How relevant is HPs legacy in todays competitive technology driven environment.

Were the changes initiated by Fiorana justified ?

HP,which was established on 1
st
January 1939 by David Packard and William Hewlett, was
known for its HP WAY, which was a set of principles, which gave the employees of HP, a
sense of belongingness for the organization, besides empowering the employees to work as
an individual, provide suggestions for the betterment of the organization, and at the same
time, excel in team work. Some of the principles of HP WAY, that were underlined in 1957
were :
I. There were specific goals which were set for the employees, and the employees were
to work, look for improvements and develop their skills keeping in view these goals.
II. These goals, which were set by HP, and which were both long term and short term
acted as the guided star of HP in their journey to the top.
III. HP laid great importance on the process and the manner of doing every work in the
organization. This led to the prevention of any unethical practices within the
organization.
IV. The employees in the organization were always motivated to keep on learning. The
main objectives of the frequent coffee breaks, employee interaction sessions held in
the organization was to make all the employees learn something from each other. HP
followed open door policy where every employee can interact with other employees,
even if the employee is senior to him / her. Communication amongst the employees
was greatly taken care of at HP.
V. One of the most interesting techniques of management that is Management by
Wandering Around was introduced by HP, where managers at all levels would move
around within the organization and check if the employees were doing their work
properly or not, if the employees were getting along with their teams properly, if the
employees are comfortable in doing the work , whether there were proper channels of
communication between employees etc.
VI. Every year HP used to analyze its performance as well as the performance of its
employees. Every year, there would be an analysis of the companys financial and
operational performance, and accordingly strategies were prepared for the subsequent


years. Even the employees performance were analyzed, every employees attitude
was check with the help of attitude surveys, the satisfaction level of the employees,
that is, how satisfied were the employees working for HP was also checked, which
gave indicators to the organization to judge its employees performance.

HP had adopted certain strategies which worked well till the 1980s. Some of HPs
business strategies were :
HP did not pay a great deal of attention on the marketing of uts products. Rather it
strived for technical supremacy over its competitors.
HPs growth was self financed, and it did not follow forward pricing.
Employees in HP were given the utmost importance, and there was no such rule as to
fire any employee for his / her non-performance. Any employee, whose performance
was on the decline was given proper counseling, and motivation, apart from the
required training.
HP was strictly against contract business.
During this period, HPs customers were mainly engineers, and their products were
instruments which were used for testing purposes. Hence their strategies paid off well. But
with the rapid development in the IT sector, entry of many new entities, breakneck
competition, falling prices, etc, HP found itself faced with a serious challenge of sustaining
its position in the market. There was a downward slope in the stock prices of HP, and then
with the outbreak of recession, HP was faced with a major challenge of retaining all its
employees.

With the change in economic environment, HPs policies also changed, and HP WAY
became irrelevant.
HP had to get down to reducing its workforce. Employees were given a 3 months notice
period, so that they could find other jobs, before being removed from the organization. With
this, the belief in HP WAY also saw a drastic reduction. HP had to find an alternative to the
testing instruments which it produced, and it entered into the computers and printers market.
It first came up with a calculator in 1972, and then introduced its mini-computer in the year
1974. In this way HP set its foot into the computer market. As HP entered into new markets,



more of its original policies were thrown out of the door. It first did not pay any attention to
the marketing of its products. But with the personal computer and printers divison, HP went
into more of marketing rather than focusing on the technical developments. Earlier HP was
completely against contract work and forward pricing. But now HP switched to contract work
and forward pricing to acquire greater market share. Since in its early days in the personal
computer and printer segment, HP was as inexperienced as any novice, it tried its hand in
mergers and acquisitions, first by acquiring Apollo Computers for $550 million, and then
acquired more companies subsequently. HP was also forced to embrace outsourcing
following the change in business environment.

As we see now, circumstances forced HP to change its policies. HP way became irrelevant.
Employees belief about the organization also changed. The level of communication amongst
the employees also reduced drastically owing to the more hours spent on work by the
employees. Frequent coffee breaks changed to one or two coffee breaks in a day. Even the
system of Management by Wandering Around also diminished as managers were no longer
able to give that much time to examine their employees. The new era saw internet as the new
channel and medium of communication, a medium, where communication was instant, and
was not restricted to any constraints. People from different parts of the were were
interconnected. Even the communication system in the organizations also changed because of
the advent of the internet. New forms of communication within the organization like video-
conferences, e-mails, teleconferences, push messages etc replaced the traditional management
by Wandering Around, coffee break communication etc in HP. As a result of this the power
in the market was transferred to the consumers, and the employees were no longer the most
important asset of HP. The tastes and preferences of the consumers also changed. People
wanted their personal computers to be more trendy-looking, to be compact, to be of the latest
technology. People had become tech-savy, and hence wanted the most modern of computers.
Earlier HP didnt even think of marketing its products, but now HP had to create an
impression among the potential consumers so that they its products and become its real
consumers. With the acquisition of Apollo Computers, HP learnt the art of surviving and then
gradually growing in the ever expanding personal computer market. The aim of HP changed
to not only produce innovative products (computers), but also to market its products
successfully, and capture as greater a share of the personal computer market as possible. HP


faced tough competition from Dell and IBM in this divison, and it lost to both in computer
sales. That was when Carly Fiorina came into the picture.


Fiorinas stint with HP as its CEO:
Fiorina became the President and CEO of HP on 19
th
July, 1999. She was the only woman
CEO amongst the top 30 companies in the world. Fiorina was all about charisma. She had
proven her merit as a great leader prior to joining HP, by increasing the growth rate of the
companies she had previously worked for. When Fiorina joined HP, it was believed that she
will be capable of once again surging power into HP which will lead to its growth, when it
looked that HP had reached its maturity stage and was ready to decline. When Fiorina joined
HP, HP at that time was a leader only in the printers department, and was being crushed by
IBM and Dell in the personal computers department. True to her charismatic style, and her
obsession in bringing instantaneous positive results, she made some organizational changes in
HP the moment she entered HP.
She opted for the reduction in the number of divisons within HP.
She put pressure on the marketing department to come up with new ideas and
campaigns to re-position HP in the market.
She divided the organization into two basic divisons- the front end and the back end.
The back-end divisons focal point was on the manufacture of computers and printers
required for imaging, printing etc, and also within the back end there was a sub-
divison whose focal point was research and development.
The front end was the divison which took care of the customers. The front end was
again divided into two sub-divisons - the Computer Business Organization (CBO),
which looked after the sales of HPs products, and the Business Customer
Organization (BCO), which looked after the marketing of the products, the
distribution of the products, and support.
She removed the Management by Wandering Around style of management, and
instead put forward a more dictatorial style of management.
Fiorina believed that every employee should perform his best during work, and as a
result every the bottom 5% of the employees, were eliminated from the organization


based on their performance level, whereas the top performing employees were given
handsome rewards and bonuses.
The bonus system which Fiorina introduced based on HPs performance against its
own competitors.



The impact of Fiorinas leadership and the changes which she brought about were :

People didnt like Fiorinas leadership. They thought Fiorina dictatorial form of
leadership was harmful for them. Employees began to work in HP not out of
belongingness for HP, but out of fear of losing their job, which resulted employees
taking a lot of stress, and thus the performance of the employees were not upto the
mark as it would have been in a normal situation.
Fiorinas interaction with her own employees was minimal, and this resulted in
communication gap among the employees at different levels.
Fiorinas passion for getting positive results at any cost didnt go down well with the
employees. This attitude of Fiorina made her a popular figure in the media, but
hampered her professional relationship with her employees.
Ultimately she was removed from HP, and was paid a huge compensation.
Though the changes which were introduced by Fiorina was in accordance to the changing
business environment, the changes were abrupt. They were too quick to be able to enforce
any adjustments from the employees, and as a result was not so successful as Fiorina had
thought to be. Also Fiorina never took any blame for anything which went awry in the
organization, and passed on the blame to others. Her partnership with Compaq, which was
her strategic move for the development of HP, became more of a battle with the shareholders,
and after the meger, the share prices of HP saw a steep decline, and even though Fiorina
tasted victory, she lost the confidence of her employees, and also the board of directors
completely, which led to her removal from HP.

Its a debatable topic as to whether the changes brought about by Fiorina were justified or
not. Of course, HP, now is reaping the benefits of some of those changes, but if we look from


the employees point of view, the changes were too abrupt and too sudden, for the employees
to adjust with. An organization grows only with the help of its employees. Employees form
the back bone of the organization, and if they are not taken care of, if they remain
disgruntled, then the organization will never perform. Hence, those sudden, abrupt changes,
which Fiorina brought (which was her nature-to bring about instantaneous results) were not
justified, even though the changes, if brought about gradually, would have led to more
fruitful results, as HP is experiencing now.




ATANU MISRA
SECTION A
PRN 13020841009
MBA 2013-2015