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The Word from Hurd

Before he was named Hewlett-Packard's chief executive on Mar. 30, almost no one other than investors in NCR Corp. knew the name Mark Hurd. While he had helped that once-moribund computer maker become a Wall Street high-flier, Hurd didn't even make most observers' dark-horse list of possible successors to Carly Fiorina, who was ousted in February. After all, NCR (NCR) is roughly 1/16th the size of HP (HPQ), and Hurd had never run a business aimed at consumers -- the segment that makes up much of HP's growth and profit.

Hurd, 48, presents a striking contrast to Fiorina, the charismatic super-saleswoman lured from Lucent Technologies (LU) in 1999 to inject some pizzazz back into HP. She came full of bold plans to get its diverse businesses working in sync. Hurd, however, favors a less centralized approach that puts the onus on business managers to bring in their own results. While she relied heavily on consultants, Hurd has shown them the door.

Fiorina reckoned her gender and star power could help HP build its brand, but colleagues say Hurd is mystified -- even annoyed -- by the intense media interest in his hiring. While Fiorina got in trouble with Wall Street more than once for missing earnings expectations, Hurd is known for underpromising and overdelivering.

"RENEWED ENERGY." And if Fiorina built her career as a stand-out marketer, insiders say Hurd's most jaw-dropping skill is his financial acumen. "He can go toe-to-toe with any CFO in the country," says Marty Seyer, a corporate vice-president at AMD Micro Devices (AMD), who worked for Hurd in the 1990s.

So how is this long-shot working out? Though still in the honeymoon stage, Hurd is off to a good start. His approach is resonating with investors, who have pushed the stock up almost 40% since his arrival, to $27. Despite announcing a plan to lay off 14,500 people, or 10% of the workforce, morale seems good among employees -- especially HP veterans who like the back-to-basics approach that hearkens back to how the company was run in its heyday (see BW Online, 9/1/05, "HP Says Goodbye to Drama").

And business partners and customers say they're already seeing a faster, more productive pace from HP. "They've got some renewed energy," says Gregory Spierkel, CEO of tech-distribution giant Ingram Micro (IM). "The people I've dealt with that are working for Mark or hearing about Mark are all feeling very good -- even though there are difficult decisions to be made. They've got a hands-on leader, the stock is moving in the right direction, and it's giving everyone a bit of a kick in their step."

Hurd reflected on his new job, management philosophy, and plans for HP in two interviews with BusinessWeek Computer Editor Peter Burrows. Edited excerpts follow:

You've spent a lot of time giving talks at various HP locales and meeting with customers. What have you learned?

If there's anything that struck me in coming to HP, it's the desire on the part of employees to see this company succeed. Employees are pretty smart. You go ask them what's wrong, and you'll get answers. You may not like what you hear, but you'll get answers.

That's one reason I take so many trips [to see customers]. People think I do this solely because I want the input from the customer. But I learn as much in the car on the way to the customer as I do when I get there.

Have you found that there's a morale problem?

You hear stories coming in about how HP is demoralized. But that's not what I find at all. I just came back last week from two of our biggest sites, and I think hope is high. I think people want to go kick some butt.

The CEO actually gets motivated by the employees, sometimes. Everyone thinks the CEO doesn't have emotion around all this stuff, but I get motivated by it, too.

Clearly, Carly Fiorina attracted a lot of media attention. How do you feel about all the media attention you're getting?

I'm interested in helping the press get a view of our company, our technologies, what we're doing for customers. I'm not very interested in having them write about me. I'm part of HP. This isn't Mark Hurd's HP. It's not Mark Hurd's thing. This is Hewlett-Packard, and I'm the CEO of Hewlett-Packard.

Many analysts have said HP needs to make a big strategic move, such as selling its PC business or spinning off its printer business. How do you feel about those comments?

More times than not, when people ask about HP, they want to hear some blockbuster speech -- that we're selling the PC business or spinning out the printer business, or we're getting out the services business. We need to temper the idea that this company has to have some earth-shaking event every 15 minutes.

Some of this frankly has to do with our public relations. We have to be focused on execution. We're in some very good markets. Some are better than others, but we have to focus on the core things that we do well. That's our job -- more than trying to create some incredibly great story.

Does that mean you're not considering spinning off the PC or printer businesses?

I'm not working on spinning out the PC business or on spinning out the printer business. It's not happening. And you can quote me.

Still, most analysts say you do have some nasty strategic problems to figure out.

Our cash-flow numbers are quite strong, and if you then look at our R&D spending plans over the next two to three years, we should be able to bring a lot of value to the marketplace.

That's how I think about strategy. There are all these markets out there that we have chosen, right or wrong, to participate in. We have to look at our assets -- our technology portfolio, our brand, our customer base, our heritage, our financial resources -- and then we can decide in which areas we should expand, where we should narrow our focus, where we should double down on our core.

I'm not going to get into a debate about [specifics]. But in the end, my view is that HP has an impressive set of assets we can bring to bear over the next few years.

What about criticism that HP is simply too complex to be run efficiently?

Yes, we're a complicated company. But my job is to simplify things and to make other people's jobs as simple and straightforward as I can possibly make them -- and to then go and get the most capable people we can find.

You've brought in some high-ranking outsiders, such as former Palm (PALM) CEO Todd Bradley and Former Dell (DELL) CIO Randy Mott. Will you be bringing in more outsiders?

I'm not wedded to any specific answer, other than I do believe in my heart that most great companies are built organically. Some say it doesn't look that way to them, but I'm going down the same process every time. The first choice is to look internally. If we can't make a perfect match or a close to perfect match, we'll look outside -- and a tie goes to the internal candidate.

HP has struggled in recent years to find the right organizational structure. You've returned HP to a more decentralized approach, and away from the matrix approach of your predecessor. Why?

You can align organizations every which way, and there are always fragilities. Go build me one on a piece of paper, and in 15 minutes I'll break it for you. But in the end, you can't reorganize every 15 minutes. You have to stay with your organizational models, let the fragilities play out over time, and then get the capabilities required [to make that approach work].

What was wrong with the matrix organizational structure initiated by your predecessor?

The more that I require a decision to be made by the three of you [pointing to the reporter and two press-relations people], the harder I've made the job. If I can make one person responsible, I've made it simpler. But I've also made you more accountable and more responsible. Over time, if you have a good batting average, I'll reward you. And if you don't, I won't.

The more accountable I can make you, the easier it is for you to show you're a great performer. The more that I make it a matrix, the more I give you the opportunity to blame others for something, or for you not to shine if you disagree with them. All of this fits together. Every time you promote, demote, reward, or recognize, you're doing the very same thing: You're telling everyone in the company what you value.

Why did you decide to stop selling Apple's (AAPL) iPod?

There are a lot of bets we can make, but we want to make those bets in markets that are exciting, have growth, are worth dominating -- make that "leading," the lawyers don't like "dominating" -- and in which, by the way, we can lead. So think about putting our logo on the iPod. Is the market worth leading? Maybe it is. But can we lead it, with no or very little technology differentiation? Doubtful. You have to go into places where you can lead.

Over the years, there has been a lot of debate over whether the so-called HP Way, the company's culture, is an asset or an anchor. What do you think?

It's a real strength. When a company has the kind of passion that HP-ers have, it shows up not only inside the company in a positive way but it bleeds into how we support and treat our customers. That's just got to be good.

Now, history doesn't predict the future. Just because you were good at something in the 1970s doesn't mean you'll be good at it tomorrow. But to the degree that it's a foundation to build on, I believe it's a strength.

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