This case analysis examines the organizational challenges faced by Hewlett-Packard as it attempted to institutionalize structural change across several decades. The paper identifies two core problems: difficulty managing change in a dynamic market environment and poor internal cooperation between computer divisions. Drawing on Fiedler's Contingency Model, the analysis evaluates how leadership styles, task structure, and position power contributed to HP's operational difficulties — most notably during Carly Fiorina's tenure as CEO. The paper also critiques the "HP Way" as a well-intentioned but ill-defined cultural framework that hindered adaptation. Both short-term and long-term recommendations are offered, centered on improving communication, realigning reward systems, and clarifying corporate culture.
In any company, change is a difficult process. Stress levels rise, and communications may result in conflict rather than solutions. For Hewlett-Packard, change has been a necessary part of organizational operations. However, the way in which these changes were implemented proved somewhat ineffective when viewed in terms of the business requirements of its product lines. This document outlines specific problems such as division cooperation, corporate culture, and management issues. A consideration of these problems is followed by a description of relevant theories and frameworks, and concluded with a summary offering short- and long-term solutions.
There are two major issues at the root of the problems described by the Hewlett-Packard case study. First, the company appears to struggle with implementing effective change in a continually evolving environment. Second, there is significant difficulty in internal cooperation between computer divisions. At first glance, the difficulty of handling change effectively seems somewhat unusual, as the company had successfully implemented major changes for decades. In any event, these problems give rise to a number of additional issues the company must address.
Specifically, the case describes the root of HP's current structure: the "HP Way." This is a cultural element that places emphasis on the importance of individual performance, and it is also the reason for the difficulty in cooperating and coordinating across divisions. The management style has provided little incentive for different divisions to work together. The company has historically operated on the basis of separate divisions serving distinct niche markets, with each division creating its own innovations and competing with others rather than cooperating. While managers have tried to encourage cross-divisional cooperation, little has been done to replace the individual performance incentive with meaningful encouragement to operate cooperatively.
Another problem related to the HP Way is that it is a vague and ill-defined concept within the company. While it is intended to unite and strengthen employees' relationships with each other and their organization, the HP Way in fact hinders the implementation of structural change. The concept is an icon within the company's culture and, as such, continues to serve as the basis of operations even when it has outlived its practical usefulness. Because it is so ill-defined, the HP Way is itself resistant to necessary change, as the case study makes clear.
The case describes the changing electronics market that prompted a wide-scale structural change at the company during 1982. The decision to enter the computer market required that HP's structure change fundamentally. Whereas separate divisions had worked well for the small electronic instrument market, the computer market required greater cooperation, as products needed to coordinate and complement one another. To achieve this, HP restructured to incorporate two major groups of divisions — one for instruments and one for computers — and centralized the components of research, marketing, and manufacturing. However, the lack of coordination between the still-existing divisions resulted in problems: products designed to interface with each other often did not. This lack of coordination between divisions manifested directly in their products.
Ironically, the attempt to solve this problem resulted in further fragmentation, in the form of decision-making committees. These multiplied far beyond the number of decisions they were actually useful for, hindering rather than helping the company's processes and products. In keeping with the HP Way's promotion of egalitarianism and consensus, reaching agreement among the many different divisions could sometimes take months. This heavily impacted profitability and turnaround time for both new and existing products. John Young, the CEO at the time, recognized the problem and reorganized the company again in order to better balance the HP Way with internal divisional cooperation.
"Fiorina's autocratic style clashed with HP culture"
"Fiedler's model applied to HP's leadership problems"
"Short- and long-term solutions for HP restructuring"
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