Brad Porter, President of Porter Consulting
I have worked in and around Hewlett Packard for a long time, as an individual contributor, manager, and then on the supplier side for over ten years. Lots of changes have occurred within HP over the past fifteen years – new CEO’s, new strategies, new products. A few acquisitions and mergers have been done as well, with mixed success. Some have been successful, some have not. What I want to do in this article is comment on the company split into Hewlett Packard Enterprise and HP, Inc. from the perspective of one month later.
To accomplish this, I first looked at a number of articles that have come out over the past year discussing, promoting, or panning the split. I have read some with an ‘I told you so’ tone – which indicated that HP’s split was inevitable. Others have more of the ‘it will never work’ opinion.
- So is the HP split the last straw, the last gasp of a large company in slow decline? I actually don’t think so, and here are my reasons why:
- HP has a core set of employees, partners, and customers that want to make both individual companies work.
- Both companies are now free to create and implement strategies based upon their now more focused product offerings, and target markets.
- New portfolio changes, strategies, and product introductions should now be faster to market. Neither company will have to worry about stepping on the other side’s market introductions.
- Both HPE and HP, Inc. will have greater freedom to make acquisitions, be bought out, or even further spin off portions of their companies.
Some might argue that this is a step being taken because other efforts to restore growth and vitality have not worked – the many acquisitions, re-organizations, and new strategies over the last 15 years. However, it should be instead argued that HP reached back into its long and storied history and realized that it is easier to grow a smaller company than it is a larger one. So instead of taking stock and saying ‘we might as well try this, nothing else has worked’, I believe they chose to take a pretty bold step. Meg Whitman has created a foundation for both the consumer and the enterprise businesses to generate new growth strategies, based on their ability to now focus on their core markets. And there is no guarantee that HPE and HPQ will not continue a trend of splits, spinoffs, or acquisitions. Once the precedent has been set, as it has been now, the option now exists to do more.
I have done my reading on company splits and spinoffs – some have been successful and some have not. Over the last decade, several memorable ones have occurred. Here are a few links to articles evaluating splits: abcnews.com and Businessinsider.com.
I agree wholeheartedly with the comment in the Business Insider article – management decides to split companies up for two main reasons: focusing management and increasing shareholder value. I think HP is doing both things here, but more than that, they are recognizing that much smaller entities with a clearer market focus can grow faster – and arguably increase their value to the market. We see this too with the recent Google move to the Alphabet (BusinessInsider.com), which I would consider is accomplishing the same thing as what HP is doing.
While many would argue this move is a statement of HP’s lack of success, I would argue differently – that this is a courageous move to the future and an enabler of future growth for both companies. Neither company is looking back and saying that they are sorry about the past – they are only looking to the future.
So what have I seen in the month after the split has occurred? I have seen greater transparency and candor coming out of the two companies. No longer can the growth and profitability of the consumer business make up or mask problems in the enterprise business, and vice versa. This means that each new entity should be quicker to make moves to clean up problem areas and launch new products or solutions into the market to react to emergent needs. I am also seeing the first steps in developing strategies to attack their focus markets – partnerships, new alliance strategies, products, etc.
My viewpoint is of optimism. This is a new opportunity for both companies to succeed…again.
Let us know your thoughts on the split. Email me at: brad(at)porterconsulting(dot)net.
Brad is a 30 year veteran of marketing who understands the value of content that helps close business. You can find more blogs and content from Brad atwww.porterconsulting.net.