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Group A8 – DWO – WMP Term 2 – IIM Lucknow Noida Campus
Organizational Separation & Igniting Organizational transformation of Hewlett Packard
Group A8 – DWO – WMP Term 2 – IIM Lucknow Noida Campus
Background – Internal & External Challenges
Restructuring – Transformation - Separation
Key Advantages
HP Enterprise Group
HP Enterprise Ignite Program
Agenda
Reflections and Future Steps
Group A8 – DWO – WMP Term 2 – IIM Lucknow Noida Campus
BackgroundInternal & External Challenges
A
B
C F
E
DRevenues and profit pools for most profitable businesses were declining
HP’s portfolio was heavily weighted towards low growth assets
Portfolio Mix
HP was facing a number of execution challenges – lack of competitive focus, sub-optimized GTM, complex partner programs, under-investment in R&D and culture
Execution Challenges
HP had high cost structure relative to revenue performance
Technology industry was experiencing a tectonic shift driven by a number of factors including explosion in data, shift to cloud, rise of social and mobile and associated security risks
Changes in IT Industry
Revenue & Profit Pools
Group A8 – DWO – WMP Term 2 – IIM Lucknow Noida Campus
Compelling Rationale for SeparationSeparation will accelerate the turnaround
OperationalStrategic
Sharper, stronger, more focused companies
Drive more customer intimacy
Better able to compete against a distinct set of
competitors
Faster to respond to changing customer
requirements and market dynamics
Improves alignment between rewards and
results
Simplifies organizational structures to make
decisions faster
Financial
Optimize the financial profiles of each
company to enable distinct investment and
growth opportunities
Enhance capital allocation to R & D and
M& A each company needed. efficiency and
investor clarity on future cash flow use
Group A8 – DWO – WMP Term 2 – IIM Lucknow Noida Campus
Transformational JourneyIn FY12 HP Launched its five year transformation journey
Diagnosis & Foundation
FY 2012
Fix & Rebuild
FY 2013
Recovery & Expansion
FY 2014
Acceleration
FY 2015
Industry Leading
Company
FY 2016
Group A8 – DWO – WMP Term 2 – IIM Lucknow Noida Campus
Confidence
Improved credibility with customers, investors, and
employees
Enhanced channel relationships with industry leading programs
and tools
Inspired workforce and management teams
Position of Strength
Rebuilt financial foundation – stronger balance sheet, predictable performance
Right leadership team
Very strong innovation pipeline
Speed of Market Transition
Accelerating technology transitions require agility to respond to evolving market
conditions and customer demands
Increasingly competitive markets necessitate
concentrated and distinctive responses for each of the new
companies
Right Time!After three years of work, HP was in a position of strength in 2014
Group A8 – DWO – WMP Term 2 – IIM Lucknow Noida Campus
In early 2015 HP was in the middle of a five-year turnaround effort, and in October 2014 the company had announced it was splitting the $111 billion, 75-year old
company into two independent, publicly traded companies.
Hewlett-Packard Enterprise HP Inc.
Separation StrategyHP to separate into two new industry-leading public
companies
Defining the next generation of technology infrastructure,
software and services for the New Style of IT
Build upon HP’s leading position in servers, storage, networking,
converged systems, services and software as well as the company’s OpenStack Helion cloud platform
Meg Whitman to be President and Chief Executive Officer of Hewlett-
Packard Enterprise; Pat Russo to be Chairman of the Hewlett-Packard
Enterprise board
Leading personal systems and printing company delivering innovation that will empower people to create, interact and
inspire like never before
Strong roadmap into some of the most exciting new technologies like 3D
printing and new computing experiences
Dion Weisler to be President and Chief Executive Officer of HP Inc.; Meg
Whitman to be Chairman of the HP Inc. board
Group A8 – DWO – WMP Term 2 – IIM Lucknow Noida Campus
“The market is changing tremendously, and the separation is important to give us the ability to be nimble and make faster
decisions. HP was not a company that was recognized for making quick decisions in the past but we are changing that. We have all the assets and the elements to deliver against
what the customer needs, but we have not been good about putting it together in a way that the customer can always see
the full value of our portfolio.”
Antonio NeriSenior Vice President and General Manager of HP’s Enterprise Group
Group A8 – DWO – WMP Term 2 – IIM Lucknow Noida Campus
Separation Strategy (contd.)
Two new independent publicly traded companies
Revenue Mix
Leadership
Key Markets
Financial Metrics
Enterprise Group 48% Enterprise Services
39% Personal Systems 59% Software 7% Printing 41% Financial Services 6%
Group A8 – DWO – WMP Term 2 – IIM Lucknow Noida Campus
Restructuring UpdateSignificant updates as of Q3 ’14 as the restructuring plan continues
Restructuring plan continuesAs of Q3’14, approximately 36,000 employees had left the company as part of the program
Total plan expected to be higher than previously communicatedEstimated employee reductions were communicated during the Q2’14 earnings announcement at 45,000 to 50,000 with charge, savings and cash payment guidance provided at the low end of the range
Incremental opportunities for reductions have been identified and now anticipate a total of 55,000 reductions, independent of the separation transaction
Charges, savings and cash payments will increase versus previous guidance
Net incremental savings from increasing the headcount reductions to 55,000 are planned to be used in FY15 to fund investment opportunities in R&D and sales
Group A8 – DWO – WMP Term 2 – IIM Lucknow Noida Campus
HP Enterprise GroupDevelopment of capability for designing and driving the execution of
key strategic change initiatives
EG Ignite – Internal Transformation program
Group A8 – DWO – WMP Term 2 – IIM Lucknow Noida Campus
HP Enterprise Group – Business ModelThe Enterprise Group had $6.6B in revenue and $950M in operating profit in
second quarter ending April 2015.
Servers Technology Services Storage Networking Business critical systems
Global Business Units (GBUs) Americas Europe, Middle east & Africa Asia-pacific & Japan
Regional (Sales)
Functional Units
Business operations & transformations
Sales strategy and pricing Sales operations Marketing
Group A8 – DWO – WMP Term 2 – IIM Lucknow Noida Campus
EG IgniteEG Ignite was designed to provide a framework and problem-solving support for
the most critical transformation initiatives
Served as interlock point between different functions, BUs and regions keeping a big picture view of the changes and inter-dependencies
Small central team (10 members)
HP was not known to be a sales & GTM company – Ignite was envisioned to make HPEG competitive and aggressive, going forward
Go-to-market strategy changes
Ignite was to focus on the few critical areas that drove the biggest impact while stopping or de-prioritizing the less important ones, and it operated on the belief that 20 percent of activities drove 80 percent of the results
Focus on impact areas
Ignite is to focus on results and not mere lite-weight project management. It is also supposed to have a meaningful P&L impact with quantifiable results
Quantifiable results
Group A8 – DWO – WMP Term 2 – IIM Lucknow Noida Campus
EG Ignite - Key Initiatives and Framework
EG Ignite had a nine-box operating framework for its strategic initiatives
PRICING STRATEGY
Two-tiered pricing strategy with low cost
Fuel hedging, Point to point flight, faster turnaround time of 15 mins, frequent flights, multitasking of employees
Efficient Operations
Short haul (less than 500 miles), Booking on basis of online ticketing and vending machines
HR STRATEGY
Employee profit sharing, open environment for innovation and creativity, university trainings and recognition, low turnover
EG RegionsAmericas, Europe middle east and Africa, Asia Pacific, Japan
Financial and operational metrics Revenue vs margin Supply chain metrics Ignite Metrics
Delight
Talent Development metrics Employee engagement Performance management Career development
Score card category Sample Metrics
Group A8 – DWO – WMP Term 2 – IIM Lucknow Noida Campus
Human Resources and IgniteHuman Resources cuts across functions and BUs, so tight integration with Ignite
was key to its success and implementation
Integrating the HR performance metrics into Ignite processes helped drive focus and accountability
More formalized performance management structure was created by identifying high performers and reward systems were increased accordingly
Managers were trained in constructive performance discussions to help them identify top and average performers in their teams
A hybrid structure was promoted to augment performance with an aim to drive collaborations and effective development processes
Group A8 – DWO – WMP Term 2 – IIM Lucknow Noida Campus
Branding & Sustained CommunicationManagement of change and communication was the foundation element of the
Ignite
Since inception Ignite tried to engage ~ 50,000 employees on its jour-ney
Engagement
Branded as “Wining the speed, focus and sustainability” to foster sense of connect to Ignite
Aggressive Branding
Content rich website and newsletters were flashed all the time in internal communications
Content Marketing
Ignite communicated with employees through fun animated videos
Regular Communication
Ignite viewed it as important to have a wide range of speakers and content to credibility
Credibility
01.
02.
03.
04.
05.
Group A8 – DWO – WMP Term 2 – IIM Lucknow Noida Campus
Reflections & Future StepsFuture vision and roadmap
The most import question was how long Ignite will continue ?
How to continue to drive strategic initia-tives? One option was for Ignite to change positioning away from “transformation” to “ strategic initia-tives”In future Ignite needed ongoing strong leadership to succeed. This type of role required unique leadership, qualities and experience
In rare instances where line managers did not buy into ignite program, It was important to find out a strategy for handling such situations as they come up in future
Group A8 – DWO – WMP Term 2 – IIM Lucknow Noida Campus