When Meg Whitman, Hewlett-Packard's chief executive, was preparing to cleave her company in two, she feared reliving a shoe disaster from early in her career.
Whitman was an executive in charge of the Keds brand at Stride Rite a few decades ago as the company was making a transition to a new "high-tech" warehouse. The transition was bungled, and for nine months the problem could not be fixed.
Whitman worried so much about a similar hiccup that during planning meetings for the HP breakup, "Can we ship Keds?" became a sort of shorthand for worrying about bungling.
When HP splits in two on Sunday after a year of planning, what is left will bear little resemblance to the engineering-driven company founded more than 75 years ago in a garage not far from Stanford University.
On one side will be HP Inc, which will largely consist of personal computers and printers. On the other, Hewlett Packard Enterprise, or HPE, which will sell the computer servers, data storage, networking, software and consulting services that run a modern company. Each company is expected to have annual revenue of about $50 billion and will be among America's 500 largest public companies.
Neither will have the standing as one of the most innovative operations in the world that the old HP enjoyed for decades.
But the people who will run the new companies argue that may not be a bad thing. Indeed, HP for years has endured a sort of corporate existential crisis - a company trying to change with the times while trying to hold on to the past and managing to do neither well.
"We're leaving behind a company that was very large, running two businesses that were very different," Whitman said in an interview at her headquarters last week. "We're creating two new big companies, not bite-sized morsels, with real capabilities to change things."
And Whitman, who will run HPE, made certain throughout the transition that her company would most assuredly still be able to ship computers.
"We have to ship products, we have to send invoices, we have to collect money," she said. "HP sells two PCs a second. A server every six seconds. We had to keep selling them."
The change cannot come fast enough for HP, whose stock is off more than 30 percent since the start of the year. The question is whether Wall Street believes the two companies will benefit from the separation.
"Anytime you make a change, you make a claim," said Toni Sacconaghi, an analyst with Sanford C Bernstein. "They say, 'We're on the front edge, everyone will have to catch up to us.' But both new companies aren't that wildly different. They're both growth-challenged."
Of course, quitting history is not simple. HP Inc, the less technically ambitious of the two new companies, will largely occupy the building that used to house HP's famed research and development division.
The offices of William Hewlett and David Packard, kept intact after they left more than 20 years ago, are being sealed off with a separate entrance so that employees of both companies can come by for visits. The garage and a collection of information technology relics are also common property.
More important for the future of both new companies are the plans that Whitman seems to have worked on since she took over at HP in 2011. The story HPE is taking to corporate customers is HPE itself.
Need to change your business? HPE can show you how, executives say. After all, few companies in the world have gone to greater lengths to change.
Since October 6, 2014, the day Whitman announced the split, a 500-person team inside HP has done over 300,000 tests of its systems to see if they work right, built 75,000 new ways to interface with its computers and cloned 2,800 applications to use in one company or another.
Translation: HP has learned to do tough automation for big computing systems, and that experience is something it can sell to customers.
This kind of big technology upgrading will be attractive to the information technology, or IT, departments at companies going through change, said Scott Spradley, who led the team.
"Most people think IT knows when its servers are going to go down, but the reality is, they mostly rely on manual tickets," he said. "We automated everything."
As transformational as Whitman's message sounds, around HP it is also familiar. Carly Fiorina, now a Republican presidential candidate, wanted customers to learn from the way HP consolidated operations after it bought Compaq for about $25 billion in 2002.
Her successor, Mark Hurd, now co-CEO of Oracle, said customers could learn from the sharp cost-cutting he undertook with the help of corporate computing.
Like Whitman, Fiorina and Hurd both took over HP with little previous experience of HP, and had built careers largely on their skills in sales and marketing. Leo Apokether, another CEO who ran the company for less than a year before Whitman took over, was trained as an economist. These four outsider chief executives followed 60 years of an HP led by engineers who were either founders or lifers.
This is another thing that has to change, said Whitman, who for years ran the auction site eBay. "This is crazy - Carly, Mark, Leo, me - the learning curve is too steep, the technology is too complex for an outsider to have to learn it all."
One year into the job, Whitman gave a devastating report on the company's health, sending the stock sharply lower before it gradually recovered. And one year ago, she concluded that HP needed radical change.
"She had in strategic folks from Goldman Sachs and McKinsey," said Chris Hsu, HPE's chief operating officer. Whitman hired him earlier in 2013 from Kohlberg Kravis Roberts, the private equity firm. "It wasn't a surprise to me. When I'd looked at HP before joining, my question was whether it had intrinsic value. The separation helps that."
Hsu has built benchmarks for HPE's software and services business from models made from parts of different competitors. His financially oriented metrics have become common standards among Whitman's top executives, who had used a wide variety of measurements to gauge the performance of their business units. In place of some research and development, HPE will invest $100 million a year in start-ups, like a venture capital firm, in search of promising technologies developed elsewhere.
Still, within its own technology rooms, the company has in the past year had some notable reversals. In 2014 HP said it would transform computing with something called the Machine, which relied on advanced computer memory. In June it backpedaled, saying the project would begin with conventional parts.
A plan to build a competitor to the wildly successful "cloud computing" business of Amazon Web Services was killed in October. Instead, HPE will sell smaller cloud systems to companies that still want their own machines and will operate its own cloud for customers who want their computing that way.
Wrenching change is now the norm among the older tech giants. Just in the past few weeks Dell announced a deal to purchase EMC, a maker of data storage equipment and software, for $67 billion. Lexmark, a competitor to HP Inc's printer business, has hired Goldman to explore alternatives to its beleaguered life as a public company. And IBM has reported declining revenue for 14 consecutive quarters.
"We have to recognize how much technology has changed and change with that," Whitman said.
©2015 The New York Times News Service
