I have written before about Hewlett Packard’s splitting into two companies and now the manufacturer is in the news again for slashing nearly 30,000 jobs, most from the enterprise business that will be listed as separate company on November 1. These Hewlett Packard layoffs come on top of the already 55,000 cuts that were previously announced. HPs rationale is that this a cost-cutting measure to deal with falling demand.
I say it is a symptom of a company that lost its way some time ago.
You would be both right and wrong to think that HP is nothing more than a seller of expensive ink for cheap printers or the purveyor of computer hardware (from Compaq). For the most part, that is what it does now, but that was not always so. In fact, HP began about a half-century before Apple and Google by David Packard and Bill Hewlett, creating and designing “instruments that were not yet available” as Packard once said. For years and years, the company ran on the philosophy that new ideas were more important than profits and, in an infantile semi-conducter industry, the way that HP did business became the model for companies like Intel, Apple and Google as well as countless other chip and technology companies.
At its core, HP incubated and produced new ideas that ultimately became things it could sell. The company did it better than anyone and, to its credit, HP held no emotional attachment to any of them. Hewlett Packard knew that when an idea ran its course, was copied or became obsolete, it was time to move on.
What changed at Hewlett Packard?
But something happened along the way that changed the core of HP. Some argue it was too aggressive in entering the PC business with the acquisition of Compaq and others say it was a change in the business culture where profit became more important than the idea. In any case, Hewlett Packard’s business changed in direct counter to its brand.
Sure, those who started the company with ideas and the unsentimental attachment to them are mostly gone. But those brand attributes had been woven into the fabric of what was at the core of HP in such a way that the business changes were a complete about face for the brand of HP. The new Hewlett Packard, so to speak, still wanted to do things the “HP way” but couldn’t because of the changes in the way the company was managed. Internally, all the attributes of the core brand were no more than words and a fading memory.
So we see now that mistake continuing. Unlike before, when an idea had ran its course, it was jettisoned in favor of a new one. HP fights its core brand by holding onto an idea that has not only run its course but has been run over by the very companies HP inspired – Apple and Google, just to name two.
What these cuts represent is not creating a leaner Hewlett Packard, it is just cutting the tail of the dog off, an inch at a time. While falling demand is certainly one of HP’s problems, its bigger problem is that it walked away from what made it successful.