Digressing from normal blog, I wanted to reflect about how America could get out of this plague and see why we are in here in the first place.
HP: Is it a broken company?
http://www.zdnet.com/blog/btl/hp-is-it-a-broken-company/59293?tag=content;feature-roto
I know my blog goes away from the article to a point but it sees to reinforce the issue we are dealing with.
How does a company generate revenues and stay profitable in a dynamic environment?
To have a competitive advantage!
What competitive advantage could be focused on operations, products, and strategy.
HP has becoming the laughing stock because they have become the fool they made themselves to be especially going away from their roots.
HP was founded and focused on research and product development. HP was all about innovation and was the biggest reason for their success.
When the economy started to tank in 2000, companies got focused on business operational cost. This led to Dell and its outsourcing of their business to India. Then companies followed like HP. Seeing that it still did not resolve their budget, they cut research and development instead developing better products.
I remember how Mark Hurd was given so much accolades for his profitability. But it was clear that he was all about cut business costs (including R&D) and did not really improve on new product lines (see the past 5 years of HP product lines). Now, Mark is gone and all his directives are clear and visible in that it helped the short term but failed on the long term.
As the article points out:
"Add it up and I argued that HP’s problems will outlast Whitman’s tenure:
Whatever HP decides it wants to be when it grows up it needs to focus on research and development and carve its own path. The current model revolves around being someone else—IBM, Cisco, Apple, whoever’s next. The problem is that HP has starved R&D at 3 percent of revenue all through the Mark Hurd years. Now HP doesn’t have the financial heft to suddenly jump to 6 percent (IBM levels) or even higher. That’s why I’m arguing that Whitman can’t turn around HP. HP’s R&D problems will last longer than Whitman’s tenure if history is any guide."
So HP can't be Cisco or IBM. They do not have the manpower to research and innovate new products. They can't develop their own competitive advantage. Cost is as low as HP could focus on strategy (but that is already an issue at hand).
This is the same issue with corporations today. R&D development is in what companies do internally. Instead, it is all about acquisitions and mergers. So there is a lack of fluidity and continuity and makes innovation harder to achieve efficiently. To constantly make profits short term could hamper the long term goals and revenues.
Why I am so adamant? It is the same thing of placing American workers as commodities and expecting profits short-term. Selling goods at a premium while not fairly compensating Americans workers for their hard work. Who do you think is going to buy your goods? All I hear is that American workers are lazy but the reality is far from the truth. Do Americans have to lower their cost of living? Maybe but the extent seems a bit unfair and naive on both fences. Companies tell us to re-invest ourselves at our own cost but won't pay necessarily premium wages. Our education is by far more than the wage but that is easily justified one way (workers) but not with corporations (R&D and self-innovate)...
HP is reflective of corporations' mentality of trying to get most for little. At one point, investment has to be made and requires commitment for success. Do I think companies need to be lean? Of course but being lean and starving are two different things. It is important to understand that even well-trained athletes just can't be lean but be strong to perform. Why does corporations fail to acknowledge that?
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