Power Tools 1993 November - Disc 2/Power Tools Plus (Disc 2 of 2)(November 1993)(HP).iso/hotlines/cnhl/young.txt

Text File | 1992-08-10 | 22KB | 455 lines

Bill Murphy and John Young
Radio HP March 1992

BILL:
Well thanks, Ted, and welcome again to Radio HP.  Over the past several
broadcasts, we've been fortunate to hear from Wim Roelandts and Lloyd
Taylor.  I thought that Wim provided great insight into our future
product direction and Lloyd did an outstanding job of explaining what's
really important to the CIO of a Fortune 29 company.  Also from the
response we've had from you, you've really enjoyed these interviews and
have gotten useful information.

The key message here, of course, is that HP is very well positioned to
capitalize on the clear, and emerging trends toward open systems and a
client/server architecture. Wim has the products, and Lloyd, as CIO of
a Fortune 29 company, is capitalizing on them and he's capitalizing on
them now.

Now with all this, what does the man at the top think? What's on the
mind of the CEO of a large global firm? What is he asking his
organization and his IT community to do and why?

These are really very relevant questions -- questions you need answers
to if you are to really take advantage of HP's position and
successfully penetrate large firms.

To answer them and provide his perspective on HP's position and
prospects, we are very pleased to have John Young, President and CEO of
Hewlett-Packard join us.

John, thanks very much for being with us, I know you have a very busy
schedule.

JOHN:
Well Bill, thanks for inviting me, I'm delighted to be with the Larry
King of HP Radio, and to have a chance to join you for this broadcast
today.

BILL:
John, what is on the mind of a Fortune 29, CEO?  What are your
priorities with regard to IT?

JOHN:
I do spend a lot of time talking to other CEO's and my concerns are
very similar to those that others have.  Fundamentally the world is
changing very rapidly out there and improving your ability to compete;
that is fundamentally changing the positioning of your company so you
can be more competitive in this environment is at the top of everyone's
list.  So those are the goals and information technology among those
CEOs that understand how it works, can be one of those really important
differentiators.  It's not the difference in and of itself, but applied
in the right context among other goals that drive the company ahead.
It can be extremely valuable.

BILL:
Clearly a lot has been said and written about that, in fact as you
know, we had Stephen Roach, the economist from Morgan Stanley recently
speak at a Uniforum dinner that we sponsored and he's made the point
for years that firms really haven't gotten the payback for the IT
investments they've been making.

JOHN:
Well, that's right.  The data is very clear on this point.  But when I
was speaking at Uniforum with Stephen, I was pointing out that alot of
it has to do with, I think, company management and particularly in the
service industry, those managements haven't put in place the right set
of ingredients to get the benefit out of IT investments.  And I
characterize how HP had performed over the last few years 'cuz the
first time I read Stephen Roach's articles on this, which was clear
back in the mid 80's, I got Lloyd Taylor together and we put some white
collar productivity things in place and, was interesting because
between 82 and 87, HP's white collar productivity grew about 5% per
year.  And at that same time our investment inside HP in Information
Technology, was only growing at about 1% per year.  Now that 5% per
year white collar productivity contrast was something like 14% per year
for blue collar productivity -- a big gap.


Well, we got interested in this and we spent alot more time thinking
about white collar productivity just recently we put the statistics
together again. For the 5 year period, 86 to 91 white collar
productivity grew 14% but the investment in information technology per
knowledge worker at HP went up 17% per worker during that period. And
we actually got white collar productivity to grow faster than blue
color productivity. So I think it shows you that when you focus on it,
you had to write programs, information technology, the investments can
get productivity just the same as the classically do in any other
industry.

BILL:
So at HP we actually have gotten the payback of the IT investments.

JOHN:
We actually have. And we have the hard data to support it but it's been
an outcome of having other clearly defined goals and drivers. Things
like 10X processes and other things that were challenging the
organization that forced us to change the processes.  That's the point.
If you don't do the process re-engineering or whatever it takes to get
your productivity up, you can buy all the IT stuff you want and it
isn't going to make any difference.

BILL:
But you're not going to affect the change.

JOHN:
Just not going to get the results.

BILL:
So if people are not getting the results, its not an IT issue, its a
management issue.

JOHN:
It starts with being a management issue.  I think and really setting
the right goals for the organization that says productivity improvement
is top of our list, proving our ability to compete is a strategic
importance for the company, and here are the things we're going to do
to turn that into an action plan.  At that point, the CIO and the IT
community can come together as one of the most important ways of
implementing that kind of strategic objective.

BILL:
O.K., let's talk a little bit more about the IT community and the CIO
-- What is their role?  What kind of guidelines are they getting from
the top?

JOHN:
Well, I think that's kind of the heart of the problem. They're role is
strictly supporting.  They're not getting the right kind of guidance
and support from the top.  No matter how hard you push, it's like
pushing on a string. You're not really going to affect the organization
and in the same way, as if the CEO was leading it in a certain
direction, and now you can come in and complement that leadership
direction and really make a difference in execution.

BILL:
What are you looking for from the CIO in terms of being more tightly
linked in the business strategies of the firm?

JOHN:
Well, I think that is exactly what you're looking for.

BILL:
You want them more tightly linked...

JOHN:
Absolutely and so many CIOs, you go in call on them I find, even today,
they spend so much of their time on cost reduction.  I mean they're
talking about changing things around, getting the numbers down, as if
this were the contribution.  And they're still missing the point, that
CIOs if they're doing their job, they ought to be working with the CEO
to help them shape the firm's overall goals and get these things in
place so that they can do their job properly by complementing these
strategic thrusts and driving the business ahead. At that point, they
can do faster applications, reusable code, all the things we talk about
fit in to implementing these things that are going to help something,
otherwise, as an end in itself, they're just doomed to be a lot of
churning around and not really making the difference that they need to
make.

BILL:
O.K., so the CIO tightly linked to the overall business processes of
the firm, but you mentioned some other things in terms of obviously
driving costs down, developing applications faster, re-engineering
processes.  Again, a lots been said and written about that as well, how
are they going to get that done?  I mean linking with the business
elements are one thing, how're they going to affect those fundamental
changes in the organization?  Is there a way for them to do that?

JOHN:
Well, we know how to do it at Hewlett-Packard.  It's the kinds of
things we've been concentrating on for all the decade of the 80s and
thats focusing on process base management. And at it's heart, total
quality control, all the things we've learned there, are about
processes, and how you get them laid out, how everybody in the company
gets to see how things really work, probably for the first time, and
how we can re-engineer that process to get the results we need.  That's
where the payoff really comes.  I'm sure all of you know that every
process we've looked at HP, whether its our manufacture base processes
or how we pay our bills, you name it.  Somewhere between 25 and 30% of
all the effort expended in that process does nothing but find and fix
failures. It doesn't do anything useful about advancing the cause of
whatever we're doing.  So, talk about productivity effects, if you can
make a big dent in that wasted effort, you not only approve attitudes
and enthusiasm and all of those things, you make a very big dent with
the productivity of the whole firm.

BILL:
What kind of technology does the CIO now have available from your
perspective to effect these kinds of changes?

JOHN:
Well, luckily the technology developments of the world have been very
complementary to this need for process re-engineering.  In fact, the
whole idea about client/server architectures and open systems, and all
those associated "middleware"  that have gone in there, exactly lay on
top of this problem. It's just a given that there are no greenfield
environments.  Everybody has some kind of complicated installed base
these days, and you don't have the luxury of just stopping everything
you're doing, scraping it all apart, starting over again, in fact,
those kind of dooms day application attempts always guarantee some kind
of disaster is soon to follow.  It just confirms what the CEO already
thinks-- these guys don't know what the hell they're doing and
generally speaking, that's probably the case. But this whole
client/server architecture, and the things we now know how to do can
provide a layer on top of those -- building on the existing databases
and information sources within the firm with a minimum incremental
investment produce the kind of user interfaces--the really useful
integrated information across the firm that get you a long ways,
probably 90% of the value can be achieved with 10 or 20% of the
investment you'd expect if you had to re-engineer this information
systems from scratch.

BILL:
Now we've done that within HP, but we're also able, given the
investments we've made over the past decade in open systems and
client/server, to do the same kind of things for other firms as well.

JOHN:
We have.  US West, very good example of changing around again a very
traditional way of providing customer support organization, lots of
mainframe databases, maybe 100 data sources in that company. Call
backs, waiting... if you liked Muzak as a customer, you were in great
shape, you got to hear alot of it while they were fumbling around
between the four terminals on their desk trying to find out whats the
pricing, what's your installed base and so forth.  The idea that you
could get a simplified client/server application laid over the top of
those databases and then get these multiple windows output the minute
the call comes in, here's what the installed base is, here's some
suggestions, artificial intelligence program providing prompts... Gee,
I got call waiting on line 1, but they didn't ask for it on line 2, I
better check with then.  This is a chance to not only have a much
improved sales environment but again, customer satisfaction has
absolutely sky rocketed.  It's very typical of the kinds of things
we're seeing happening more and more places.

BILL:
So that's an environment where you can take an existing application and
in many cases, the existing hardware, the mainframes already in place,
and in effect, surround them or  access the information, but provide a
much more flexible user interface, much better customer service, more
rapid development of new applications, things like that.

JOHN:
Well said.

BILL:
Now, we're doing that at HP too.  In fact, when Lloyd was on the
program last month, he mention the fact that all new application
development within HP--new applications-- were being developed in a
client server environment.

JOHN:
Right, it's a lot more efficient and the output, we're finding that
these integrated window environments and so forth is producing
productivity results beyond anything we had guessed.

BILL:
You know, a lot has also been said and written about that, in fact
we're getting alot of very favorable press these days. I suspect we're
the envy of virtually every other computer company right today.  From
your perspective, how did we get in this position?  What have we done
right?

JOHN:
Well, I think with the benefit of hindsight we've done alot of right
things over the year, the decade of the 80s, and it's literally almost
the last 10 years in which we have been putting things in position to
create the kind of nice competitive position we find ourselves in right
now.  We knew that being kind of number three in minicomputers, behind
IBM and DEC wasn't going to be a very comfortable place to be in.  And
we tried to think about  how can we change this game around to be
number one.  And we thought that open systems and conservative
computing were going to be the hallmark of the way things worked in the
years ahead so we started putting in the position HP to win in that
game.  And to try to change the game so we could win. RISC processors,
something HP reduced to practice and spent half a billion dollars
converting our entire product line--the only company that went through
that kind of pain and  strain to get it done.  Perhaps even higher risk
in the risky sense of the word was a going to industry standard
networking.  When we started to do that in 1983, nobody was doing that,
and yet our current experience with how that works is really central to
getting this heterogeneous environment under control and being able to
manage data across this whole kind of activity.  So I think we've had
the right view of what the customer dissatisfiers were and we
articulated those very early  and we literally set our development
agenda to systematically pick off these dissatisfiers and put together
a new structure in a way that would really solve the real business
problems that were pretty clear in the world out there.

BILL:
In addition to that, we've also seen some very significant shifting and
distribution -- distribution strategy -- how we get our products and
services to our customers and quite frankly a different role for HP's
direct sales force.

JOHN:
You're exactly right.  Partners are absolutely essential.  It hasn't
been that many years where we all things to all people, but today you
need value added partners of every kind.  We have those that supply
applications, we need help with databases and tools and technology
alliances.  Said another way, sort of a value chain has really been
affected dramatically by standards and we've had to look carefully at
this value chain to see where we can make a contribution and then where
these next door neighbors are in the value chain that we need help from
to provide kind of an integrated solution, which is what customers
still want to buy but it takes teamwork to make available to them.

BILL:
But quite a difference from back in the old days when you did it all
yourself.

JOHN:
Quite a difference.  So it really changes around what salesmen have to
do today in the kind of role they have to play in working with the
customer and with all these partners.

BILL:
One of the things we've been talking to the sales force about for quite
some time is the need to call high, and you're as high as it comes
within our company, how do you feel about the necessity to know about
information technology, information technology partners, the strategy
that they're pursuing, where they're going?

JOHN:
Well I think it's important simply because in my own case, I understand
pretty clearly what the potential is for information technology and how
it can be a central change agent and differentiator when properly
applied within your company.  I thing there are a growing number of
CEOs who are beginning to see that who are dissatisfied with what they
see today and they're starting to ask questions.  Particularly the more
you see in the papers about open systems and new things happening, you
know, your phone begins to ring; people raise these issues with you at
conferences and so forth, and it's clearly much more on CEO's minds
than it was one or two years ago.

BILL:
So the guy in the executive suite really wants to know whats going on.

JOHN:
Indeed.

BILL:
OK, But a CEO, a COO and Executive VP's are not the easiest people in
the world to get to see. Getting an appointment can really be a
challenge.

JOHN:
There's no doubt about that.  I think the average salesperson out there
has a tremendous challenge in getting a chance to have a detailed
discussion with somebody at that level in the corporation.  All the
defense mechanisms are put in place to keep them out, as a matter of
fact.

BILL:
What do they do to break free?  How do they break that log jam?

JOHN:
Well, I think they have to try  something different in order to get a
chance to make an appointment, some different way of coupling together
with them using traveling executives from the factory or region people
or whatever, you need to create a maybe an environment in which you can
get through that barrier system.

BILL:
OK, let me try this.I did this with Lloyd last month.  This is what I
call the 2 minute test.

You're in an elevator with a sales rep, and  he or she say had 2
minutes in that elevator with you, what could they say that would help
break that log jam.  What could they say that would get your attention
and get an appointment... to say, gee this person really has something
relevant to say.

JOHN:
What did Lloyd say?

BILL:
OK, Larry King wouldn't let you get away with that, and neither will I
You can't get away with that!  I want to know what's on your mind, then
I'll tell you what Lloyd said.

JOHN:
Well, I think the top of the mind ideas for CEOs have to do with
improving their ability to compete. And if I were riding in an elevator
and I found someone who was talking to me about something that had
maybe been in the company newspaper or a speech that I had given that
said, boy if we could only do A, B and C we would win in the
marketplace in years ahead and you brought up that talk that you read
of mine and you said "here are at least 3 things I thought about that
could make a big difference in implementing this in your company",
you'd get my attention right away.  Here's a guy that understands my
business and has been able to translate what he's doing into a direct
benefit idea for me.  If that could happen I would drag you out of the
elevator and take you into my office with me.

BILL:
You know that's interesting, you know what you're suggesting is that
obviously a lot of background work would have to be done to reach that
situation.  You'd have to research that company, research the
individual, understand what's going on, really on an up-to-date basis
to be able to hit the nail on the head and say something that was
really relevant to you.

JOHN:
Absolutely!  You go into a CEO's office were you to get an appointment
and start  talking about open systems and things like that, I mean
you're going nowhere.  You've got to realize that that's a means to
some end.  And the more you can understand the firm's requirements and
strategic directions, and particularly the articulation from the
leaders in the firm about what it's going to take to get there, what
our challenges are, and then translate that into "here's what we can
do" , that's what you gotta do, otherwise CEOs could care less about
technology or these sort of just wandering around discussions. It's got
to be to the point, they don't have the time to be off in some wild
goose chase.

BILL:
OK John, that's very insightful.  We've taken up a lot of your time. Do
you have any final comments or remarks you'd like to make for the field
organization?

JOHN:
Well, I'd just like to thank our audience for the tremendous job they
have done.  We have seen a lot of changes over the course of the last
year particularly, a little over a year since we have put CSO in place.
I am very satisfied with the progress that we have been able to make in
CSO, getting our vision clarified and everybody seeing things from the
same point of view and then translating that into a changed
organization and new staffing and kind of moving ahead.  Its been a
tremendously exciting 18 months but I think we have made an enormous
progress and it not only shows up in many conversations I had and
people's attitude and the bottom line as well.  So from every dimension
of it I think I'd like to extend my thanks to everybody and along with
that real recognition we have asked alot of our people everywhere and
particularly from those in the field.  We've had redeployments, we've
had this, that, and the other thing and asked alot of people move or
take different jobs or whatever.  And I'm just really grateful for the
positive attitudes and the willingness that's gone in to do this.
Everyone seeing that this is what it takes to put ourselves in position
to win in the marketplace and we're there.  I think you could see our
results over the course '92, we are going to get the payoff now for all
that hard work that we have put in place for the last 18 months.

BILL:
John thank you very much.  We very much appreciate you taking time out
of your busy schedule to be with us.

Well gang, there you have it.  Word from the top. I hope you find these
guest appearances from HP executives both informative and helpful. And
please let me know any feedback you have about them and things you'd
like to hear about and people you'd like to hear from. I'd certainly
love to hear it.

I look forward to joining you on the next Radio HP.