Institutionalizing structural change is a crucial aspect of sustaining long-term organizational success. Hewlett-Packard (HP) has exemplified this through its ability to repeatedly implement and embed major organizational changes. HP's journey showcases how a company can maintain strong financial performance and corporate reputation amidst continuous transformation.
Background and Strategic Objectives
HP's history of structural change is extensive. Since its founding in 1939, HP has successfully transitioned through numerous significant changes, including evolving from a high-tech entrepreneurial start-up to a leading computer company, and from a technology-based organization to a market/brand-driven entity. These changes were driven by the need to innovate and adapt in the highly volatile electronics and computer industry.
The HP Way, a cultural artifact emphasizing participative management and teamwork, played a dual role in facilitating and constraining these changes. While it fostered a strong sense of purpose and collaboration, it also posed challenges in implementing new structures that required more centralized coordination.
Key Structural Changes and Challenges
Initial Structural Changes (1982)
Transitioned from a producer of high-quality electronic instruments to a computer company.
Structured into over 50 autonomous product divisions, which promoted innovation but hindered cross-division cooperation.
Reorganization in the 1990s
Faced issues of slow decision-making and product development due to an unwieldy committee system.
John Young, then CEO, reorganized the computer group, centralizing research, marketing, and manufacturing.
Further Structural Reforms (1990)
Divided the computer business into two groups to focus on market needs, restoring autonomy to divisions.
This reorganization led to strong revenue and profit growth, showcasing the balance between individuality and common purpose.
Strategic Shift under Lewis Platt (1993)
Announced a strategy to converge base technologies to create new products for the converging markets.
Tied division managers' incentives to working cooperatively across divisions, reinforcing the new structure.
Institutionalizing the Changes
Institutionalizing these structural changes involved several key processes:
Commitment from Leadership
Leadership commitment was crucial in driving the changes and ensuring they were embraced throughout the organization.
Leaders modeled the behaviors and values needed to support the new structures.
Cultural Integration
The HP Way supported the new structures by promoting common values and collaboration while balancing individual freedom.
Cultural workshops and training programs helped employees understand and adopt the new behaviors.
Performance Management and Incentives
Changes in performance management systems reinforced the new structures.
Incentives were aligned with the desired behaviors, ensuring that employees were motivated to embrace the changes.
Ongoing Evaluation and Feedback
Continuous evaluation and feedback mechanisms ensured that the changes were effective and allowed for adjustments as needed.
This helped in identifying and addressing any issues early on, sustaining the momentum for change.
Conclusion
HP's success in institutionalizing structural change highlights the importance of leadership commitment, cultural integration, and aligning performance management systems. By embedding these changes into the organizational fabric, HP was able to maintain its innovative edge and market leadership.
Organizational Development Services
At OrgEvo Consulting, we specialize in helping organizations institutionalize structural changes for sustained success. Our services include leadership training, cultural integration workshops, and performance management alignment to ensure that changes are deeply embedded and effective. Contact us to learn how we can support your organizational development needs.
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