Given what you said about HP's "Byzantine" internal policies, vis-a-vis
part's ordering, this guy calls it "Kafkaesque":
 
http://www.windsorwealth.com/dongle.html
 

Tracy Johnson
MSI Schaevitz Sensors 

 

James B. Byrne said:


Core Issue: 
Q. What is the track record of companies that outlive their founders? 

A. Not Good. 

The average life expectancy of a multinational corporation-Fortune 500 or its equivalent-is between 40 and 50 years. This figure is based on most surveys of corporate births and deaths. A full one-third of the companies listed in the 1970 Fortune 500, for instance, had vanished by 1983-acquired, merged, or broken to pieces.


http://www.businessweek.com/chapter/degeus.htm


In 1981 I read a very similar piece in Forbes Magazine which showed that of the Fortune 500 companies of 1951 fully 50% no longer existed in any form (they were not subsidiaries or parts of conglomerates, they had completely ceased to function), over 25% no longer existed as independent entities and less than 10% were still on the fortune 500 list. Basically, 75% of the Fortune 500 of 1951 had disappeared in 30 years. 

What we are we witnessing with HP is the process of dissolution that comes from a loss of direction and focus and which apparently is quite a common thing. A loss of direction is not new at HP. It has been evident from time-to-time since the mid-eighties and far more frequently since the early 90s. However, the effects may have become more pronounced as the technology sector has matured and profit margins have shrunk. 

The problem of focus, or lack thereof, may also have been exacerbated by a failure on the part of those who succeeded to B+D to share their vision or to appreciate the social aspects of HP which made it a unique place to work for and with. However this supposition is unprovable and remains a speculation on my part. None-the-less, I believe that much that is ill with HP was present a long time ago and that the negative effects of the underlying problems were disguised by the revolution in computing wrought by the IBM-PC, the laser printer, and latterly the Internet. Now that two of these three income streams have slowed the lack of a viable business strategy at HP is becoming more and more evident. 

In my opinion HP's fundamental problem was exposed in CSY's announcement to this list, they just don't know who their customers are. HP has been notorious for decades for its Byzantine internal policies and ordering procedures. When individual sales were for equipment valued in the hundreds of thousands or millions of dollars then we could all afford to laugh and HP could afford to continue to impose their view of the world on the purchasers of their equipment. The margins were wide enough to support this type of nonsense, and to support the legions of people needed to overcome the bad impression that this procedural nightmare of HP's making made on prospective clients. 

The world changed however, and HP's method of dealing with that change was not to evolve and adapt but rather to cocoon itself from reality by excluding larger and larger numbers of purchasers of their equipment from that privileged group of entities that HP choose to dignify with the title customer. By restricting customers to those with budgets over a specific threshold HP was able to limit the internal impact of changes occurring in the outside world (for a time), but in so doing it cut its own throat. 

HP's problem is a lot deeper than its failure to promote the HP3000, or its ill- founded dependency on a single line of consumer products to generate profits, or its debasement of its reputation for high quality products. HP simply does not understand that the end user of their product is their only customer and that everyone, including independent resellers of used equipment, between the point of use of their product and their factory floor is just a part of their distribution chain and nothing else. If HP does not wake up to this fact and radically overhaul its internal approach to its real clients then whatever else they do it will only be a matter of time before the collapse comes. 

The off-the-cuff response of Walter Hewlett as reported in CNN is unfortunate in that his inability to articulate a strong counter-argument to the decision of the HP board will inevitably weaken the position of the opposition. It would have been better to have said nothing, or at least point out that it is unreasonable that he must come up with an new alternative himself. It would have been far more telling to say that sensible corporate governors do not 'bet the company' that they are responsible for on anything and that 25 billion dollar gambles shouldn't be made with other people's money. I am very much afraid that his ill-advised statement will prove fatal to the cause of the opposition since now we can expect a descent into meaningless quibbles over the unworkablity of a hypothetical alternative at the expense of hard-headed look at what will most likely actually happen if the merger proceeds. 

Regards, 
Jim 
---     e-mail is NOT a secure channel 

James B. Byrne                mailto:[log in to unmask]

Harte & Lyne Limited          http://www.harte-lyne.ca

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