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HP and Meg Whitman: signs of a Silicon Valley in transition

HP, as Silicon Valley's biggest and most mature corporation, is more big business now than Silicon Valley startup. Meg Whitman has to help HP figure out which way to go from here.

By Daniel B. WoodStaff writer / September 24, 2011

A picture of the Palo Alto, Calif., garage where Bill Hewlett and Dave Packard founded their company in 1939.

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Long the symbol of Silicon Valley, HP could now be coming to represent new challenges facing America's idea factory.

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From the days in 1939 that Bill Hewlett and Dave Packard founded their venture in a one-car garage in Palo Alto, Calif., Silicon Valley has been the province of the young and brilliant. From Hewlett and Packard to Apple's Steve Jobs and Facebook's Mark Zuckerberg, Silicon Valley thrived by producing young entrepreneurs who understood the needs and wants of individual consumers and how to meet them through technology.

But HP is now America’s largest high-tech company with revenues of $126 billion, and its recent troubles in finding an effective CEO reflect a company caught between the Silicon Valley way and a more traditional model for big business.

In short, HP has until now remained a player in the printer and PC market that made it famous, but it has also expanded into business-to-business platforms. The difference is fundamental, and as Silicon Valley's most mature startup, HP is perhaps the first to face this transition – thinking more about the needs of General Electric or General Motors than the general populace.

As the new CEO of HP, Meg Whitman faces the decision of whether to continue to try to balance these goals or to abandon one for the other. The difficulty of that task – and the doubt about whether she can do it effectively – has driven HP stock to a six-year low.

“If you look at those companies which have been enormously successful in Silicon Valley in the last five to 10 years, you find that they are largely founded on the business-to-consumer model,” says Faisal Hoque, CEO of BTM Corporation, which analyzes the convergence of business and technology management.

Leaving the garage behind?

But he suggests HP is now based primarily on the business-to-business model that much of Silicon Valley does not understand. And that has caused problems, he says. This lack of understanding – by both CEOs and the boards that fire and hire them – is what is behind the musical chairs of management.

Yet the rough transition is to be expected, in some ways. Business-to-business savvy comes from experience – from operating in the corporate world – and that comes only with experience, Mr. Hoque says

“There is a vacuum of understanding at this level of needed knowledge and creativity, and it won’t be solved by the appearance of a Steve Jobs-type genius," he says. "The whole region needs to go through a growth curve, and it will take lots of time. Most high-tech creators are very young, and this coming new era requires a skill set of great experience – possibly by working within the giant businesses themselves, from the ground up.”

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