Hewlett-Packard's business strategy and market positioning

¶ … Hurd undertook in order to make his vision happen was with respect to the key personnel. The pre-Hurd Hewlett-Packard had a corporate culture that was not conducive to Hurd's vision. The previous culture had lost sight of the necessity for operating strength, focusing on grand visions and bold strategic moves. Hurd settled the culture down and re-focused it on a simpler operating model.

He brought in some of his own people to help implement this change, including R. Todd Bradley. These individuals were focused on the tasks that Hurd felt were most important, such as improving operations and crunching numbers. The communication style of the company was also changed, such that it focused on directness (Burrows, 2005).

Structurally, Hurd removed the matrix structure that was implemented by the previous management. Matrix structures can be highly effective but are notoriously difficult to implement and Hurd felt that the challenges associated with the matrix structure simply were not worth the benefits they offered. He simplified the operating structure of the company to place more emphasis on direct responsibility (Burrows, 2005).

Hurd's changes had a number of key impacts. The first was that they shifted the focus of the company. Core operations and personal responsibility were emphasized, which made individuals managers accountable when core measures lagged. Hurd shifted the culture towards what was a more traditional HP culture, which was more business-like than under Fiorina, where the company had become a circus. The move towards accountability trickled down throughout the organization as well. Managers became more focused on delivering the expected results, since that is what was rewarded at HP under Hurd (Burrows, 2005).

Each of these elements -- cultural shift, organizational structural change and the installment of a new management team -- served not only to signal the end of the previous era at HP but also to reinforce the organizational traits that Hurd wanted to cultivate. As the result of this, HP began to recover its business, which had been waning for several years previous to Hurd's arrival.

One example of this new culture and attitude in action was at the Technology Solutions Group, the company's server arm. The existing management team was bolstered by the changes that Hurd made. Experienced HP staffers, they responded to the shift back towards a more traditional HP culture. This encouraged the unit to improve performance. The manager, Ann Livermore, was made more accountable personally for the results but took advantage of the opportunity to excel. As a result, the group increased revenues, slashed costs and improved efficiency. Operating earnings increased 50% as a result (Burrows, 2006).

The new organizational structure also helped HP move into the new growth markets. It recognized the opportunities that lay in countries such as China, where growth rates are much higher than in developed nations. The new structure and focus on accountability allowed HP to move aggressively into the Chinese market, taking its products into direct competition with local brands at the country's technology malls (Einhorn, Kharif, Roberts, 2007).

The tactics that HP adopted were congruent with the company's strategy. HP wanted to continue to thrive as a mass market differentiated player. The firm's industries -- PCs, servers and more -- had become commoditized, but HP realized that its brand still had value as a premium product. Part of that recognition has allowed it to move into China, where no-name brands are common and local brands dominate the market. HP realized that its brand was strong enough to enter that market despite the challenges.

HP also realized that the matrix structure was inappropriate for the company. Its businesses rely on innovation and marketing in order for the company to thrive. As a result, the company needs a streamlined organizational structure with direct lines of communication and accountability. This will focus managers on results, including innovation and cost control. The company always had the talent to succeed -- such as Ann Livermore -- but that talent was underutilized. With this talent, the firm's brand and its technology the only thing holding HP back was its strategy and focus. Hurd's moves returned that focus and allowed the company's assets to shine. Dramatic changes were not required, only the unleashing of talent on specific tasks.

It all, it was the combination of all three changes that led to HP's revival. The company's culture had deviated from the culture that had brought it success. As a result, the company benefited from Hurd's return to a more traditional HP culture and old managers began to thrive once more. In addition, the simplified operation structure allowed for better communication flow and accountability. The managers, under the new culture, enjoyed the accountability and responded well to the challenge. The controls that were used were largely numerical. Managers knew what they needed to achieve and were given the freedom to take the necessary steps to make those achievements. Again, this played to Hurd's broad strategy of utilizing the substantial talent at his disposal by focusing that talent on specific objectives and given it the resources it needed to succeed.