HEWLETT-PACKARD

CULTURE IN CHANGING TIMES

NEREA ESCRIBANO MS in Corporate Communication TRACOR The Communication Arts Institute November 15, 2011

Nerea Escribano email: nerea.escribano@mac.com

HEWLETT-PACKARD

CULTURE IN CHANGING TIMES

What are Hewlett-Packard traditional values?

For almost sixty years of its history, Hewlett-Packards (hereafter, HP) traditional values were a STRONG CORPORATE IDENTITY and EMPLOYEE LOYALTY, the spitting image of its owners values:
PROFITS

&

PEOPLE

THE HP WAY - Prots - Teamwork - Open door management - Full employment - Egalitarian pay practices - Flexible work hours

Are there any contradictions in their culture, strategy and business environment?
HP sold primarily test and measurement equipment for its first four decades, based on leadingedge technology developed inside the company, and these products provided high profit margins.. During nearly six decades, from 1930s to mid 1990s, HP expanded its range of products: it had launched computer and printer products in 1970s and started building lower margin PCs in 1980s. In my opinion, it was in late 1990s when contradictions between culture and strategy started to flourish: instead of economic and cultural implications, HP decided to focus on PCs market. This decision was made (according to dates in the business case) when Lew Platt hold both chairman and CEO positions, and while he hadnt clearly defined HPs strategic future. At this time, there were two shifts in industry dynamics, which force to the companies in the sector to rethink strategies and organizations. First, the number of mayor buyers looking for suppliers to provide technology solutions grew up; and in second term, the growth of the internet forced suppliers to develop and sell products

Nerea Escribano email: nerea.escribano@mac.com

according with this new technology. Here it is were it seems to me that the contradiction between culture and business environment was born. In a decade where industry leaders competed for market share, HP was making changes in its culture (as test and measurement business was being dwarfed by the companys other lines) and it had no solution for the growing concern of its no presence in internet business. To sum up this conclusions in a diagram :

STRATEGY

Employees felt this business violated the founders belief in innovation

Test-measurement instruments

Printers

Computer business

CONTRADICTIONS CULTURE High Volume/Low Cost Leading prot generator

BUSINESS ENVIRONMENT

NO RESPONSE TO INDUSTRYS DYNAMICS ( Competitors take advantage)

Does Fiorinas prole t in with HP traditional culture? Was she the ideal candidate?
Even if during her career she gained the reputation for understanding the big picture and appeared in Fortune magazines cover as the Americas most powerful female executive, I think her profile wasnt the better one for HP situation. She had great skills , but not the ones for this position (Fiorina seemed to have the ability to use whatever selling style was necessary to close a deal); and she hadnt experience as CEO or she hadnt knowledge about the industry. Fiorina was received with enthusiasm, I think because of her charismatic personality , but when she made the front-back reorganization in the company, executives and divisional managers reacted against it. She wanted to establish a business philosophy and style totally different from those of the founders. Changes were needed, but not a 180 degree reorganization in structure, strategy, image...
Nerea Escribano email: nerea.escribano@mac.com 3

Mergers and acquisitions. What are the main values of Compaq? What company culture survived to the change?
Although merger and acquisitions are the front line strategic option to have competitive advantage over its competitors, their success rate is less than estimate mainly due to the clashes of corporate culture.

Main values of Compaq

After reading the case and think about this question, it seems to me that in the time when the merger was discussed, Compaq had no clearly defined values. This was because of the unsuccessful integration of cultures driven by the acquisition of Digital Equipment Corporation.

What company culture survived to the change?

As in my opinion, Compaqs culture was diluted after the acquisition of Digital Equipment Corporation in 1998, there wasnt a survivor culture after its merger with HP. For HP, the acquisition helped Fiorina to achieve her goal of changing the high-commitment culture still remaining in the company; and for Compaq, it was the way to establish a clearly defined culture and values based on Fiorinas business philosophy: performance-based pay, commission-based pay structure for salespeople, faster decision making... In addition to this post-merger culture issue, I would like to emphasize that it seems like the integration was not totally successful: communicating with employees failed as an internal HP memo indicated that they gave low marks on management credibility, respect and fairness.

Nerea Escribano email: nerea.escribano@mac.com