CHANGE MANAGEMENT IN HEWLETT PACKARD &

ROLE OF CARLY FIORINA

PRESENTED BY

GROUP 1AMAN

DHANYAIFTHAKAR

JISHNU

INTRODUCTION

• Bill Hewlett and Dave Packard founded HP on Jan 1st, 1939• Head Quarters in Palo Alto, California 

"What we consider the HP Way doesn't just happen from the top, it's built into the organization. I tell HP people, 'You're really the propagators of the HP Way. You're where it resides” - Bill Hewlett

• The company originated in a garage near Palo during a fellowship they had with a Prof: Fredrck Terman at Stanford

The HP Garage (1939 photo)

• HP's Corporate Objectives have guided the company in the conduct of its business since 1957, when first written by co-founders Bill Hewlett and Dave Packard.

CORPORATE OBJECTIVE

• Earn Customer loyalty • Achieve sufficient Profit & create value for shareholders • Recognize & seize opportunities for Growth • Market leadership • Commitment to employees • Developing leaders at all levels for achieving business

results• Global citizenship  & fulfillment of social responsibility

“I am perfectly aware that HP has never guaranteed absolute tenure status to its employees; but I also know that Bill and Dave never developed a premeditated business strategy that treated HP employees as expendable”

- David Packard

VALUES UNDERPINNING “THE HP WAY”

• Continually improve the value of the products and services offered to customers

• Seek new opportunities for growth but focus efforts on fields in which the company can make a contribution

• Provide employment opportunities that include the chance to share in the company’s success

• Maintain an organizational environment that fosters individual motivation, initiative and creativity

• Demonstrate good citizenship by making contributions to the community

• Emphasize growth as a requirement for survival.

PEOPLE PHILOSOPHY IN “THE HP WAY”• Help HP people share company's success, which they

make possible• Recognize individual achievements• Help employees gain a sense of satisfaction and

accomplishment from work• Relationships will be good only if employees have faith in

the motives and integrity of their peers, supervisors and the company itself

• Job security is an important HP objective • Foster initiative and creativity by allowing the individual

great freedom of action• Individuals at each level in the organization should make

his or her own plans to achieve company objectives and goals.

Developed an informal, egalitarian culture in HP

Efforts to exert control led to bureaucracy that got HP badly bogged

down

Operations expert and devoted practitioner of the HP Way

Unable to prepare HP for the next big wave: the Internet

David Packard & Bill Hewlett (1938-1978)

John Young (1978-1992)

Lew Platt (1992-1999)

Carly Fiorina(1999 -2005) Nimble, Aggressive, Change Oriented,

Passionate , authoritarian

Mark Hurd(2005-2010)

LEA

DER

SH

IP @

HP

A style in alignment with the HP gestalt

CARLY FIORINA

• Born on Sep 6th 1954 in Austin, Texas

• Daughter of Joseph Tyree Sneed & Madelon Montross

• Official Birth Name : Cara Carleton Sneed

• Popularly known as : Chainsaw Carly

CARLY FIORINA’sEDUCATIONAL QUALIFICATION

• Bachelor of Arts in Philosophy and medieval history from Stanford University in 1976

• Fiorina received a Master of Business Administration (MBA) in marketing from the University of Maryland,in 1980

• MS in management from the MIT Sloan School of Management in 1989.

CARLY FIORINA – CAREER GRAPH

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

Board of Directoar Cyber Trust -2005

Advisor to Republican presidential candidate John McCain - 2008

Honorary Fellow of the London Business School - 2010

Joined AT&T as a management trainee – 1980

Senior VP AT&T hardware and systems division -1992

President of Lucent Technologies - 1998 CEO, HP -1999

•Carly Fiorina became CEO of Hewlett Packard in1999•First outsider to take control of HP. •First woman to head a DOW 30 company•First woman to lead a Fortune 20 company •Challenge was to help HP grow in the Internet Age

without eliminating its corporate culture.•HP had over 85,000 employees and operations in 120

countries when she took over.•A company that offered job security to employees even

during massive downsizing of late 1980’s

CARLY FIORINA TENURE IN HP

• Chief Executive Officer of Hewlett-Packard Company (HP) from 1999 to 2005

• During her tenure, HP’s revenues doubled, from $44 billion to $88 billion

• Her pursuit of the controversial merger with Compaq Computer is now acknowledged to be the most successful merger in high-tech history

THE PROBLEM CARLY FIORINA FACED IN HP

Although Fiorina possesses a leadership style and

strategic vision that has contributed to the success of

previous companies that she held leadership positions

in, HP wasn’t ready for the organizational change she

thought would be necessary for the future of HP.

SIX MAJOR CHANGES DRIVEN BY CARLY FIORINA IN HP

1. Fiorina fostered a top-down approach to management which conflicted with the HP style of completely decentralized management

2. Variegated the corporate culture of HP, Fiorina did away with a 60 year tradition. Company employees were not happy about this change

3. Improvised too many revolutionary company projects at one time against a product improvement methodology of Founders.

Eg : Simultaneous Projects on wireless service, digital imaging, and commercial printing etc.

SIX MAJOR CHANGES DRIVEN BY CARLY FIORINA IN HP (Contd..)

4. HP employees no longer possess job security. The company had cut nearly 20,000 jobs between 1999 to 2003

5. Modified the Structure of selling team as well as their compensation

6. Fiorina has led the company to its most widely scrutinized strategy yet; the merging of HP with Compaq

TWO PERSPECTIVES OF CHANGE IN HP

• The rapid transformation resulted in resistance to change

&

• The HP-Compaq merger was widely scrutinized

SOURCES OF RESISTANCE TO THE EMPHATIC CHANGE PHILOSOPHY OF

CARLY FIORINA

SOURCES OF RESISTANCE IN HP

ORGANIZATIONAL SOURCES

INDIVIDUAL SOURCES

INDIVIDUAL SOURCES OF RESISTANCE

1. HABIT

When confronted with change the human nature is to respond in accustomed ways.

2. SECURITY

People with high need for security are likely to resist change because it threatens their feelings of safety.

3. ECONOMIC FACTORS

Change in established work practices can arouse economic fears in people especially when pay is closely tied to productivity

INDIVIDUAL SOURCES OF RESISTANCE (contd..)

4. FEAR OF UNKNOWN

Change substitutes ambiguity and uncertainty of the unknown

5. SELECTIVE INFORMATION PROCESSING

People hear what they want to hear & they ignore information that challenges the world they have created

ORGANIZATIONAL SOURCES OF RESISTANCE

1. STRUCTURAL INERTIA

Built in mechanisms counterbalance to sustain stability during change

2. LIMITED FOCUS ON CHANGE

Organizations are made of number of subsystems, when change is limited only to subsystems, its overall effect tends to be nullified by the larger system

3. GROUP INERTIA

When Individuals wants to change, group norms may act as constraint

ORGANIZATIONAL SOURCES OF RESISTANCE (contd..)

4. THREAT TO EXPERTISE

Change in organizational patterns may threaten the expertise of specialized groups

5. THREAT TO ESTABLISHED POWER RELATIONSHIP

Any redistribution of decision making authority can threaten the long established power relationships within the organization

6. THREAT TO ESTABLISHED RESOURCE ALLOCATION

Groups that control sizable resources tend to be content with the way things are

THE UP’S & DOWN’S IN BRIEF

HOW COULD HAVE FIORINA OVERCOME THE RESISTANCE

Education & Communication Participation Building support & commitment Implementing change fairly Manipulation & Cooptation Selecting people who accept change Coercion

CHANGE IN HP COMPARED TO KOTTER’S CHANGE MANAGEMENT &

LEWINS MODEL

KOTTER’s CHANGE MANAGEMENT STEPS• Establish a sense of urgency• Creating a guiding coalition• Developing a vision & strategy• Communicating the vision• Empowering broad based action• Generating short term wins• Don’t let up• Creating a new culture by reinforcing change

LEWINS 3 STEP MODEL OF CHANGE MANAGEMENT

LEWINS MODEL

REFREEZING

UNFREEZING

MOVEMENT

TIME

DESIRED STATE

STATUS QUO

RESTRAINING FORCE

DRIVING FORCE

WHAT IS ORGANIZATIONAL DEVELOPMENT

“A collection of planned change interventions built on humanistic democratic values that seeks to improve organizational effectiveness and employee well being”

RESPECT FOR

PEOPLE

TRUST & SUPPORT

POWER EQUILAZ

ATION

CONFRONTATION

PARTICIPATION

OD

5 THINGS I LEARNED ABOUT LEADERSHIP – CARLY FIORINA

Excerpts from Interview given to CIO Magazine, 2007

1. LEADERS CREATE SOMETHING NEW

Management is about producing acceptable results within known constraints and conditions. The force for change must be stronger than an organization’s natural inclination to preserve the status quo

2. DON’T FALL IN LOVE WITH YOUR PRODUCTI thought the point of our technology was to serve customers and, in the process, to deliver revenue and profit. Sometimes, technologists forget the customer. This was happening at HP in the late ’90s, and it was one of the reasons our growth was slowing dramatically.

3. THE 21ST CENTURY IS ABOUT BRAINPOWERIt requires different capabilities than the 20th, and American competitiveness is not something we can take for granted

5 THINGS I LEARNED ABOUT LEADERSHIP (contd..)

4. COMPETITION REQUIRES RISK-TAKING

Leaders have to be willing to make tough choices at the right time, which usually means before they are obvious to everyone else. The Compaq merger was a prudent risk given the changes in the industry and our decision to return to a leadership position within it

5. ETHICS MATTERBusinesses often tolerate behavior that’s on the edge; people justify it as necessary to achieve results and take comfort that it’s not strictly illegal. Yet such actions are corrosive. Some of the most important choices I ever made were firing people who weren’t conducting themselves with integrity.

EVALUATING CARLY FIORINA TERM OF OFFICE AND RESULTS FOR HP

BASED ON STRATEGIC LEADERSHIP STUDY REPORT PUBLISHED BY GEORGE FOX UNIVERSITY

FRAME WORK OF EVALUATION

1) GENERAL AUTHENTIC LEADERSHIP PRINCIPLES

2) ETHICAL LEADERSHIP PRINCIPLES

3) LEADERSHIP PITFALLS

4) LEADERSHIP SUCCESSES

GENERAL AUTHENTIC LEADERSHIP PRINCIPLES

  LOT OF EVIDENCE

SOME EVIDENCE

NO EVIDENCE

Perception established that leader is Authentic, sincere, follows through

  X  

Understand self, seek self-improvement, know personal strengths and weaknesses.

X    

Aware of the needs of those being led  X  

In harmony with organization –understand history, traditions, customs.

  X  

Power applied consistently with the needs of the organization, and not for sense of power alone.

 X    

Words match deeds X    

Convictions match organizational values and objectives

  X  

Leadership style matches organizational need X

 

ETHICAL LEADERSHIP PRINCIPLES

 LOT OF

EVIDENCESOME

EVIDENCENO

EVIDENCE

Takes a moral position – i.e., seeks to do what is right

X    

Considers a long-term approach to decisions. X    

Separates personal interests from organizational interests. Able to objectively deal with personal bias

X    

Interested in long-term view of organization, to include product, customers, community as well as profitability.

X    

Concern for others   X  

Quietly seeks to do the right thing and influence others to do the right thing   X  

LEADERSHIP PITFALLS

 LOT OF

EVIDENCESOME

EVIDENCENO

EVIDENCE

Self-centered, and tells lies of convenience to diffuse or divert negative situations.

    X

Disclaim weaknesses X   

Overly dependent upon “vision” as a leadership method

X    

Overly dependent upon charisma resulting in prior hypothesis bias X    

LEADERSHIP SUCCESSES

 LOT OF

EVIDENCESOME

EVIDENCENO

EVIDENCE

Builds organization of good people as a top priority   X  

Faith in the plan X    

Maintain momentum with incremental improvement X    

Support technical innovation X    

Disciplined organization that follows management best practices X    

•  Fiorina was not wrong about the need for change – but had she really grasped the reality of the culture of Hewlett Packard, so deeply engrained, and now apparently perpetually endorsed by the almost mythic status of the founders?

•  In 1999, HP was no longer among the top 25 innovators in the world. Fiorina challenged HP engineers and inventors to innovate. By 2004, HP was generating 11 patents a day, the highest rate of innovation in HP’s history, and had become the number-three innovator in the world.

CONCLUSION

• HP stock had stood at $54.43 when Fiorina joined the company; it rose to a peak of $74.48

• However the company struggled to meet its growth targets, especially as the downturn in the economy that began in late 2000 started to bite

• Bottom line “ Carly Fiorina transformed HP into a Learning Organization. A new culture was impregnated which is the foundation on which HP stands today in the 10th Position among Fortune 500 companies or Hp would have perished in an Era characterized by

Explosive population growth,Unprecedented Economic developmentExponential Technological advancement ”

THANK YOU

QUESTIONS??