HP's Board: Missing the Point Entirely

While everyone is talking about how great it is that Hewlett Packard (HP) finally got a real manager for a CEO, the general approbation seems (at least to me) to have missed the point entirely. HP is a great example of a company moving in the wrong direction.

HP was perhaps the first and best example of a large industrial organization in the Creative Age. While many academics consider them prime movers of the information age (they did start out by making equipment which turned noise into information), HP is in fact the first real example of a Creative Age company. From the way that they treated their employees to the way that they viewed invention (creativity) HP epitomized the transition from capitalism to talentism.

HP made it work where others failed. Years before anybody else grew a big company through a focus on talent and the people that provide it, HP was mastering it, all while becoming a staple of the capitalist index (also known as the Dow Jones Industrial Average). They were proof that Creative Age companies would grow faster, yield greater margins and have greater sustainable competitive advantage than their Machine Age foes.

As is always the rub in the tale of success, problems ensued. The HP culture became stale and stagnant. Invention took a back seat to complacency. The virus of poorly run companies everywhere took hold and the HP body began to wither.

The board had a decision to make. Invigorate the culture through Creative Age leadership (using the spirit and energy of invention to drive the talent capital to feats of corporate excellence, providing greater revenue and opportunity for employees and shareholders alike) or move back through the ages to the more comfortable Information Age.

We know which way the board went: they focused on talent that created hardware and software infrastructure that could be leveraged to increase shareholder value. They went back to the Information Age. They reasoned that employees are important, but not the actual driver of competitive advantage. In the Information Age, talent creates infrastructure that creates opportunity. It takes invention to create infrastructure, but once you get the infrastructure, that’s what an Information Age organization focuses on to make their money.

It is easy to see in retrospect that HP’s board made the wrong move and everyone (especially HP shareholders and employees) got o pay for their incompetence. What is ahead for HP, however, is far worse than what is behind, as the board continues to demonstrate just how poorly they understand the assets of the enterprise they are guiding.

What is about to happen is that HP is going to move backwards again. HP is regressing to the Machine Age, just as their primary competitor (IBM) is trying to move out of the Information Age and into the Creative Age. This should chill the heart of any HP employee and every HP shareholder (except, of course, if your position is short).

Why do I believe that? Because of the pronouncements (and previous behavior) of the new CEO. In an interview with the San Jose Mercury News on April 1 (and let’s hope that’s more than just irony), Michael Hurd, the new CEO of HP said of his business philosophy:

``If it was a PC simulation game, it would be relatively simple,'' he continued. ``The problem you get when you deal with things like cost structures, humans are involved.''

Still, good leaders must constantly cut costs and grow revenues, he said. ``You have to work both lines simultaneously. There will never be a day when we are not trying to improve our cost structure. “

There has never been a better summation of Machine Age thinking than that. Business is simple: you win markets and cut costs. The only difficulty is that people are hard to fire.

HP may go down in history as the first company to win in the Creative Age and then take that asset and brand and move it backward to the 1880’s. HP’s board may go down as the worst in corporate history. Yes, even worse than Enron’s and Worldcom’s and Adelphia’s.

Any of us who have spent time in the Silicon Valley knows that this could be the death knell of one of the great companies of the 20^th century. It will be one of the most egregious wastes of human capital the modern business world has ever witnessed. And all the press can do is talk about Mr. Hurd took a Machine Age company (NCR) and made it more efficient, and how this distinction so clearly parallels the needs of HP.

Baloney. It misses the point entirely.

Comments

[Heather]

Yeah, and the fact that any successful merger or acquisition has to have a point; one that creates a competitive advantage. "Being bigger" isn't a competitive advantage in many markets where compaq and HP were already competing (I think that's called cannibalism). The final company has to be better than the sum of it's parts. I'm not sure enough due diligence was done to ensure that scenario. But what do I know..I'm just a recruiter ; )

[Doug Miller]

This is so true. I managed a partnering relationship with HP in the early 90's when they were absolutely running in the Creative Age. They were my most fun partner! I worked for another not-to-be-named company that was acquired by HP in the late 90's. The company had sadly changed significantly by then. They weren't creative and they weren't fun. By the sounds of the quote from Michael Hurd, they are taking yet another giant step toward obscurity.

On a related note--I firmly believe this is what has happened between 2000 and today to corporate recruiting functions on a smaller scale. We have witnessed a massive shift of emphasis with efficiency (cost containment) triumphing over effectiveness (business impact). This too is a massive step backward and must be rectified. The discussions on your blog and Dave Lefkow's regarding the creation of effectiveness metrics is totally the right focus. And as you stated in an earlier blog--it is time to stop being recruiters focused only on efficiency and become talenteers focused on creating business impact!

[Used/Refurbished Laptops]

HP executive vice president Peter Blackmore called any comparison between HP's and Dell's software management strategies "apples and oranges."

[cheap computers]

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[Urlaub in Germeny Auf Sylt]

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