The HP Future Without Mark Hurd

There’s been a flurry of media activity surrounding the departure of HP’s CEO Mark Hurd.  Here’s what I wrote about this matter on my weekly “Thank God It’s Monday” released today, August 9th:

I’ve long been concerned about HP’s CEO Mark Hurd being so focused on execution that he lost sight of the need to innovate to ensure a sustainable, viable business. Now, in light of Hurd’s unplanned departure from HP, others are suddenly writing that it is time for a new HP CEO who embraces the need to innovate.

The CEO’s role is to create and deliver a compelling strategy. The COO’s role is driving execution. HP does not have a COO, a structural problem in the company’s leadership team that may have distracted Hurd. Hurd acted like an extremely effective COO, not a CEO.

Great strategy and great execution are required to ensure a company thrives.

Others may not agree with my view. While under Hurd’s leadership, HP’s stock price doubled—quite an achievement. My sense is that the stock price alone doesn’t reveal the entire picture. I look at a company more holistically. HP has been weak in the innovation area. The recent acquisition of Palm was hopefully the beginning of a refreshing trend.

Question I received today:

Can you explain how the acquisition of Palm is seen as the beginning of a new trend? The only thing I know about Palm is/was their Palm Pilot. They were at the front of the game until others like HP came along and took this device to the next level. I just tossed my HP I-PAQ into the trash, as my iPhone now does everything (and more) that my Palm and HP did.

My response:

Palm’s new operating system (which they rolled out on the Palm Pre) apparently has some wonderful attributes that Palm would never have been able to fully exploit due to its internal problems. Palm had hoped that this OS would become as big Android. But, given poor marketing and an inability to get strong support from firms like Verizon, Palm was dying a slow death.

HP acquired Palm for this operating system and was looking forward to creating other products around it, e.g., an iPAD-like tablet. This OS would also enable HP to get into the smart phone business and, using their reach, make an impact that Palm never could have on their own. This acquisition was a win-win: great for Palm, great for HP. This acquisition looked like an opportunity for HP to get its mojo back.

HP focused more on execution than innovation under Hurd–I didn’t believe the balance was appropriate. I believe at one point Product Development investment had been about 6% of total revenues, substantially less than other corporations in their space that invest about 9%. It is true that HP would have invested far more in real dollars than anyone else just based on their size. How has HP benefited from that investment?

Frankly, HP hasn’t captured excitement with new products for years. Can you name one standout HP product in the last 5 years? I can’t.

When you live in Silicon Valley as I do, it is easy to compare HP with Apple. Apple is about buzz and excitement. HP has begun to look like little more than a provider of commodity products competing with Dell, Acer, etc.

HP used to be the premium provider of innovative products. The HP35, one of the first scientific calculators, came on the market in 1970 or 1971 and was priced at $400, about 4-6 times what other calculators sold for. Engineers and engineering students craved the HP35. “Real engineers” moved from slide rules directly to the HP35. It was a dominant, sought-after product. Price didn’t matter.

Apple is in that space today–Apple is thriving in a down economy. HP is playing a different game than Apple.  I’d like to see HP offer value-laden, innovative products again that create buzz and excitement.

Let the innovation begin!

Dave Gardner, Gardner & Associates Consulting

© 2010 Gardner & Associates Consulting


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