| BUSINESSWEEK ONLINE : AUGUST 2, 1999 ISSUE | ||||||||
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| COVER STORY
Making a New HP Way STRATEGY PROBLEM HP remains the printer king and is growing fast in PCs, but it almost forgot the Net. PLAN On May 18, it announced its E-services Net strategy. This pulls together technologies so corporations can quickly add new services on the fly. HP has begun to sell online and intends to grow its services business as a way of boosting box sales. GRADE B+ E-services is a compelling approach that has struck a chord with many Net players. And Carly Fiorina's expertise in communications is the perfect complement. There's just one snag: HP is three years behind rivals IBM and Sun in the E-business market. LEADERSHIP PROBLEM Outgoing CEO Lewis Platt largely let HP run without setting a clear direction, say critics. And insiders say he should have milked old-line businesses to invest more heavily in the Net and digital photography. PLAN Once Platt has completed the spin-off of HP's measurement business, Fiorina plans to drive synergies in the remaining printer and computing units. GRADE A Fiorina is the charismatic, brand-conscious leader that Platt wasn't. She learned at Lucent how to turn a stodgy business into a Net Age one. And incoming HP Chairman Richard Hackborn is revered as the keeper of the HP Way. The combination could be dynamic. INNOVATION PROBLEM HP built its reputation by inventing groundbreaking products, but the inkjet printer in 1984 was the last one. Since then, most of HP's growth has been in PCs and printers, where cutting costs is as important as cutting-edge engineers. Meanwhile, promising Net technologies wasted away in HP Labs. PLAN Fiorina intends to speed technology transfer from HP Labs. HP also plans new business models, where instead of being paid for its gear, it takes a percentage of E-commerce revenues made by its customers. GRADE C+ The new models are the kind of risk-taking HP needs. But they are no replacement for product breakthroughs. ORGANIZATION PROBLEM HP has struggled to get a proper balance between decentralization and central control. Its history of giving 130-plus product groups autonomy worked beautifully in simpler times but proved an obstacle when HP tried to pull together an overall Net strategy. PLAN Besides splitting off the test-and- measurement unit, HP seems to have found middle ground: It has given CEO-like powers to four divisional CEOs, who will have authority over the 130 fiefdoms. GRADE B+ This approach will help HP knit together a Net strategy, while also keeping its entrepreneurial bent. There's more to do, however, like merging the inkjet and laser printer divisions into one major imaging push. MARKETING PROBLEM HP's balkanized approach of hawking stand-alone products does not fly in the Internet Age. Customers want a vision of a future and integrated suites of products to solve particular needs, like E-commerce. PLAN HP is already planning its biggest-ever corporate-level branding effort, to be rolled out early next year. And Fiorina will build on that by making marketing a top priority. GRADE C- The E-services marketing campaign is an improvement, but HP needs to boost spending and name a chief marketing officer. And the branding campaign won't roll out until next year. That's too long if HP wants to spiff up its stodgy image. TALENT PROBLEM HP's turnover is one-third that of the rest of Silicon Valley, but it may not be keeping the right folks. Insiders worry that it's losing top talent due to its old pay practices and is dangerously dominated by lifers attracted by HP's safe, paternalistic ways. PLAN HP is filling key positions from outside and is considering an expansion of a pay-for-performance policy that was introduced this year for 90 top executives. GRADE B HPers have a long history of rallying when given clear marching orders--and are starting to respond again. Still, HP should move faster to update compensation practices with more stock options. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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 RELATED ITEMS HP's Carly Fiorina: The Boss COVER IMAGE: The Boss RESUME: Cara Carleton S. Fiorina PHOTO: Carly Fiorina, as a Child CHART: Profits May Rebound...And Sales Should Rise...So HP Shares Are Surging TABLE: Making a New HP Way TABLE: HP's Executive Branch TABLE: Leadership over the Years Online Original: Lew Platt on HP's Ups and Downs--and the HP Way Online Original: Why Fiorina Convinced "an Icon" to Become Chairman Online Original: HP's Stock Rocket Will Need Some Refueling INTERACT E-Mail to Business Week Online | |||
