Could we have had it all? – the HP way forward

This week’s all employee call ended, maybe unintentionally, with the lyrics of the fade out song, “we could have had it all”. Until this month HP’s unique selling point positioned the company as one-stop shopping across the entire IT spectrum. Our go-forward focus is on strategic customer relationships. We expect our leaders to be bold and to take the long term strategic view, rather than pander to quarterly financial interests. According to Leo we must recognize that the world is changing and that we need to change. Speakers on the call made a strong show of unity and you couldn’t have put a pin between them.

Right now there is a lot of public discussion of HP’s transformation, not all of it favourable. Indeed, it was a lot to swallow in one go for industry followers, shareholders and employees alike. No-one could have been delighted by the plunging stock price, apart from potential purchasers. Nor can we be sure what contributed most to the fall in stock price, whether the, in some eyes, inflated offer to Autonomy, the re-think on the PSG business, the weakened business outlook or doubting HP’s ability to execute this challenging shift in the current environment. As pointed out in last week’s article we were to expect a major external impact of going public prematurely. Some customers and employees were uncomfortable, if not angry, at being taken by surprise. Does the shift make our business task easier or more difficult? So far, we know where we are going but exactly how to get there is work-in-progress.

The way forward is all about renewal, anticipating trends and developing strategies which address the market sweet spots, while successfully navigating disruptive technology. HP has made its bets on cloud and solutions, on big data analytics and security, so the Autonomy move fits. Acquisitions are tricky things to negotiate and even more difficult to make succeed. The ones that do so typically offer significant mutual advantage and have cultures which blend well. Why did the BP TNK tie-up in Russia fail, while the Exxon Mobil Rosneft deal has been hailed as a strategic coup? In the Exxon case, each party had something the other wanted, access to Arctic vs. Gulf of Mexico oil. Russia’s Prime Minister Putin was further delighted by the Exxon technology, stating that he was “surprised that one of your platforms was able to withstand being struck by a 1m ton iceberg”. Know that feeling? It is a positive that HP has had a lot of practice at acquisitions and has technology to impress. The trend of IT consolidation is already in full swing, evidenced recently by Google’s proposed acquisition of Motorola. The downside of large corporations is that size leads to complexity and may lead to paralysis. At this level, trying to give the PSG organisation more flexibility and agility makes sense. On the other hand, Richard Waters writing in the Financial Times captures the mood by talking about HP’s $B 40 “orphan”. He accuses HP of thinking product and not customer. Did you ever hear that before? As to Touchpad and co well hey ho we are apparently producing another run to meet unfulfilled demand. By the way, I’m still looking for a Touchstone, if anyone can oblige. The real challenge in all this transformation will be in the execution, so we’ll need to get our heads and hearts around it.

There are some other trends we shall need to address, both economic and social. We know that in most countries the economy is a basket case, parsimony is the order of the day as governments are vying to reduce their sovereign debts. Women are slowly making their way into boardrooms in many European countries, either voluntarily or due to legislation on quotas. Youth unemployment is a problem in both emerging and developed economies. What opportunities is HP offering young digital natives? These topics are all part of shaping the company up for the challenges ahead - we need this renewal cycle.