| BUSINESSWEEK ONLINE : AUGUST 2, 1999 ISSUE | ||||||||
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| COVER STORY
Lew Platt on HP's Ups and Downs--and the HP Way Lewis E. Platt, who handed over the CEO reins of Hewlett-Packard Co. to Carly Fiorina on July 19 and will step down as chairman at the end of the year, has personified HP since taking the helm of the much-admired company in 1992 -- for better or worse. In a go-go high-tech world with little time for anything beyond stock options and quarterly results, Platt has always championed the philosophies that set HP apart: the egalitarian work culture, the progressive attention to employees needs, and a real commitment to the communities where HP is located. But while his down-to-earth style and hard-working ways made him an icon of the "HP Way" in the hot-growth mid-1990s, when booming PC and printer sales pushed annual growth over 20%, he has since become a symbol of what's wrong with the company. Even as rivals were rocketing off for cyberspace, Platt failed to drive a Net strategy or prime HP's innovation engines. Instead, he seemed focused on cutting costs and tending the bottom line. In two interviews in recent weeks, before Fiorina was named, Platt talked with Silicon Valley Correspondent Peter Burrows about his record, the health of the HP Way, and what the future holds for him. Here are edited excerpts of their conversations: Q: After increasing sales and profits at over 20% through much of the 1990s, HP's growth has dropped to roughly half that in the last two years. What happened? A: I would argue that people never cut us quite enough slack for what was going on in Asia and some of the other developing regions of the world. We've always been a bit different from other computer companies, in that we've always invested very heavily in some of those places. The [financial analysts] loved it when it was contributing to our 20%-plus growth. But when it turned South, we really took a hit.... Our business actually fell 17% in Asia last year. That's a big deal.... All I need to deliver growth that [they] would like just fine is a recovery in Asia. That's all I need. When these economies recover, we'll put out some eye-popping growth again. Q: So you don't think investors should get used to the kinds of growth we've been seeing? A: I've always felt the growth prospects for the company were great. The growth opportunities are as good as they have ever been. Q: In the past six months, HP has split off its measurement unit, come up with a new Net strategy, and is looking for a new CEO. And revenue growth is expected to jump back to double digits in the second half of this year. So it seems HP has been able to avoid the kind of meltdown and renewal that high-tech powers like IBM, AT&T, and Motorola have had to go through in recent years. What's different about HP? A: We've always been pretty self-critical. Rather than resting on our laurels in good times, we tend to be constantly looking at things. We went through some tough times, but even as we entered them, we were already talking about what we needed to do to change. There's no fancy answer: It's classic HP. Q: What led HP to decide to spin off the measurement business in March [HP plans to sell 15% of the $8 billion unit later this year, and the remaining shares by mid-2000]? A: When we started to look at why we weren't growing, and why we seemed to have missed the turn to the Internet Economy, it led to a reexamination of our structure, strategy, and programs. And I think it's going to help both companies grow more effectively than they did in the past. Q: If you look at HP's history, the company tends to go through a slowdown every six or seven years. But doesn't the Internet present a more radical shift? How will HP have to change to make sure it remains a top-performing company? A: Now, it's all about speed -- actually, more than just speed. It's also about agility, and the ability to change direction. The Internet Economy introduces a lot of uncertainty, and anyone who tells you they have a 5- or 10-year plan is probably crazy. This is very much the age of scenario planning.... You know, I happen to like one of [Sun Microsystems CEO] Scott McNealy's quotes quite alot. He's said there's two kinds of companies -- the quick and the dead. I don't like everything Scott says, but he's right about that. Q: Does the HP Way have to change? A: As far as the core values of the HP Way, no. But the HP Way is a tricky thing. It's what makes HP great, but it can also be used as an excuse for practices that are no longer relevant. It can be an excuse for not changing. When you boil it down to its fundamentals, it's about keeping core values constant and frequently changing practices -- and a lot of people inside HP and outside HP get confused about that. Q: So you're not talking about fundamental changes in how you need HP's employees to approach their jobs? A: No, just more of the same -- but more of it, and faster. Let's say you see an opportunity for an acquisition or a partnership. How about if you could do it in weeks or days, rather than months? Let's challenge ourselves. Maybe things don't have to take so long. Q: In April, you promoted the heads of the computer and printer businesses that will remain after the split, giving them CEO-like authority over their divisions. Why? A: Until these people gain prominence for themselves, the CEO becomes the switching point for everything that goes on around here -- and we're too big for that. If every big customer wants to talk to me, then I slow us down. No matter how hard I work, I still slow it down. I know Jack [Welch at GE] doesn't have to get involved with every decision regarding a locomotive purchase or programming at NBC. Q: How would you compare HP's health to Compaq, the other top computer maker that [just named] a CEO? A: We're infinitely better off. I think we know where the hell we're going, and all of our businesses are profitable. It's just a whole different situation." Q: HP's new Net strategy, dubbed "e-services," is striking a chord in the industry, but many wonder if HP will really follow through in a big way. Do you think the company will rally around this new strategy? A: It's really a natural play for all of our businesses. It emerged from the enterprise computing group, but it's the direction of the entire company. And it hasn't been a very hard sell. For example, our advertising had sort of been all over the lot, so I said we're going to fix that [by consolidating all advertising under the e-services banner]. I thought I'd be in for the fight of my life. But guess what -- it didn't happen." Q: You've been a champion for diversity in the workplace, breaking the glass ceiling for women, and trying to establish a more humane balance between work and personal life for your employees. But some critics say that given the emergence of the Internet, you should have been more focused on devising a strategy for the Net. A: Any programs that relate to keeping your best people and helping them work through personal issues are important to the company. Talent is what it's all about. You win when you have the best talent. Q: Why is work/life balance so important to you? And is it related to the fact that HP has so many high-ranking female executives? A: No question, the death of my first wife had a big impact. I had 8- and 10-year-old daughters at the time, and I was grieving, but the company gave me the space I needed. If I needed to be gone for an afternoon, it became an O.K. thing to do. So it taught me that things I might have thought were gender-related were not about gender at all -- but about the role you are thrust into in life. Q: Do you think efforts to improve work/life balance have helped the company? A: Yes. For example, for a while there we were losing lots of mid-level women managers in their in 30s and 40s. But by letting them do job shares, or by making it easier for them to get leave and things like that, we started hanging on to more of them. And guess what -- there comes a time when a lot of women's family obligations tend to fall back a bit, and they want to get more involved again. Q: HP has continued to be a leader in community involvement during your watch, not only in terms of committing money, but by encouraging employees to volunteer their time. Again, there are those who say the business environment is just too intense to expect that from workers. What do you think? A: Almost every one of the practices that has been part of the HP Way that people look at as soft or nice come down to being damn good business sense. This is no different. If you want to attract and keep the best employees, you better be operating in communities where people want to live. That's how it pays off. As for the time commitment, I don't worry about that. Everybody has some energy that they put into things outside of work. And doing [work in the community] does some good, and it almost always reenergizes people. Q: How do you feel about your record as HP's CEO? A: We've ahad a couple of tough years. But there's a lost of positive momentum now. So I'm going to leave feeling great. When people look at the Lew Platt era in the annual report, it's going to look pretty good. Q: After more than 30 years, was it hard to make way for a new CEO? A: It'll be harder when I'm walking out the door. Q: Will you stay active in business? A: I haven't been on any boards for the past few years, and I really enjoy that. So I hope to be doing more of that. And I've had some calls about other [CEO] positions. The conversations lasted just three minutes, but I'll think about it more when I have time. I could imagine being in another leadership role -- by the way, probably not in this industry, probably something completely different. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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