‘Re-invented’ HP appoints top execs

Has Hewlett-Packard, the big-horse, no-rider company, made a strategic error in its self-inflicted surgery, or "re-invention" as HP likes to call it? The evidence is that people work better in smaller units, and 122,800 employees is too great for one organisation in such a fast-moving sector. But there seems to be three things wrong with the move to split into two separate companies for computing and what it grandly calls imaging (printers to you and me), and the measurement side (where HP had its origins). First, the split should have been into three independent units: computers, printers and measurement instruments. HP seems to have allowed its own perception of what goes together to blind it to the perception of its customers. Second, it is reported that the instruments company will adopt a new name, as yet undecided, and effectively throw away its brand name, which seems silly, just to be able to float 15 per cent of the company in the middle of next year. Existing shareholders will get new shares in both companies. The measurement side generated only (only!) $7.1 billion of HP's $47.1 billion revenue, so the split is very uneven anyway. Yesterday, HP announced some staff juggling, with the elevation of four executives, each to be president and CEO of the four remaining HP businesses. This could be the company's third mistake, since it is hard to see how these chiefs, who are given a great deal of autonomy, can easily be effectively ruled over by a paramount chief who will not be in post until probably the middle of next year. Ann Livermore will head what is being called the "enterprise computing solutions" unit. Her 17-year HP career has mostly been in sales and marketing, and she is being tipped as the potential paramount chief. Duane Zitzner, who has a software and hardware background and has been at HP for ten years, will run the computer products unit. Antonio Perez will head the inkjet unit, and Carolyn Ticknor the LaserJet side. The logic of splitting the printer side into two is hard to follow: to the punters, printers are printers, and the business needs one supreme leader and two operating officers. Some functions will remain central: intellectual property, corporate governance, and HP labs. HP seems to have overlooked that it will be hard for it to establish credibility for this new team and a new paramount chief. Since the new execs are in effect COOs (or even presidents) with budgetary control, it might have been better to have spared them the additional titles. It does look absurd when one hard-pressed person undertakes seemingly two or three jobs (many CEO/presidents are also chairman of course, as we chided Scott McNealy of Sun in our recent exclusive interview -- see below). The importance of the forthcoming paramount CEO is diminished by the superabundance of lower-level CEOs. Lewis Platt, the present 57-year old paramount chief, said he will stay on the job until this transformation is complete. He insisted yesterday that "the core values that comprise the HP way will remain central", which to many observers implies a continuing, slow-moving and rather unprofitable behemoth. He seemed to realise this, since he added "we simply must move faster and more decisively if we are to meet customers' needs and maximise shareholder value". HP has admitted that its reorganisation will not help the near-term bottom line, but this posse of meritocrats that has just been appointed is no substitute for a charismatic sheriff to ride the big horse. ® See also Interview with Scott McNealy Part One, Part Two, Part Three and Part Four