47HPsaidit’sgoingtogetbetter,butif the
problempersists,it’sgoingtomakeit
hardforHPtomeettheirtargets.”
Torecap,a onetimeinnovationfac-
torynowfindsitselfsofocusedonthe
comingyear’sresultsthatit’llbehard-
pressedtoreturntomakingserious
betsonthefuture.Inotherwords,HP
appearstrappedina classicinnovator’s
dilemma.Thecompany’sexecutives
vehementlydisagree.ChiefCommercial
OfficerChristophSchellsaysHP’sforays
into3Dprintingareasambitiousasany-
thingit’sattempted.“Idon’tthinkwe
haveaninnovator’sdilemma,”hesays.
“Wearetryingtodisrupthowmankind
doesmanufacturing,”which,thecom-
panyhassaid,is a $12trillionindustry.
Sofar,thecompany’sbiginvestments
are in machinery that can “print”
production-grade plastic and metal
components,technologythathaswon
overcorporatecustomersincludingGE
Transportation,VolkswagenGroup,and
BMWGroup.Lastyear,theadvanced
printing group manufactured more
than 18 millionparts,a tallysettodou-
blethisyear.It’sa signofrapidgrowthin
3Dprinting,butalsoa scaryreminderof
howmuchfurtherHP’sefforthastogo
tocatchuptoitspaper-and-inkbusiness.XEROXHASONLYMADEITMORE
difficultforLores’steamtofinditsHP
Way.Severalpeoplefamiliarwiththe
matter saythepast year’spressuretoreviveprinterearningshas 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