Data-Driven Decision Making at Hewlett-Packard
When Mark Hurd was named chief executive of Hewlett-Packard Co. in March 2005, the board gave him a clear mission: fix the giant computer and printer make, which was suffering from slow growth and inconsistent results. Hurd took a big step forward attempting to fulfil that mandate when he embarked on a sweeping plan in July 2005 to cut costs and restructure the company. He planned to lay off 14,500 employees, or about 10 percent of the company's global workforce, modify its pension benefits, and revamp its sales force in an effort to make the company more efficient and better able to service customers. (All of these plans were implemented by 2007.) But before Hurd could attempt to fix HP, he had to figure out HP. Shortly after arriving at the Palo Alto, California, company, the 48-year-old former chief executive of NCR Corp. set about to collect information methodically. He spent time with senior executives, conducted extensive business reviews and even travelled with sales people to meet HP customers firsthand. He visited HP offices and factories from Boise to Beijing. At each site he spoke to employees and sought feedback. In all, he has collected more than 5,000 e-mails from HP staffers. With his findings, Hurd built two computer models- one financial and the other an operating model- designed to help plot the company's course. "I have a pretty standard process," Hurd said. Getting out into the field "is some of the best market research I can get." After reviewing the businesses at each site, Hurd typically held an employee "coffee talk" in the afternoon. For him, the aim is to trigger feedback from employees so that they can unearth facts not covered by managers. Many visits are dominated "by the biggest personalities," he says. "But it's some of the people who don't speak upwho send the crispest two-page e-mails." About 320 new e-mails arrive every day, the company says. Hurd has also encouraged staffers to call him directly: Hearing someone's voice helps him understand what they are emphasizing and their emotion, he says. Then came the rigorous analysis. Back at his Palo Alto office, Hurd reviewed the findings from a site visit or business review with executives. Based on a series of spreadsheets, these models change daily as Hurd adds new facts and thoughts from his travels, such as the number of salespeople in an office versus the size of a sales territory, and ruminations on what kinds of capabilities must be added to or subtracted from a facility. The goal of the models is to winnow down all the information being collected onto a single page that lays out a vision of HP's future and how to get there. "I want to get everything between us and the goal line on a piece of paper," says Hurd. Hurd points out that although he is heavily involved in decision making, he relies on the collective intelligence of his executive team. Upon being recognized as "The Chronicle 200's CEO of the year," Hurd said, "Running a company like HP, which is so global and so diversified, is absolutely a team sport. I'm very honored to receive the recognition." Hurd left HP in 2010 because of his involvement in an expense account irregularity, but is still regarded as a data-driven manager.
Case Questions
1. Why might employees and customers be a valuable source of input for Hurd in making decisions about the future of HP?
2. In what way is employee input shaping the future of HP?
3. What, if any, ethical issues might there be in collecting input from employees about fixing the company, then laying off 14,500 of them?