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Beyond the Conference Room Solution

April 08, 2013

How HP Lost its "Way"

Hewlett Packard’s logo when it was founded was “invent.”  Boy have times changed.  Founded in 1939, HP quickly grew and became a major multinational information technology firm by the 1960s.  It grew its to line through spectacular products (Laser printer, inkjets, networking gear), and acquisitions (Compaq, EDS, 3 Com, Palm).  In 1983, HP was rated as one of the most admired companies in the world.  Now HP is saddled by bloated labor costs (320,000 employees), me-too products, and a questionable future.    And just last week, HP’s Ray Lane gave up his role as chairman of the company and two of the company’s longest serving board members, John Hammergen and G. Kennedy Thompson have resigned their seats entirely.

What happened?  A remarkable string of “big bet” decisions that failed to deliver the expected results.  The slide began with Carly Fiorina’s decision to buy Compaq and slash R&D budgets to focus on competing in the generic Windows-based PC market.  Fiorina  reallocated profits from the tremendously successful printer business to finance the PC strategy and in doing to, cratered HP future prospects.

Mark Hurd followed Fiorina and made some progess cleaning uo the mess left by Fiorina, but his grand vision was to shrink his way to greatness by focusing on operating efficiencies to deliver PC price reductions PCs rather than on investing in growth businesses such as data centers and cloud services.   Hurd’s poorly-timed purchase of EDS helped it compete in traditional IT services long after the market had demonstrated a major shift offshore and created an $8B write-off last year – the largest in the company’s history. 
Hurd also purchased Palm for a staggering $1.2B for a business that was once the industry leader (think RIM), but had no compelling products in the development pipeline.  HP did use Palm to launch a  Touchpad tablet, but it was so late and had so few applications that the product was recalled from retailers after only 49 days.

In some ways, it is shocking to see this data in black and white – it really speaks to the impermanence of the world of business.  When you look beyond the numbers you realize that several strong themes emerge:

  • Business models are often very slow to react to changing business conditions and companies can lose relevance remarkably quickly
  • Companies can lose sight of what really matters to their customers and lose out to more responsive competitors
  • Companies are not able to continuously improve their most critical operations and lose to leaner, more nimble competitors

There is no question that today’s business environment has grown into a rapidly changing whirlwind of fierce competition that has left many casualties in its wake. Customer expectations of products and services—in part because of digital technologies and more savvy, connected customers—are exponentially escalating and are growing harder and harder to predict. Units of one, customized products and services, corporate transparency, and overnight fulfillment are now mainstream requirements. Governments are facing large and growing long-term fiscal imbalances and are reassessing and reprioritizing how they conduct business. Nonprofits are also facing huge challenges, ranging from a tighter economic squeeze that threatens programs and missions to rigidly stringent metrical proof of success by donors. Educational institutions as well are being forced to contend with seismic upheaval, including technological changes, fiscal crises, increased competition, and much more.

To some organizations, these demands are stumbling blocks, even brick walls. To others, they are colossal opportunities. It depends on an organization’s ability to recognize the possibilities, innovate, implement change, and sustain the transformation.   Ultimately, an organization’s only chance for real and lasting success in this rapid-change environment is to be extremely nimble, flexible, and responsive to the constantly changing stimuli that impact what and how it develops, builds, and delivers products and services. Unless an organization is at the forefront of responding to change, it could easily be left in the dust.

Blog Mission

"When I have fully decided that a result is worth getting I go ahead of it and make trial after trial until it comes." - Thomas A. Edison

Let’s start with an explanation of the title, Beyond The Conference Room Solution. In all of my workshops and in many of my lectures, I refer to the phrase, The Conference Room Solution as a far too common approach used by organizations use to solve many of their most challenging issues.

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The Q-Loop by Brian Klapper

How does an established organization filled with long-time employees, a deeply entrenched culture, and a history of drawn-out planning and development cycles become nimble, innovative, and responsive in today’s challenging business climate? Published by Bibliomotion, The Q-Loop: The Art & Science of Lasting Corporate Change delivers an actionable strategy to help your company rapidly achieve lasting transformational change.

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