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HP Gets Practical

In between interviews for the CEO job at Hewlett-Packard, Mark Hurd plowed through The HP Way, David Packard's 1995 book about the company's circuits-and-switches origins and commitment to turning employees' brightest ideas into successful products.

Mark Hurd left NCR to take the CEO job at HP on April 1. Photo by Lou Dematteis/Reuters

Yet Hurd added some less-enjoyable fare to his reading list before his appointment became official on April 1: HP's Securities and Exchange Commission filings and analyst reports that lay out the financial challenges before him. Hurd appears to have the cost-cutting moxie to whip HP into better shape, based on his recent performance as CEO at NCR Corp. But the question hanging over his head--one even larger than looming decisions about whether to spin off the printer or PC businesses--is whether he can instill discipline without stifling innovation.

Many of HP's greatest successes have come from a culture that values creative thinking over cost-cutting, as well as Bill Hewlett and Dave Packard's faith in "management by walking around" over managing by the numbers. Hurd said last week that he'd do "everything in my power" to live up to the founders' commitment to innovation. "Culture and values are a very important thing for a company."

That may be, but during his two-year tenure as CEO of NCR, the 48-year-old engineered a turnaround by cutting $200 million in costs and 5% of NCR's workforce. "Mark, like the board, is very much a fan of metrics," said HP board chairman Patricia Dunn, who helped oust former CEO Carly Fiorina in February. HP will put together a set of "goals and key performance indicators" meant to get its staff on the financial straight and narrow, Dunn said at a press conference.

Like HP, many technology companies are just now emerging from a profit-sapping recession and wrestling with the margin-cutting commoditization of their products. Then there are rising IT powers in India and elsewhere that offer the high-profit services, in the past dominated by HP and its like, for less money. "It's probably the direction the whole industry is moving," says John Thomas, VP of infrastructure solutions at Perot Systems Corp., which resells HP technology but competes against the company in the outsourcing market. "We're trying to become very strongly metrics-driven as well."

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