I came in, the people gave me three pages of problems, in a Word file, but I put all of them inside a drawer. In life, I believe it’s either we run at the sun and looking always at the shadow behind us, or we turn around to face the shadow and change things. In the face of difficulties, it is better to identify opportunities and to run as fast as possible.

As an international business leader, how do you assess the prospects of our Philippine economy and your market here?

I feel excited about your Philippine economy and its potential. Actually, to say that I’m excited, that is an understatement; I’m actually thrilled about the Philippines. Your gross domestic product growth, your population — this place is an opportunity you cannot and you don’t want to miss. Acer has been the No. 1 bestselling personal computer or PC brand in the Philippines since 2009 and No. 1 for notebooks since 2006. Acer Philippines is doing well, it is fabulous, and we want to grow with your economy even more.

 * * *

Thanks for your feedback! E-mail willsoonflourish@gmail.com or follow WilsonLeeFlores on Instagram, Twitter, Facebook and http://willsoonflourish.blogspot.com/.