Business Week: HP's Cultural Revolution

Business Week just wrote a cool story on HP's Cultural Revolution. Certainly things are changing at HP all the time. ...and though it's a huge company, there's no questioning the desire for progress. They interviewed a bunch of us, including someone I respect and admire, Patrick Goddi from HP Labs.

Business Week: HP's Cultural Revolution
By: Reena Jana

At Hewlett-Packard's (HPQ) Page Mill Road complex in Palo Alto, Calif., in the basement beneath the meticulously preserved offices of founders William Hewlett and David Packard, is a cavernous room that has the feel of a chaotic startup. Tables and chairs are strewn about and a giant, makeshift screen takes up an entire wall, even wrapping around a corner. HP projectors made for corporate presentations are clustered together to cast huge video-game images on the wall. The life-size scenes are so crisp and detailed that you almost feel as if you could walk onto a Madden NFL game or Halo 3 battle.

This game room is the kind of place where you would expect to find young programmers hanging out, jazzed on Mountain Dew and revving up ideas for a new 3-D Web or the next generation of social media. It's a different business culture from the one you'll find in the gray cubicles, where most engineers work, in the rest of the building. The area's playful environment is critical to HP's future. The space—and its projection system, itself a prototype—is one result of the Innovation Program Office, launched in 2006 to help the info tech giant buy hip, nimble startups for its huge Personal Systems Group, which makes PCs, mobile devices, and workstations. The hope is to inject big doses of the small companies' creative juices directly into the HP culture. (See also a playbook on learning from startup cultures.)

HP has learned some key lessons on the acquisition trail over the past two years: how to develop cool, high-margin products that appeal to new consumer groups such as video-game fanatics; how to use social media to conduct Web-based consumer research; and, perhaps most important, how to inspire engineers in HP Laboratories to turn concepts into products faster.

HP's culture has been in turmoil in recent years. The HP Way, the company's management code, was once Silicon Valley's innovation model. Top executives mingled with lower-level employees to discover fresh ideas. For decades the company's engineer-led approach generated a flow of popular, affordable, and utilitarian products until it became synonymous with complacency and high costs. Carleton S. "Carly" Fiorina came in as chief executive in 1999 and tried to blow apart that culture. Her marketing-focused strategy generated strong sales but demoralized employees. Mark V. Hurd, who succeeded her in 2005, has been working to restore tradition and reinvigorate the company's 30,000 engineers.

Trouble is, restoring the HP Way may no longer be enough. The old strategy was for engineers to create technologies and products and then expect customers to buy them. Yet over the past five years the company's businesses—computers, printers and imaging machines, storage devices and servers, and info tech service—as well as those of Dell (DELL), Cisco (CSCO), and Yahoo! (YHOO)—have shifted their focus from developing cool technologies to making products customers want. "We were missing the DNA of an organization that had its finger on customer desires," says Phil McKinney, a chief technology officer of the Personal Systems Group and head of the innovation office.


HP is trying to market personal computers today as being friendly, not just fast and powerful. Its slogan: "The computer is personal again." It's not just selling fast printers, but pitching terrific printing experiences. But shifting away from a tech focus to a consumer orientation is proving hard for a 156,000-person company that includes a small army of engineers convinced they are right.

Enter Voodoo PC. The gaming room at HP was the brainchild of Voodoo's Rahul Sood, co-founder of the 30-person startup based in Calgary, Canada, a cult brand among gamers. Now 35, Sood is chief technology officer of HP's new global gaming business unit.

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