HP at Cultural Crossroads

During the late 1990s, HP, the second largest computer manufacturer in the world, faced major challenges in an increasingly competitive market. In 1998, while HP's revenues grew by just 3%, competitor Dell's rose by 38%. HP's share price remained more or less stagnant, while competitor IBM's share price increased by 65% during 1998. Analysts said HP's culture, which emphasized teamwork and respect for co-workers, had over the years translated into a consensus-style culture that was proving to be a sharp disadvantage in the fast-growing Internet business era. Analysts felt that instead of Lewis Platt, HP needed a new leader to cope with rapidly changing industry trends.

Fiorina implemented several cost-cutting measures to streamline the company's operations. Some of the measures included forced five-day vacation for the workers and the postponement of wage hikes for three months in December 2000. In January 2001, HP laid off 1,700 marketing employees.

In April 2001, Fiorina announced that HP's revenues would decrease by 2% to 4% for the quarter ending April 30, 2001 due to the decrease in consumer spending. In yet another move to cut costs, in June 2001, employees were forcibly asked to take pay-cuts. More than 80,000 employees volunteered saving the company $130 million.