I owe HP (Hewlett-Packard) a debt of gratitude; in the mid-70s (when I was some 14 years old), the HP-41C, the world’s first alphanumeric programmable calculator is what sparked my interest in technology.
From a beautiful but too quiet medieval village in Holland, I wrote applications for it that won awards (and was paid in new accessories) and found a mental connection with some of the developers who wrote about their role (and hobbies) in a monthly newspaper distributed to all owners (think of it as a Facebook group before Facebook).
The development team members wrote passionately about their incredible innovations explaining why they designed the HP-41 the way they did, its extensibility, its use in space, and even how and why keys on the keyboard tilted the way they did. I read that magazine and all other publications related to it from cover to cover. In my eyes, HP was synonymous with great design, groundbreaking innovation, and flawless execution of marketplace models.
A lot has changed since then, not surprising since HP chose to move from a technology specialist to a technology generalist to keep Wall-street happy. With a big hammer, it stuffs the market with massive marketing vigor and manages to stay just ahead of its competitors, for now. But HP has lost its vision, agility, and enthusiasm to innovate and fundamentally change the computing landscape.
1/ Longevity by association doesn’t work
HP never grew up to own a part of the evolving technology stack from hardware to software to services (or better yet, the consumer experience). Still, today is making little more than me-too gestures with large manufacturers to suggest they own a unique proposition in the application and services technology segments. HP has become a master of associating itself with many things it does not own or add value to (just like the many parasites’ behavior in our industry).
To give some examples: HP rode the gold rush of the PC evolution (driven by Microsoft) and then had to buy Compaq to win the battle in a market that is still 40% owned by no-brand suppliers. HP rode (and lost) the database war by buying a stake in Informix (rather than buying it) even though it sold more servers with Oracle as the primary database (HP’s stance propelled Oracle bed-fellow Sun then). HP partnered with Apple to deliver an iPod with no value add to kill the program one year later. HP acquired Snapfish in the consumer photography space and never attempted to improve its convoluted photography strategy. Examples abound.
So, the key for HP is to identify and own certain technology ecosystems (from beginning to end) and redirect its massive R&D budgets to build proprietary technologies that attach customers to HP and HP only.
2/ Lacks product vision and execution
Mark Hurd is a great operational CEO with a proven ability to optimize an engine. Hence, it consumes as little gas as possible, but sustainability comes from engineering new engines only HP can produce that run faster and better. Mark can continue to hold as many fire-side chats as he desires, but that vision is unlikely to come from employees that have been with the company for more than twenty years. Innovation from within is likely to produce nothing more than the same.
With all of HPs fragmented and discombobulated assets in many segments such as document management, printing, imaging, it should have developed by now a cohesive customer-facing experience that ties these products together as Apple does with music. The company needs a CTO with business experience and an aptitude to fundamentally tap into continuously changing consumer behavior and be open to outside counsel rather than adhere to a stifling “process for investigating outside ventures to allow equal access to these firms and inventors.”
3/ Treat people differently
For more than 10 years, I’ve heard stories about how people took advantage of a one-sided aspect of “The HP Way,” the ability to stay with the company for many years and move from one division to another to escape being confronted with the outcome of their own decision-making. Some people left HP only to make three times the money as an independent consultant working for the same group. But “The HP Way” also describes a high level of achievement and contribution that because of today’s large and hierarchical org-chart (with many dotted lines) is hard to measure and manage. HP needs to reorganize just once, not based on product – but based on ecosystems that align with customer experiences.
Many of HP executives have disclosed to me that the company does not have the engineering talent to build its own product strategy, and that probably isn’t helped by rampant stories of how HP (a profitable company that should not need to lay off employees) is now allegedly laying off people who have worked at the company for 20-years, challenging their severance payments and disallowing them to ever work for HP again. Can you imagine how fast that news spreads to Silicon Valley developers? Not too smart, HP. No surprise that it can only attract the talent that favors a paycheck over a challenge.
Start with a compelling vision
But amazing things happen when you drive a company with strong leadership, vision, and execution. As a CEO, I have experienced that employees’ original assessment fundamentally changes when they are confronted with visionary leadership. They wake up and become energized, feel part of a common cause. So, the way to optimize a business is not to lay off people but to deliver a compelling vision to which people can either subscribe or not. The employees that don’t will walk themselves to the door, especially when you turn up the volume.
So, turning HP around is actually very easy. It requires an innovative mind that “believes nothing it hears but anything it sees.” It requires a visionary who cares about nothing but customer adoption and can model a company towards its purchasing power. Everything else is simply irrelevant.
I know HP despises it when I reference Apple (only to whisper their name in a restaurant), but the company has a much better DNA than HP. It is not too late for HP to change. Still, it should start by reading “How to compete with Apple” to assess whether it wants to make the real sacrifices inherent to innovation (rather than resort to business process optimization).
Call me for a fireside chat, Mark. I would enjoy repaying my debt of gratitude.
