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REV: JANUARY 25, 2005



Hewlett-Packard: Culture in Changing Times

It is an affirmation of our belief that progress is not made by the cynics and the doubters. It is made by those who believe everything is possible.
— Carly Fiorina, Chairman and CEO1
We might have stopped at the audio oscillator (HP’s first product in 1939). It was a nice business. We might have stopped at the scientific pocket calculator. After all, HP invented the category. Even now, some suggest we might stop at printers. But HP’s ambitions have always been much greater. The coming together of HP and Compaq is a renewal of HP’s traditional aims, adapted to new technological time. . . . While blending company cultures is challenging, the HP Way has always been bold enough to embrace change and flexible enough to absorb it.

— HP advertisement promoting the merger2
There is now a real danger that HP will die of a broken heart.


— David W. Packard (son of cofounder)3


In September 2001, Hewlett-Packard, led by Carly Fiorina, announced a highly controversial acquisition of Compaq Computer that would result in the largest proxy fight in corporate history and a court battle with Walter Hewlett, company board member and son of one of the company founders. Fiorina believed the acquisition was necessary to help lift the two struggling companies. Together they would rank at the top, or near the top, of market share in most important computer industry segments. It would also enable significant cost savings achieved in part through job cuts. Fiorina believed that the acquisition was the best strategic option for HP and that it would further advance the organizational and cultural transformation that she began at HP two years earlier. While she readily admitted that merging the two organizations would be difficult and would challenge the “HP Way,” she had confidence that HP could pull it off.


Many investors, analysts, and employees, however, vehemently opposed the deal, and HP’s stock price had fallen 18% following its announcement in September of the previous year. The CEO of a major competitor stated, “The visual I see is a slow-motion collision of two garbage trucks.” An investor added, “It is like taking two stones and tying them together to see if they float.”4 Employees, some of whom had already begun referring to Fiorina as “Chainsaw Carly” due to cuts made before ________________________________________________________________________________________________________________ Professors Michael Beer and Rakesh Khurana and James Weber, Senior Researcher, Global Research Group, prepared this case. This case was developed from published sources. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. This case draws extensively from Peter Burrows, Backfire: Carly Fiorina’s High-Stakes Battle for the Soul of Hewlett-Packard (Hoboken, NJ: John Wiley & Sons, 2003). Copyright © 2004 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.

This document is authorized for use only by EVA H. SARAGIH until September 2010. Copying or posting is an infringement of copyright. or 617.783.7860.

Hewlett-Packard: Culture in Changing Times



the merger, were dismayed. Hewlett, who thought the acquisition could seriously damage the company, had failed to...
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