Q & A with Mark Hurd

Mark Hurd is Chief Executive Officer, President and Chairman of HP’s Board of Directors. He’s an alumnus of Baylor’s Hankamer School of Business. HP is a technology solutions provider for consumers, businesses and institutions globally. The company’s offerings are in IT infrastructure, global services business and home computing, imaging, and printing. With over 150,000 employees and one billion customers worldwide, last year’s revenues totaled $91.7 billion. Earlier this year, Hurd was given the Baylor Business Legend award from the Houston Baylor Business Network.

Baylor University

Q1. Tell us a little bit about your Baylor experience and how it shaped you.

I came to Baylor on a tennis scholarship. I carried a full academic load and was in a fraternity. I think all of that – carrying the academic load, being a scholarship athlete, trying to be part of a fraternity – taught me the value of time and organization. I didn’t have a lot of time. I had a lot of things I wanted to get done while I was there, and it caused me to learn to discipline myself. Frankly, my days at Baylor were not too different from my days as part of a company. I had to manage my time. I had to divide it into certain pieces so that I’d get as much done as I possibly could. And I had to have the discipline to stay focused on the most important things that needed to get done.

Q2. Do any professors or programs stick out in your mind as being influential on your career?

While at Baylor, I had a professor who had a positive influence on me. Dr. Clifton Williams taught a course on leadership and management and spent a lot of time talking about the difference between the two. We discussed the importance of developing people to become leaders and about the importance of leader’s role in aligning an organization to execute against a plan. What I learned from Dr. Williams has stuck with me 27 years later and I would argue that he has been one of the most profound influences on my career.

Q3. How did you get started in you career?

Coming out of Baylor, I interviewed on my own, and I took a job as a frontline salesperson. I began by selling computers to anybody who would buy them. I think it was good for me to begin in a sales function because I got the opportunity to work directly with customers from the start. To be successful, I had to really understand the customers and their needs. I had to have a deep knowledge of my products and a solid understanding of our competitors. I learned some pretty important lessons in those first years as a front line sales person.

Q4. In the beginning, were there any specific events that formed your leadership style and career priorities?

I learned a couple of lessons quickly from my first boss, a company veteran and the district sales manager. After my very first sale, which I was pretty proud of, I learned I had filled out the order wrong and was told by a billing person to go back to the customer and re-do the form before we could fill the order. He told me I had used the ‘wrong hierarchy’ for the billing form and sent me away. When my boss asked me how my first customer call went, I told him with a sigh, ‘wrong hierarchy’. After explaining what I thought was a failure on my part, he quickly picked up the phone and called that billing manager and told him that HE was to fix this problem, immediately, not me nor our customer. And, that when I came down there to give him the order form back, he should stand up, shake my hand and thank me for keeping him employed. This lesson concluded with my boss telling me, “next time do it right”.

Twenty-five years later, I still remember the importance he placed on staying focused on the fundamentals and especially the customer. That it’s important not to let internal processes or bureaucracy distract from the basics of how a business ought to run.

When you get to the scale of HP, it’s easy to get lost in the sheer size and complexity of the company and forget about the fundamentals, the things that really make companies succeed: building great products, selling those products and offering services around them. And, at the same time, keeping a sharp focus on what customers say they need and want.

HP

Q5. What brought you to HP?

HP is a great company. It’s one of the great American business stories of our time. It is the original Silicon Valley startup. HP is a company that has historically seeded the valley and, frankly, the business world with a whole generation of entrepreneurs and leaders running some of America’s great companies today. HP is credited with inventing some of the great business practices you read about in business school like management by walking around, management by objective, flex time, and catastrophic health insurance for their employees. This company was expanding globally in the 1950s and was the first high-tech company to set up operations in China in the mid 1980s. Today, Hewlett-Packard is not just a global business; it’s the largest information technology company in the world. For me, the company has a great legacy, great people, and fantastic technology. In so many ways, this is a company worth working on and a company worth working hard for.

Q6. What inspires you about the HP culture?

HP was a company born in a garage in Silicon Valley in 1939. Bill Hewlett and David Packard built their first products in their garage, took them to market, and really built the company step by step from there. They created a performance-oriented culture from the very beginning. They built their reputation on world class products, great customer and employee relationships; and a culture of giving back to the communities where they do business. They valued their people and their customers. Their values and uncompromising integrity are still things that attract employees to the company today. And working as part of a company with such an important history motivates me to make sure we continue to deliver against this legacy. The employees of HP are talented people with a strong will to win and an incredible desire to please customers.

And the scale of HP, a Fortune 11 company, makes my job challenging and rewarding at the same time. HP has approximately 150,000 employees in 170 countries. We ended fiscal 2006 with about $91.7 billion in revenue. Our technology runs the world’s top 200 banks, 25 insurance companies and hundreds of the largest stockbroker firms on the planet among many other things. We have a $55 billion supply chain. The company shipped over 50 million printers last year; more than 30 million PCs; 2 million industry standard servers, and we have almost a billion customers that touch HP products world wide. It’s an enormous undertaking every day just to be sure we’re continuing to get it all right and answering to the many customers who depend on us and who are looking for us to lead.

Q7. What are the complexities that go along with running a company the size of HP?

Complexity in a company is not created by scale. The difference between running a company with $1 billion worth of revenue versus $91 billion of revenue isn’t nearly as significant as running a global company and a company with very distinct business groups and offerings.

Being truly global creates complexity. Doing business in China, doing business in India, doing business in France, doing business in the U.S. – in 170 countries – means intricate operational processes and a sound understanding of the marketing, cultural differences, exchange rates and regulations in every place we do business.

Having multiple businesses also creates complexity. At HP, each separate business has its own business model with different investment needs, different trajectories and different market structures that are competing. At the same time, we’ve got to be able to allocate resources and priorities across all of those businesses to optimize the total answer for HP.

Q8. In your first year at HP, you have done a lot of realigning. What are your major strategic goals?

We realigned the company to try to eliminate matrices at every turn. We want to push responsibility and accountability as low in the organization as we possibly can and get it as close to the customer as we possibly can.

We also want to shrink the layers of management. When I started at HP there were too many layers of management between the customer and the CEO. There are still too many layers but we’re making improvements. Matrices and layers create too much complexity and can slow an organization down which takes away from the customer experience. So by simplifying that, we gain speed and responsiveness.

We are working hard to streamline our operating model to try to raise accountability in the company. At the same time, we are actually spending money to save money. We are driving towards a lower cost structure by transforming our IT infrastructure and by consolidating and streamlining our real estate portfolio over the coming years. These actions to reduce our cost structure allow us to become more competitive in the market. I’m a firm believer that if you have too much cost, you won’t grow.

So, in a nutshell, we’re trying to decrease our cost structure, increase our accountability, improve our ability to go to market, make sure we stay focused on technology, and build the best customer service organization on the planet.

Q9. What are some of the challenges HP faces doing business in a global economy?

We are operating against a global economic backdrop that many of us are seeing for the first time in our lives. We’re sitting with an economy in the U.S. that’s growing between three and four percent in GDP and with markets like China and India growing at exponentially faster GDP rates. And, IT spending grows even faster than the overall GDP in these markets.

HP is growing in every market in which we operate. My job is to capitalize on all the changes in our disparate marketplaces – changes in IT and engineering education, increasingly rapid adoption of IT and evolving customer needs. By leveraging the distinct characteristics in each of these economies and marrying the assets of our company, we ought to be able to put HP in the best possible position to serve our global customers.

Q10. When you took the reigns at HP, you made it a priority to meet with as many customers as possible. What did that teach you?

Yes. I actually met with hundreds in the first three months, and I’ve met with thousands more since then. One statement I can make is that I’ve never seen a company whose customers really want to see it win more than HP. The respect they have for the people of HP is really incredible. I also learned that while HP is a great technology and engineering company, it could be a lot better from a sales perspective. Now, we know we still have work to do from an account management and a customer relationship perspective. We believe if you show up for business with a customer, you actually get more business. Something like 23% of the time, we didn’t even call on a customer when there was business to be earned. This is unacceptable, and as I said, not focusing on the fundamentals. Also, we’re focused on making sure we have the right people to cover the right accounts. For example, with our 200 largest customers, we’re doing an evaluation process to make sure we are meeting their needs. We need to be having the right level of conversations with these customers from the get go. We need to operate more like a CIO’s strategic partners rather than simply selling what’s in the catalog to their procurement department. We will build the HP sales force into the World’s best sales force. We know that is hard work and it’s going to take time, but that’s what customers say they want from us, and that’s what we’re going to give them.

Leadership

Q11. In your opinion, what is the difference between a manager and a leader?

The definition of managers in my mind is someone who says, “I have a hand. I’m going to optimize the hand that I’ve been given.” Leaders actively change the hand to drive the business. Leaders make change where they see it is needed and actively develop the talent they have on their teams. I think the ultimate mark of leadership is to say, “Here’s where I’m going to go,” and to go put a plan together to get there and get it done. I think people want that leadership, they want to be developed, they want to know what to do. They want to have clear objectives; they want to understand what they did right, what they did wrong and what they can do. In other words, I think leaders actually have to lead. Leading is not just about managing people. To lead, you have to help people understand where we’re trying to take the company and what their role is in getting it there.

Q12. What makes a great leader?

I think it’s all the things I’ve mentioned: being able to clearly communicate about where you want to take the team; knowing who and what it will take to get you there, and building a plan for the team to work against to get you there together. Bill Hewlett and Dave Packard were great leaders – truly visionary before their time while also leading by example and being accessible to everyone in their company. They didn’t just manage their people; they rolled up their sleeves and went every step of the way with them to build one of the world’s great companies.

They built their company from nothing. They started with basically no money; there wasn’t “venture capital” at the time. This was “do whatever was necessary to fund the company and grow it.”

I have tremendous respect for what they accomplished and how they led this company through several decades and stages of growth. I work hard every day to help HP get where it wants to be and to ensure we’re training the next generation of leaders who will continue to build and grow this company into one that is truly the best it can be.

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Baylor Business Review, Fall 2006



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