HP and the “Never Give Up” Rule

    This week HP had their “Power of Print” event, and I was reminded of what makes HP, the company that was designed to fail, so successful. Every company that has been around for a long time will face industry changes where it has a hard choice. Most often than not, when it looks like the industry is moving away from where the company is, the right choice is seeing the trend and then starting to migrate to an industry where there is growth and away from the industry dropping into decline. The exception to this rule is when you are a significant player, dominant in the segment, or can find a way, if you are smaller, to focus and differentiate on the part of the market that sustains.

    Let’s take horseback riding, for example. It once was the predominant way to get around in the U.S. It’s been a hundred years since that was the case, yet you can still make money selling saddles and horse gear for those that compete or ride recreationally; it required a shift to focus on recreational or competitive riders.

    It is a similar situation for smaller firms looking to sustain and maybe increase revenues while the major players exit the segment. There are two significant examples for large companies —IBM with the mainframe and HP with printers — that showcase how to both deal and not deal with this problem.

    This week, let’s chat about how HP could turn printers into a substantial profitable success in a market in decline. At the same time, how IBM almost went under trying a premature pivot to a new market. I call this the “Never Give Up” rule, and it is worth exploring.

    Maintaining Perspective

    HP was successful in its effort because it didn’t panic, while IBM almost lost its most profitable computing line because it did. I was working at IBM at the time, and it was fascinating to watch.  Back in the 1980s, IBM was severely hampered because it was an employment-for-life company like many of its peers. Without a regular influx of external employees and a massive level of dominance and client control, it didn’t see the threat.

    I wrote one of the papers on why IBM nearly failed and was recognized internally for the effort. IBM panicked when they saw both Apple and Sun Microsystems emerge and it tried to become those smaller companies with disastrous results. Ironically, had the company remembered the one piece of advice their most famous CEO, Thomas Watson Jr., had left behind, they likely would have been fine. That advice was, “never change who you are but be willing to change everything else.”

    In contrast, HP was pretty much designed to fail. Former president and CEO, Meg Whitman split the company off with most of the debt and declining two industries. HP started life in crisis, and that turned out to be an advantage. For IBM they went, almost overnight, from being the most well-regarded company in tech to being the only firm in tech with negative brand equity (this was the first time I’d seen this, which means a customer will pay more for a non-branded product than one with your brand on it).

    To say IBM was blindsided is an understatement. Still, HP knew they were in a world of hurt. Instead of trying to be something else, they realized that even though they seemed to be in two declining industries, PCs and printers, everyone else was cutting resources to those segments. If HP didn’t cut, they could gain share and offset those declines until and unless those declines reversed.

    PCs eventually recovered, and with the pandemic they returned to become part of a viable growth market. Printing continued to decline in general, but some parts did not. 3D printing is emerging, box and packaging printing is growing with no end in sight, and people continue to want to print at home, particularly now that their homes have become their offices.

    While IBM initially panicked (later management reversed this effort and mainframes remain a powerful part of IBM’s portfolio today), HP did not. They took who they were and used that to open new adjacent markets like personal photo printers and 3D printing. HP also expanded into areas like packaging and lower cost industrial printers, which in a declining market, would become more attractive to buyers in the print business trying to contain costs. The company even found ways to move printing technology into the medical market in testing and has showcased massive productivity improvements during these critical pandemic times when such improvements are precious.

    I expect as we move into areas like printed food, we’ll find HP there as well. Instead of being a company in a death spiral, they are a firm with an impressive number of future possibilities resulting from keeping their eye on the ball.

    When Markets Change

    We will be going through one of the most significant economic and business changes that have ever occurred on this planet this century. Robotics, flying cars, autonomous machines and vehicles, new ways of communicating and collaborating, new and innovative ways to explore the world around us, even the chance of going to Mars are all on our relatively near-term horizon.

    The questions you should be asking or reaffirming are:

    • Who are you as a company?
    • Who do you serve?
    • What parts of what you do remain relevant and which parts do not?
    • Where do you need to be a company, or an employee, in 5 to 10 years?

    The goal is to  figure out how to benefit from these coming changes as opposed to getting buried by them.

    PCs and digital assistants will evolve into cloud-connected devices and robots. Cars will evolve into horizontal robotic elevators, which you may no longer own. Travel likely will become more virtual (with COVID mutations, the likelihood we will go back to the old normal is declining sharply). And, unless you evolve, what you are now selling may not sell tomorrow.

    HP has provided a template on how to survive these changes by finding ways to remain relevant. In effect, they never gave up, and if you learn from their example, you shouldn’t either when you are faced with the hard decisions connected to massive market changes. When faced with your challenge, remember the “Never Give Up” rule that HP appeared to use.  And, also remember Thomas Watson’s advice to be willing to change everything but who you are as a company and maybe, who you are as an employee as well.  

    Rob Enderle
    Rob Enderle
    As President and Principal Analyst of the Enderle Group, Rob provides regional and global companies with guidance in how to create credible dialogue with the market, target customer needs, create new business opportunities, anticipate technology changes, select vendors and products, and practice zero dollar marketing. For over 20 years Rob has worked for and with companies like Microsoft, HP, IBM, Dell, Toshiba, Gateway, Sony, USAA, Texas Instruments, AMD, Intel, Credit Suisse First Boston, ROLM, and Siemens.

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