HP is the world’s largest technology company.
It matters. With this in mind, I offer the following observations, from my “been-there, done that” vantage point.
1. Cost-cutting may be necessary for efficiency and effectiveness, but it is never sufficient for growth and the creation of long-term, sustainable value. While difficult on employees, cost-cutting is actually the easiest of management challenges. The harder trick is to make the right trade-offs between short-term gain and long-term success. Over the last several years HP has seen too much cutting for short-term gain and not enough investment for long-term success.
2. Any company’s success is based upon a fundamental understanding of what makes it unique. Put another way, long-term value requires real competitive differentiation. HP’s unique assets include its supply chain, its distribution network, the breadth and depth of its product portfolio, the diversity of its geographic presence and the size and loyalty of its customer base.
3. Successful differentiation results in growth and margin expansion. For HP , differentiation means consistent investment in R&D for ongoing innovation as well as investment in marketing to persuade customers that this innovation translates into unique benefit for them. Both R&D and marketing have been cut too much for too long.