With the latest news that Hewlett Packard has dubbed Mark Hurd as its new CEO, I wanted to make you aware of the expertise Professor Todd Zenger, the Robert and Barbara Frick Professor of Business Strategy at Washington University in St. Louis, has on Hewlett Packard’s success and failures over the years. Zenger has had his eye on Hewlett Packard for more than 20 years and his research could shed some light on what Hurd can expect in his new role, why Fiorina blew it and what directon the new CEO should take the company.
In brief, Zenger studied what has happened each time Hewlett Packard reorganized its structure–from centralized to de-centralized control. He concludes that Fiorina ignored the necessity of restructuring once again to a de-centralized structure at this point in the company’s history. Below you’ll find a brief summary that explains Zenger’s perspective on HP’s future strategy in greater detail.
If you have any questions, you can contact me directly by phone (314) 935-5202, pager (314) 559-5585 or via e-mail, sneuman@wustl.edu.
You are also welcome to get in touch with Todd Zenger directly. His e-mail: zenger@wustl.edu, phone: (314) 935-6399
MORE DETAILS OF ZENGER’S OPINION ON HP:
When Mark Herd takes the helm of Hewlett Packard, he might benefit by learning from the company’s history–that’s what Carly Fiorino failed to do had in 2001 when she announced she was going to restructure Hewlett Packard’s operations. She should have contact professor Todd Zenger for advice. Zenger would have told her to take a lesson from the company’s history and be prepared to decentralize operations in the future.
Zenger is the Robert and Barbara Frick Professor of Business Strategy in the Olin School of Business at Washington University in St. Louis. He’s been studying the changes in Hewlett Packard’s organization structure over the past 20 years, as it centralized and de-centralized through the 80s and 90s. He said each reorganization came about when the company let its organizational structure get in the way of the company’s strengths.
“The lifeblood of HP has long been its innovation and products focus.” Said Zenger. “The company has thrived on an entrepreneurial culture that fueled this innovation. However, customers want solutions not merely products.”
Through repeated waves of centralizing and decentralizing, HP has struggled to strike the right balance between a products and a solutions focus, Zenger said. With each episode of centralization, HP made significant strides in refocusing HP around solution provision and solution selling. With each episode of centralization, redundancies were eliminated, compatibility issues were addressed, and effective marketing programs developed However, with each wave of centralization, innovation and new products took a major hit at HP.
“The results of centralization under Fiorina were no different than centralization under Young and Platt.” Zenger says. “However, these CEOs recognized the stifling effects of centralization on innovation and were willing to shift the lever back. Carly refused and lost her job as a result. Hopefully, Hurd will be more flexible.”
Professor Zenger is available for comment on Hewlett Packard’s current upheaval. He can be reached at (314) 935-6399, or via e-mail, zenger@wustl.edu