I’m fascinated by HP Inc., largely because it shouldn’t have been successful. At the start, it was as if CEO Dion Weisler had been set up to fail. When HP split into HPE and HP Inc., HPE got all the growing businesses and HP Inc. got the declining ones and virtually all of the debt. Yet in its latest quarter, HP Inc. outgrew its competitors, paid off debt, invested in R&D, and is significantly out-executing HPE (and most of its own segment). It reminds me a bit of a video I saw a few weeks ago, where a Lamborghini Aventador was drag racing a Korean SUV. The outcome seemed obvious, but it wasn’t. The SUV won because, under the hood, it had one hell of a well-tuned engine.
We often forget that, in companies, the quality of the people is the engine. The reason HP Inc. is doing so well is that it has one hell of a well-tuned staff. This not only starts at the top but, I think, requires a common threat. In this last, HP Inc.’s disadvantage may have been a big part of its eventual success.
Let me explain.
The Importance of the Team
One of the problems with a lot of big iconic companies is that, internally, competition between employees often seems to be a higher priority than cooperation to accomplish a common goal. I’ve heard, over the years, a number of terms in different firms that seem to justify this, from the relatively benign “constructive confrontation” to a phase that I can’t repeat that speaks to a practice of loving you in public but screwing you when your back it turned.
I once saw two division heads at an analyst meeting on stage nearly come to blows because they hated each other so much. The firm later nearly failed. Competing siloes in IBM were largely responsible for helping Microsoft take the lead in software revenue. Competing siloes in Microsoft significantly contributed to that firm falling off against Google and Apple. Executive conflicts are what got Steve Jobs fired from Apple back in the 1980s.
When I’m brought in to look at a firm that is failing, as often as not, it is because it’s being destroyed from the inside and, as often as not, the problem starts at the top.
Why Firms Self Destruct
I can blame a lot of this on a practice that came out of GE called “Forced Ranking,” which pits employee against employee for a limited pool of recognition and credit. It was created as a way to cut through an equally bad practice of review by tenure (your promotions and raises were based on tenure and not performance), but it simply swapped one nasty problem with another that was worse.
Employees should be reviewed and compensated based solely on their contribution to the common good of the company, which should include how much they assist others, and positive individual contributions should be offset by actions against peers that hurt the common good not being rewarded. Yet under Forced Ranking, employees often benefitted from trashing their less aggressive and more team oriented peers.
HP Inc. and the Common Threat
I think what actually helped HP Inc. persevere was the fact that what it was trying to do looked impossible. It was clear right from the start of the formation of the firm that if folks didn’t work together, they were going to lose their jobs. This is Maslow 101: You put folks’ jobs at risk in a credible way but give them a path to save them and you get an incredible focus on working together for the common good. If someone works against this effort, you get a real focused effort to get rid of them.
This kind of common crisis can create a rather impressive esprit de corps and you can see it in HP Inc. You don’t see the typical backstabbing off the record or snarky comments about executives that are common in most firms; the people at HP Inc. are like family. Or more like a military team that has come back from a suicide mission than the more common reality show-like mess that seems to define many firms.
And, you know, if you have a team that is honed like that, there are few things you can’t do. Flipping PCs and Printers from decline into growth is a clear showcase of the related benefits. It does bring into doubt this whole “PCs and Printers are declining” meme, though. Tablets were at the heart of both predictions, but tablets themselves are in decline, suggesting that past declines were more the result of poor investments in demand generation than any unstoppable market trend. In effect, it is possible both dire predictions may have been self-caused and HP Inc.’s performance founds this opinion.
Wrapping Up: HPE vs. HP Inc.
At the beginning of the split, it seemed that HPE could only win and HP Inc. could only lose because that was how the game seemed to be rigged. But I think the combination of this common problem and a far better skilled and focused executive team has resulted in not only a firm that is doing well but a lesson in executive management that we shouldn’t forget.
If you can get everyone focused on a common goal, and you have good people, then what is impossible becomes fluid and amazing things result. Steve Jobs did this when he returned to Apple. John Chen is doing this at BlackBerry. Dion Weisler has apparently done this at HP Inc. That company again reminds us that we often forget the value of a well-honed and focused team. And we really shouldn’t.
Rob Enderle is President and Principal Analyst of the Enderle Group, a forward-looking emerging technology advisory firm. With over 30 years’ experience in emerging technologies, he has provided regional and global companies with guidance in how to better target customer needs; create new business opportunities; anticipate technology changes; select vendors and products; and present their products in the best possible light. Rob covers the technology industry broadly. Before founding the Enderle Group, Rob was the Senior Research Fellow for Forrester Research and the Giga Information Group, and held senior positions at IBM and ROLM. Follow Rob on Twitter @enderle, on Facebook and on Google+