Carly Fiorina on the post-merger 'HP Way'
Published: 23 Jul 2003 08:37 BST
When Hewlett-Packard announced its intention to acquire Compaq, critics attacked the plan as a lamebrained idea and said CEO Carly Fiorina was stepping into a tar pit that would swallow up both companies.
History unfolded differently. The $19bn deal, which came in under budget and ahead of schedule after a bitter proxy fight, is expected to result in a bigger-than-expected $3bn in cost savings. What's more, HP has been able to hold its own during the transition and now finds itself in a neck-and-neck race with Dell for the lead in global PC market share.
In retrospect, that may seem like the easy stuff.
Before Fiorina can run a victory lap, HP will need to prove to Wall Street that the company can generate sustained revenue growth. HP has been unable to replicate the consistent double-digit sales increases of Dell. What's more, there are recurring questions about whether the company can execute as nimbly as its Texas rival, which now resells printers.
For her part, Fiorina bristles at suggestions that the merged company is essentially a cost-cutting story. Even amid a still-desultory IT market, she says HP is taking PC share from the competition and not feeling any pinch on its printer sales from Dell.
All the while, Fiorina is going about the refashioning of HP's company culture, a process that picked up steam with the Compaq merger. Her ambition: accelerate the corporate metabolism while still retaining the positive legacy embodied in the famed "HP Way".
She recently spoke about her plans with ZDNet UK's sister site CNET News.com.
Q: Looking over the horizon, what are the technologies that you think will be strategic for HP and change the current constellation of forces? Or is there one? Is it going to become more of a gradual improvement year by year?
A: One of the things we have to let go of is this notion that growth in the technology industry will be driven by the next big thing, by the next "killer app" or hot box...The real big thing in technology is that all this stuff has to work together. And when all this works together, what do you have to think about? Security, liability, mobility, rich media, total cost of ownership -- all these things matter.
But that's boilerplate. All those things have been around for the last few years.
No, I don't think that's true at all.
What you are saying sounds as if you're agreeing with the gist of that Harvard Business article of a few months ago that said -- and I'm simplifying -- that --
That innovation doesn't matter.
-- that innovation doesn't matter and that IT is no longer strategic.
I think that HB article was dead wrong, and I don't agree with it at all. What I'm talking about is not that innovation doesn't matter, but how it gets applied... As a customer, I have to have lower (total cost of ownership), better reliability, greater risk mitigation -- and oh, by the way, I have to get mobility security. Those require real innovation. But I'm not willing to trade off innovation for reliability; I'm not willing to trade off flexibility for quality; I'm not willing to trade off ease of doing business with price -- I want it all.
And that's why technology has turned into a scope and scale business. Delivering all of that requires sustained investment, and sustained investment takes balance sheets and cash and the ability to make multiyear investments. It is actually because innovation is more important, not less important, that not every fly-by-night is going to make it.
For most of the last year, HP has been a cost-cutting story. Wall Street's been surprised at your progress, but when does this become more of a growth story rather than the reduction of overlap?
I wouldn't completely agree with your characterisation. Certainly, in our first year we were quite clear that we needed to complete the integration... On the other hand, it's also true that during the same period we have been growing share in virtually every category in which we compete... What we said in June at our analyst meeting is that growth for us now doesn't depend upon the technology spending environment improving. And we, like others, don't see evidence of a tech spending rebound yet -- I said that in June and now others are now saying it. But what we think we can look forward to is taking more of our customer's share of wallet.
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