An open letter to HP's Mark Hurd

HP HAS CHOSEN the new guy, Mark Hurd(1) from NCR, and he comes in with nothing but good reviews and $20 million. It is so tempting to say there is nowhere to go but up from Carly, but that just isn't the case, it isn't even close. There are a lot of lingering problems from the savaging the company took at the hands of the previous mismanagement. The following are things I think Mr Hurd should address, in no particular order:

A) Morale
B) Channel restoration
C) R&D
D) Execu-Purge
E) Reinforce Customer Expectations
F) Sales Staff Compensation
G) Support

The first one, morale, is probably the most important, but the easiest. The grunt work is done, Carly is gone. There really was dancing in the cube farms, even if some don't want to stick by their stories. The trick here is to keep morale up until you can fix everything else. The afterglow will wear off sooner rather than later, but since you were not associated with HP, Compaq, Lucent or Carly in any way, shape or form, you have more time.

The first thing to do here is to distance yourself from the policies of the past. Stand up and have the guts to admit that your predecessor screwed up both in a way and in a scope that we have previously only associated with governments. Apologise to the people who were wronged, both inside the company and out. Then restore the bonuses.

What am I talking about? If you look at a chart of the HP Spring/Fall bonus structure below, and the raw numbers, you notice a trend. While things do change, be they fortunes, profits, and methods, there is more than a rough correlation between Carly's reign and the shafting of the average employee. If there are any ambitious HP readers out there, feel free to graph Carly's compensation against the average HPer, both for bonuses and salary.

Long suffering staffers who stuck it out are the ones you want to keep, and they are also the ones who most likely remember the old ways. Restoring the bonus plan would go a long way to ingratiating yourself to the rank and file. Start out with a bang, it will pay off.

Next comes the execu-purge, something that was done under Carly to the wrong people for the wrong reasons. If you look at the Fusion debacle that cost you a mere $400 million last year and the related SAP screwups in finance, you will see something interesting. All the problems were known before they went up, then down in short order. Look for things like the Jon Flaxman email from Feb 8, 2005, and then look into what was known before they made things like that go live.

Things like this must stop, and the people who either advocate such practices, short term bottom line thinking, need to be taken out back and metaphorically shot. The culture that Carly put into place was one of fear and keeping your head down. Your management staff is filled with people who are adept at kissing up and keeping their names out of headlines. If you want Dell to stop steamrollering you, this has to end, yesterday.

Carly was adept at using bad news and her people were spectacularly good at delivering bad news. This was then used to purge good people who had the gall to question the decisions. Look to who caused the Fusion debacle, and compare and contrast that with who got fired for it. Extra credit if you can figure out where the responsible people got promoted to.

Basically, hang the weasels out to dry, and do it quickly. If you do it publicly, and without golden parachutes, it will have a secondary effect on morale, a very good secondary effect. Bottom line, review management, but don't let management itself have any input into it, the culture you stepped into is about lying to save your skin,and that is not good for self-evaluation.

This is closely followed by R&D, or in the current case, lack thereof under Carly, or more specifically Shane Robison. His tenure as the arbiter of R&D hasn't been covered in glory. HP was always about basic research, and doing the right things for the right reasons. If you bought an HP product, you usually got something built like a tank that would last forever, and was demonstrably better than the competition. You paid for it, but it was worth it. How many LaserJet 4s are out there churning away? How many of their successors are still alive? You can probably plot a graph showing age vs expected lifetime of HP printers, and the new ones probably make up the low points.

While it may seem counter-intuitive to make products that last past their warranty period, you don't get repeat customers from things that let the magic smoke out on day 91 of a 90 day warranty. HP has of late shredded R&D in the areas that matter and replaced it with off the shelf technology. Dell has access to the same tech, and they are better at putting a badge on it and getting it out the door than you, and always will be. If you don't want to keep getting kicked around, you have to be better, you will never be cheaper.

This is why you need basic R&D. Review your R&D, and do it now. Skins on iPods and camera cases designed by washed up rock star-ish people are not the way to enterprise success, but it will afford you the opportunity to pimp yourself at trade shows. Hopefully you will not carry on that tradition.

If you get back to the traditional ways of being better rather than cheaper, you have a chance. If not, you have a long career of watching your marketshare numbers slide. Make HP innovation worth more than a slogan.

The next three are interrelated. First and foremost, make your customers know there is a change. Let them know they are the most important thing to the old HP, and the ways of the new HP are behind you. Assure them that the products they will see are going to be much more solid, dependable and innovative than they were over the last few years. Tell them that HP is back, and it will make their lives better if they use you rather than Dell.

The HP tradition of innovation, as opposed to the marketing slogan of the same wording, will really benefit them, but they need to know it. If you restart R&D, put the right people in place, and get the product pipeline going again with more than badge engineering and skinned iPods, you will do well. The products you have now are not bad, but the trend is declining. Let people know this has changed.

Then comes the channel. From everything I have read, it is not doing well. The Carly way was pretty bad for them, and Dell is laughing all the way to the bank. The HP resellers I know personally back up the articles I read. If you stop treating them like second class citizens who need to prove their loyalty in order to survive for the short term, things will start looking up.

The resellers I know are all pretty depressed right now. Several are content for the short term, but are already making plans for what to do when they get cut. People in this state do not push HP, and that means they sell less HP. This must change. You can put a stop to the bleeding with a well thought out speech, but you need to follow up on it with actions.

As is becoming a theme with this letter, purge the nitwits. Proverbial bullets are cheap, use as many as you need. You have to turn the channel around, but it is not as critical as the other problems. You have some time here, and they will sit and watch for other positive changes to happen.

The last of the sales problems is your direct sales force. Look at what happened over the last two or three years, and look at the morale there. The tales that I have seen are both saddening and unbelievable. The sales staff were outright screwed, and many of the best ones left long ago. Restore a living wage to the people who sell your products, and do it now. For a great start, look to the open letter from a one 'HPdoesnotcare@hotmail.com' dated August 27, 2003. While this may be old, the problems raised in it have only become more pointed. Things like this urgently need fixing, your sales staff are the ones that bring in the money.

Follow up on the whole Omega/sales debacle and apply the bullets with abandon. Once again, simple measures backed up by a little money, will do absolute wonders for morale here. Follow it up with real reform, and you will turn your rather briused sales staff from moribund to motivated, and that can only help the bottom line. Public executions will do wonders here, they are long overdue.

Last up is something near and dear to my heart, support, or lack thereof. Carly pinched pennies to the detriment of the long term, a theme that characterised her mismanagement. Support was the thing that got me started on HP. I was a buyer of a lot of HP merchandise. Shortly after I got an outsourced and flat out incompetent support staffer, then another, then another, I stopped buying.

Others did the same. How much do you save if support costs you $5 less per machine, but no one will ever buy anything with the HP logo on it again? Support under Carly has gone from a top notch organisation that brought me back time and time again, to a running joke. I have written extensively about this in the past, and I won't rehash it now, but there is one key message, fix support.

Outsourcing is fine and dandy, I have absolutely nothing against it, be it India, Canada, or next door. Low bid support with poorly trained cube monkeys who have never seen the product they are allegedly supporting is not a way to win hearts and minds. Solid support from well trained individuals is. It may cost you in the short run, but hopefully the HP board picked a CEO that is not in it for the short term this time.

Overall, one theme emerges, go back to your roots. This means good products, real innovation, and treating your employees like people. Creating a cult of personality may do wonders for your ego, but it is not a way to run a company. All of the articles I have read about you, Mr Hurd, say that this is not the way you run a company. The above items are just a few of the sore spots at HP, fix them and you have a chance. Carry on with the Carly way, and you will be selling the pieces of a once great company for pennies on the dollar.

I mean this in all seriousness, good luck, and do well. HP was a great company staffed with great people, and can be again. Feel free to write back.µ

(1) Shouldn't it be Mark GNU/Hurd?