A great giant stands holding the world on his massive shoulders. Drops of sweat on his face. The strain in his body was clearly felt. Then, without warning, the tension becomes overwhelming. He shrugs, and the stability of the world he carried on his shoulders shatters forever.
The beginning of our story
In 1993 I joined Hewlett-Packard as a financial analyst working on corporate financial reporting. four years later i was 3 years oldthird Working for the General Counsel (Chief Counsel) of HP in the capacity of Senior Director responsible for the IT and Finance operations of HP’s Legal Department at HP. HP’s legal department at that time consisted of approximately 300 individuals and spent approximately $50 million on outside counsel fees. It was essentially a medium-sized law firm within a larger company.
I believe the events of this story represent the beginning of HP’s slide from greatness. A decline that resulted in several ups and downs and splits over the course of a decade and a half. I also believe that this decline was not inevitable and first and foremost it can only be called a crisis of confidence.
HP as Colossus
When I joined HP there were three major business groups. The test and measurement business was the oldest part of HP. This has been going on since the company was founded in the 1930s. HP’s first product was an audio oscillator and one of their first customers was Walt Disney. Disney used these oscillators to test audio equipment in 12 specially equipped theaters showing Fantasia in 1940.
HP entered the computer field in 1966 and became the secondRa The main business areas that made up the company. HP’s last major business was printing and imaging. They produced both laser and ink jet printers. At that time most people knew HP because of its calculators, computers or printers. Few people now knew it as a leading test and measurement company, although it still was.
In the early 90s, HP was a Fortune 25 company. It has existed for almost three-quarters of a century and has been able to adapt and thrive despite constant technological change. Although not uniform, revenues were well distributed across the three major business areas, and all were solid, growing businesses.
HP’s revenues were growing in double digits for several years before I joined and will continue to do so for several years after I join. For a Fortune 25 company, such multi-year double-digit growth in revenues and earnings was not a common occurrence.
The company was considered one of the best-run companies in America. Some mythology had also developed over its management practices. Dubbed the “HP Way”, HP’s management practices were considered by the business community to be an example of what a great company culture should look like.
For my part, overall, I thought it lived up to its reputation as a very progressive company in those days. It was ahead of most other companies both in how it managed its people and how it executed business operations.
creeping doubt
Around 1997, when I was working for the General Counsel, HP engaged a major global consulting firm in a multi-year project to help them think about the question: “What happens to very large companies that have experienced significant growth for many consecutive years?” This is an oversimplification of the scope of the engagement, but I believe this was the fundamental question that weighed heavily on the minds of the company’s senior executives at that time.
Among the many findings and recommendations, at the highest level, was an assessment that the decade-long trend of double-digit growth was unlikely to continue. The consulting firm recommended that the company begin planning for much slower growth in the future.
At one level this finding was not surprising. Looking back at history, it makes sense that most companies that experienced a similar situation were unable to maintain extraordinary levels of growth. However, I believe the way senior HP executives internalized these findings sowed the seeds for a two-decade-long decline.
changing behavior/changing culture
When I first joined HP in the early 90s as part of corporate financial reporting, I got to see up close how aggressively HP’s business leaders pushed back against the spending and investment guidance issued by the companies’ CFOs. Especially when they believed that following that guidance would impair their ability to achieve their business objectives.
It was clear to me that these business unit leaders felt strongly that there were net positive investment opportunities in front of them, so they were willing to work hard to ensure they had the resources to pursue those opportunities. There was a very good exchange between the Business General Managers of HP and the CFO of HP.
After the report was released, I felt as if HP’s business leaders had lost the will to fight. They appear to have fully accepted the idea that there will be slow growth in the future. That change in thinking had a deep and profound impact on the way the company operated. Instead of obsessing over how to win in the markets, the focus increasingly turned to how not to lose.
The behavior I saw is similar to what you sometimes see at sporting events. A team has a comfortable lead and then instead of continuing to play the way they got the lead, they start playing without losing. You often see that the team which was behind starts roaring, taking advantage of the new caution of its opponent.
a very different hp
HP ended the 90s with big and important changes. The changes I believe are rooted in a shift from “let’s win” thinking to “let’s not lose” thinking. HP established Test and Measurement as Agilent Technologies in 1999. Agilent faced layoffs in the early 2000s as it faced a severe downturn in the telecom market. Perhaps it would have fared better had it been part of a larger organization, which would have been better able to weather the storm.
Lew Platt retired from HP shortly after the Agilent spinout and was succeeded as CEO by Carly Fiorina. While Platt “retired” from HP, he did not retire from being CEO. He went on to run Kendall Jackson Winery for a year and then Boeing several years later. Perhaps after moving out of Test and Measurement, the part of the company where Platt had spent so much of his career, HP no longer felt at home.
Carly Fiorina replaced Lew as CEO of HP. Fiorina, a veteran of Bell Labs and Lucent, did not mesh well with the more relaxed HP culture. The HP/Compaq merger, a combination that Carley fiercely supported, was like bringing oil and water together. At best, the Compaq merger could be viewed as an unnecessary distraction. At worst, it laid off thousands of people and seriously damaged trust between the rank and file and HP’s leadership.
Carly was replaced by Mark Hurd. Heard drastically cut back on investment in R&D, a trend that had begun when Carley was CEO. The Autonomy debacle rocked HP under CEO Leo Apotheker, after Mark was unceremoniously fired for misconduct. Ultimately, in 2015, the PC and printer business units were separated from the server and enterprise services business units to form HP and Apache, respectively.
an important measure
There’s no way to tell whether HP would have been better or worse if executives had continued a more positive business outlook in the late ’90s. The late 90s and early 2000s were incredibly chaotic as the dotcom bubble grew rapidly and then collapsed just as quickly. At the turn of the century, the pace of change increased dramatically and has done nothing but accelerate since then.
When thinking about that time and how HP performed, it’s important to keep in mind that “Himachal Pradesh moved“It suffered, not because it was attacked by external market forces, but because it allowed self-doubt to enter its psyche. It might have continued to stumble in the future, regardless of what it believed or not, but it did not. HP began this stumble by doubting its ability to remain as successful as it had been during much of the past decade.
Looking back at this point in time, I think there is at least one important takeaway from whatever happened to the business. That conclusion is simply this: If you think you won’t succeed you pretty much guarantee that you won’t. If you think you’ll succeed, the odds may still be against you, but at least you have a chance.
Playing to win versus playing not to lose will also have a positive impact on the morale of employees who have to carry out the organization’s mission. That improved morale will certainly translate into a more motivated workforce – further increasing your chances of success as a result.
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