Leadership and Change Management: A Case Study of HP

Contents

List of Figures

1 Introduction

2 Strategy analysis for the company HP
2.1 Current challenges of HP
2.2 HP’s organizational complexities
2.3 Leadership approach of HP’s senior management

3 Strategic Change Plan for HP
3.1 Determination of the required type of change
3.2 Execution plan of the change path
3.3 Required leadership skills for HP’s revolution

4 Results

References

List of Figures

Figure 1- Hewlett Packard's dysfunctional organisation

Figure 2- Agile organization as the new dominant organizational paradigm

Figure 3- HP's leadership issues

Figure 4- Types of Change

Figure 5- Lewin's change management model

Figure 6- HP's change path

Figure 7- HP's required leadership profile

Figure 8- HP's path to future success

1 Introduction

The company Hewlett Packard (HP) is an international acting technology enterprise with the focus on manufacturing software, hardware and services to individual clients, corpora- tions, governmental and education sector (cf. HP Inc. 2017: I; HPE Ent. 2018: 3.).

HP had a widespread product line starting enterprise standard servers, computing devices, networking products, software and IT-consulting services (cf. Glassman / Zell / Duron 2005: 10.).

Today, HP is structured into two separate companies. HP Inc. is focused on the former hardware product line (computing products, printers, etc.) and the Hewlett Packard Enter- prise (HPE). HPE’s strategy is to use “capabilities focused on technology, people and eco- nomics to enable customer’s digital transformation” (HPE Ent. 2018: 2.). The current share prices of the two HP companies show high volatility in the share price (cf. Yahoo Finance 2019; Yahoo Finance 2019a.).

In 2012, no spin-off was conducted and HP was one IT company. HP struggled with internal structures, significant internal clashes of culture and finding a path to future success. All of these issues are related to a lack of leadership and change management skills within the enterprise (cf. Goleman 2011: 3.; Cook / Macaulay 2004: 5).

This term paper wants to answer the question:

How could a successful strategic turnaround of HP could be structured and implemented?

In answering this question, the focus lies on change management and leadership theories for a successful transformation. The paper is mainly structured in two parts: Chapter two describes the current state of HP in 2012 taking the dimensions of challenges, organiza- tional complexities and leadership issues into account. Based on that insights, a fitting trans- formation plan is derived by using modern leadership and change management tools.

As a result, all gained insights are summarized and finally assessed in the last chapter.

2 Strategy analysis for the company HP

Abbildung in dieser Leseprobe nicht enthalten

Figure 1- Hewlett Packard's dysfunctional organisation.

2.1 Current challenges of HP

In 2011, HP struggled with declining financial performances which was expressed by 19% lower profits and losing market share (cf. Bandler / Burke 2012: 1-2.). This lead to an in- creasing investor pressure on the company to perform better in the short term.

Simultaneously, HP had to deal with an intensive competition with a strong innovation ca- pability (cf. Bandler / Burke 2012: 3.). However, HP showed a significant lack of innovation (cf. Economist 2015). This lead to a vicious circle because HP was also not able to build up innovation capabilities caused by talent hiring issues (cf. Economist 2015.). This resulted in the need for external acquisitions, but significant investments could not be financed (cf. Hall 2017). Furthermore, HP had to decide which strategy it wants to follow. The hardware fo- cused strategy faced a declining market share. The combination of short term pressure from the investor base and the need to reconfigure internal capabilities and the strategy made a challenging general condition for HP. Further disturbances like ongoing law suits against HP (TomorrowNow case) averted to focus on important decisions.

2.2 HP’s organizational complexities

Modern technology companies established a new form of organizational structure: The agile organization. An agile organization consists of a network of smaller teams which are strongly customer-centered. The employees of the different sub-teams are all committed to one predefined vision (cf. Nadella / London 2018: 5.). Furthermore, it operates in fast de- cision and learning cycles so that the ability of quickly reconfiguring structures and strate- gies toward value-creating opportunities is possible (cf. Aghina et al. 2017: 3.).

However, HP did not establish the required culture and structure to cope with similar chal- lenges of the modern companies.

HP’s culture is poisoned. HP’s employees were preoccupied with internal conflicts and power rivalries. Cross-functional collaboration was not accepted (cf. Bandler / Burke 2012: 1-5.). Overall, the culture was damaged by a significant lack of trust between employees and directors (cf. Bandler / Burke 2012: 13.).

Simultaneously, HP established an efficient and cost-saving driven internal structure. Even trash pickups were cut (cf. Bandler / Burke 2012: 4.). This Taylorism management approach was successful in an environment that was stable and predictable. McKinsey defines this kind of organization as “organizations as machines” (Aghina et al. 2017:3.). There was a strong hierarchy and efficiency management rationale established and the business units were clearly silo-thinking driven which led to dramatic misalignments of the business units. For instance, HP printer software could not be run on HP computers (cf. Bandler / Burke 2012: 11.). Modern companies are structured like an organism (flexible and responsive) with strong leadership as the core (cf. Aghina et al. 2017: 5.). HP showed a significant gap in terms of an environment fitting structure and culture which was simultaneously poisoned by internal conflicts.

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Figure 2- Agile organization as the new dominant organizational paradigm (Authors own illustration based on Aghina et al. 2017: 5.).

2.3 Leadership approach of HP’s senior management

Good leadership is directly interrelated with the success of a strategic transformation pro- gram (cf. Kotter 2000: 60.). The former CEO Leo Apotheker wanted to take HP towards more software business with focus on big data analytics (cf. Bandler / Burke 2012: 10.). As described in the case, the transformation failed. The leadership approach of HP is evaluated in five dimensions of failure:

( 1) Not Establishing a Great Enough Sense of Urgency

According to Kotter, the first leadership fault in a transformation is to not seed sufficient urgency for the change in an organization. Only motivated and committed people can achieve successful change (cf. Kotter 1996: 4.).

Apotheker did not communicate the urgency in a way that the organization was committed to the change. The process was “messy and contentious” and even senior management participants were not aligned to the new strategy (cf. Bandler / Burke 2012: 10.).

(2) Not Creating a Powerful Enough Guiding Coalition

It is essential to build up a change coalition that supports the efforts. This is a process of a growing fan base of the future state after the transformation (cf. Kotter 2000: 62.).

Apotheker was clearly committed to his own vision for HP and did not seek for different perspectives (cf. Bandler / Burke 2012: 13.). Kotter says that a transformation need a co- alition throughout the hierarchy and it has to grow from the senior management down to the employees (cf. Kotter 1996: 6.). The coalition growth stopped at Apotheker and an opposi- tion gained participants which finally stopped the change.

(3) Lacking a Vision

The vision of a leader for the company plays a key role in producing change. It helps to align and inspire large numbers of people dealing with the company (cf. Kotter 1996: 7.).

Apotheker derived a strategy of how to develop HP further, but never defined a clear vision. The strategy could have been the right one, but the main reason why it was confronted with resistance was that no one saw a clear vision. A transformation without vision leads to in- compatible projects and finally to failure (cf. Kotter 2000: 63.).

(4) Not Removing Obstacles to the New Vision

To achieve a high amount of committed people, obstacles have to be removed. Obstacles can be the structure, compensation systems or middle management directors who want to stop the proposed change (cf. Kotter 1996: 10.).

HP’s hierarchical and silo-focused structure is not able to fastly change. Apotheker started with dictating the strategy without reconfigure the internal structure of HP. Apotheker and his team did not show any supportive or inspiring approaches to convince the directors to follow his strategy. Apotheker did not realize that fear is one of the most important feelings in a process of change (cf. Kotter 2000: 65).

(5) Not Systematically Planning For and Creating Short-Term Wins

People of an organization have to see short-term wins to believe in the long-term success (cf. Kotter 2000: 65.). Apotheker’s short-term performance was insufficient and lead to doubts (cf. Bandler / Burke 2012: 10.). The occurrence of leaks show that the employees did not believe in the strategy and felt confirmed that HP does not follow the right path. Resistence was built up.

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Figure 3- HP's leadership issues (Authors own illustration based on Kotter 1996: 16.).

3 Strategic Change Plan for HP

HP had to face multiple challenges that were obviously not solvable with the current state of HP. A restructuring of a company is commonly very costly and complex (cf. Katowski / Wysocki 2014: 116). Therefore, a successful transformation always has to predefine the required type of change and derive a proper change path supported by a fitting leadership approach (cf. Katowski / Wysocki 2014: 116).

3.1 Determination of the required type of change

To define the type of change, speed and extent of HP’s change is evaluated.

( 1) Speed of Change

In HP’s case, investor’s trust is decreasing caused by poor financial performances; no clear strategic path can be defined; cultural issues like leaks and mistrust are increasing dramat- ically and a significant lack of innovation is present (cf. Ibarra / Rattan / Johnston 2018: 10). Therefore, HP’s planned change has to be fastly executed. Otherwise, HP is in danger of losing the trust of workforce and investors. HP needs a “Big Bang” (cf. Balogun 2001: 3.).

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