Issue link: https://iconnect007.uberflip.com/i/1288481
14 PCB007 MAGAZINE I SEPTEMBER 2020 Johnson: But there's also the long-range game, meaning that once they ran HP software, they were more likely to choose HP hardware when it came time to upgrade. Holden: That's what we told him, but no. He would not allow his people to sell something that enhanced the competitors' computers. He was looking at it the wrong way. If they paid for our software, he shouldn't worry about what computer it runs on. He insisted that they have to switch to HP. He destroyed hun- dreds of millions of dollars, and my division head dissolved the division. Rather than have a profitable future, they cut our losses, dis- solved the engine, and got out of the software business. Unfortunately, I had to tell a bunch of cus- tomers that we were discontinuing the soft- ware they had bought from us, but HP in Japan would not obsolete the product. They contin- ued to enhance the product and support it only in Japan. They could not face going to their customers and telling them, "Remember all that good stuff we told you and how great we said it would be? We're going out of business and leaving you high and dry." They weren't going to fall on their sword over that. To the rest of the world, we told people, "We're dropping out." We didn't want to tell them why we were dropping out. When that VP retired and somebody came in who under- stood, HP started being successful in the soft- ware business. Until that time, we invested money, didn't do so well, threw it all away, and started over. When the board of directors looked at HP's singular focus, and things became too compli- cated, they chopped it up. In 2000, they created Agilent. That move took away all the business costs of HP's test and measurement products and put in a separate, totally new company. We were getting to have so many products with so many divisions that all the products were being funneled through that one sales or- ganization. It was really difficult to manage the complexity, and it was easier to form a com- pany with its own board of directors and infra- structure. Johnson: It sounds like the moral of that story is "pick your niche." If you find out that your niche is too large, spin off a company to work on that particular niche. Holden: They didn't have to buy anything; they already had it. But they spun the niche off so that the people in charge who were plan- ning and managing day-to-day activity knew their customers, their competitive advantage, and how to build it. Being spread out too thin doesn't give the proper amount of time and fo- cus on them. For HP, the computer and net- working products were getting all the focus, and the board of directors complained they spent 5% of their time on test and measure- ment and 95% of their time on computer and networking issues. That wasn't fair to the whole of measurement and test. Measurement and test needed their own board of directors that was 100% focused on those customers, not 5% focused. Johnson: That example certainly works as well in a smaller business in fabrication, too. Holden: The fun thing about printed circuits is we never seem to obsolete anything, even over the last 60 years, but we keep adding new stuff all the time. In printed circuits, you could get spread too thin by trying to be a job shop for everybody, and you don't do anything really well because you are so diverse. Johnson: Isn't the risk that you are betting your company and your company's future on that specific area of specialization that you choose? That's a scary proposition. You could pick well and create a very successful space for yourself competitively, or you could pick a technology that looks like it has promise, doesn't get ad- opted, and then you're stuck in a backwater. Those are some risks to try to manage. How does one approach that? Holden: At first, HP just dropped the business. Later, they got a little smarter. They said, "We have the top technological solution. The only reason that we can't be successful is we don't