HP-Ppt 30 Jan 2012 (Final)

TRANSFORMATION LEADERSHIP AT HP

Arab Academy Graduate School of Business (AAGSB), Master of Business Administration program (MBA),

Presented to:Dr. Ahmed Farouk

By: Omar Shams, Ehab Shafei,Walid Sobhy, Ahmed Abdo,

Yasser SalehJanuary 30, 2012

OBJECTIVE

Understanding the nature of transformation

leadership and its Role in HP Corp.By:

1) Exploring the HP Corp. Background.

2) Exploring the Role of the transformation leader (Carly Fiorina) in forming the New HP Corp.

3) Discussing the different stages of the transformation process and HR challenges.

HEWLETT PACKARD (HP)

An American information technology corporation headquartered in California.

One of the world's largest information technology companies.

Specializes in developing and manufacturing (personal computing devices, data storage devices enterprise servers, printers and other imaging products as well as networking hardware and designing software).

HEWLETT PACKARD (HP)

Vision : Future is Worldwide,

connected, continuous, secure computing through automated data centers,

Power of digital technology in low-power, low-cost, lightweight that it could display multimedia information in formats as small as a watch or as large as wallpaper

Mission: Profit Employee

commitment Growth Field of Interest Customer loyalty Market

leadership Global citizenship

HP: MAJOR DATES 1935: Bill Hewlett & Dave Packard

graduated from Stanford University. 1939: Bill and Dave established HP

with capital of US$538. 1947: HP was incorporated. 1957: HP shares went on public. 1958: HP created Dymec company,

to specialize in digital equipment. 1961: HP purchases the Sanborn

Company.

1963: HP partnered with Sony and the Yokogawa companies.

1966: HP Laboratories is formed, which become Agilent Labs splitted in 1999 taking all computer business.

1985: Company establishes first high-tech joint venture in China.

1986: "the HP.com domain“ was opened to help marketing their computers.

1989: HP purchases Apollo Computer for US $476 million.

HP: MAJOR DATES

1995: HP purchased Convex Computer. HP launches the Pavilion line of home computers in China.

2002: HP and Compaq merged on May 3, 2002; HPQ is unveiled as new stock ticker for combined company.

HP: MAJOR DATES

HP: FOUNDERS & CO’S

John Young: (77-92) 15 years

Lewis Platt: (92-99) 7 years

Carly Fiorina: (99-05) 6 years

Mark Hurd: (05-10) 5 years

Leo Apotheker: (10-11) 1 year

Meg Whitman: (11-12) Current

David Packard

(Chairman 1964-1996)

Bill Hewlett

(President 1964-2001)

HP’S: REVENUES

1960 1965 1970 1980 1985 1990 1994 1997 1999 2002 20110

20

40

60

80

100

120

140

160

180

200

220

240

0.03 0.165 0.365 3 6.5 13.225

42.9

80.1

145

233

Revnue ($P)

HP’S: WORKFORCE

1960 1965 1970 1980 1985 1990 1994 1997 1999 2002 20110

50,000

100,000

150,000

200,000

250,000

300,000

350,000

1,778 9,00016,000

57,000

85,00091,500109,700

121,900

179,200

290,516

325,000

Workforce

Diversity policies Equal opportunities and

Nondiscrimination

HP Workforce

HP Workforce

HP WAY: 20 YRS EXP.Fundamental Precepts1. Contribution2. Superior Performance &

Profitable Growth3. Responsibility to the

communities4. Integrity and period5. Best results come when you

get the right people, trust them, give them freedom to find the best path to achieve objectives, and let them share in the rewards

HP WAY: HR PRACTICES MBO, innovative thinking = higher

productivity Decentralized Decision-Making Reassignment, creating loyal work force Careful Screening Management was part of the team Trust Problem solving teams insure information

flows Job Rotation = Multi-tasking Flexibility, better communication Training in problem solving, team skills Group Incentive Pay small groups is

effective

HP WAY: HR PRACTICES

Results: Innovative HR system: 6.7% higher productivity High teamwork: 3.2% higher productivity High communication: 1.4% higher productivity

This mean higher profits with innovative HR

HP WAY: HR PRACTICESCompared to Traditional HR Practices:

Wage tied to performance appraisal Narrowly defined jobs Limited screening “non-managerial

jobs” Tight supervision Little training Layoffs in hard times

HP: SIGNIFICANT TRANSFORMATION There Are Several Stages And Things

That Happened At Hp Over The Years. But The Most Significant One Was: “The Merger With Compaq” That

Happened During 2001-2002.

Carly Fiorina: Mike Capellas:

C.E.O. of HP C.E.O. of Compaq

PRE-MERGER: HP-COMPAQ POSITIONS HP, the second largest computer

company behind IBM

High end server market was dominated by IBM, HP struggling to keep up HP was number 3, with Dell being the market leader and Compaq no.2.

Both HP and Compaq were struggling companies HP alone could not compete with Dell in the Low-cost, high volume PC market.

Compaq wanted to achieve expertise in High end UNIX servers.

PRE-MERGER: (CONT…) HP-COMPAQ POSITIONS

The company lost more money in the three years following the merger than in its entire previous history: more than $2 billion by the end of 2000.

Compaq also lost its position as America’s leading PC maker, having been passed by both Dell and HP in the retail market.

PRE-MERGER: (CONT…) HP-COMPAQ POSITIONS

PRE-MERGER: STATISTICS

HP’S: FALLING STOCK PRICES

As a result, HP was forced to cut jobs and also to ask employees to take unpaid leave, in 2000.

By September 2001, HP’s stock value had fallen to less than half of its level.

HP’S: STOCK VALUE

HP-COMPAQ: MERGER DATES

September 4, 2001 - HP and Compaq announced a definitive merger agreement to create an $87 billion global technology leader.

Eights months later on May 3, 2002 HP and Compaq officially merge.

HP’S CARLY FIORINA: HP’S CEO AND LEADER

Fiorina the CEO of HP.Fiorina the Transformation

leader of HP.

CARLY FIORINA: THE HP’S CEO

Following an intensive search that involved lengthy interviews and a 900 question psychological test, Fiorina was hired as the CEO.

Carly Fiorina has a silver tongue and an iron will.

Fiorina not only brings leadership to HP but also savvy marketing and sales techniques.

Fiorina also understands that what customers need is not always what they ask for.

She also shares five lessons she has learned: Leaders create something new Don’t fall in love with your product Competition requires risk-taking Ethics matter The 21st century is about brainpower

CARLY FIORINA: THE HP’S CEO

CARLY FIORINA: LEADERSHIP PROFILE Networker

Carly Fiorina is a brilliant networker. She is good at meeting people and making a positive initial impression.

Analytical Thinker Carly Fiorina's strength lies in selling ideas. She is not

good at breaking ideas down and looking at their pluses and minuses.

Charisma Carly Fiorina is known for her charisma. She has a

magnetic personality and is an electric speaker. Relationship Builder

Carly Fiorina's strength lies in forming short-term relationships that are created by networking rather than long-term relationships that are built over time.

CARLY FIORINA: THE TRANSFORMATION LEADER

Fiorina and her executive team countered Hewlett’s and other shareholders objections with five key points:

1. Information technology industry rapid change and changes of new environment.

2. Comprehensive benefits and opportunities from Compaq merger.

CARLY FIORINA: (CONT…) THE TRANSFORMATION LEADER3. Combination addresses industry dynamics and

customer requirements, creates stronger company and is financially compelling.

4. Management is experienced and focused on execution, and integration planning is ahead of schedule.

5. Walter Hewlett filings (filings against merging) are based on a static and narrow view of HP and the industry, selectively ignore synergies, offer no alternatives and rely on faulty financial assumptions and analyses.

While pursuing the shareholder approval of its merger, HP management issued several projections of anticipated growth for the various segments of the resulting combined company.

CARLY FIORINA: (CONT…) THE TRANSFORMATION LEADER

CARLY FIORINA: (CONT…) THE TRANSFORMATION LEADER

MERGING PROCESS: IT ALL STARTS WITH PEOPLE

The Main Objective: Creating Integration Process.

By Performing Culture Due diligence. Appointing Integration Leaders.

CREATING THE INTEGRATION PROCESS

In deciding to acquire Compaq, HP would create a company with $80 billion, with over 155,000 employees with a presence in 178 countries.

Managing this change Needs “massive inspection and discipline,” (Fiorina )

“I used the phrase: ‘We will over gun this, not under gun it.’

DUE DILIGENCE: ASSESSING THE CULTURAL DIFFERENCES

Due diligence is a term borrowed from the financial due diligence is a part of any merger or integration Process.

HP-Compaq Cultural Due Diligence is the process which analyzes key cultural domains that includes: Leadership and management practices, Styles, and relationships, Formal Procedures, Informal practices, Employee satisfaction, Organizational characteristics,

DUE DILIGENCE: ASSESSING THE CULTURAL DIFFERENCES

DUE DILIGENCE: ASSESSING THE CULTURAL DIFFERENCES

DUE DILIGENCE: HARMONIZING 4-FACTORS

Source: HP AND COMPAQ COMBINED IN SEARCH OF SCALE AND SCOPE: http://www.cendix.com/downloads/education/HP%20Compaq.pdf

CULTURE DUE DILIGENCE: FAST START PROCESS To liven up the core values of new hp, they

developed: Fast Start. Two day business meeting for intact teams

designed to speed execution excellence. Fast start provides the structure and content

of every team’s first staff meeting. It was designed to:

1. Provide directions and roles so that people can execute effectively in the new company,

2. Engage managers and their teams in taking action to assure successful integration.

CULTURE DUE DILIGENCE: FAST START PROCESS (CONT…)

INTEGRATION LEADERS:APPOINTMENT Fiorina and Capellas (CEO of Compaq) each

selected an executive from their respective companies to co-lead the integration effort.

Fiorina chose Harry McKinney (a longtime HP veteran who ran worldwide sales and marketing for enterprise accounts).

Capellas selected Jeff Clarke (Compaq’s CFO), at that time Compaq's chief financial officer.

INTEGRATION LEADERS:APPOINTMENT (CONT…)

THE WORKING OF THE CLEAN TEAMS McKinney and Clarke assembled a 30

person integration team and set out to create and execute a plan to blend a single company out of two longtime rivals.

Clarke and McKinney’s team had grown to 500 members; by March 2002, it numbered >900.

The group grew to 2,500 members.

It became known as the “Clean Team”.

THE WORKING OF THE CLEAN TEAM: THE TEAM TASKS

Adopt-and-Go,Launch-and-Learn,Launch the Moose,Watch out for Icebergs,

THE WORKING OF THE CLEAN TEAMS: WATCH OUT THE ICEBERGS

Source: HP AND COMPAQ COMBINED IN SEARCH OF SCALE AND SCOPE: http://www.cendix.com/downloads/education/HP%20Compaq.pdf

MEETING WITH STEERING COMMITTEE

Source: HP AND COMPAQ COMBINED IN SEARCH OF SCALE AND SCOPE: http://www.cendix.com/downloads/education/HP%20Compaq.pdf

POST-MERGER:

The company’s top and senior executives seemed to feel that the organizational integration of HP and Compaq had been a success.

Within a few weeks after the merger date they were already operational with all the accounts.

All retailers and consumer partners knew the new HP structure, they knew the product roadmap.

the consumer business has stayed strong.

POST-MERGER: THE NEW HP (CONT…)

The merger called for a consolidation of HP’s and Compaq’s product lines into four major operating groups: services, imaging and printing, access devices, and information technology infrastructure.

POST-MERGER: THE NEW HP (CONT…)

Merger Integration Team Size: 1200.

Both companies are in similar businesses: Combine Product road maps.

They don't need two Unix or NT development teams15,000 Jobs Eliminated (HP:6000 , Compaq: 8500).

Achieving the integration tied to peoples compensation packages.

Achieved merger-related cost savings of more than $1.3B annually.

Restructured direct material procurement to save $450M annually.

Consolidated multiple mfg sites achieving $120M in annualized savings.

Achieved manufacturing savings of $200M annually.

Realized logistics savings of $100M+ annually.

POST-MERGER: THE NEW HP: OPERATING EFFICIENCY

POST-MERGER: THE NEW HP: OPERATING EFFICIENCY

HP Stock Price Movement after the Merging

POST-MERGER: THE NEW HP (CONT…)

The challenge HR faced was ensuring the best aspects of both companies were incorporated into a single new company culture focused on achieving business goals.

The strategy for managing cultural change mirrored HP’s proven change management way, with specific HR initiatives and programs tied to the five stages in management of change (MOC):

1. Awareness.2. Coping.3. Internalize and align.4. Execute. 5.Reinforce and arrive

HP-COMPAQ MERGER: THE CHALLENGE FOR HR

FIVE STAGES OF CHANGE MANAGEMENT

STAGE ONE: AWARENESS

 Awareness Define/clarify the end state Develop the steps to achieve this goal

Based on: ongoing communications and open, honest dialogue.

strategy help HP employees understand how their work contributes.

Awareness helped to speed up and smooth the process of change.

STAGE 2&3: INTERNALIZE AND ALIGN Coping

Overcome resistance

How? By Stabilizing and harmonizing two different

plans, two different sets of practices, policies and procedures from two separate companies, multiplied by the 54 countries where they do business.

By delivering an integrated set of HR plans, policies, practices and procedures.

STAGE 2&3: INTERNALIZE AND ALIGN Alignment of HP’s strategies and individual

objectives enables effective execution of those strategies and better understanding of how individual employees contribute to the business success.

How? the key criteria of the employee selection process

which is people’s capability and performance related to the business strategy as well as people’s understanding of company culture.

STAGE FOUR: EXECUTE: CREATING A HIGH PERFORMANCE WORKPLACE

HR continued to play a vital role in helping HP to deliver on its merger promises.

STAGE FOUR: EXECUTE (CONT…) The High Performance Workplace Program:

New ways of motivate, review and reward in order to align Employees performance and personal objectives to the overall business strategy.

Drive change throughout the organization and to accomplish behavioural change swiftly and comprehensively using reward as the motivator.

providing managers standard training programme, online tutorials and e-learning training.

STAGE FOUR: EXECUTE : HIGH PERFORMANCE MODEL

balanced scorecard, HP values and supporting behaviors

STAGE FIVE: REINFORCEMENT & ARRIVAL Reinforcing the employees day by day

desired behaviors Through

setting expectations, holding employees accountable and

responsible, providing the tools and resources that leaders

and teams need to drive these changes through the organization, and

actively promoting and rewarding positive examples

Thank You For Your attention