Once Hewlett-Packard was a great start-up technology company, producing innovative products within a talent-friendly culture fostered by its founders William "Bill" Redington Hewlett and David "Dave" Packard.
Then came the time when the founders retired and were succeeded by the leaders who saw HP as an ATM distributing bonuses and other benefits, making one strategic mistake after another.
Like the outsourcing of the company's product value chain, for example, it gave the company's competitive advantage to Asian competitors.
Then came a wave of unfortunate strategic acquisitions (for example, Compaq Computer, Palm and Autonomy), which made HP an "elephant", wasting resources and chasing after the talents.
The rest is history. HP is still around. But it's not the great company it once was. It is a small piece of a larger company, trying to find direction in a universe of rapidly changing technology.
Once, IBM was a great company, too, producing one product after another, like the PC in the 1980s. But that was when its leaders, complacent with success, made a series of strategic mistakes, such as software outsourcing To Microsoft and hardware to Intel.
"From time to time, the enormous consequences come from decisions that at the moment do not seem strategic," write Bruce Greenwald and Judo Kahn in Demystified Competition. "When IBM entered the personal computer business, it chose an open standards approach and made two builds - which are likely to seem insignificant and merely tactical. Instead of developing the operating system itself, one is licensed from a small business that No one has ever heard of it. He made a similar choice for the microprocessor, giving that business to another provider. "
As a result, those two tiny companies, Microsoft and Intel, outperformed IBM to become two of the most successful franchises in the world.
"These companies, instead of IBM, became the beneficiaries of the personal computing boom," added Greenwald and Kahn. "In retrospect, these were clearly strategic decisions with enormous consequences."
In short, corporate complacency and strategic mistakes can be dangerous, even for large, resource-intensive companies. As Greenwald and Kahn put it: "For an elephant that operates within the barriers, life is sweet and returns are high. But competitive advantages still have to be managed." Compliance can be fatal, as it can ignore or misunderstand the sources of The elephant's first priority is to sustain what it has, which requires it to recognize the sources and limits of its competitive advantages. "
