EUROPEAN OUTLOOK

'RULES OF GARAGE' ENSURE CONTINUED INNOVATION

Hewlett-Packard (HP) CEO Carly Fiorina spoke to Lance Knobel about the challenge of making over a multibillion-dollar business while keeping up with a rapidly changing new economy.

GLOBAL ECONOMIC VIEWPOINT: What is the future of the IT (information technology) market? How is a company like Hewlett Packard prepared to cope?

CARLY FIORINA: We are moving into a world where business life and personal life are blurring. The technology between the home and the office is blurring. In many ways, the home is the next great frontier of technology advances.

Hewlett-Packard is prepared to head into this frontier because we are both a consumer and an enterprise company.

We have both the computing and the imaging businesses. That's important now because the Internet is driving a lot of printing and imaging. It's also important because digital imaging represents a transformational opportunity for a whole set of industries. We're finding unique ways of putting the imaging and the computing platforms together. We talk about moving toward services-based computing, toward a world where almost anything can become an e-service accessed by information appliances that are intelligent and connected and increasingly small. And all of that is supported by always-on Internet infrastructure.

We're the only company that plays in all three of those spaces: e-services, Internet infrastructure and information appliances. So for all those reasons we have a unique position and a unique opportunity.

Beyond this, I would say that the world we are seeing now -- the world of services-based computing, of computing as a utility -- is one that was predicted some 20 years ago by Joel Birnbaum, who ran HP Labs at the time. So it's as though this company's time has finally arrived. The world we've been predicting and imagining and planning for we almost missed because we weren't focused enough. But now we're ready for it.

We have tried to capture the spirit of the original HP in what we call the rules of the garage. The garage is a special place for us. It represents that entrepreneurial, inventive spirit that is special about HP. The reason we wrote them down was to remind ourselves that this is what this place used to be about, it's what this place always needs to be about. Those soft things, those things that represent the soul and the spirit of the place, in the end, those are in many cases the most sustainable competitive advantage that you have.

I think they are even more important now than they used to be. Why are there growing protests in places like Seattle and Davos and Quebec City as well? Some of it is just rabble-rousers looking to cause trouble. But there is a real set of issues where technology has to be about more than the greedy and the few. It has to be about more than just stock options. Technology also needs to play a role in transforming the world into a better place. There are a lot of values- and ethics-based issues that technology creates for companies. Values, or soul, or spirit is a compass for companies in what will be some difficult choices. It's really the values and soul and spirit that we mean when we talk about preserving the best and reinventing the rest.

RULES OF THE GARAGE

-- Believe you can change the world.

-- Work quickly, keep the tools unlocked, work whenever.

-- Know when to work alone and when to work together.

-- Share tools, ideas. Trust your colleagues.

-- No politics. No bureaucracy. (These are ridiculous in a garage.)

-- The customer defines a job well done.

-- Radical ideas are not bad ideas.

-- Invent different ways of working.

-- Make a contribution every day. If it doesn't contribute, it doesn't leave the garage.

-- Believe that together we can do anything.

GEV: Transforming a company the size and complexity of HP is no easy task. What is your advice to others?

FIORINA: Change is always hard. My job as a leader in the organization is to effect change on a massive scale, because it's required, and in a relatively quick period of time because the industry is moving. To do that, you need to startle the organization strongly enough so that change is possible. And yet you can't send the organization into cardiac arrest. Getting that balance right -- of enough surprise, enough seriousness, enough shock to the system so the system begins to respond, but not so much that it goes into arrest -- is important.

That initial shock to the system is hard. People suddenly find that the way they used to do things doesn't work any more. They have to rethink how they contribute and what their skills are. That's difficult.

GEV: How do you deal with the shifting, murky boundaries among businesses today?

FIORINA: I think an organization today needs to be permeable. There need to be lots of places where there are connections with the muddy, cloudy boundaries that exist. One thing to bear in mind is in that kind of world, which is where things are going, you require some tolerance for a bit of chaos. It's not all going to be neat. There will be shifting alliances, and relationships will not always be clean and pure. The technology industry has really pioneered the idea of competition, and sometimes it is messy and uncomfortable. But that is what it takes. I think in this chaos, this muddiness, there are fewer and fewer decisions that chief executives can and should make. I think the role of leadership now is to set the frame, and by setting the frame I mean make the high-order decisions around strategy, structure, process, rewards, metrics, culture and behavior. Get the frame right. But within that frame I think it's the job of leadership to set people free and let them go out and create the relationships, push the boundaries, be entrepreneurial. So much of that permeability is required to respond with speed to changing market requirements.

I think biology is actually the appropriate science in this way. I have this mental picture of the organization really functioning like an organism, moving around, feeling its way through a new space. That is not a model where centralized command and control work.

GEV: In what ways does the relationship between government and business need to change?

FIORINA: There has been a view in the high-tech industry that the right role of government is to leave us alone. And there has been a view in government that the right role is to police the industry, because the consumer needs protection. I think we are entering an era where there is real empowerment of the individual, where there is destruction of physical barriers and the destruction of geography as a potent political force. That means a different role for government. The consumer, the individual, is a different entity from 10 years ago. It means business, particularly the high-tech industry, can no longer say with any credibility: ''Just leave us alone. Don't tax us, don't influence us.'' It's not realistic, it's not credible.

Government can learn a lot from business about what this new world is going to be like. Businesses need to invest in the time to build some partnerships to work with government. In some cases it means learning each other's language.

GEV: You've mentioned the anti-globalization protests. I don't see that as being particularly focused on the technology industry, but more on business writ large.

FIORINA: I see a big yellow flashing light. People are legitimately concerned about what appears to be a growing set of inequities. Nowhere is that more obvious than in the technology space. You have Silicon Valley dot-coms and stock options and famously wealthy people, and yet half the world has never made a phone call. So the technology industry should be paying attention to it. Because it says that globalization and the power of technology cannot simply be about the few and the wealthy. If we don't pay attention to that flashing light, we will become a focus.

And, of course, technology, if well applied and well understood, has the opportunity to help with many of those issues.

(c) 2001, World Link. Distributed by the Los Angeles Times Syndicate International

For immediate release (Distributed 5/15/01)

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