A magazine for Hewlett-Packard people

r• 1 I: 'I

www.HPARCHIVE.com

May-June 1999

FROM THE EDITOR

T he year was 1963. The Hew1ett­Packard Company was a mature24 years old. The population

had grown to 6,000 employees.Communicating with HP's far-flungemployees was more difficult each day.

Dave Packard had an idea: Start aprint magazine that would link employ­ees around the world. It would be inter­esting, informative and entertaining.

Dave named the publication:MEASURE.

It's 36 years later now. HP has122,800 employees with 600 officesin 130 countries. More people knowthe company today for our printersand computer products than for ourroots in test-and-measurement prod­ucts. Communications is measuredin Internet time-seconds. The "new"HP-the computing and imagingcompany-is agile, fast and focused.Those aren't exactly the qualities of abimonthly print magazine.

And so, after nearly four decadesof continuous publication, MEASUREwill stop being printed after theSeptember-October 1999 edition.

Instead, beginning November 1,stories that you're accustomed to see­ing in MEASURE will be available onthe internal Web site at http://hpnow.hp.com. You won't have to wait twomonths to see them because new sto­ries will be posted there about everytwo weeks. While MEASURE hasbeen mostly a feature-oriented publi­cation, the Web site has the ability todeliver more timely stories, too-andfaster. And you'll see articles targetedat each of the four businesses in thecomputing and imaging company.

In other words, the stories will beagile, fast and focused.

Believe me, this isn't a decision wemade lightly. Some readers have sug-

gested for two years or more thatMEASURE should be Web-only. Butwe didn't think the timing was right.However, since the announcementon March 2 that HP will split into twocompanies-one for computing andimaging, the second for measurementbusinesses-it seemed appropriatefor a change.

HP is taking a bold step forwardand MEASURE should, too. Like Hp,we can be fast, focused and agile.

Of course, this decision comeswith some sacrifices. Productionand some other workers-less than10 percent of the computing andimaging audience-don't have easyaccess to the Web. Also, retirees­among our most loyal and vocalreaders-can't access the internalWeb from outside HP. Somehow, thecompany will have to explore otherways to serve these audiences.

Several people have told usthat they like receiving the printedMEASURE and, in the case of U.S.employees, receiving it at their homes.Developing a loyal online readershipwill be a challenge for us. But it's agoal we're committed to achieve.

The HP Way isn't dead becauseMEASURE no longer will be printed.HP still has a strong commitment tocommunicating with employees. We'rejust changing the delivery vehiclefrom print to online.

You can help us shape the contentof the online articles by filling outthe survey card in this edition ofMEASURE. Tell us what you've likedabout the publication and what needsto improve. We'll publish as many let­ters as we can in the July-August andSeptember-October editions.

It's an exciting time as MEASUREmoves into the next chapter of itshistory. I hope you like the change.

-Jay Coleman

MEASURE

On the cover: For 60 years,"the garage" has symbolizedHewlett-Packard and thecreative spirit for which thecompany became known.The garage was HP's first

"facility" and in 1989 wasnamed a California historicallandmark as the birthplaceof Silicon Valley. So, whenHP announced in March thatit's splitting into two com­panies, Scott Willis, SanJose Mercury News editorialcartoonist, chose that mod­est image to symbolizethe breakup.

For expanded coverage ofHP's historic realignment,turn to page 14.

2 MEASURE

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8 E-services: connecting the dotsWhat began as a seemingly impossible HPvision makes the Web a huge virtual computer.

4 Lucent: a clear winnerWhat can HP learn from Lucent Technologies,which successfully split from AT&T fouryears ago? As it turns out, plenty!

Comcast Cellular Communicationsplans to use lucent's Short MessageService to allow its customers to sendbrief text messages instantaneously towireless phones via the Internet. Forother lucent innovations, see the storythat begins on page 4.

40 Your turnMEASURE readers sharetheir views on matters ofimportance.

38 Web-wiseDr, Cyberspace recommendsa cure for your Y2K ailments.

36 Letter from Lew PlattHP's chairman and CEOemphasizes the need to "keepthe plane flying" during theorganization's transition totwo companies.

34 Letter from Ned BarnholtThe CEO of "NewCo," the newcompany being formed fromHP's Measurement Organi­zation, discusses the excitingopportunities ahead.

11 PeopleHP salutes retiring Labs'director Joel Birnbaum.

DEPARTMENTS

28 Getting back to the HP WayBoard of directors' member DickHackbom shares his views.

26 Branching out from the familytree-Susan Packard Orr andWalter Hewlett discuss their views.

24 A million and one questionsHow do you make "infra­structure" decisions?

18 A capital ideaWhat happens if "NewCo"has an IPO?

16 The two sides ofa split decisionEmployee reactions varied widelywhen HP announced the split.

15 Coining a name: the flip sideFinding the perfect companyname in 1999 isn't easy.

14 Breaking up is hard to doA special HP-transition section

20 Just the two of usHP's evolving organizationalstructure shows our roots.

30 The $40 billion fourThe leaders of HP's fourbusinesses discuss their vision.

41 ExtraMEASURENews from around theHPworld.

32 Exciting possibilities in life sciencesLab-on-a-chip and gene scanning are justtwo of the new ventures.

42 Parting shotFormer employee RhondaKirk captures a lasting imageof Bill and Dave.

MEASUREEditor:Jay Coleman, ABC*

Associate editors:Kathy MirtalloDavid L. PriceJoan Tharp

Art director:Tim Mitchell

Contributing writer/Web liaison:Lila Kakuk

Photo research:Carol Parcels

Circulationllntern:MuoiTran

MEASUREis published in mid-January, March, May, July, September and November for employees and associates of Hewlett-PackardCompany. It is produced by HP Communications, Employee and Executive Communications section, Shirley Gilbert, manager. Addresscorrespondence to MEASURE, Hewlett·Packard Company, 3000 Hanover Street, 20BR, Palo Alto, California 94304-1185, U.S.A. The telephonenumber is (650)857-4144; the fax number is (6501857-7299; and the e-mail address is jay-coleman@hp.com.

Affymetrix is a U.S.-registered trademark used by Affymetrix Inc. GeneChip is a U.S.-registered trademark used by Affymetrix Inc.

• Copyright 1999 by Hewlett-Packard Company. Material may be reprinted with permission.*Accredited Business Communicator by the International Association of Business Communicators (IABC).

Hewlett-Packard Company is a global manufacturer of computing, communications and measurement products and services recognized forexcellence in quality and support. HP has 122,800 employees worldwide and had revenue of $47.1 billion in its 1998 fiscal year.

Selected articles from this and past editions of MEASURE are available on HP.Now at http://hpnow.hp.com/'

* MEASURE magazine is printed on recycled paper with vegetable-based inks.

May-June 1999 3

www.HPARCHIVE.com

EST OF THE BEST

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"The AT&T breakup was a shockfor me at the time, but now I view itas the opportunity of a lifetime," Tomsays. "I think it could be the samething for the two new HP companies.It's an opportunity to rethink yourbusiness practices forthe future. This is agreat time to makechanges-cultural,strategic or behav­ioral. You can startwith a clean sheetof paper."

For Lucent, thatmeant a new begin­ning as a communica­tions systems andtechnology company-one of the largestcompanies of its kindin the world-withrevenue of more thanUS. $20 billion.

Ironically, in settingup the new company,Lucent executivesstudied two bigcompanies with solidbusiness track records:Motorola and HP.Today, HP is usingLucent as a model forhow to spin off itsnew measurementcompany.

For Lucent, it allbegan with an initialpublic offering (IPO)of stock-the largestIPO in US. history atthe time. One hundredemployees represent­ing all parts of the

'TheAT&Tbreakup wasashock forme at thetime, butnowl viewit as theopportunityofa lifetime. fI

om Uhlman knowsfull well what Hewlett­Packard employees aregoing through as the

60-year-old organization splits intotwo new companies.

In May 1995, Tom, then HP'sdirector of Corporate Development,ended a 12-year HP career and headedback to his East Coast roots to takethe Corporate Development v.P. jobat AT&T-the 300,000-person, US.$75 billion-a-year telecommunica­tions giant.

It was a safe, upwardly mobilemove to an exciting job at a presti­gious company with a 110-year history.

Then everything changed. OnSeptember 25,1995, AT&T announcedit would divide into three new com­panies: AT&T, Lucent Technologiesand NCR.

"I'd hardlyunpacked my boxesand was just begin­ning to understandthis huge, complexcompany when thetrivestiture hap­pened," says Tom,who today is presi­dent of Lucent'sNew VenturesGroup.

Innovation is one of the three key characteris­tics ofBest of the Best companies. And few

d companies innovate as well as LucentTechnologies. Even its logo says it: Bell Labs

Innovations. MEASURE examines the AT&T off­spring to learn how Lucent has become one of the Best ofthe Best in fewer than four years.-Editor

4 MEASURE

By Jay Coleman

What can HP learnfrom Lucent Technologies,a company that hasrocketed to successsince its split from AT&T?

Best of the Best

Lucent:aclear

•winner

Some applications of Lucent technology include:

Left:Telecom Italia, the largest phone companyin Italy and the sixth largest in the world, is aglobal service provider that uses Lucent intelligent­network software. The company handles 18 millioncalls a day.

Right: QVe, which depends on Lucentcall-center technology to handle customer

orders and inquiries, receives between6 million and 10 million calls a month.

Below: Bank One Ballpark in Phoenix, Arizona, isthe world's first "smart" stadium. A single networkbased on Lucent's SYSTIMAX technology not onlyconnects the stadium's telephones and computers,but also controls the temperature, lighting, score­board and retractable roof.

diode, communications satellite,sound motion pictures and stereorecording, among other technologies.

When Lucent wasn't inventing newtechnologies during the past threeyears, it was buying them. The com­pany made more than 20 acquisitionssince 1996, including 11 in the field ofdata networking.

One of those acquisitions was HP'sLMDS (local multipoint distributionservice) Wireless Business. Theacquisition combined HP's exper-tise in microwave technology andLucent's strength in network integra­tion to forge a formidable presencein the wireless broadband arena-30 tinles the speed of a TIline.

Lucent's boldest move came inJanuary 1999 when it announced anagreement to merge with AscendCommunications, an Alameda, Calif­ornia, provider of wide-area-networkcore switching and access data­networking equipment. The transac­tion is valued at about U.S. $20 billion.

In less than four years, Lucenthas established itself as a technicalleader in virtually every field it's in.It's outrageously successful fman­cially and ranks No. 62 on Fortunemagazine's 1999 list of the bestcompanies to work for in America.

"AT&T had more formality andless openness than I was used to atHP," Tom Uhlman notes. "This datesback to the company's long history,the monopoly the company held

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Every Lucent employee was grantedan option for 100 shares of stock inApril 1996. Today, those options areworth about U.S. $18,000.

According to the Standard & Poor's500 stock index, no other $30-billioncompany is growing at 20 percent ormore a year. "The stock has beenjust a monster," Mark Herskovitz,co-manager of the Dreyfus Tech­nology Growth Fund, told BusinessWeek magazine.

Perhaps the key to Lucent's suc­cess is what it retained during thesplit with AT&T-namely, BellLaboratories. How important is theidentity with the lab, which datesback to inventor and founderAlexander Graham Bell? It's promi-

nently displayed under theLucent Technologies logo, "BellLabs Innovations."

This is a lab that hasemployed 11 Nobel Prize win­ners, including Horst Stormer,who, with two former BellLabs scientists, won the 1998prize in physics. Bell Labs hasreceived more than 25,500patents, and employees in 20facilities worldwide earn 3.5each workday. R&D teamsare getting innovations tomarket in half the time it

took just three years ago.Bell Labs is the birthplace of the

transistor, laser, solar cell, light-emitting

lvi. UhlmanThomas presidell!

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In three years, LucentTechnologies stockhas grown from $13.50 to $108.50 per

share and split twice. Lucent's 773-per­cent growth is staggering compared withthat of the Dow Jones Industrial Average

(76 percent), the S&P 500 (101 percent)and NASDAQ (129 percent).

business gathered at the New YorkStock Exchange. A company elec­tronic specialist from Oklahomamade the first Lucent stock purchase-an honor traditionally reserved forthe company CEO-and anotheremployee, a technician, rang theclosing bell at the stock exchangethat day.

The original April 1996 IPO stockprice of $13.50 grew to $108.50 byMarch 1999. In February 1999, Lucentannounced a two-for-one split-itssecond in 12 months. Today, Lucentis the second-most widely held stockin the United States (behind AT&T):about three million shareholders ownmore than 2.6 billion common shares.

Lucent

The name gameAccording to Lucent, thenew company name wasdeveloped after extensiveinterviews with customersand other stakeholders.

"Lucent means 'markedby clarity' or 'glowingwith light: The logo is abold, red, hand-drawninnovation ring."

6 MEASURE

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M~lIions of people surf the Internet each day for every­thing from homework assistance to tax advice, withhelp from LucentTechnologies. Lucent provides a widerange of Internet-enabling technologies to PC manufac­turers, Internet service providers, network operators andbusiness enterprises.

and a culture of bureaucracy andentitlement.

"Lucent is somewhat more akin tothe HP I left than to the AT&T I

Lucent at a glance• Headquarters: Murray Hill,

New Jersey• URL: http://www.lucent.com• New York Stock Exchange

Symbol: LU• 1998 revenue: U.S. $30.1 billion• Number of employees: 143.000• Number of employees in United

States: 113.000• 1999 Fortune 500 rank: 33• Number of shares of stock granted

to each Lucent employee whencompany went public in 1996: 100

• Value of those 400 options (aftertwo stock splits) today: about U.S.$18.000

• Number of Lucent patents earnedeach workday: 3.5

joined," Tom says. "Clearly, thestock has perfornled very well andthat has helped reinforce the benefitsof the breakup, but I would add thatLucent has excelled by all perfor­mance metrics."

As the Lucent account executiveto Hp, Tom meets quarterly withHP management to discuss ways inwhich the companies can work bettertogether. "We are a big customer ofHP," he says, "and HP is a significantcustomer of Lucent. So we're veryinterested in HP's new organizationalalignment."

The HP-Lucent relationship evenextends to Lucent's board of direc­tors. Former HP CEO John Young hasbeen a Lucent director since 1996.

Lucent's largest clistomer is its for­mer "parent"-AT&T. In March 1999,Lucent announced that it expects tosupply U.S. $1 billion in equipmentand services, including wireless

access to the Internet,to AT&T.

Early on in the trivesti­ture, AT&T anticipatedlayoffs as high as 40,000employees. And althoughLucent did spin off someof its non-core businesses-consumer products andmodems, for example-it grew in other areas,including wireless andsoftware development.Today, Lucent actuallyhas 20,000 more employ­ees than it did at the tinleof the AT&T breakup.

Acquisitions. Innovations.Phenomenal growth. Lucent

Technologies has proven

Lucent's Visual Insights software can helpbusinesses detect patterns in their data.Each dot in this example represents itemspurchased by shoppers at one supermar­ket, with lines drawn between the purchas­es of individual shoppers. It reveals a not­unexpected link between purchases ofcookies (red dots) and milk (white dots).

What can HP learnfrom Lucent?Lucent Technologies was a$20 billion startup when it spun offfrom AT&T in 1995 and today hasmore than U.S. $30 billion in rev­enues. Tom Uhlman, president ofLucent's New Ventures Group andformerly HP's director of CorporateDevelopment, passes on theseimportant lessons:

1. Decide quickly. Try to be"roughly right" during the transi­tion. "It's more important than totalaccuracy in today's demandingbusiness environment."

2. View change as an oppor­tunity. You've heard it before, butit's true. "People who are chal­lenged by change and who embraceit have thrived in Lucent."

3. Stay focused. "Most of thejobs at HP aren't changing, eventhough the logo and the companyname will change for some.Meeting customer needs is stilleveryone's NO.1 job."

4. For those HP employees inthe new measurement company,identify with the new company andthe new name as soon as possible."It will be difficult for some people;but remember that the HP cultureand values can transfer to the newcompany, as well as remain withthe existing company."

that the AT&T breakup-and achance to reinvent itself-may bethe best thing that ever happened.

"It's an emotionally chargedtime," Tom Uhlman says of thetrivestiture period, "but it can bethe beginning of great opportunitiesfor all concerned." M

May-June 1999 7

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Anythingthat can bedigitized canconceivablybecome ane-servlce.

TRATEGY

E-services:connectingthedotsWhat began as a seeminglyimpossible vision nearly20 years ago at HP is trans­forming the Web into a hugevirtual computer today.

By Lisa Lion Wolfe

8 MEASURE

It's 1982. Joel Birnbaum, then direc­tor of HP Labs and an information­technology guru, paints a pictureof an extraordinary future world toan audience of HP engineers. It's aworld in which society will viewcomputing as a utility-as pervasiveas every day, as available and conve­nient as a utility, much like electricity.

Joel predicts that a whole host of"appliances"-specialized devices­will plug seamlessly into this infor­mation utility to accomplish a hostof tasks for the user. He postulatesthat HP will take a leadership rolein building this brave new world ofpervasive computing.

The world that Joel pictured 17years ago seemed inconceivable.Today, it's fast becoming a reality.It's a computing paradigm that cen­ters on the information utility ande-services that will help our cus­tomers do business in entirely newways; that will allow us to get infor­mation and services virtually anytime,anywhere, using almost anydevice. And HP is takingthe lead in bringing thisnew world to customers.

Joel affirms the vision."There is no better time forHP to introduce e-servicesand the information utilitythat we've been workingtoward for years," he says."We've defined it, we'vebeen developing it foryears and now we will beable to let customers reapthe benefits."

So what are e-services?How do they relate to theinformation utility that Joelhas been talking about for sometime? What are the benefits toour customers?

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E-services andthe informationutility that Joelenvisioned will dramatically trans­form the Web from a network usedprin1arily to store and forward datato what will effectively become ahuge virtual computer. As a result,people will access computingresources that are always available,have no single point of failure andare seemingly everywhere at oncebut nowhere in particular. What'smost exciting about this vast virtualcapability are the electronic services,or e-services, that can be deliveredtransparently to the user from aremote provider.

The relationship of the utility toe-services is that of an infrastructureto an application. For example, thinkof the relationship of the telephonenetwork (an infrastructure) and theservices built on top of it such as faxand voicemail. These telephoneservices depend on the telephone

HP's Enterprise Computing Solutionslaunched a multimillion-dollar

print ad campaign in March, featuringHP's e-services vision. Four-page ads

like the one that begins here-and con­tinues on page 10-appeared in severalbusiness publications and newspapers.

network but are quite distinct fromthe voice service for which it wasconstructed originally. Just as newservices have been created on thetelephone network, we will see newe-services enabled by the utility.

Anything that can be digitized canconceivably become an e-service.For example:

• Remote heart monitoringcould save the lives of patients wholive in fear of their next heart attack.They could wear a soft patch thatcan track heart rhythms on a 24­hour basis.

• Business-to-business e-servicessuch as billing services, EnterpriseResource Planning (ERP) andpersonal finance all can becomee-services.

• Remote diagnostic car repair canbe offered, thanks to the informationutility. A wireless connection can helpdiagnose an engine problem andtransmit the fix back to the electron­ics complex in the car.

• IT-based services such as com­pute power, storage or applicationscan be delivered transparently to theuser from a remote service provider.

E-services also will create entirelynew business models. Processes,such as [mance, administration andmanufacturing, present prospects fornew revenue streams not thought ofbefore. Businesses whose processesare superior in performance, forinstance, could offer their internalcapability as an e-service to generateadditional revenue. For example, atelecommunications company withan established billing system couldcreate a new source of revenue foritself by offering its billing systemas an e-service to other companieswho choose not to invest in their own.

Another specific example of ane-service could be a pharmaceutical

company's R&D processes thatrequire what seems like unlimitedcompute power to create its nextbreakthrough pharmaceutical product.When the company's R&D peoplestart a simulation that needs morecompute power than available, ane-services provider would offload thesimulation transparently to the user,delivering seemingly unlimited com­pute power on demand. The computerthat's actually being used could be inthe local enterprise or located else­where on the utility.

The beginning of these e-servicesexists today. Take Amazon.com, forexample. It took the wired booksellera long time to create its distribution,billing, inventory and supply-chainmanagement capabilities. HP hasdeveloped software, code-namedFremont, that makes it easier andfaster to create, deploy and managee-services. Furthermore, it will enablethese e-services to collaborate witheach other. So the next Amazon.com­like company can come online ina fraction of the time using HP'sFremont software.

www.HPARCHIVE.com

Customers benefit in many ways.ew revenue opportunities will

abound as creative e-services ideasdevelop and are offered to theircustomers. E-services will result inbetter return on assets, lower obso­lescence costs and less capital invest­ment to start new ventures. The listof benefits goes on and on.

Access to e-services will be avail­able through both wired and wirelessconnections, as well as through abroad range of appliances:

• soft patches and smart cards;• laptops and handhelds;• personal appliances not yet

created; and• large, high-end servers.So what took us so long to realize

Joel's dream?General use and acceptance of the

utility depends greatly on standards.However, there was no de factostandard connectivity of the world'scomputers until 1990 when theInternet was opened to the generalpopulation and http (hypertext trans­fer protocol) and html (hypertextmarkup language) became worldwideconnectivity standards. The Fremontsoftware for e-services developed by

May-June 1999 9

strategy. It's a strategy that bringssynergy to all of ECS's computeractivities.

"E-services is the basis for anexplosive new economy," Ann says."Today, we're positioned perhaps bet­ter than anyone else in the industryto take advantage of a movement wesee everywhere around us." Ann saysthat all of our expectations and per­ceptions will be impacted in thisworld where services are deliveredelectronically. "This is a tremendousopportunity for HP," she concludes.

Nick Earle, HP vice president andECS's chief marketing officer, is lead­ing the massive marketing effort toannounce e-services to the world.Nick also is responsible for thee-services marketing strategy, whichwill thread through every division,product, software, service and solu­tion offering in ECS.

"Since the formation of ECS," icksays, "the team has rallied around thee-services vision. I've never seen somuch achieved in such a short period.It's an amazing time for all of us anda time that should make us all proudto be here."

Today, HP is putting the "e" in ser­vices. The picture that Joel outlinedin 1982 is being filled in, defmed,made palpable by HP employees.

"For half a century we've investedin innovation and differentiated con­tribution in our products," Nick says,"and we're not stopping now." M

(Lisa Lion Wolfe is a strategicprogram manager in EnterpriseComputing SOlutions.-Editor)

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An infrastructure of hardware, middlewareand software linked by the Internet willconnect businesses and services like neverbefore. As the campaign's catchy "tag line"says, "The next E. E-services."

The print ad campaign is running in multi­ple languages. This Spanish-language adtouts the new HP 9000 N-Class EnterpriseServers. The headline reads, "For your con­venience, the ceiling has been removed."

Joel and his team in HP Labs buildsupon and extends the standard con­nectivity of the Internet to e-services.

The information utility ande-services represent the next chapterof the hurly-burly, fast-moving historyof the Net. It's being written today, andHP-particularly Enterprise Compu­ting Solutions (ECS)-has taken thelead to let the world know about it.

Ann Livermore, ECS president andCEO, and her team have been leadingthe development of ECS's e-services

wish, when you consider the implications of e~services.

Here's the scenario. You've got a heart condition. You're

wearing a small monitor that sends a constant signal

to a medical service your hospital subscribes to. Minutes

before you even know there's onything wrong, bids

for other services are going out automatically through

the Intemet. Paramedics are dispatched, the best car­

diologist within 20 minutes of your location is tracked

down and a prescription is electronically sent to a

pharmacy that's confirmed to have your medication

in stock. But there's more. This service contracts with

another service thot collects heart dolo from onywhere

in the world. So this some scenario plays out whether

you're in Paris, New York or Bangkok. Look at what's

happening here. The service-based economy is about to

explode as businesses and devices ore seomlessly linked

together. This is the next chapter of the Intemet. And it

has nothing to do with you working the Web. Instead,

the Internet will work for you. www.hp.com/e~services

The next E. E-services.

"An avalanche could start at any moment,"says one ad, here in French, that introducesthe new HP enterprise servers.

10 MEASURE

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Brilliant, articulate, greatwith customers-retiringHP Labs chief Joel Birnbaumhas been one of HP'Sbrightest stars for nearly20 years.

By Betty Gerard

Above: An HP visionary for nearly twodecades, Joel Birnbaum officially retiredfrom HP Labs in February. Retirementcelebrations included this one at theTech Museum of Innovation.

Right: Joel applies his training inphysics as a pitcher on the 1957

Cornell University baseball team.

Playing stickball in the streets of theBronx, New York, where he grew up,Joel BiInbaum was a "three-sewer man:'

To the uninitiated, this means hecould whack the ball the distance ofthree city sewer covers. ot bad for abrainy guy who would go on to pitchfor the Cornell University varsitybaseball team and cover even greaterdistances in the world of technicalresearch. (With characteristic mod­esty, Joel points out that the legendaryballplayer Willie Mays, another NewYorker, was a "five-sewer man.")

Joel officially retired from hisposition as senior vice president ofR&D and director of HP Laboratories(HPL) in February, triggering a seriesof farewell parties. The largest gath­ering was at the Tech Museum ofInnovation in San Jose, California,attended by hundreds of HPL peopleand CEO Lew Platt, who joked, "Joel,you've had a lot of parties for some­one who's not really retiring."

In "retirement," Joel will spendhalf his time as the first "HP ChiefScientist." He will report directly tothe CEO and focus on the newly

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independent computer company,serving as a premier representativeof technical-and business-solu­tions expertise to outside contactsin industry and academia, and as atechnical resource internally.

He will play an important part inhelping shape the development androllout of e-services, based on HPLtechnology, which HP envisions as

May-June 1999 11

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sales teanlS and to customers. He hasa deep understanding of customerproblems and can relate conceptsdirectly to solving major issues theymight be confronting.

"Joel listens deeply," Dick Lampmansays. "He doesn't just dazzle with hisbrilliance and then leave the cus­

tomer wondering what he saidafter the light disappears."

The demand for Joel's timefor customer visits has been fargreater than he could fulfill withhis other travel commitments.HP Labs has major labs in PaloAlto, California, and Bristol,England; labs in Japan and Israel;and smaller research groups nearthe Massachusetts Institute ofTechnology in the Boston areaand in Canlbridge, England.

That's quite a travel regimenfor an East Coast fellow whohad never lived elsewhere beforejoining California-based HP nearlytwo decades ago.

While in graduate school at YaleUniversity, where he received twodegrees in experinlental nuclearphysics, Joel moonlighted as a self­taught systems progranlIDer for IBMin New York City. After receiving hisPh.D. in 1965, he joined IBM in theThomas J. Watson Research Lab inYorktown Heights, New York. He firstheaded its joint project with Yale andthe Atomic Energy Commission todevelop an online data-acquisition­and-control system that led to awhole family of IBM products.

"I spent three or four years livingbetween the worlds of physics andcomputer science," Joel says. By1975, he had advanced up the man­agerial track to become director of

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Although a steady stream of newtechnologies continued to be trans­ferred from the central labs to theproduct divisions for development,Joel challenged HPL people fiveyears ago to find ways to transformHP Labs into the World's BestIndustrial Research Lab (WBIRL).

This challenge gave all employees achance to define what "best" trulymeans and the many ways in whichexcellence could be demonstrated­for the community of the world aswell as the company. The result wasdozens of projects that improvedprocesses and a much-improvedresearch agenda.

He also served as technical advi­sor for a series of vision videos forthe company. Jan Smith, who hasdirected videos such as "Image,""Synergies," "Magellan" and "FirstGlobal," says, "Over the years, Joelhas shared with me the most anlazingand very usable ideas. Not only is hebrilliant, but he's such a nice man,with a heart of gold."

Because he can speak to non­scientific people in a way they canunderstand, Joel has been a greatasset to the field, talking to HP's own

Joel's son, Michael, and wife, Eileen, withJoel, are entertained by the speakers athis retirement party. Joel was on theboard of directors for the San Jose TechMuseum of Innovation for many years.

the next chapter of the Internet (seearticle on page 8). It is an assignmentdear to Joel's heart, because he spot­ted early the potential of the Internetand the Web, and has been promotingthe concept of a pervasive informa­tion utility for almost two decades.

The sweep of the e-servicesconcept fits Joel's instinct forthe big idea, the home run. "He <f)

5has the ability to make people il:expand their vision," says §Eugenie Prime, Corporate ~

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Libraries manager. "You think ~

your dreams are so big until l;;

you talk to Joel."HP Labs has found an appro­

priate way to honor Joel's influ­ence: The Joel Birnbaum Prizeof $10,000 will be awarded annu­ally to an HPL employee whohas shown outstanding vision, inno­vation, persistence and contribution.Says Ed Karrer, director of the meas­urement-and-component company'scentral research lab, "Those are allproperties associated with Joel."

HP Labs Director Dick Lampmanbelieves Joel has an empoweringstyle that in many ways is ideal fora research environment, whereanswers aren't always known. "Joelexplores ideas with probing ques­tions," Dick says. "He's also one ofour true visionaries and he has anextraordinary ability to articulatehis vision."

In the past, MEASURE has cov­ered some of Joel's provocative for­mulations, such as MC-squared (thecoT\iunction of measurement, compu­tation and communication) and hisfuturistic prediction of a computer­aided "second brain."

Joel Birnbaum

12 MEASURE

www.HPARCHIVE.com

...Joel has anempoweringstyle that inmany ways isideal for aresearchenvironmentwhere answersaren't alwaysknown.

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•Computer Science, responsible fora wide range of projects, includingIBM's first RISC (reduced-instruction­set) computer.

After HP recruited him in Novem­ber 1980, Joel first headed a newlyformed Computer Research Centerin Palo Alto, which initiated theSpectrum program. That programultimately consolidated all HPnon-PC computer products intothe HP Precision Architecturefamily. In 1984, he was namedvice president and director of HPLaboratories. In 1986, when HP'sRISC architecture went from thelab to production, Joel moved toa line job as general manager ofthe Inforn1ation TechnologyGroup, responsible for all HP-PAhardware and core software sys­tems. Two years later, he becamegeneral manager of the InformationArchitecture Group that developedHP's Cooperative ComputingEnvironment -the next generationof HP's networked systems. Hereturned as director of HP Labs in1991 with the added responsibility ofvice president for R&D, and waselected a senior vice president in 1993.

Along the way, he has collected anumber of high professional honors.He was elected to the NationalAcademy of Engineering and the

Royal Academyof Engineering.He is a Fellowof both theInstitute ofElectrical andElectronicEngineers andthe CaliforniaCouncil onScience andTechnology. He

Among Joel's proudest awards are (left toright) the National Academy of Engineering,the Institute of Electrical and ElectronicEngineers, the Royal Academy of Engineer­ing-presented by Prince Philip-and theSheffield Fellow medal from Yale University.

also serves on advisory boards atYale, Carnegie Mellon University,Stanford University and theUniversity of California at Berkeley.

In March, Joel shared the platformat the American Physics Societymeeting with many Nobel laureatesto explore the intersection of physics

HP CEO Lew Platt and his wife, Joan,helped honor Joel at the party at the TechMuseum. In "retirement;' Joel still willspend half of his time as the first HP ChiefScientist.

with other disciplines; he representedthe information-technology commu­nity. In June, the Technion Universityof Israel will award him an honorarydoctorate of science.

Bill Worley, an HPL DistinguishedContributor, has known Joel sincethey were at IBM together. "I appre­ciate Joel's openness to new ideasand his ability to see to the core ofthings," he says. "He has very broad­ranging interests himself, in both atechnical and personal sense, andhe keeps track of the thinking of ahuge number of people in academiaand industry."

Joel now will have time to readsome of the many beautiful booksand listen to some of the classicalCDs he's been collecting. He's alsoinstalled a home digital darkroom forhis photography hobby. He and hiswife, Eileen, a retired opera singer,

www.HPARCHIVE.com

own an apartment in ew York City,where they'll live three or fourmonths of each year. They'll spendsix months a year at their home inCalifornia, and they'll have time totravel for the sheer pleasure of enjoy­ing the great architecture and arts ofthe world. Their family-a son and

four daughters, along with a fIrstgrandchild-also is bi-coastal.

While Joel is "looking forwardto the ease of semi-retirement,"he welcomes a continued asso­ciation with the restructuredHewlett-Packard. "I want somuch for HP to rebound fromits problems," he says, "and Iwant to help if I can."

Joelstilllovessports,andsports metaphors often crop upin his elegant presentations.

When HP becan1e a sponsor of theStewart Grand Prix auto racing tean1three years ago, Joel asked racerJackie Stewart how HP Labs couldprovide meaningful technical sup­port. The result is an ongoing projectto correlate the massive data (a giga­bit each lap) collected from 190onboard sensors so the car can betweaked for top performance. Some­day the application may well becomea product for customers.

The three-sewer man of kids'ballgan1es in the Bronx moved onto a big-league career in technology.For Joel Birnbaum, it's been a fulfill­ing game-with many more inningsto go. M

(Betty Gerard is an HP retiree andPalo Alto, California-based free­lance writer.-Editor)

May-June 1999 13

WoO

or 60 years, Hewlett-Packard has beensteady, predictable, envied, imitated.A Boy Scout, some said. Boring, othersadded. Then came the big announcementon March 2: HP will split into two companies

-the computer-and-imaging company (about a U.S.$40 billion enterprise), which retains the HP name,and "NewCo"-the temporary name for a new mea­surement company-that will begin operationin the year 2000 with a new name and about U.S.$8 billion in revenue.

HP Chairman and CEO Lew Platt will over­- ~ see the division of the companies and serve on

~~----=~~~~r!-~~~1f ~- a four-person committee to select a new CEO.-=.:::::::-~-- - MlJJ6D TO A

2-CAR Then he'll retire from H~r;,A~•.

Ned Barnholt, formerly an HP executivevice president and general manager of theMeasurement Organization, becomes CEO of"NewCo." Other top officers will include BobWalker, chief financial officer; Bill Hahn, vicepresident for Strategic Planning; and JeanHalloran, vice president of Human Resources.

'11 ,~ Barely a month had elapsed when HP made'(

,.V!/'''.i- A~ht " a second announcement: the heads of the fourcomputing-and-imaging business groups were

named as presidents and CEOs, and will have greaterautonomy and accountability than ever before.

This edition of MEASURE offers a glimpse at theannouncement and its impact. For up-to-date informa­tion, check the H~Now site at http://hpnow.hp.com.

14 MEASURE

www.HPARCHIVE.com

..

The formula for selecting the name for anew company includes history as well asfuture goals, says Bill Hahn, vice presidentof strategic planning for the soon-to-benamed "NewCo."

Founded in 1941, LandorAssociates has helped createsome of the world's most famousbrands-from airlines (DeltaSkyMiles) to services (FedEx­The World On Time), fromtelecommunications (LucentTechnologies) to consumerproducts (Frito-Lay Sun Chipsand Hanes Smooth Illusions).and including global institutionslike the Olympic Games and theNobel Prize.

• Creative development: At thispoint, Landor recommends specificname suggestions to "NewCo" and aselection team chooses the name.Also, Landor validates proposednames to ensure that the actualnames, logos, brands, Internetdomains, trademark searches, etc.,are legally available.

• Refinement and launchpreparation: Depending on theresults of the search, the fmal choicemay need some tweaking to be valid.And while the name is being selected,both internal and external launchcampaigns are being developed forthe nanle announcement and follow­on awareness campaign.

Brand image is critical in launch­ing a name, Bill notes. For example,if the image is fast-acting, then acompany can't respond slowly to cus­tomer requests. "It's very importantthat we match new internal behaviors

-what we do-withthe new externalmessages we're try­ing to project-whatwe say-to havean effective nameand brand launch,"Bill adds. M

For today's corporations, thedifficulty of selecting a name hasincreased tenfold. Past traditions andvalues must be considered simultane­ously with future goals and oppor­tunities. "Capturing the best of theold and the best of the new is acritical challenge," says Bill Hahn,vice president of Strategic Planningfor "NewCo."

Creating new names in the pastwas a simple, straightforward process,according to Landor Associates, theleading international firm helping"NewCo" pinpoint a perfect title.Today, however, legally availablenames that are clear, distinct andmemorable are in short supply.

Furthermore, names that tran­scend national boundaries must bereadily understood, easy to pro­nounce and free of inappropriatecultural associations.

With these numerous considera­tions, the quest to find a new namefor the measurement company isespecially complicated. But HP andLandor have devised a three-phaseplan, spanning from two to threemonths, to guide the selection andannouncement of the new name.

• Assessment and strategy:First, Landor assesses the currentbrand by interview-

ing employees, Name to famecustomers and busi-ness partners andreviewing literatureand advertising.Then, it establishesa "positioning plat­form"-futuredesired brandimages that thenew name shouldreflect.

In 1939, two recent college graduatesdecided to start their own company.By simply tossing a coin, Bill Hewlettand Dave Packard determined thename: Hewlett-Packard. The namewas one of the few certainties forthe new business, which had $538 incash, a headcount of two, a one-cargarage as a laboratory and no prod­ucts to sell.

Zip through six decades to 1999.Seconds after the initial announce­ment of the creation of "NewCo"­one of the two companies that willresult from the realignment of theoriginal Hewlett-Packard Company­it already would make the Fortune200 list, with its current $8 billion inrevenue, 40,000 employees, and 60years of experience and technicalsuccess. But, alas, it lacks a name.

Somewhere between 1939 and1999, the business flip-flopped.

By Muoi Tran

Finding the perfectcompany name in 1999takes much more thanchoosing heads or tails.

Coininga name:the flipside

,

...

May-June 1999 15

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",Ii.! - ".""( '-"

Thetwosidesofas~litdecisionEmployee reactionsvaried widely when HPannounced the biggestchange in its 60-yearhistory.

By Kathy Mirtallo

Tom Ashburn,Customer Serviceand Support G.M.,outlines the transitionplan with MountainView, California,employees.

16 MEASURE

The news hit most HP people like aton of audio oscillators. After monthsof speculation and rumor about majorcompanywide changes, employeeslearned in early March that HP wouldsplit into two separate companies­one focused on measurement andcomponents, the other on computingand imaging.

"Shocked" is the way many employ­ees described their feelings upon flrsthearing the news. Few had predicteda change so dramatic. The biggeststunner of all was that only oneof the companies would keep theHPname.

Those in the Measurement Organi­zation, the business in which HP isrooted, were hit particularly hard.Initially, many felt sadness, anger andbetrayal. Some wept.

"People felt very badly over theloss of the HP name," says RobertoFavaretto, vice president and generalmanager of European Field Oper­ations for the Test and MeasurementOrganization. "One person said,'I feel as if 1 have been deprived ofmy family name.' "

But sadness gave way to optimismfor many as they began to talk withtheir managers, their employees andeach other about the positive thingsthat could come out of the realign­ment-for both companies.

"The coffee pot talk here in SanJose (California) had a galvanizingeffect," says Kelly Mitchell, commun­ications representative with theComponents Group. "Our G.M. pro-

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jected a positive attitude that wasquite contagious."

Tom White, general manager ofthe Communications SolutionsGroup, was en route to Beijing fromMelbourne when the news broke. "Iarrived prepared to describe the ben­eflts of the realignment, but soonfound the opposite was happening,"Tom says. "The employees were soonexplaining the beneflts to me, aswere many of the customers we metduring the following days."

Measurement people speculatedabout the possibilities for success inan $8 billion start-up. "This is excit­ing. We can fmally be a bigger fish inthe pond rather than a tiny part of abig company," says Anita Manwani,general manager of the NetMetrixDivision.

There was a less emotional reac­tion to the announcement amongcomputing-and-imaging businessemployees. Many thought a split ofsome kind was inevitable. Somewere surprised it hadn't happenedmonths oryears ago.

"Thesplit is apositiveflrst step tohelping thebusinessesmove withmore speed and focus," says JimBurkett, a quality consultant with theRoseville (California) Site Organiza­tion. "But 1 don't think we're doneyet. 1 think there are some bigunknowns out there as far as futurechanges go."

Jeff Contos, order-fulflllmentmanager in Channel Logistics andFulflllment at the Santa Clara(California) site, feels the changeopens up opportunities in both com-

Cynthia Danaher, MedicalProducts Group G.M. inAndover, Massachusetts,talks to employees at her

"All Hands" meeting.

•

panies to find new and better ways ofdoing things. "The old way of doingthings was great for us," Jeff says."It served our needs, but this changewill allow us to look at processes andpractices in a fresh way."

The 16,000 employees in HP'sinfrastructure and shared services­those organizations that provide

Above: Lew Platt joins a meeting called byBob Walker (left) and Bob Wayman (right)to address the Corporate offices employ­ees. Below: HP Japan's President MasaoTerazawa discusses the strategic transitionplan with his employees.

support to both the "NewCo" and thecomputing-and-imaging businesses­were left with few answers to ques­tions about where they might landas a result of the split. They'd haveto wait for those answers as manage­ment worked out the details of thetransition.

HP began communicating withemployees as soon as the publicannouncement went out-which dueto an information leak was moved upabout four hours. The HP. ow inter­nal Web site was chock-full of up-to­date information. E-mail and voice­mail messages flooded the networks.General managers held coffee talksto capacity crowds. Some G.M.swent on the road to reach as manyemployees face-to-face as possible.One hosted seven coffee talks infour days.

Employees were diligent, as well,in their efforts to get information.The internal HP.Now Web site receivedmore than half a million hits in 16

hours. Employees sent in more than1,000 questions to the site's Q&Apage the day of the announcement.At HP Singapore, 150 employees ofthe Inl\iet Supplies ManufacturingDivision walked a kilometer throughsnarled morning rush-hour trafficfrom one HP building to another toattend a division coffee talk.

Weeks after the announcement,many employees continue to ponderhow this change will affect them per­sonally. Will benefits change? Willcareer options be limited comparedto opportunities in the old, largerHP? Through all of this change, willHP's values persist?

The breakup of HP still is difficultto imagine for many, even as thecompany moves closer to the officialsplit. "I personally felt sad and stilldo-it's the end of an era," saysCheryl Katen, general manager of theHome Imaging Division. "Though myhead knows this is good, this alsowon't be the same company it was." M

EAP advice for youHP employees in the United Stateshave a resource available to themcalled the Employee AssistanceProgram (EAP). which offers confi­dential. professional consultation andreferral for a wide range of issues.

Here are suggestions from the EAPfor managing job-related change:

• Tell yourself the truth. Allow your­self to be upset, worried or angry.

• Reach out to others. Discussyour feelings with supportive family,friends, co-workers or the EAP.

• Stay focused. Use "to do" liststo keep your goals clear.

• Be patient. It takes time to sortthrough your emotions and adjustto change.

• Let go of the past. Keep movingforward. Prepare yourself with a pos­itive attitude and new skills.

www.HPARCHIVE.com

May-June 1999 17

Acapitalidea

According to Morgan Stanley DeanWitter, the leading underwriter oftechnology IPOs, an IPO is a key mile­stone, marking a company's entryinto the world of publicly tradedcompanies. It's a special event andusually a rallying point for employeesbecause they can see the fruits oftheir labor directly reflected in themarketplace. An IPO offers a chancefor the management team, invest­ment banks, accountants, attorneys,PR and investor-relations firms toexpress to public investors what isspecial about a company. Among theIPOs Morgan Stanley has handled inrecent years are those for Cisco,Rambus, Netscape and@Home.

There are circumstances, however,that could derail the possible IPO,Bob says-"mostly market condi­tions, some kind of an adjustment inthe market. If you go back to August'98 when Russia defaulted on itsdebt, the IPO market literally driedup. There are times when theinterest in new equity is either so

HP's firstpublicofferingHP's IPO wasNovember 6, 1957.Ten percent of thecommon stockthat Bill Hewlettand Dave Packard Stock Exchange.

had owned becameavailable to the public at $16 a share. Want to know whatthat share is worth today? Multiply today's HP stock price by192-that's your answer.

3.. 00 0 ~ .~Separating the two companies ~ 4 .v-Accounting employees have The S1 (also called the reg- ()been working since the March istration statement)-This2 announcement to separate document, filed with theHP's "books," apportioning SEC and incorporating thethe assets, liabilities and cash~ prospectus, is usually sev­flows of the two enterprises. l!!J eral inches thick. It containsThis must be completed before details of three years ofthe prospectus is filed. "This 0 audited financial informa-is a challenge," says HP Vice tion, contract and leasePresident and Treasurer Larry agreements, businessTomlinson, "since HP is so prospects, competitors,interconnected." board members and more.

Since the announce­ment that HP'sMeasurementOrganizationwill split off andbecome a separatecompany with a possible initial pub­lic offering (!PO) of some portionof its stock, employees have raisedmany questions about IPOs. Whatexactly is an IPO and why is HPconsidering one? What are the advan­tages and disadvantages? How wouldthis one compare with other SiliconValley IPOs or IPOs in general?

Bob Wayman, executive vice presi­dent and chief [mancial officer, saysthat it's not yet definite, but an IPOis being considered. "The purposeof most initial public offerings is toraise cash," he explains. "An impor­tant consideration for us is to createa following in the stock."

Somewhere around 15 percent of"NewCo's" stock would be issued inthe IPO. While it could end up beingslightly more or less, an IPO cannotreach 20 percent without incurringpotential tax liability.

Since most technology IPOs raiseless than $100 million, this one likelywould be the largest technology IPOin Silicon Valley history.

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Investment bankers-Shouldthere be an initial publicoffering, HP must selectlead underwriters to handleit. Others likely will be addedlater.

Board of directors-The boardand certain officers must benamed before you can file aprospectus with the Securitiesand Exchange Commission (SEC).

oAn IPO's fUlusual ~sequenceof steps

If INewCo"-themeasurement-and­components company­has an IPO, it could be thelargest in Silicon Valleyhistory.

By Mary Anne Easley

18 MEASURE

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Employeesshould beaware thatsecurities lawprohibits anydiscussion ofan IPO beforeaprospectusis filed...exceptfor the name ofthe company,the type ofsecurities thatwill be issued...and the purposeof the IPO.

Learn the lingoIPO experts have their own termi­nology. Here, with the permission ofRenaissance Capital Corporation, issome of the more colorful slang.

Beauty contest-The parade ofinvestment bankers through /"'a company's offices whenthe company is consid­ering an IPO andplans to select one ormore investment banksto handle it.

Fallen angel-A'fIT. high-quality company

whose stock drops belowits issue price due to mar­

ket conditions or lack ofresearch coverage.

Flipping-Obtaining shares ofstock at the IPO price and immediate­ly selling them in the aftermarket.

Gunjumping-Promoting or hypinga new company before filing therequired documents with theSecurities and Exchange Commission.This is a no-no.

Tombstone­Advertisement in thefinancial press oncean IPO is completedthat lists the under-writers in order of importance.

For a complete glossary, go tohttp://www.ipo-fund.com/glossary.htm.

Measurement Organization will beclosely watched.

But employees should be awarethat securities law prohibits any dis­cussion of an lPO before a prospec­tus is filed with the Securities andExchange Commission (SEC) exceptfor the name of the company, thetype of securities that will be issued(in this case, common stock) andthe purpose of the lPO. At no timeshould any employee discuss thevalue of the new company, its growthprospects, the potential value of itsstock or the investment banks likelyto underwrite the lPO. Such disclo­sures, referred to as gur\iumping (seesidebar), could seriously jeopardizethe possible lPO.

Bob Walker, chief financial officerof "NewCo;' predicts, "There will bea lot more attention focused on theMeasurement Organization by boththe investment community and thegeneral business community. Thatmeans recognition when we do agreat job and exceed expectations,but also a lot of negative commentsand scrutiny when we fall short."

For a plain English guide to IPOs,visit The Initial Public OfferingResource Page at http://linux.agsm.ucla.edu/ipo/ipopage.html#9. M

low or it has tobe priced sofavorably to getany interest, itdoesn't makesense to do anlPO. So youjust pass, butyou have todecide for howlong you're goingto pass."

While an lPOcould add threeto five months tothe time it will

take to split HP in two, it has severaladvantages: It establishes interestedinvestors and a research followingamong stock analysts, it generatescash and, compared to a straightspinoff, it can result in premium valu­ation of the stock.

The sequence of events during anlPO is fairly standard (see time lineat bottom of page). An important partof every lPO is a roadshow, duringwhich company management spendstwo to three weeks meeting withinvestors, often in Europe and Asia,as well as the United States.

Of course, before the lPO, HP'sperfom1ance and that of the

May-June 1999 19

Distributing shares in thenew company-About sixmonths after an IPO, theremaining shares of the newcompany likely would be dis­tributed to HP shareholdersas a dividend. This interim"seasoning period" allowsthe new stock to get estab­lished in the marketplace.

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The offering stock price­The day after the roadshowends, the board and manage­ment team of a new company,based on investor interest andon the advice of the underwrit­ers, set the opening price ofthe stock and it begins trading.

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The roadshow-A new com­pany's management teamspends two to three weekson the road meeting individu­ally and in groups with poten-

o tial investors.@6 e

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The prospectus-Thisdocument, which isusually 50 or more pageslong, outlines the meritsand risks of investing ina new company. It is dis­tributed to institutionalinvestors a week beforethe roadshow.

www.HPARCHIVE.com

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"For sites whereboth organizationsshare space today,we'll decide whetherthe non-owningorganization willmove out or remainas a tenant."Amillion

andonequestionsHow do you make"infra­structure"decisionsinvolving 16,000 employeesand 600 offices in 130countries? Very carefully.

24 MEASURE

Realigning Hewlett­Packard into two com­panies is relatively easy,right? If you work primarily for theMeasurement Organization, you'renow part of "NewCo" (the newmeasurement-and-components com­pany). If you work in computing andimaging, you stay with HP.

Now, what about the 16,000 "infra­structure" employees? And the 600HP offices in 130 countries? Andthe patents, licenses and other legaldocuments for more than 30,000products?

How do you begin to sort out amillion and one details?

For Dotty Hayes, who headsHP's internal audit group, it's been adaunting task from the moment shewas asked to chair the infrastructuretask force.

"I started jotting down issues Iknew we had to address and stoppedwhen I reached 400," Dotty says."And that's just the beginning."

Infrastructure employees are thosewho work in HP Labs, GeographicOperations, the Product ProcessesOrganization and Corporate func­tions such as Information Technology(IT), Finance, Real Estate, HumanResources and Legal. The key deci­sions are which employees will windup with each of the two companiesafter the realignment, and whichfunctions might provide sharedservices to both.

"This is bigger than anything we'veever done before and we need to pro­duce results under an extremely tighttime line," Dotty notes. "We have anarrow window of opportunity tocapture the full value of this transi­tion, so our motto is, 'Fast and goodenough.' We can make it perfect later."

As you can imagine, it will takeweeks or months to make some deci-

sions. The HP. ow Website at http://hpnow.hp.com remains the

most reliable and up-to-date sourceof information during the 12- toIS-month transition period. Mean­while, Dotty's overall infrastructureteam and dozens of smaller subteamsare working hard to forge the bestsolutions in their areas.

In Corporate Real Estate, forexample, Director Laine Meyer isscran1bling to make decisions byMay 1999-just in time for the deci­sions to be included in the fmancialplanning and structuring of "NewCo."

"The primary criteria will be whichorganization is the primary occu­pant," he says. "For sites where bothorganizations share space today, we'lldecide whether the non-owning orga­nization will move out or remain asa tenant."

Laine's team will develop a planfor future relocations and establishservice agreements for the transitionperiod at sites where one company'sactivities remain as a tenant. With thelarge number of offices in the geo­graphic operations the transitionperiod may take up to two years.

Corporate Offices for HP'scomputing and in1aging businesseswill remain in Palo Alto. "NewCo"headquarters also will be in Palo Altoat 395 Page Mill Road-a site that HPhas occupied since 1943.

IT decisions represent somethorny issues, including: How will ITresources be redistributed across thetwo companies? What happens to thedata centers? How will IT divide mil­lions of dollars of computer systems?

Two of the many approaches beingconsidered for the redistributionquestion are "clone-and-go"-where

a:

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-

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each company would have identicalapplication interfaces and data-andtemporary "service bureaus"-wherean IT group would sell shared ser­vices to both companies.

Employees can get ongoing infor­mation about IT decisions by check-

ing the IT Connection Web site athttp://it.hp.comlit.

"People" issues revolve aroundhow to relieve uncertainties for the16,000 infrastructure employeesand how to create two strong, appro­priately staffed companies that are

www.HPARCHIVE.com

Dotty Hayes (left), who heads theinfrastructure task force, talks withShiela Robertson, transition managerfor "NewCo," and Doug Thompson,international HR transition manager,during a break from their meeting inHong Kong.

great places to work and poisedfor success.

First, the leadership team for"NewCo" had to be defmed, andthose people had to hire theirdirect reports. That happened inMarch and April. Next, they deter­mined staffing needs and sharedinfornlation about the new com­pany with employees.

Infrastructure employeeswhose time primarily has beendedicated to one company mostlikely will continue to work forthat company. The other employ­ees will fill out a brief skills/experience questionnaire andindicate which company they'dlike to work for.

The process of placing employ­ees takes into account the skillsneeded in each company andemployees' preferences.

All infrastructure people willlearn which company they'll workfor by June 30, 1999. Employeeswho believe the assignment is amismatch can use HP's job-postingprocess to find another job upuntil 30 days before the legalseparation of the two companies,which will occur in the secondquarter of fiscal year 2000.

"We envision that we'll needmore people for the two compa­nies than we currently have," saysSusan Bowick, HP vice presidentof Human Resources, "so weanticipate some external hiring toget the right skill sets in place.

"This is a demanding time forus, but the end result should be twohigh-performing teams." M

May-June 1999 25

opportunities that we might other­wise have missed.

Over the past year or so, HP hasnot been performing at the level thatit could-or should-be performing.So it was necessary to take somebold moves and re-think the direc­tion or directions that we want to go.

Overall, I think this opens up won­derful opportunities for both sides.

Walter: The question that couldbe asked is "Why now?" It's possiblethat the realignment could have beenput off for a while. But this is actuallya good time to do it. The companyis very strong now, so we're going

to end up withtwo strong enti­ties-both ofthem, by theway, the descen­dants of theHewlett-PackardCompany.

If a familyhas a son and a

daughter and.•III!!!!~"'---'-'-""'. they both get

married, inour societythe son gen­erally keepsthe family

name andthe daugh­ter gets a

new one. Butthey're equally the descendants oftheir parents. I regard both entitiesas equal descendants of the companythat Bill and Dave started.

"I regard bothentities asequaldescen­dants of thecompany thatBill and Davestarted. "

Why do you think the move wasnecessary?

Susan: The two parts of thecompany have very different businessmodels. By realigning them, it createsa lot of opportunities ahead and putsus in a much better position to takeadvantage of them. And there are

How do you feel about the realign­ment of HP into two separatecompanies-as both directors andas members of the Hewlett andPackard families?

Susan: I'm an enthusiastic sup­porter. We all thought very long andhard about it, and discussed it atlength. It seems to me that at thispoint in HP's history, the realignmentis the right thing to do.

Of course, there is the emotionalside to it-there was the legacy ofthis great company to consider. Theway I like to think about it is thatwe're spawning two great companiesthat will both carry on the HP Wayand all the very important values thathave been there from the beginning.

Walter: As we were gettingcloser to making the decision, Istarted thinking more about whatit meant from the emotional side. Iwas surprised at how strong my feel­ings were.

So it was a difficult thing emotion­ally. But intellectually, I understoodwhy this was something that hadto happen.

Susan Packard Orr andWalter Hewlett discussthe realignment from theirunique perspectives: asHP board members andchildren of the company'sfounders.

Branchingout fromthe familytree

What concerns do you have aboutthe two companies?

Susan: I'm concerned in theshort term that there is a lot of workto be done. It's important that every­one stay focused on achieving good

26 MEASURE

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"Father did notmake decisionsbased onsentimentality.He was alwayslooking forward-always lookingto see what wecould do nextand where we

could gonext. "

insights into things. I couldn't beginto understand exactly how he wouldhave seen this.

However, I will say that Father didnot make decisions based on senti­mentality. He was always looking for­ward-alwayslooking to seewhat we coulddo next andwhere we couldgo next.

I don't thinkthe need to holdon to somethingfrom the pastwould havestopped himfrom doingthis. M

tinues to be a tremendous competi­tive advantage for Hewlett-Packard.Our competitors would love to see itgo away and we have to make surethat doesn't happen.

You have a unique viewpoint asmembers of the founders' fami­lies. How do you think Bill andDave would have felt about theseparation?

Walter: The realignment mightnot be something that my father andDave would have done when theywere managing the company, but thetimes have changed.

What I'm getting at is that eachgroup of leaders has to look at thesituation in a fresh way and do what'sright for the company at that time. Ithink that's what my father wouldagree with. He would say, if the levelof complexity that we've gotten to isinterfering with the various parts ofthe company-interfering with theirway of doing business and theirobjectives-then this is what weneed to do.

Susan: It's extremely difficultto guess what Father would havethought. He was such an extraordi­nary businessman and had such

"Our competitorswould love tosee (the HP Way)go away andwe have tomake sure that

doesn'thappen. "

results whilewe're goingthrough all therealignment andrestructuring.

Such things can be very distracting,so that's my deepest concern.

I think everybody should realizethat the realignment does not meanthe end of the Hewlett-PackardCompany or that somehow thisgreat legacy is gone. AB we look tothe future, it's important that all thevalues stay in place. I believe theywill, but it's something that everyoneneeds to work on.

Walter: There are people outthere who would love to see the HPstory come to an end-I'm talkingabout our competitors. I can imaginethese people saying that the realign­ment is proof that the HP Wayworked in the 1950s and '60s and'70s-and that it worked for a com­pany of a cer-tain size-butthat it doesn'twork now and itdoesn't work fora big company.

I think that'scompletely false.I think the HPWay has beenand con-

"I think every­body shouldrealize that therealignmentdoes notmean theend of theHewlett-PackardCompany or thatsomehow thisgreat legacyis gone."

May-June 1999 27

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What needs to be done next?Dick: We have to follow through

on getting strong leadership for bothcompanies. On the measurementside, we already have Ned (Barnholt),and from the early things I've seen, I

think he's going to beleading an extremelyexciting company. He'llbe able to really focuson some of the keyareas-in electronicinstrumentation, lifesciences, componentsand some other places.And his new companywill be lOO-percentfocused on these busi­nesses, rather thanbeing part of an organi-zation that derived only

about 15 percent of its revenue fromthe measurement activities.

On the computer side, it gives us achance to take the next step in ourCEO area. Lew is retiring in a year ortwo and it's very important that wefind somebody who is going to leadthis business for at least the next fiveyears. It's also important that webring in some fresh insights as wemove into the Internet world-andeven in some of our more traditional

along with dedicated boards-thingsthat are increasingly important thesedays. To me this was the critical needfor HP.

'The realignment willgive us a dedicatedCEO in each ofourmain businesses,along with dedicatedboards-things thatare increasinglyimportant these

days."

Why do you think the realignmentwas necessary?

Dick: I think we reached the pointwhere it had become humanly impos­sible for anyone CEO-or anyoneboard of directors-to adequatelycover all the businesses that we're in.

With the increasing rate of changein the high-tech industry, and thecomputer industry in particular, it'scritical for the CEO to have time todirectly lead the business-from the point ofview of keeping thecompany focused onthe major market andtechnology trends,keeping the managersworking as a team andchampioning thecompany's strategiccontributions to theoutside world.

So it became clearthat it was a neces­sary step-but notsufficient-to sim­plify the company'sstructure. Therealignment willgive us a dedicatedCEO in each of ourmain businesses,

Dick Hackborn is destinedto be afirst-ballot memberof the Hewlett-PackardHall of Fame. He joined thecompany in 1960 as a designengineer and held severalmanagement positionsbefore being named G.M.of the former ComputerPeripherals Group in 1979.In this role, he establishedHP's legendary printerbusiness-contributingto his HP legacy and dra­matically changing thecompany's focus.

In 1992, he was namedto the HP board of directors.

Dick retired from HP ayear later, remaining onthe board as an influentialmember.

Following are some of histhoughts on the realignment.

Gettingbackto theHPWay

28 MEASURE

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But if they think the core valuesare objectives like making a contri­bution to customers, expecting areasonable return on your invest­ments, trusting people and givingthem maximum freedom to imple­ment-but also holding themaccountable-then those are thekinds of values that continue to be

important and should beemphasized. I don't seeanything in today's worldthat changes that. M

"I really believethat these two,more-focusedcompanies willgIve us achance toget backto thereal HPWay."

a contribution, a contribution thatresulted in tangible market perfor­mance-actual end results in termsof market success and [mancialperformance. That was how yourcontribution was determined. Weseem to have gotten away from that.

HP has gotten so much larger,complex and bureaucratic-despitethe best intentions ofeverybody. And that'snot the HP Way either.

So if people arethinking that we've beenlosing some key partsof the HP Way in recentyears-some of theimportant ones-theymight be right. I reallybelieve that these two,more focused compa­nies will give us achance to get back tothe real HP Way.

We've also heard commentsfrom employees who say thatthere is such pressure to performin today's fast-moving marketsthat their managers don't seemto pay as much attention to lIP'score values as they should. Doyou think there might be some-thing to this concern?

Dick: That's a tough questionbecause you have to ask the personwho's saying that what the core val­ues are. If somebody thinks the corevalues are studying and analyzingwithout implementation, procrastina­tion caused by trying to achieve con­sensus and allowing everybodyinvolved in a decision to have vetopower on every other person's busi­ness, then those are the kind of val­ues that I'd like to see go away.

businesses likeprinters and PCs.

So getting avery strong CEO forthe overall computing-and-imagingcompany is crucial. That's the nextstep that needs to be taken.

One of the concerns amongemployees is that there has beensome erosion in the lIP Way overthe past few years and that therealignment will cause it toerode even further. How wouldyou respond?

Dick: That's a very importantconcern. When we were looking atrestructuring the company, we pur­posefully went out and gathered a lotof inputs about the state of the HPWay today and what it means to peo­ple. Most of the inputs we receivedsounded very familiar to the HP Waythat I remember-back almost 40years now.

However, there were other aspectsof it that were not at all the way Iremember Dave and Bill operatingthe company. An example is con­sensus building. In my personalexperiences with Dave and Bill, youcertainly had opportunities to giveyour inputs. But once that was done,a decision was made-everybodyaccepted it and everybody acted onit. That isn't exactly consensus.

Another thing that Dave and Billalways demanded was very strongaccountability. I mean, you felt itevery day. You were there to make

"In my personalexperienceswith Dave andBill, you certainlyhadopportunitiesto give yourinputs. But oncethat was done,a decision

d "wasma e...

May-June 1999 29

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The$40billionfourAgile, fast and focused.Those were the threeprimary attributes that HP'scomputing-and-imagingbusinesses hope to achievewith the March 2announcement of thecompany realignment.

30 MEASURE

'The most important thingthat occurred as we wentthrough this process ofrestructuring the com­pany was that each ofthe four ofus started

How agile, fast and thinking differently. We The changesfocused can a $40 bil- began taking control of for Inkjet Imaginglion company be? In Solutions will beApril, HP named the the destiny and direction focused primarilyleaders of the four that we wanted each of on a greatlybusinesses president our companies to go." expanded business-and chief executive development capa-officer of their respec- -Carolyn Ticknor bility, which willtive organizations to help increase contribute strongly to our growth. Weauthority and accountability. also expect to significantly strengthen

MEASURE asked the executives group expertise in a number of areasto comment briefly on their new where we previously relied onautonomy, vision for their organiza- HP Corporate. We also expect totion and possible changes ahead. strengthen our efforts in the area

Ann Livermore, Enterprise of industry communication.Computing Solutions (ECS) Carolyn Ticknor, LaserJet

The new titles represent the Imaging Systems (LIS)appropriate stature for our execu- The most important thing thattives in the marketplace. The cus- occurred as we went through thistomers and partners of ECS know process of restructuring the compa-that my staff and I can make every- ny, was that each of the four of usthing happen in our business. started thinking differently. We began

ECS will have a very intense taking control of the destiny andfocus, coupled with faster decision- direction that we wanted each of ourmaking. That will help us from a companies to go.growth perspective. We've already worked with Ann

We've been working on an intense Livermore to move Commercialcustomer focus and faster decision- Hardcopy from the Product Supportmaking ever since ECS was formed Division over to LIS. This is part ofin November 1998. We created a new stepping up and saying that servicebusiness plan, realigned resources and support are going to be impor-and launched our e-services vision in tant differentiators in the future.the first four months that ECS has PSD did a world-class job of No.1existed. customer satisfaction, and we have

Antonio Perez, Inkjet Imaging to maintain that.Solutions We'll hire some business-develop-

The change will result in greater ment people to work on acquisitions.speed and flexibility, and will help Acquisitions-either of technologyenable significantly expanded or of companies-are going to be abusiness partnerships. In tum, this key to our growth.will result in our ability to fme-tune Duane Zitzner, Computertotal solutions for our customers, Products (CP)and give us a greater presence and This structure will bring the focusinfluence in our own ecosystem. of the business even closer to the

customer. We want our customersto feel a real partnership that extendsbeyond the products they buy from us.

www.HPARCHIVE.com

INKJET IMAGING

SOLUTIONS

Antonio Perez

HP Computing and Imaging CEOs

(left to right) Antonio Perez, Inkjet

Imaging SOlutions; Ann Livermore,

Enterprise Computing SOlutions

(ECS); CarOlYn Ticknor, LaserJet

Imaging Systems (LIS) and Duane

Zitzner, Computer Products. The lat.

est organization chart is On HP.Now

at http://hpnow.hp.com/.

Major disruPtions in business

models are now measured in weeks

rather than Years. We must have the

flexibility to make changes With this

kind of velocity. When an oPportunity

is presented such as a Partnership,

we need to assess and capture it

qUickly. Our competitors are mOVing

qUiCkly to embrace the OPPortunities

unleashed by the Internet. We need

to make real traction in that direction.

We intend to drive the visibility

of Our business to the outside world,

including Customers and market

influentials at a mUch faster pace. M

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MaY-June 1999 31

Excitingpossibilitiesin lifesciencesLab-on-a-chip and genescanning represent two bigopportunities for HP's formerMeasurement Organization.

By Sam Lightman

One area of focus in"NewCo," the newcompany to be formedfrom HP's Measure­ment Organization, is microfluidics. HPequipment will measure samples as smallas a billionth of a liter as part of CaliperTechnologies' lab-on-a-chip technology.

32 MEASURE

HP's Measurement Organization ison the path to becoming a separatecompany. So how do you identifynew opportunities for your business?

"Basically, it's easy," says edBarnholt, HP executive vice presidentand CEO of "NewCo," the temporaryname for HP's former measurement­and-components business. "You pickmarkets that are big, growing fastand undergoing a lot of change. That'sgenerally where you fmd your bigopportunities."

Well, sure. Nothing to it.Two of the big opportunities, ed

says, are communications and all thegood work the Measurement Organi­zation is doing there, and the wholearea of life sciences.

If you're in the Chemical AnalysisGroup (CAG), that's music to yourears. Things have been a little flat inCAG recently-if you can call a billion­dollar business "flat"-at least inCAG's traditional marketplaces.

There is, however, a massive rosyglow on the horizon. "While our tradi­tional businesses are growing at arate of maybe 5 to 7 percent, the

businesses focusing onpharmaceutical and bio­pharmaceutical marketsare growing in excess of20 percent," notes RickKniss, GAG vice presidentand general manager.

The overarching temlfor these markets is "lifesciences." And life sciencesis defmitely where theaction is for the foresee­able future. Fortunately, inthat area-as in so manyothers-GAG has a long­

standing dominance as a vendor ofbasic instrumentation.

"Gas and liquid chromatographsconnected to mass spectrometers are

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like the hanlffiers and chisels-the basic research tools-for thiswhole life-sciences area," says VinceDauciunas, GAG business-develop­ment manager. "Since we have alwayshad a strong position there, we arepoised to continue our growth byproviding these instruments to theexpanding biopharmaceutical industry."

But beyond the basics, CAG hasa handle on some new technologiesthat could launch HP's new measure­ment company like a rocket to thenext millennium. On the front end,there's microfluidics. At the output,there's gene-array technology. In themiddle, figuratively and literally,there's CAG.

The trouble with these new tech­nologies is that they're so hard tovisualize. Consider microfluidics.Here's a technology that takes ananoliter of sample-a billionth of aliter-and applies it to an instrumenthousing a glass or quartz chip withpathways measured in microns (I/Hmof a millimeter or .00000039 inches)etched into it. The instrument per­forms complex sample preparation,separation, detection and analysistasks at unheard of speeds while theanalyst sits there waiting a few mil­liseconds for the result.

There's more. When the instrumentis finished perfomling the separation,the analyst simply throws the chipaway, inserts a new chip that auto­matically reconfigures the instrumentand begins a completely differentanalysis.

The company pioneering this tech­nology is called Caliper TechnologiesCorporation, based in MountainView, California. In May 1998, HP andCaliper signed a deal to develop thefirst generation of analytical instru-

Affymetrix uses HP technology to identify unknown DNA sequences. A researcherinserts a GeneChip probe array-a glass chip, mounted in a cartridge (left inset)­into a Fluidics 400 station (left) for analysis. The whole GeneArray system includesan HP G2500A GeneArray scanner (below), a PC with GeneChip software and theFluidics 400 station.

mentation and information systemsbased on Caliper's lab-on-a-chiptechnology.

"About two years ago, we devel­oped a plan to focus on markets inthe pharmaceutical and biopharma­ceutical industries," recalls BillBuffington, R&D manager for CAGand general manager for the bio­science program. "We identifiedsome of the elements we wouldneed to move CAG into that direc­tion. We saw microfluidics as a tech­nology that would enable massiveparallelism and increase the rate ofnew discoveries and development."

"We think a combination of micro­fluidics technology and microelectro­mechanical sensor technology willeventually enable the individualresearcher to have an entire synthe­sis-analysis-screening facility on thedesktop," Vince adds. "We think thathas the power to speed things upexponentially."

What does this all mean? "Caliperhas the potential of revolutionizingthe fundamental chemical and bio­chemical processes of research, dis­covery and diagnosis," marketingguru Regis McKenna wrote last year.

One of the applications of this newinstrument probably will be in DNA

sizing experiments. What does ananalyst do with a segment once it hasbeen separated from the D A?

Enter Affymetrix,® CAG's otherbooster rocket into the brave newworld of the biopharmaceuticalfuture. Affymetrix has a businessarrangement with CAG similar toCaliper's.

Affymetrix uses GeneChip® probearrays that enable researchers toidentify unknown DNA sequences.They apply a known DNA sequence-that is, a gene-to a substrate andrun a sample mixture of unknowngenes past it. If an unknown sequencemates or docks with the knownsequence, voila, there's identification.

But Affymetrix doesn't do this forone gene at a time. Rather, it createsa chip on which the company appliesperhaps 100,000 different sequences."The result is a massively paralleldetection device for genes," BillBuffington says. "Comparing thisto conventional gene-sequencingdevices is like comparing an abacusto a supercomputer."

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HP's contribution to the relation­ship with Affymetrix involves thetechnology in the award-winninggene-array scanner, which can readchips with as many as 400,000 fea­tures. The scanner won the Editors'Silver Award for best new productat the 1997 Pittcon conference.

The main idea is to improve thedrug-discovery cycle by reducing itfrom about 10 years to five years,Rick Kniss says. "By understandingthe genetic cause of disease, we cantreat it earlier in a person's life andtreat it with a lower-cost solution,rather than waiting for some trau­matic event like a heart attack tohappen," he adds.

"I am absolutely convinced," Billsays, "that life sciences in a broadsense is going to drive the fabric oflife for the next 20 years or more." M

(Sam Lightman is a free-lancewriter based on Salt Spring Island,British Columbia, Canada.-Editor)

May-June 1999 33

LETTER FROM NED BARNHOLT

The CEO of "NewCo,"the new company tobe formed from HP'sMeasurement Organization,discusses the excitingopportunities ahead.

34 MEASURE

In the weeks since the March 2announcement on the realign­ment of HP into two separatecompanies, change has been aconstant for all of us involved

with the transition. Starting up a newcompany is a bit of a roller coasterride. It's exciting, it's thrilling, and itleaves us wondering when we'll beable to pause, take a look around andreflect on where we are.

As you know, we have many teamsin place that are sorting through allthe complex issues this transitionentails. There is a lot to be lookedinto, and I knowit takes longerthan everyonewould like to getfinal answers. Mythanks to all ofyou for your con­tinued patienceas we workthrough the diffi­cult questions.

I want to takea minute for us tocatch our breathand let you knowwhat the viewlooks like frommy perspective. Of all the activitiesthat have kept my staff and me sobusy over the last few weeks, onepriority, of course, has been thesearch for a new name. That's beena roller coaster ride in itself. Likemany of you, I felt some initial sad­ness that we would not have the HPname going forward. But I know itwas the right business decision, andthe firm we are working with hasbeen doing a super job. They have

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interviewed managers, talked toemployees, gotten the opinions ofour customers and reviewed lots ofour sales and advertising materials. Iam confident my managers and I willhave some great suggestions fromwhich to choose.

When I think of all the workbeing done and the excitement anddedication of all of you, I can clearlysee our new company taking shape,and I want to share that perspectivewith you.

My goal for us is to create agrowth company. We are the leading

supplier of test equipment for thetelecommunications and the wirelessworld. We have new initiatives under­way in the Internet world, testingcritical infrastructure and measuringthe quality of Internet services. Weexpect and are fmding huge growthas the leading supplier of opticalcomponents and optical measure-

The idea ofmakinga contribution­central to thevalues ofHP-isone that we willtake with us to formthe foundation ofour new company.

ment. Fiberoptics, hostbus adapters

and lightwave instruments all haveexcellent growth.

In life sciences-and I include ourmedical products in this-our liquidchromatographs sell into the pharma­ceutical market for drug discoveryand development. And increasingly,opportunities in this field come fromoutside the hospital-in-home as wellas outpatient care. Our Heartstreamportable defibrillator is doing very well.

As you can tell from the list above,we are and will continue to be adiversified technology company, byno means restricted to measurementonly. With our vision of creating inno­vations that change the world, wewill grow in a number of directions.Walter Hewlett, Bill's son and an HPboard member, points out that Billand Dave never thought of HP as aninstrument company. They believedin fmding opportunities where thecompany could make a contributionthat matched our capabilities. Thenthey pursued those opportunitiesregardless of where they led. That'swhy we got into the computer busi­ness and why we got into printers.Over time, our new company willwant to grow in areas outsideour current markets, areas wherewe can make technology-basedcontributions.

The idea of making a contribution-central to the values of HP-is onethat we will take with us to forn1 thefoundation of our new company.But it's not the only one. I know asemployees, you have been wonderingjust what kind of company this is

going to be. I want to assure you thatour goal is to carry forward the besttraditions of HP.

I have worked for Hewlett-Packardfor more than 30 years. I want ournew company to be a place like HP,one that people are proud of, a placewhere we can all contribute, growand have a successful career. Wewant it to be a place where we enjoythe people we work with and theenvironment in which we work. Wewant to continue much of the infor­mality of HP. We want to keep thetradition of how we treat people,how we manage and how we makeothers feel included.

Clearly, we want to attract andretain the best-to continue toemploy the excellent people we havetoday. A part of being a top place towork includes a competitive, attrac­tive compensation and benefits pro­gram. We don't have all the specificsyet, and we know that's of concernto many of you. It's a very complextask to work through all the differentprograms in all the countries of theworld where we are located. Eachcountry has its own set of laws thatmust be complied with. But anychanges we make will be done withinthe context of our desire to attractand keep the best. We don't intend totake away your length of service oryour retirement benefits. We willhonor these things according to thelaws of each country.

So you can count on continuity inour new company. You can count onit being the san1e great place to workthat HP has always been.

But there are some things that wedo want to change. The company Isee taking shape will emphasizeincreased focus, speed and account­ability. We must focus on our cus­tomers and on the right business

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opportunities. We need to pick a fewthings and do them well. Increasedspeed implies a sense of urgency tomeet customer requirements. Tech­nology moves fast. We need to stayahead of the pace in order to serveour customers as their technologyevolves. And we need increasedaccountability. That means that wemeet our commitments, whether toour customers or to each other, andexecute well.

So from where I sit, it looks likethe changes will continue. But so willthe traditions we all value. And withthese key elements wrapped in anenvironment of growth and excite­ment for our businesses, I think wecan have a dynanute organization.The ride is just beginning. I know wehave more thrills in store. But fromhere, the view looks great. Let's enjoyit together.

May-June 1999 35

LETTER FROM LEW PLATT

HP's chairman andCEO emphasizes theneed to "keep the planeflying" during theorganization's transitionto two companies.

36 MEASURE

It's been more than two monthssince the biggest announcementin HP's 60-year history-thedecision to split the company­and I think it's a good time to

reflect briefly on recent events whilefocusing on the critical tasks facingus in the next 12 to 18 months.

I'll talk about why it's absolutelyessential that we "keep the planeflying" during this transition periodlater in this letter. First, I want toaddress two questions that I've heardfrequently during the past two months:

1. Why did lIP decide on thissplit-separating "NewCo" (thenew measurement-and-componentscompany) and computing-and­imaging companies?

HP's board of directors and Exec­utive Conumttee seriously have beenstudying the best course of action forHP for more than nine months. Inthat time, we've looked at dozens ofcompany models, including the GEmodel, where businesses are veryindependent and GE essentially is aholding company that links the busi­nesses. In the end, we overwhelm­ingly decided that it made the mostsense to establish two independentcompanies: one for "NewCo" and theother for computing and imaging.

You could spend years debatingif HP's realignment could be accom­plished in a better way. Our com­pany leadership certainly debatedthe choices for a long time. We feelconfident that we made the rightdecision, and that time-and business

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results-will prove us correct. (Seecomments from HP Directors SusanPackard Orr, Walter Hewlett andDick Hackbom on pages 26 to 29.)

2. What was the urgency formaking the announcement whenwe did?

A better question might be "Whydidn't we do this six months or a yearago?" The fact is, dividing HP is anenormously complex job. It's a con­clusion you don't reach without agreat deal of analysis and discussion.

Once we made the decision, wewere required by U.S. law to disclosethe news publicly.

We were set to make the announce­ment at 1 p.m. on March 2. When thestory appeared in The Wall StreetJournal that moming, we had tomove up the press release by fourhours. That ruined our plan to informemployees simultaneously with theoutside world.

We had more than 100 peopleinside and outside HP working on thecommunications plan from Januaryuntil March 2, so it's pretty incrediblethat word didn't leak sooner.

Once the news broke, there wasconsiderable attention in the media,as well as some predictably lively dis­cussion within HP. The media largelycharacterized the announcement cor­rectly: Dividing HP will give bothcompanies greater speed, focus andownership for their respective direc­tion and success.

It isn't the split itself that's impor­tant, but what comes after the split.Let me explain.

"NewCo" will be the largest of itskind in the world, and it will be rec­ognized as such. That never wouldhappen under our old structure

because most people who followHP were far more interested in thecomputing-and-imaging side ofthe company.

Now, under CEO Ned Barnholt,the new company can focus on twofundamentally high-growth areas­communications and life sciences-and get the respect it deservesfrom investors and analysts.

I've known Ned for more than25 years and I know he'll be a greatCEO. He's smart, has good strategicand operational judgment, and he'sbuilding a very solid managementteam. Ned is committed to retainingthe core values of HP, just as we arein the computing-and-imaging com­pany. Ever since March 2, I've seena tremendous excitement aboutthe prospects of his new business.Ned's company has an extremelybright future.

I've also seen a sharper focus inthe past two months by employeesin HP's computing-and-imagingcompany. On April 6 we elevated theheads of the four businesses whilegiving each more autonomy andaccountability. This means that eachbusiness can have a crisp, custom­ized mission that concentrates on itsmarket, but still be part of a unifiedstrategy. For example, we can haveone coordinated HP message, such

as our current e-services strategy(see page 8). We also can meet ourcustomers' needs for broad solu­tions, using the capabilities of thefour businesses.

Of course, we still have a hugeamount of work to do, includingdetermining what's the best for­mula for infrastructure employees­those in Corporate IT, Legal, HumanResources, Finance, HP Labs and theGeographic Operations-in the newtwo-company alignment. There arestill hundreds of questions to beanswered, and I urge you to consultthe HPNow internal Web site(http://hpnow.hp.coml) and yourmanagement for the answers duringthe transition phase.

There's a natural tendency to getcaught up in the excitement-oroverwhelmed by the details-duringthe transition period. However, wecan't let that happen. We have anobligation to our customers, ourshareholders and ourselves to keepthe company strong. The objectiveis to take one healthy company andcreate two healthy companies. Thatmeans not waiting until all the detailsare known or until a new CEO isnamed to move ahead aggressivelywith innovative products, programs,

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Ned Bamholt (standing), CEO of "NewCo,"the new company being formed from HP'sMeasurement Organization, and Lew goonline March 2 to check real-time mediacoverage of the announcement that HPwill split into two companies.

services and support that satisfy ourcustomers' needs and bring rewardsto our shareholders.

You may remember that there wasa rash of commercial airplane crashesin the United States in the late 1970sand early 1980s. After extensiveinvestigations, the Civil AeronauticsBoard was shocked to learn the rea­son for the crashes: The three-personcockpit crews had not really beentrained to operate as teams.

Something went wrong in eachof the crashes. One plane couldn'tget its landing gear down. Anotherplane's flaps hadn't deployed as theywere supposed to. In each of thecases, the cockpit crew began work­ing on the problem and no oneremembered to fly the airplane.

So as we continue our journeythrough the most exciting anddemanding times in our history,remember the fundamental reasonHP has been great for 60 years:We've always expected the bestfrom our company and ourselves.Let's keep that in mind as we com­plete the transition.

May-June 1999 37

WEB-WISE

Doctors don't just writeprescriptions. The cure foryour Y2K ailments simplycould require a change indiet and a little exercise.

38 MEASURE

ers

I know, I know: Life is crazy enough.You don't have the time for anything,much less making sure your systemis Y2K compliant. Besides, the year2000 is months from now, right? Well,my friends, you might not feel thepressure now, but if 2000 comes asfast as changes around here havebeen coming, now's the time to stopprocrastinating and take matters intoyour own hands. After all, 2000 willbe here before the realignment of HPinto two companies.

And speaking of the realignment,more than a handful of people haveasked how the current companywideY2K effort will be affected. Being agood sport, I thought I'd look intothe issue.

According to Bernard de Valence,HP's Y2K general manager, the split

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ac

won't radically change the company­wide preparation for Y2K. He's quickto remind us that Y2K still appliesto both the computing-and-imagingcompany and "NewCo" (the newmeasurement-and-componentscompany), and that there's still workto be done.

"I'm pleased with the progresswe've been making on two keyfronts: with our own internal readi­ness and with our products' andcustomers' readiness," said Bernard."We're also hearing from consultantsand journalists that our Y2K effortsare far ahead of those of most ofour competitors.

"But we can't afford to foul thisone up," he said. "We have so manycustomers who are counting on usand so many people who will bejudging our Y2K performance. We'vemade progress, but we still have lotsof work in the months ahead to testour readiness."

Dr. C'ssupplementshelf

,

Remember to drink plen­ty of water when workingout. Taking a few of thesesupplements won'thurt either.

For HP product compliance andY2K updates, check HP's externalsite at http://www.hp.com/year2000/.

HP's internal Y2K sitewill help you and yourcustomers prepare forthe millennium. Check itout at http://y2kweb.rose.hp.com/.

The American Red Crosshas a nifty brochure onpreparing for Y2K. You canfind it at http://www.redcross.org/disasterlsafety/y2k.html.

1. Warm upTake inventory of your hardware,

operating system, software andapplications. List the vendor name,product name, product number, datepurchased and support status ofyour products.

Helpful hints: Don't know theversion of your software? You canusually fmd it under "Help" and thenselect the "About" option. Not surewhat programs are even on yoursystem? If you're a Windows user,you can click on the "Start" button,go to "Find" and choose "Files orFolders" then search in your C drivefor "*.exe" fIles (.exe is shorthand foran executable or runnable progranlor software application).

2. Get pumpin'Contact the vendors. The fastest

way to do this is to check out thevendor's Web site to check on thecompliance status for each product.Keep track of the compliance infor­mation on your inventory list.

3. Come on, you can do it!Take action now! If all your prod­

ucts are compliant, you're well onyour way to being Y2K fit. If not,you have to reset, update, upgradeor replace your products.

All righty, looks like you're onyour way to total Y2K fitness.

Do you have any tips on how togive Y2K a power-packed punch?Know of any great online resources?Drop me a line at doctorc@corp.hp.com. I'll share your tips onHP. ow. M

Tickle your funny boneSometimes laughter is the bestmedicine. You might not dread Y2Kso much after getting a good doseof "Apparently So," a column onHP.Now and a bone tickler if I sayso myself.

You can learn what yourfellow employees plan to stock­pile-everything from ammunitionto Twinkies-and pick up a handyspelling tip for the word "millennium."

"Apparently So" is on HP.Nowat 0 p.com, iewappan;nt/index hbn. Look in thearchives for past columns titled,"Millennium Bugged" and "Lawyers,Guns and Money" for the funnieson Y2K.

Bernard also pointed out thatemployees should be concernedabout whipping their home and worksystems into shape, which brings meto this issue's topic-are you Y2K fit?

For your system at work, you'reprobably in good shape-if you've gota 486 or newer PC and if you're run­ning standard PC-COE software. Butfollow the steps below and make sureyou don't have some special applica­tion that might not be Y2K ready.

And since so many of you havehome offices with a home-loanmachine or HP computing gearyou've purchased, you'll want tomake sure you're OK there, too.

I hate to tell ya, but there's no suchthing as a magic pill that'll transformyour box into a lean, mean, process­ing machine. So let the good doctorbe your personal trainer and try mythree-step workout today.

May-June 1999 39

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VOURTURNMEASURE readers sharetheir views on mattersof importance.

Analyzing the splitIn recent years, I've learned to expectthe unexpected from our CEO and hisY.P. team, but I have to admit that thissplit-up was a real shocker.

I wish those of us in the measure­ment business could have kept theHP name-where it originated-but Ido understand the reasoning for thename staying with the consumer­products side.

After our management teamhere fielded some initial concerns inSonoma County, I found myself some­what excited by the challenges thatface us in the next couple of years. Iwork with some of the brightest folksin the business. We will make thisnew company a successful venture'the alternative is neither palatable 'nor acceptable.

DAVID SNOWRohnert Park, California

APrincely ideaRegarding HP splitting in two, I sug­gest that we name the portion notknown as Hewlett-Packard with asymbol so it can be referred to as "thecompany formerly known as Hewlett­Packard."

ALREUTERSpokane, Washington

Please send mailDo you have comments aboutsomething in MEASURE? If wepublish your letter, you'll receive aDr. Cyberspace MEASURE T-shirt.

Send your comments to EditorJay Coleman. The addresses andfax number are on page 3. Pleaselimit your letter to 150 words, signyour name and give your location.We reserve the right to edit letters.

40 MEASURE

Tales from thecoach sectionIt is without doubt that SingaporeAirlines is the best (March-April1999). But what are you trying to do?Torture me further? I am 188 centi­meters (6 feet 2 inches) tall, wide atthe shoulders, long in the legs.

I am only allowed coach fare. Incoach, my knees hit the seat in frontof me and my shoulders touch myfellow sufferers. I travel to Singaporeabout four times a year. From thetime I leave my house to the time Iget to my hotel room it is 22 hours.It is not a pleasurable experience.

Then you taunt me with how niceit is to fly first class. Who at HP flysfirst class? Sorry, but this article hitmy funny bone.

GREGG FERRYSanta Clara, California

How about some reality?Thank you for the anlusing fantasyarticle about Singapore Airlines.

Perhaps you could reprint thearticle and show what it's like to flyin "cattle" (economy) class. You couldshow a gentleman sitting with hisknees around his neck and a seatbackin his face. Be sure to get a shot ofthe holidaymakers next to him withtheir kids jumping over the seats anda baby crying in the background. Youcould show the cabin crew servinginedible food on plastic plates with

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"

plastic knives and forks. To finish,you could show the same gentlemanafter 10 hours of sitting cramped withno sleep, hobbling off the plane, look­ing absolutely whacked.

I have flown coach class withSingapore Airlines and I can tellyou from experience that it's just asbad as any other airline. Let's havesome reality.

EMMET HAYESBracknell, United Kingdom

Traveling 10 hours in coach class onany airline is no picnic. Still, of allthe airlines serving Asia Pacific,Singapore Airlines consistenUy hasbeen voted the best by most majortravel magazines.-Editor

Distribution thisI read the article "Meeting theTriple 5 challenge" in the March-AprilMEASURE with much interest. Onething that struck me quite readily inhow to meet this challenge is the useof Public Distribution Lists (PDLs) fore-mail services.

I work for the "NewCo" PCA orga­nization that builds printed-circuitboards at the Spokane Division. I'dsay that fully 25 percent or more ofthe e-mail I receive is junk mail. I amon one or more sitewide distributionlists and the target audience is usuallyonly one of the two entities located atour site. E-mail costs money to send.I believe that if people would take alittle time to compile a private mailinglist, or obtain a more message-specif­ic list money would be saved and mailwould go only to the target audienceinstead of randomly going sitewide.

ANDREW BRUSTKERNLiberty Lake, Washington

And the winners are ...MEASURE T-shirt winners from the January-February response card:

EXTRAMEASURENews from aroundthe HP worldBy Muoi Tran

Leonard Undstone, Fort Collins, Colorado

Thomas Nawalinski, Santa Cruz, California

Earl Evens, Santa Clara, California

Alex Weiland, Burlington, Massachusetts

Richard Rudnik, Loveland, Colorado

Emyria Bok, Singapore

Pat Fausett, Palo Alto, California

Lan Nguyen, Geneva, Switzerland

Brian Lee, Corvallis, Oregon

Muiris O'Cleirigh, Leixlip, Ireland

May-June 1999 41

http://wwc99.fifa.com/Women's World Cup Web site

http://devtmorg.sc.hp.com/Newco/default.htmTest and Measurement Web site

http://www.redcross.org/disaster/safety/y2k.html/American Red Cross V2K site

http://hpnow.hp.com/views/apparentJindex.htmApparently So columns on V2K

http://hpnow.hp.com/news/newshome.htmNewsgrams on HP.Now

http://www.hp.com/year2000HPV2KWeb site

http://www.lucent.comLucentTechnologies Web site

http://www.ipo-fund.com/glossary.htmGlossary of IPO terms

http://linux.agsm.ucla.edu/ipo/ipopage.html#9IPO Resource Page

URLs outside HPThis issue's related Web addresses:

http://ibu.cup.hp.com/eservices.html/e-services Web site

http://hpnow.hp.com/HP.NowWeb site

http://persweb.corp.hp.com/benefits/wlb/eapnumb.htmEmployee Assistance Program

phone numbers

URLs inside HPThis issue's related Web addresses:

PublicationsHP remained in 14thplace overall in Fortunemagazine's 1998 rankingof the 500 largest compa­nies in the United States.

For more information, searchfor key words in ewsgrams­on HP.Now at http://hpnow.hp.comlnewslnewshome.htm.

"\'::oO.IP·~~e

Canada's board ofdirectors.

Within EnterpriseComputing Solutions,Maureen Conway willbecome chief informa­tion officer, reporting toAnn Livermore, ECSpresident and CEO.Howard Bain will suc­ceed Conway as E:BISmanager.

The new G.M. ofHPSouth Africa is FranzLorber. Lorber hasbeen G.M. of both HPCzech Republic andHPHungary.

Istvan Pesti, CCOmanager in Hungary, hastaken on additionalresponsibility as HPHungary G.M.

Sherry Hirsch is thenew G.M. of the NorthAmerican FinancialServices Business Unit.

ro UCPeopleThe executive staffof "NewCo" (the newmeasurement-and­components company)will include Bob Walker,VP. and CFO; JeanHalloran, VP. HumanResources; Bill Hahn,VP. Strategic Planning;Craig Nordlund, VP.,general counsel andsecretary; and TomSaponas, chief technol­ogy officer. Each willreport to Ned Barnholt,CEO of the new company.

Dotty Hayes hasbeen named overall tran­sition manager for therealignment of HP intotwo companies. ShielaRobertson is serving asthe transition managerfor "NewCo."

Ed Karrer, HP Labsco-director, will lead thenew company's centralresearch lab. DickLampman, HPL's otherco-director, has beennamed HPL directorfor the computing-and­imaging company.

Lee Ting has beennamed chairman of HP

For the latest stats on teams,schedules and results, bounce tothe Woman's World Cup Web siteat http://wwc99.fifa.com/.

Shooting for a goalHP shoots-and scores-asan official sponsor of the 1999Women's World Cup (WWC).

From June 19 to July 10,16 soccer teams from aroundthe world will play in eightvenues across the UnitedStates, where HP hopes to getworld-class recognition andreach new consumer markets.

HP PCs, servers, notebookcomputers, and inkjet and laserprinters will support the 32­game tournament. "Hewlett­Packard brings tremendousexperience to the Women'sWorld Cup after their workwith the 1998 men's World Cupin France," says MarlaMessing, WWC president.

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PARTING SHOT

Aspecial feelingWhile most of this editionof MEASURE focuses onlooking forward, it onlyseems appropriate that thelast view should go to themen who started it all-BillHewlett and Dave Packard.

This photo was taken byformer HP Labs employee

Rhonda Kirk during Labs'October 26, 1995, Celebra­tion of Creativity Day. Itwas the last time theco-founders visited Labstogether. Dave died fivemonths later-on March26,1996.

"I was using a long lens­probably a 135 millimeter-so 1wouldn't be intru-

sive," Rhonda remembers."Bill and Dave were gettingon in years and 1 didn'tknow how often employeeswould be able to see themagain, so 1took as manyphotos of the two of themtogether as possible.

"As 1was shooting, amomentary feeling came

over me about what it musthave been like to work forBill and Dave in the earlyyears. It was a special feel­ing and kind of sad at thesame time." M

For U.S. address changes, use Change of Address forn1 in Personnel on the Web at http://persweb.corp.hp.com.

rh~ HEWLETT@~~PACKARO

MEASURE MagazinePO. Box 10301Palo Alto, California 94303-0890

HECTOR HERNRNDEZ

57

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