When a company stops believing in innovation, it fails
What happens when a company stops believing in secrets?
The sad decline of Hewlett-Packard provides a cautionary tale. In 1990, the company was worth $9 billion. Then came a decade of invention. In 1991, HP released the DeskJet 500C, the world’s first affordable color printer. In 1993, it launched the OmniBook, one of the first “superportable” laptops.
The next year, HP released the OfficeJet, the world’s first all-in-one printer/fax/copier. This relentless product expansion paid off: by mid-2000, HP was worth $135 billion. But starting in late 1999, when HP introduced a new branding campaign around the imperative to “invent,” it stopped inventing things.
In 2001, the company launched HP Services, a glorified consulting and support shop. In 2002, HP merged with Compaq, presumably because it didn’t know what else to do. By 2005, the company’s market cap had plunged to $70 billion—roughly half of what it had been just five years earlier.
HP’s board was a microcosm of the dysfunction: it split into two factions, only one of which cared about new technology. That faction was led by Tom Perkins, an engineer who first came to HP in 1963 to run the company’s research division at the personal request of Bill Hewlett and Dave Packard. At 73 years old in 2005, Perkins may as well have been a time-traveling visitor from a bygone age of optimism: he thought the board should identify the most promising new technologies and then have HP build them. But Perkins’s faction lost out to its rival, led by chairwoman Patricia Dunn.
A banker by trade, Dunn argued that charting a plan for future technology was beyond the board’s competence. She thought the board should restrict itself to a night watchman’s role: Was everything proper in the accounting department? Were people following all the rules? Amid this infighting, someone on the board started leaking information to the press. When it was exposed that Dunn arranged a series of illegal wiretaps to identify the source, the backlash was worse than the original dissension, and the board was disgraced.
Having abandoned the search for technological secrets, HP obsessed over gossip. As a result, by late 2012 HP was worth just $23 billion—not much more than it was worth in 1990, adjusting for inflation.
Focus is saying no to 1,000 good ideas.
Every time I read a management or self-help book, I find myself saying, “That’s fine, but that wasn’t really the hard thing about the situation.” The hard thing isn’t setting a big, hairy, audacious goal. The hard thing is laying people off when you miss the big goal. The hard thing isn’t hiring great people. The hard thing is when those “great people” develop a sense of entitlement and start demanding unreasonable things. The hard thing isn’t setting up an organizational chart. The hard thing is getting people to communicate within the organization that you just designed. The hard thing isn’t dreaming big. The hard thing is waking up in the middle of the night in a cold sweat when the dream turns into a nightmare.
The last 10% is 90% of the work.