The title is fairly uninspiring: The Value Factor. But one of the co-authors is not without interest (at least lately): Mark Hurd, the current CEO of HP
It's a short book, only 127 pages. Yet it is filled with useful strategies for senior managers who want to make their companies much more competitive. And, interestingly, the book provides some ironies in regard to the current scandal at HP.
No doubt, Hurd has a lot of credibility when it comes to managing complex organizations. When he published the book, he was the CEO of NCR, a company that was floundering until he took the helm in 2003. He engaged in significant cost-cutting and was able to post a threefold increase in the company's stock price.
Then, in March 2005, Hurd became the CEO of the embattled HP. He applied his cost-cutting skills, greatly improved profitability, and saw the company's stock price nearly double. Interestingly enough, there was the possibility that HP would eventually outpace IBM
The main premise of the book is straightforward: To be competitive, a company needs to go beyond just having a strong product. Simply put, in the global economy, products easily become commodities.
So, how can a company be different? The authors have one answer: "Capitalize on the information you own about your customers, suppliers and partners; it is the new value proposition for sustainable long-term growth."
The authors then go through a myriad of case studies. Many are the typical leaders in leveraging IT, such as Dell
However, it is critical to have a "single version of truth" of data. This is no easy feat in corporate America. After all, with many mergers and acquisitions, melding things together takes time -- if it is ever done at all.
This was a big problem at NCR. Say the authors, "It was nearly impossible, within a reasonable time frame, for NCR to get a complete view of receivables, travel and entertainment expenses, inventory and other aspects of the company's financial picture."
The authors also look into another big problem: hoarding of information. In a big organization, employees may want to keep control of certain types of information in order to enhance power (and perhaps job security). But, again, doing this debilitates the performance of the company.
The solution to this mess? The authors believe that the CEO must take command. According to the authors, "Corporate leadership is not a democracy. The core vision of a company comes from the top. The rest of the company can then be empowered to realize that vision."
The book then highlights some of the benefits of an effective information strategy:
- Procurement. A company can consolidate its overall purchasing of supplies and realize cost savings.
- Customer Feedback . This can help identify the source of product problems, which ultimately means higher quality and customer satisfaction, as well as lower costs.
- Scenario Analysis . With lots of data, a company can look at different pricing strategies, distribution methods, and marketing approaches.
The HP scandal
OK, so does the book shed some light on the HP scandal? Well, it does show how Hurd's principles are not easy to follow.
On page 79, the authors talk about how critical it is that managers not rely on summary information. But, as we learned from the HP scandal, it's extremely difficult for an executive to keep abreast of the details. For example, Hurd admitted that he failed to read a report in March that covered the questionable tactics of the HP board investigation. In hindsight, Hurd said he should have read the report.
Actually, it looks like Hurd is revising his strategy. In his Congressional testimony, he said, "I pick my spots where I dive for details."
The authors also talk about the importance of asking questions. But in Hurd's Congressional testimony, he said he should have asked more questions.
And perhaps the ultimate irony comes at the end of the book, when the authors talk about security: "Fortunately, protecting the security of personal information is well within the capability of currently available tools and infrastructure. The only obstacle is commitment."
All in all, The Value Factor is a good book. There are great examples -- and lessons for managers. But, in light of the HP scandal, the book is really describing the ideal manager. And as we have seen with HP, that's tough to achieve in the executive suite.
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Fool contributor Tom Taulli does not own shares mentioned in this article. The Fool's disclosure policy is completely straightforward.
