The New New Hp in 2004: Leading Strategic Integration

THE NEW NEW HP IN 2004 (A): LEADING STRATEGIC INTEGRATION

To be recognized as the leading technology company in the world, we have to now move up to system-level management and innovation. 1

- Carleton “Carly” S. Fiorina, chairman and CEO, Hewlett-Packard Company

INTRODUCTION

The past five years had been eventful for Hewlett-Packard. When new CEO Carleton S. “Carly” Fiorina arrived at the company in mid-1999, the technology industry was nearing the peak of a bull market. HP, however, had failed to benefit much from the buoyant market. Soon after her arrival, Fiorina set out to reorganize HP, streamlining and centralizing decision-making in order to face a rapidly changing environment with increasingly demanding customers. Within a year of her tenure, the technology market crashed, exacerbating the need for further change. Fiorina, by then chairman and CEO, and HP’s board of directors decided that radical strategic change was necessary, leading to the far-reaching move to acquire computer rival Compaq. After a dramatic proxy fight, the acquisition took effect in May of 2002.

A merger as big and bold as Hewlett-Packard’s $19 billion acquisition of Compaq Computer had never taken place before in the technology industry. Fiorina called it an “historic” event.2 She believed it was the right move for HP; a key element in her mission to make HP, in her words, “the leading technology company in the world.” The integration went more smoothly than anybody outside of the HP and Compaq executive suites predicted3. Integration targets were met and ambitious cost-saving estimates were exceeded. During 2003, HP had been able to sustain or improve its strategic position in its core businesses.

1 All quotes from Carleton S. “Carly” Fiorina are from the authors’ interview on September 26, 2003