HP's sense of purpose Give credit to Mark Hurd, the new CEO of HP, to act quickly and decisively in cutting 14,500 jobs, or 10% of HP's workforce, and scrapping an account-driven sales organization that had added complexity and bureaucracy to the organization while increasing the disconnect between sales people and the products they were selling.

Hurd's actions in many ways are a step toward returning HP to the decentralized, close-to-the-market culture that made the company so great in the first place. They're also reminiscent of the moves Lou Gerstner made when he first joined IBM during its financial crisis in the early '90s. Gerstner shook up the complacent IBM culture by cutting hundreds of thousands of jobs and making every project accountable to a business benefit. Painful as they were, Gerstner's moves saved IBM.

I'm not so sure what's going to save HP. HP is a great company with a great culture, but it's a perennial #2 or #3 in most of the markets it serves. In fact, outside of printers I can't think of a single product category in which HP enjoys a clear leadership position. The company has done some innovative things in the consumer market with its multimedia PCs, and its OpenView systems management suite is a top-tier product, but it's been a long time since HP has had the kind of big bang hit that gets people buzzing. This is still basically a company that makes most of its profit selling ink.

I trace HP's decline as an innovator to two events. The company partnerered with Intel in the late '90s to build a family of chips that became the Pentium family. It was an unprecedented deal and HP trumpeted it mightily at the time. But there's no evidence that the actual partnership ever amounted to much and the partnership seemed to take some of the urgency out of HP's efforts to build a competitive processor. It was basically the first major computer to concede the chip war to Intel.

The other was HP's decision a few years ago to play Switzerland on the Unix/Windows debate. By not lining up on one side or the other, the company essentially positioned itself as the safe choice on servers. It's okay to be the safe choice if you're the market leader, but HP did not enjoy such a position at the time. I think that strategy was a recipe for ambivalence. If you don't have a side to root for in any conflict, it's hard to get motivated about participating. HP, which had been a leader in Unix workstations and which had challenged in Intel-based servers through the late '90s, seemed to fall into a funk after it took itself out of the operating system debate.

I don't know how Mark Hurd is going to shake up that culture. It's a huge challenge. I do know that playing it safe would be the wrong thing to do. Hurd has the endorsement of HP shareholders, who have seen shares drop 50% in the last five years, to take bold action. The layoffs are a start. Let's hope he can stay true to Carly Fiorina's advertising slogan and find a way to make HP "innovate" again.  ¶ 10:49 AM