47HP said it’s going to get better, but if the
problem persists, it’s going to make it
hard for HP to meet their targets.”
To recap, a onetime innovation fac-
tory now finds itself so focused on the
coming year’s results that it’ll be hard-
pressed to return to making serious
bets on the future. In other words, HP
appears trapped in a classic innovator’s
dilemma. The company’s executives
vehemently disagree. Chief Commercial
Officer Christoph Schell says HP’s forays
into 3D printing are as ambitious as any-
thing it’s attempted. “I don’t think we
have an innovator’s dilemma,” he says.
“We are trying to disrupt how mankind
does manufacturing,” which, the com-
pany has said, is a $12 trillion industry.
So far, the company’s big investments
are in machinery that can “print”
production-grade plastic and metal
components, technology that has won
over corporate customers including GE
Transportation, Volkswagen Group, and
BMW Group. Last year, the advanced
printing group manufactured more
than 18 million parts, a tally set to dou-
ble this year. It’s a sign of rapid growth in
3D printing, but also a scary reminder of
how much further HP’s effort has to go
to catch up to its paper-and-ink business.XEROX HAS ONLY MADE IT MORE
difficult for Lores’s team to find its HP
Way. Several people familiar with the
matter say the past year’s pressureto revive printer earnings has made
futuristic products less central to the
team’s focus. “Carl Icahn could prob-
ably buy HP himself, lay off more
employees and shut down R&D, and just
make all his money back by continuing
to sell ink and toner,” says a former HP
printing executive who was involved
in acquisitions.
At the moment, HP and Xerox seem
unlikely to regain anything resembling
their 20th century R&D aura. Tolga
Kurtoglu, CEO of Xerox’s research cen-
ter, says it’s investing significantly in 3D
printing, AI, and data analytics, including
ways to predict when Xerox hardware
will need maintenance. “But that doesn’t
change the fact that paper is being used
less and less,” he acknowledges.
When Lores joined HP in 1989, its
annual report, signed by a 77-year-old
Dave Packard that December, talked
up the major challenges the company
faced but also gleamed with optimism
about the ideas on the horizon. “New
products are the lifeblood of our com-
pany,” the report read. Today old prod-
ucts are arguably the lifeblood of the
company. In 1989, 10% of HP’s revenue,
about $1.3 billion a year, went to R&D
spending. Today the company spends
just 2.6% of sales on R&D, or $1.5 billion,
a tiny fraction of what Amazon, Apple,
and Google invest in their futures.
Lores, HP’s first lifer CEO in more
than two decades, says it’s unfair to com-
pare the company he joined in 1989 to
the “much narrower set of businesses”
he runs today. Still, he argues that the
spirit of Bill Hewlett and Dave Packard’s
corporate culture has a lot more in com-
mon with his own strategy than nostal-
gia might suggest. After becoming CEO,
he took his first meeting in Packard’s
old wooden garage at 367 Addison Ave.
in Palo Alto, now an historic landmark
with a sign that dubs it the birthplace
of Silicon Valley. “Bill and Dave were
extremely focused on results,” Lores
says, “driving significant innovation but
staying cost-competitive.”
“It’s about creating the future,” he
adds. “But if you read the HP Way, the
future is based on delivering today.” <BW>
�With Scott Deveau and Olivia CarvilleBloomberg Businessweek March 2, 2020