How to Innovate

How Hewlett-Packard Turns Strategy into Action


In early 2007, Shane Robison, Hewlett-Packard's (HPQ) executive vice-president and chief strategy and technology officer, gathered the seven chief technology officers from HP's business units together. Robison, as a Compaq vice-president, had played a major role in the two companies' controversial 2002 merger and the integration that followed. But when he summoned his division technology chiefs, he was focused on the future: What technologies were emerging, how would they shape the market, and what were the implications for HP?

After months of debate, the group came up with a strategy dubbed "everything as a service," based in part on the then-emerging trend of cloud computing—the idea that the computing and storage needs of a person or a company could be handled off-site. Companies including HP had already begun offering "software as a service" rather than on a shrink-wrapped CD, and HP wanted to build on the service model by developing the supporting hardware and software, as well as its own services. Less than three years later, HP has introduced at least six completely new service offerings, along with several cloud-related software and hardware products and consulting services. More are in development.

How HP implemented its new strategy relatively quickly across its many divisions is worth some attention. As Harvard Business School professors Robert Kaplan and David Norton showed in their 1996 book, The Balanced Scorecard: Translating Strategy into Action, and in subsequent research and books, it's common for companies to develop strategies and then fail to execute them. Following through on innovative strategies is even more difficult.

Here's a look at how HP made "everything as a service" more than an empty buzz-phrase.

New V-P for cloud services & strategyFaced with executing a new idea, Robison had a head start because he had already involved the company's divisional CTOs in the process. In other words, the executives who would be key to realizing the strategy within the business groups—as well as the director of HP Labs responsible for developing new technologies to support the strategy—were already invested in the plan.

While each individual CTO was developing an "everything as a service" strategy for his unit, Robison created a temporary position—vice-president of cloud services and strategy—to take a broader approach. For 18 months, Russ Daniels, who had previously served as CTO in HP's software services group, took on that role. "I was able to approach the cloud computing opportunity from a pan-HP perspective," he says. That included looking for possible opportunities outside of the existing business units, as well as helping ensure that the units' individual efforts worked in unison. For instance, was the group that was charged with developing next-generation servers considering the needs of potential users of the company's planned services?

Meanwhile, Prith Banerjee, vice-president of research, was reorganizing HP Labs. Under Banerjee, a rough total of 150 projects then at the labs was cut to 21, all of which supported the new strategy in some way.

For instance, one research project that came out of the reorganization was a technology enabling people to print from a mobile device. Patrick Scaglia, the CTO of HP's Imaging and Printing Group (IPG), then stepped forward to have his group take the project on and conduct a market test. "If our strategy makes sense, then we should be able to deliver a proof point," he says. And he did. After diverting some of his incubation funds—venture capital-like money that HP gives each CTO to market-test high-risk and potentially high-payoff technologies that don't fit naturally into the existing road map—to create a prototype, Scaglia got Blackberry-maker RIM (RIM) interested in the product. In May 2009, HP announced CloudPrint, a service allowing RIM users to print documents on the nearest available printer. The new partners are now testing the program, with plans to launch it early next year.

Translating strategy into action is "a messy process," says Scaglia. "You can't just send everyone a memo saying: 'Now we're going to do this.'" But money talks. This year, more than half of Scaglia's budget went to support services—CloudPrint, MagCloud (a printing, mailing, and subscription-management service that allows anyone to publish a magazine), and BookCloud (a similar service for book publishers —as did 100% of his incubation funds.

HP won't disclose revenues related to the new strategy and many of its new services are too young to have made a significant top-line impact. But the company says it expects "everything as a service" to remain a key part of its future.

What can executives learn from HP's approach to implementing its innovative strategy?

Appreciate the DifficultyYou can't just send a memo. For tips on executing a strategy successfully, read The Balanced Scorecard: Translating Strategy into Action.

Engage Key Leaders in the ProcessRobison involved all of the company's group CTOs to help develop the new strategy. When the time came to implement that strategy in their divisions, they never felt it had been imposed on them.

Make Sure You Have the Right People in PlaceSometimes a new strategy requires fresh blood, but if you have people who can adapt to it, keep them. HP asked Russ Daniels to take on a temporary CTO role to help realize the strategy.

Buy or PartnerA new strategy often requires new skills, some of which can come through partnerships. Bigger companies should consider acquisitions, as HP did when it bought Mercury, a company with experience in the technology behind software as a service .

Be FlexibleYour standard procedure for rolling out a new strategy might not work when you enter unknown waters. In HP's case, Robison formed a novel strategy-development team of CTOs and then created a temporary CTO position to flesh out the new approach.
Jessie_scanlon
Scanlon is a Bloomberg Businessweek contributor.

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