Creating and Spreading New Knowledge at Hewlett-Packard Custom Case Solution & Analysis

1. Evidence Brief (Case Researcher)

Financial Metrics:

• HP 1996 revenue: $38.4B (Exhibit 1).
• Research and Development spending: $2.4B (Exhibit 1).
• Net Earnings: $2.6B (Exhibit 1).
• Operating Profit Margin: 10.4% (Exhibit 1).

Operational Facts:

• Organizational structure: Highly decentralized; 50+ business units acting as independent entities.
• The HP Way: Core set of values prioritizing trust, respect for individuals, and open communication (Paragraph 4).
• Knowledge management: Informal, peer-to-peer, and localized within business units.
• R&D approach: Highly autonomous units; risk of reinventing the wheel (Paragraph 12).

Stakeholder Positions:

• Lewis Platt (CEO): Focused on maintaining the HP Way while managing the increasing complexity of a global, diverse enterprise.
• Business Unit Managers: Highly protective of autonomy; prioritize local speed over corporate-wide standardization.

Information Gaps:

• Quantified cost of redundant R&D efforts across business units.
• Detailed metrics on time-to-market variations between units sharing knowledge versus those operating in silos.

2. Strategic Analysis (Strategic Analyst)

Core Strategic Question: How can HP facilitate cross-unit knowledge sharing without compromising the decentralization that drives its innovation velocity?

Structural Analysis:

• Value Chain Analysis: HP’s competitive advantage resides in the R&D stage. Current silos protect local agility but inhibit scaling successful innovations across the portfolio.
• Organizational Design: The current structure incentivizes local ownership. A top-down mandate would violate the HP Way and likely meet significant resistance.

Strategic Options:

• Option 1: Communities of Practice (CoP). Establish horizontal networks based on technical disciplines rather than product lines. Trade-offs: Low cost, high cultural alignment; Risk: Low accountability for results.
• Option 2: Internal Knowledge Market. Create an internal platform where business units bid for access to proprietary technologies. Trade-offs: Incentivizes sharing through economics; Risk: Increased internal friction and bureaucracy.
• Option 3: Strategic Knowledge Liaisons. Appoint technical ambassadors who rotate between business units to cross-pollinate ideas. Trade-offs: High impact on cultural cohesion; Risk: Talent drain from high-performing units.

Preliminary Recommendation: Option 1 (CoP) combined with a pilot of Option 3. This preserves the autonomy of the HP Way while providing a mechanism for organic knowledge transfer.

3. Implementation Roadmap (Implementation Specialist)

Critical Path:

1. Identify 5 pilot technical domains (e.g., thermal management, ink chemistry).
2. Appoint Community Leads from within existing R&D staff (not management).
3. Launch the internal portal for knowledge repository.
4. Measure participation and project-level impact at the 6-month mark.

Key Constraints:

• Cultural Inertia: Managers fear that sharing knowledge dilutes their unique advantage.
• Time Poverty: Engineers are incentivized by product deadlines, not knowledge sharing.

Risk-Adjusted Implementation:

• Incentive Alignment: Modify performance reviews to include a specific metric for peer-to-peer technical mentorship.
• Contingency: If participation is low, shift from voluntary CoPs to mandatory quarterly technical reviews for specific high-cost R&D domains.

4. Executive Review and BLUF (Executive Critic)

BLUF: HP must stop treating knowledge sharing as a culture problem and start treating it as an incentive problem. The decentralized structure is not the enemy of sharing; the lack of shared technical performance metrics is. Implement a formal internal transfer pricing mechanism for shared R&D assets. This creates a market for knowledge that aligns with the HP Way while forcing transparency on R&D ROI. Abandon voluntary CoPs; they will become coffee clubs with no impact on the bottom line. Move to a structured, audit-tracked internal marketplace.

Dangerous Assumption: The assumption that engineers will share knowledge voluntarily because it is the right thing to do. In a decentralized, high-pressure environment, engineers prioritize the specific unit that signs their paycheck.

Unaddressed Risks:

• Gaming the System: Units may hoard knowledge to drive up the internal price of their intellectual property.
• Bureaucratic Bloat: Creating a new layer of knowledge managers could stifle the very agility the company seeks to protect.

Unconsidered Alternative: Radical transparency of R&D project logs across all units. If every engineer can see what every other engineer is working on, the need for formal sharing mechanisms diminishes significantly.

Verdict: APPROVED FOR LEADERSHIP REVIEW