Organizational principles and best practices

¶ … HP Turnaround as orchestrated by CEO Mark Hurd

Mark Hurd brings a no-nonsense attitude to transforming Hewlett-Packard back to its pre-eminence as a leading provider of high technology products and service, and with the acquisition of Electronic Data Systems (EDS), the largest high technology company in the world today. Mark Hurd's expertise in operations management and a strong reliance on measurable performance is what has infused a strong culture of accountability throughout HP (Burrows, 2005). Mr. Hurd does not rely on broad, sweeping generalizations in analyzing where HP is performing well or where it needs to improve, he is known for his meticulous focus on measurable results over strategic vision (Burrows, 2006). The intent of this analysis is to analyze how Mark Hurd has successfully transformed HP's culture from one that was confused and often lacking in goals to one galvanized and marked by its clear lines of accountability (Fortt, 2008).

Redefining the HP Culture to Accountability

HP had over time grown into a vast series of cross-functional teams which rarely pushed accountability for actual results to the forefront of any managers' or division leaders' agenda. Deadlines were often missed as a result and there was much confusion over how the compensation and bonus plan worked (Burrows, 2005). Mark Hurd realized immediately that a matrix team management structure often hid vast inefficiencies as many employees were challenged to just meet the deadlines of one job. Hurd felt the matrix team management structure he had inherited from former CEO Carly Fiorina did not drive accountability far enough into the organizational culture. As a result, his major strategic change to HP was to discontinue that matrix team management structure and instead hold managers accountable for the performance of their individual teams (Fortt, 2008). He also defined specific performance targets for each area of the business, and in so doing realized that the sales force was so disconnected from the other divisions that they would need to also be re-aligned to customers, not technology areas (Veverka, 2007). In doing this he immediately changed the compensation structure for sales and marketing to make their roles of supporting customer needs much more focused and accountable for results (Burrows, 2005).

As these reorganizations were completed and the matrix team management structure was seen as clearly lacking in value, Mark Hurd chose to lay off 15,000 employees in 2005 (Burrows, 2006). This sent a message of performance and measuring results would now be of paramount importance. Mark Hurd even stated that if an employee thought being good at delivering PowerPoint presentations or trying to be ingratiating to him would save an executive job, that this was flawed and wrong thinking (Burrows, 2006). Excellence at the assigned roles and having high accountability for results measured and reported periodically quickly transformed the culture from one that sough to avoid responsibility to one that embraced it.

In conjunction with these decisions to drastically cut back the duplication of positions that were seen once the matrix team management structure was done away with, Mark Hurd looked at how disjointed the internal new product development processes and supporting systems were. Ironically for a computer technology company, Mark Hurd found many of the financial management systems had grown balkanized and separate from each other, with many of them not capable of sharing information and being integrated together (Fortt, 2008). He immediately began programs to gain greater control over these systems and the it processes that had allowed this level of disconnected development to happen over the long-term. Mark Hurd and his team analyzed all it projects and decided that the 85 data centers globally could be trimmed to just six state-of-the-art facilities running HP systems and software solutions (Burrows, 2006). He also found that over 1,200 it projects had been approved and competing for the same development resources. Hiring Randy Mott away from Wal-Mart, a CIO who has rockstar status in the it community to help sort out the systems challenges and problems led to rapid gains in information management strategies and system use as well (Veverka, 2007). Randy Mott was able to trim 784 separate databases to a single data warehouse while also assisting HP to attain their goals of attaining sustainability and green computing (Veverka, 2007). Randy Mott was also able to trim the separate projects, many based on political agendas instead of market needs, down to 500 (Veverka, 2007). Clearly the Mark Hurd way of management was settling in.