The HP Wayward

27,000 people can fill a modest football stadium, which may be where HP holds their next early retirement party.

In another spasm of realignment, Hewlett Packard announced that they were cutting nearly thirty thousand jobs and reinvesting in R&D. This lurched follows the amazingly abbreviated tenure of their last CEO who pledged to make HP a software company, which isn’t remotely a core HP competency (OpenView has been their single shining exception). This follows the scandal-terminated run of their previous CEO, and the “It’s all about me” administration of the one before that.

It is good that Bill and Dave are dead, for the sight of what their company has become would kill them.

hp-hazardousHaving cut my technical eye teeth on HP gear mumble-mumble-mumble years ago, watching them flop about like a landed flounder is depressing. The HP brand was built primarily on solid engineering, high quality products and a corporate culture with a solid foundation. In the past decade HP has gone from innovator to commodity player, trusted provider to a nearly also-ran status, and aside from ink cartridge price gouging, have not innovated core products to any great degree. Even their purchase of Palm for an exorbitant price couldn’t earn them innovation points and was dumped faster than a psychotic coffee date.

There are just a few ways of making money and many ways to make less of it. HP used to be an engineering company that created sophisticated devices (many lost with the Agilent spin-off) and earned premium prices because of it (which sound like Apple in the new millennia). You can also make acceptable money in commodity markets (laptops and home printers) by being operationally efficient instead of innovative, which was once rationale for the HP merger with Compaq. Doing both at once, serving consumer and business markets is tough to do through central command and control, which was HP’s management shift about the time Compaq was bolted on.

One truth to life is that a brain can focus only on a limited number of things. A corporate brain is no different. HP engineered a major organizational flaw by diversifying while centralizing management. Had they maintained their original decentralized model, they would be swimming like a shark and not sinking like whale waste.

The marketing angle to HP’s saga revolves around managing a brand when your executives damage it. Among old HP hands who remember the Bill and Dave years, the HP brand has lapsed into disrepair. When consumers are asked about HP they may well view HP as a PC vendor with acceptable (not exceptional) products and voice resentment over $50 ink cartridges. IT buyers cannot keep HP as a primary vendor when their repeated errors (Itanium) cause entire product lines to suffer or disappear (HP3000s). All faith is lost when their services groups create all-day run-arounds to answer simple questions, as they did to me when I needed to extended a laptop on-site service contract (can’t be done — that service is no longer available).

But the main problem is that without a central value, and without decentralized management, HP cannot hope to create and promote a brand that inspires confidence. Odds are the new management won’t reverse the branding slide, and HP may hobble off some more playing fields as they squander cash on poor-fit acquisitions and lay-off the people who tried to make it work.


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