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HP CEO Mark Hurd On R&D: 'Show Me The Money'

I wanted to share with you an insider comment I received in response to my Wednesday column, Recession Or Bust, R&D Spend HP Must. According to my correspondent, Hewlett Packard CEO Mark Hurd is a "show me the money" kind of guy. Which is not a criticism -- it simply means that company's research engineers have to earn their stripes every day.

The subject of HP's perspective on the proper place for research has been much in the news recently, followed its fiscal Q3 earnings report, wherein it was revealed that HP trimmed its Q3 R&D spending by $228 million.

In my column, I argued that, initial bad appearances to the contrary, this was actually not that big a deal. Why not? Well, because if you look at the bigger picture, HP spent $3.543 billion on R&D last year (its fiscal 2008) and so far this fiscal year, it has spent $2.115 billion for the nine months ending July 31, 2009. That's not chicken feed.

But the bigger question is, what is HP getting for its money? Is it getting acceptable bang for the buck? Global CIO guru Bob Evans tackles this question from a global perspective -- naturally! -- in his Open Letter To Hewlett-Packard CEO Mark Hurd. His main question is, what is Hurd's strategy from HP, apart from being, as Bob writes, "a highly disciplined manager, a numbers-lover, and an efficiency expert."

I think the insider comment to my column answers that question. Hurd is primarily that most disciplined of all managers. Here's what my commenter, who chooses to remain anonymous, said. (I verified that he is indeed an HP employee.):

"Working inside one of the most successful R&D labs at HP (and arguably the world), we acutely understand that Mark Hurd is not an R&D guy. He is a sales guy. His world is that R&D is something you buy, put your name on it, and then sell it for a profit. However, he is not technology agnostic. It's just the R&D is not his bag. What we hear from Mark is simply this, 'show me the money.'

So, it has become our job to justify our R&D spend. If Mark can buy that technology cheaper than we can do it, then that is what he will do. If he can make more money investing those dollars somewhere else, then that is what he will do. He is prudent and, yes, there are pockets of penny-wise, pound-foolish[ness]. Overall though, he is doing his job of managing fiscal responsibility and his goal was to bring R&D in line with our peers. So is there a down turn in innovation as a result?

I would say that we are adjusting to the constraints that Mark has thrown down. It isn't business as usual and the up side of that is the fact that we have to perform. This has actually helped open up the doors on innovation. There is a bigger push for breakthrough and middle management can no longer ride the wave of the same old, same old. So, overall good things are coming from our R&D machine. The real test is if Mark can be patient enough while we bring breakthrough to the market. Adoption sometimes takes more time than he has patience for. Therein lies the juxtapose[ition] -- a sales guy running an R&D company."

This is a cogent explanation of Hurd's strategy, which appears justified, particularly in the short term, while we're in the midst of the toughest recession in 80 years. (Hurd also has to correct the execution difficulties of the Carly Fiorina era.). I don’t think this is a bad thing. Whether the same short-term focus is the best strategy, once the recovery comes, remains a question for another day.

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What's your take? Let me know, by leaving a comment below or e-mailing me directly at alex@alexwolfe.net.

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Alex Wolfe is editor-in-chief of InformationWeek.com.

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