Hewlett Packard and The Digital Revolution

Hewlett Packard Co (HP) like many of the leading computer companies began the 1990s with a changing of the guard. The company announced in July 1992 that Lewis E Platt would be taking over for long time chief executive John A Young. Unlike IBM and Digital Equipment Corp (DEC) however, HP was an organization that was not in need of reconstruction. In fact, in terms of profits, HP was excelling against nearly all of its competitors, including IBM and DEC. While its computer rivals continued to struggle with weak sales and high overheads, HP’s orders and profit remained strong. It seemed as if all Platt had to do was sit back and maintain course. But, during the 26 years he had spent with the company, Platt had learned that success should not give way to complacency. A company has continually to re-invent itself, he asserted. The difficult part is making changes while you are doing well. You have got to start before the downhill trends are obvious.

While serving as head of HP’s Computer Systems Organization, Platt had witnessed the beginnings of a revolution – a digital revolution. As companies, communications, and consumer electronics began to merge, Platt saw that all types of media were being converted into digital form. Everything from television programs to telephone calls was being translated into binary computer code so that it could be transmitted anywhere in the world that a digital network reached. The future of the industry, as Platt saw it, lies in the multibillion dollar markets that were promising to open through the digitization of business and entertainment such as interactive games, video-on-demand, home shopping and personal communication.

The problem was that while HP continued to outpace its competitors’ traditional computer industry, the company’s place in the new computer industry was less clear. HP was absent from the merger and joint venture deal making that was taking place. While IBM, US West, and Apple were being approached by the likes of Sony and Time Warner, HP found itself unattached. Platt knew that if HP was not able to hop on to the digital bandwagon, its role in the new digital arena would be severely limited. Despite outward appearances, HP was in some difficulty.

Platt decided that HP was going to need an entirely new line of products and consumers. By marshalling HP’s numerous technologies and cross breeding them, Platt began to drive HP full speed ahead into a new technological era. Co-founders William Hewlett and David Packard had built HP around precision products for use in testing and measurement, so the problem was not with the quality of the products. Platt therefore brought in a reengineering team, primarily to spruce up the products and restructure the 53 year old company. In particular he emphasized the telecommunications industry and began developing equipment for the fast paced industry. We jumped in with both feet, he recalled. That sector of the business grew 30 percent last year [in 1992].

By reinventing and rejuvenating what already works, Platt has moved to secure HP a future in the coming digital revolution. Not being one to stop just because things are looking up, Platt set three primary objectives for 1993 and beyond. First, Platt promised aggressive restructuring in an attempt to improve HP’s profitability even further. Second, he encouraged customer satisfaction. The company had the reputation of being difficult to deal with, and Platt wants to rectify this.

Finally, Platt intends to increase HP’s emphasis on enlightened management in the company’s culture. HP’s going to be an almost totally different company 10 years from now, predicts Joel S Birnbaum, HP Laboratories Director. With all of the changes taking place at HP, coupled with Platt’s ongoing why wait till tomorrow attitude the only safe prediction seems that more change will occur.