Strategic management: strategic choices
At Hewlett-Packard, how did Mr. Hurd implement his vision?
Hewlett-Packard, a well know giant of the IT industry and Silicon Valley, appointed a new chief, Mark Hurd, in early 2005 as chief executive officer and president and was named chairman of the board of directors in September 2006. His vision was of establishing HP as the world’s leading technology company. Mr Hurd, is rated as one of the young top Silicon Valley executive. Marks Hurd`s vision is to make Hewlett-Packard to be the World Leader not only in market and financial performance but in also global citizenship activities as well. He wants to turn a good company into a great company that takes time and a lot of effort. Just two months into his tenure, he took steps to cut 14,500 jobs and axed the umbrella marketing and sales organization, making HP’s three business units responsible for their own marketing and sales. Hurd took these initiatives to expand the company globally and improve its market share i.e. increase the size of the sales force and drive accountability and responsibility down closer to the customers to make faster decisions in order to try to improve that go-to-market model in every dimension, not just quantity, but capability, decision making, and continue to drive on mobility, surround all that with building a culture of execution and accountability. These strategies started reaping benefits, though was a challenging task for Mark Hurd to bring back the company on the path of growth and regain its lead among the IT companies.
In this case three questions arise:
What steps were taken by Hurd to bring organizational change?
Some of the most important principles behind bringing the changes that Hurd wanted to bring was to simplify the things done at HP, in other words to make HP a simpler company to work within and a simpler company to do business with. That means structure, organization, processes – all simplified, bringing excellence and efficiency; about making HP a simpler, more nimble company. But most of all, it was about building a company that is more focused on the market, partners and customers. Before Hurd HP was considered as a complex organization, having a lot of businesses, a lot of layers, had a touch of bureaucracy, and not always predictable as quoted by the customers and the employees. In addition, within few months, the new CEO brought specific changes to closely align the businesses. One of the main steps he took was to eliminate layers as to speed execution and performance, as well as provide a clear line of sight from our businesses to our customers. Secondly efforts were taken for increased profit and loss responsibility and accountability while making sure that businesses control the levers that are most critical to success. Third major step was to reduce cost not only to make HP more efficient and competitive, but also to invest more in R;D, sales and other areas that will drive growth and to achieve cost leadership. All steps taken to sharpen the focus on customers, on partners, on innovation, and on developing products and services that are more manageable and reliable to provide the customers with greater simplicity, greater agility and greater value.
What type of control is used by Hurd to regain its position in the IT industry?
The growth strategies set by Hurd to regain its position in IT industry were some what related to operational changes brought by him, namely, simplicity, focus, alignment and execution. By answering the two basic questions: what HP is? What are the strengths of HP? Mark Hurd said in one of his speeches in Global Partner summit on September 13, 2005 that HP is the company of technologists, its heritage differentiates HP from competitors, and the value offered to the customers around the world. One of the visions of Mark Hurd was HP to be known for three things – creating great technology; selling and marketing products and services, and being able to service those products. One of the most important things to regain the strength of the company, was the investments done for the future, to have a strong continued commitment to innovation and to R;D. HP is now considered as one of the few systems companies left on the planet that makes a significant investment in R;D.
What type of Culture is introduced by Hurd in HP?
Hewlett-Packard believes in some shared values to develop its culture: Always putting customer’s first, developing trust and respect between individuals, striving for excellence, team work, Innovation and adaptable and achieve results faster than competitors.
Hewlett-Packard’s culture is based on 1) respect for others, 2) a sense of community, and 3) plain hard work. Mark Hurds main aim is to turn around the performance and sales culture at HP. It has been developed and maintained through extensive training of managers and employees. HP’s growth and success over the years has been due in large part to its culture. Hurd keeps his focus on results. “I believe in an execution-oriented culture,” said in one of his speeches at Forrester’s IT Forum.
His management style reflects a fundamental belief in cost discipline and is focused on investment in strategic growth initiatives. To help achieve goals, Hurd believes in making commitment to customers and customers becoming committed to HP, as he considers loyalty a two-way street, and all tend to be loyal to those who are loyal.
The company has its focus on three strategic levers: 1) Growth 2) Cost 3) Efficiency, and also keeping in mind to align both financial and human capitals to perform major tasks: Growing the company in the best way, in the right segments with the right approach. All is required to deliver an impressive performance and to generate the required revenue, advanced products and services that help in making customers of cost efficient, more energy efficient and more productive global company. Mark Hurd has HP winning “the boring way” — but it beats the heck out of failing the flashy way.
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