Umair Haque / Bubblegeneration
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Design principles for 21st century companies, markets, and economies. Foreword by Gary Hamel. Coming January 4th. Pre-order at Amazon.

Saturday, September 04, 2004

Nick Carr on Innovation in Strategy+Business (Free Reg). Same old process innovation vs product innovation stuff, with some fast imitation thrown in. Key point : have focus in what/where you innovate and try to translate innovation into a competitive advantage.

What I liked most in the article was the comparison of the innovation strategies of Dell and Gateway.

"...Compare Dell�s and Apple�s highly disciplined innovation efforts to Gateway�s shoot-anything-that-moves approach. Gateway started as a process innovator, becoming, with Dell, a pioneer of direct distribution, but it also tried to be a product differentiator, maintaining relatively high-cost manufacturing plants, investing more than Dell in R&D, and launching expensive brand-advertising campaigns. It innovated aggressively on the retailing end as well, pioneering the exclusive stores that Apple would later (and more successfully) copy. It even tried to be a service innovator, pursuing a highly publicized �beyond the box� strategy involving the provision of various consulting services to small businesses. By trying to innovate everywhere, Gateway failed to build a strong competitive advantage anywhere."

Can you see HP written all over this? This is *exactly* why I think HP's strategy (if any), will be quite ineffective. They are trying to be all things to all people, and running into more focused competitors such as IBM, Dell and Sun everywhere. Their competitive response has been to imitate all of their competitors : getting into consumer electronics like Dell and Gateway, building up consulting practice like IBM, and pushing high-end unix servers like Sun. Somewhere in this whole mess, there's also Linux, consumer electronics and printing. Imagine how much worse it would've been for HP if their bid for PwC acquisition had gone through!

Having said that, I am not quite sure of how exactly I'd fix HP if I were Carly. Probably, my starting point would be the application of Jack Welch's principle : get out of each business that is not number 1 or 2 in its market. Getting out of consumer electronics would be a no-brainer, as I think HP just does not have what it takes to compete againt the Japanese product innovators on one hand and American process innovators like Dell on the other, not to mention the emerging low-cost Chinese players. After that, selling off the consulting practice may be a good start. High-end servers could be the next to go. Then do something with the rest.

What would you do?

-- Mahashunyam // 6:21 PM // 0 comments


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