'As you were' at HP

No sooner had HP executives started coming to terms with former boss Carly Fiorina’s audacious plan to fuse the IT behemoth’s Imaging and Printing Group (IPG) with its Personal Systems Group (PSG) to form a supersize business unit, than new boss Mark Hurd (less than three months into his new role) decides to scrap it.

  • E-Mail
By  Stuart Wilson Published  June 17, 2005

No sooner had HP executives started coming to terms with former boss Carly Fiorina’s audacious plan to fuse the IT behemoth’s Imaging and Printing Group (IPG) with its Personal Systems Group (PSG) to form a supersize business unit, than new boss Mark Hurd (less than three months into his new role) decides to scrap it.

Any transition planning is chucked out the window and it is very much a case of ‘as you were’ for the thousands of HP employees around the world that would have been affected by the move. It does make you wonder how two CEOs can have such a contrasting view of what makes sense for HP — and how much some of the executives kept their views to themselves when the initial decision to merge the units was taken.

For Fiorina, the creation of a combined Imaging and Personal Systems Group (IPSG) was pretty much a last stand before her departure and one that received widespread condemnation from the analyst community. Many believed that slamming PSG and IPG together was little more than a defensive manoeuvre designed to make the company harder to break up and to conceal the poor financial performance of PSG by running it alongside the highly profitable IPG side.

There are many takes on why Hurd has decided to pull the plug on joining these two business units together. The most obvious is that Hurd is a man of numbers who likes financial clarity when it comes to seeing the bigger picture and understanding exactly where the operational issues lie. That requires a business structure built upon a foundation of simplicity.

Keeping IPG and PSG separate does not mean for one second that HP is lining itself up to ‘do an IBM’ and split off its PSG division. Not a bit of it. It does not mean the highly profitable IPG division will be spun off to unlock capitalisation value currently lost within HP’s wider structure.

The more important point to consider is that should either of these possibilities ever come up in the future — and I want to emphasise the word ‘should’ here — HP would have the ability to make any move relatively painlessly. It is really about operational flexibility and genuine financial visibility — concepts that fit nicely alongside HP’s very own Adaptive Enterprise vision that it approaches corporate customers with.

You get the feeling, having spoken to HP staff when the original decision to join the two groups was announced, that many of them never truly believed it would come to fruition. Many anticipated no real change in their day-to-day operations and were keen to stress that it was business as usual as far as they were concerned. It also makes you wonder if the executives that publicly supported Fiorina’s original plan are now wondering whether or not they did the right thing.

The newly liberated PSG division has also got a new boss in the shape of Todd Bradley, formerly of palmOne. Bradley’s 25-year career includes a stint as executive VP of Gateway’s Europe, Middle East and Africa (EMEA) operation before his days at palmOne. Vyomesh Joshi, the executive VP of the short-lived IPSG mega-division reverts back to his original position as executive VP of just IPG.

“Todd Bradley is an outstanding executive with a long track record of growing businesses, executing against plans and exceeding targets,” said Hurd, HP chief executive officer and president. “His experience driving growth and profitability in highly competitive hardware fields makes him well-suited for this position.”

“Under VJ’s leadership, the PC business has continued to grow and improve its profit margins, and I'd like to congratulate him on those efforts. Now, by managing PSG and IPG as separate, highly focused organisations, we can further sharpen our competitiveness and improve our cost structures.”

It is too easy to accuse HP of dillydallying and back-pedaling over the whole IPG, PSG, IPSG saga. It is also not the point. The simple fact is that a new boss has come in, taken stock, decided the structure he wants in place to move the company forward, and then taken the necessary steps to ensure it happened. And he has done all that in less than three months. Good stuff when all is said and done.

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code