JAPANESE CHAMBER OF COMMERCE AND INDUSTRY
NEW YORK, NEW YORK
NOVEMBER 28, 2000
"TRANSFORMING COMPANIES, TRANSFORMING COUNTRIES"
© Copyright 2000 Hewlett-Packard Development Company, L.P
All rights reserved. Do not use without written permission from HP.
Thank you the very kind introduction, and good evening everyone.
It is a special pleasure for me to be here this evening because
Hewlett-Packard has been a part of Japanese society and industry
since the early 1950s when we formed our first Japanese partnership.
In addition, we've just completed our most successful year
in Japan, ever, and we're celebrating the 25th year of our
unique partnership with a great company like Canon.
We have many great Japanese partners that have added tremendously
to the global success of this firm. I am honored as well to
share the evening with your two reward winners, Konishiki
and Dr. Joseph Nye, although they are both exceedingly difficult
acts to follow. And I want this audience to rest assured that
I feel the burden of being your last speaker in what has already
been a richly entertaining evening.
While at first our two award winners seemed to come from
very different worlds, they share, I believe, a common trait.
They are both strategists: Konishiki at the level of one-on-one
physical competition and Dr. Nye at the level of global geopolitics.
We in business can learn from both of them. We in business
can learn from the individual focus of the sumo wrestler and
from the global focus of the geopolitician. Because even as
the Internet unites the globe in a whole new ocean of linkages
and transactions and relationships, we are also digitally
empowering the individual, the consumer, the entrepreneur
to navigate that ocean. And so I'd like to use that thought
as my starting point tonight.
I believe the individual is being globally connected and
empowered in a true digital transformation. And in that process,
personal life is being transformed, business is being transformed,
and society is being transformed. Tonight, I'd like to look
at the digital transformation - what I call the digital renaissance
- through a prism. I'd like to break this huge, history-making
shift into its components:
But first, I'd like to start with what I mean by digital renaissance.
- the new business and technology landscape,
- the transformation of organizations,
- the transformation of industries and markets,
- the transformation of countries and economies,
- and the transformation of leadership.
THE DIGITAL RENAISSANCE
To find a parallel to the historical shift that we are undergoing,
I have to go all the way back to the first renaissance, not
only because I was a medieval history major in college, but
also because I think it teaches us great lessons as history
A similar reference point in Japan's history might be the
Meiji period. After all, "meiji" means enlightened ruler,
and that is exactly what the Italian Renaissance leaders aspired
to be. The similarity between what happened in Italy and Japan
is in the shared sense of energy and possibility and the breaking
down of old barriers. The difference is that nationalism was
not yet a factor in Italy, while it was, of course, very important
During the Italian Renaissance 500 years ago, Galileo and
Copernicus and Leuwenhoek turned the theory of an earth-centered
universe on its head. This, of course, forced people to completely
rethink religion, politics, commerce, and individual responsibility.
A new, disruptive technology called the printing press eventually
brought access to information and education to the masses.
Centuries of dogmatic political thinking gave way to curiosity
and possibility. Leaders began looking at how governments
could benefit everyone, not just themselves. Artisans were
given freedom to create. Scientists and engineers were given
license to question and experiment. Invention flourished.
There are hundreds of interesting parallels we could draw
to the current period - an era when a new technology is once
again liberating imagination, removing barriers, and connecting
I would argue that we are in the beginning of a second renaissance,
the digital renaissance. And, once again, millions of ideas
and inventions are coming to market as the Internet enables
anyone who has an idea to create or invent or start a business
or participate in the global economy.
THE NEW BUSINESS AND TECHNOLOGY LANDSCAPE
Let's talk for a moment about the new business and technology
landscape that's fueling this digital renaissance. At HP, we
believe that the new landscape is defined by three emerging
forces of technology:
The first force is the rise of billions of new information
appliances. Our personal interactions with technology are
no longer defined or confined to the personal computer. Anything
with a microchip can or will become intelligent and become
connected. All of these intelligent connected things will
serve as platforms for the delivery of Internet-based services,
or what we call e-services.
This brings me to the second emerging force: digitally delivered
services or e-services, in which any process, any asset, can
be digitized and transformed and delivered over the Web.
Whole chains of transactions will be electronically negotiated
behind the scenes while you do better things with your time.
This is not simply about the automation of existing process
- which is what e-commerce and business has been about - this
is about the transformation of process to create value in
The third emerging force is the always-on Internet infrastructure
to support this swarm of Internet-based transactions and interactions.
Three trillion dollars will be spent worldwide over the next
decade to build out an information grid that will make access
to Internet-based information and services just like access
to other utility-based services that we take for granted together:
electricity or water, for example. But this information grid
has the power, the potential, to be even more pervasive, more
deeply woven into our personal and professional lives.
Now, in building out these emerging markets, we at HP are
leveraging our position as the world's largest consumer technology
company. We are also leading Internet infrastructure suppliers,
selling more than $34 billion in servers, storage, software,
and services last year. In building out these emerging markets,
we're seeing that by understanding the linkages, the relationships,
between these three forces and by inventing at their intersection,
we have the opportunity to transform the customer experience,
to transform the value-creation process, and to transform
entire industries. Let me give you a couple of examples.
TRANSFORMING THE CUSTOMER EXPERIENCE
At HP, we spend a lot of our time thinking about how to transform
customer experience. What if, for example, we could transform
the role of printers, turning them into smart Internet appliances.
In fact, there is no "what if" involved - we are already doing
this. Your HP printer can now be your local post office, with
stamps delivered over the Web and printed at home. No more standing
in line to buy postage. Your HP printer can now be a ticket
office for movies or sporting events or theater events. No more
standing in line to buy tickets, because you can print them
off the Internet, at home or at the office.
Through our partnerships with companies like AT&T and Excite@Home,
you'll soon be able to print coupons while you're watching
TV in your family room. Perhaps some day we'll print ballots
as well. Just kidding.
We've also announced a number of alliances with companies
like Palm, Nokia, and Singapore Telecom that will make it
possible for you to walk up to an HP printer with your cell
phone or PDA and print your email messages or your custom
presentation or the day's stock trading report.
The goal of all this is to make printers more valuable and
more useful to our customers as they go through their day.
Of course, at the same time we create new revenue streams
for HP by thinking about printers in entirely different ways.
TRANSFORMING THE VALUE-CREATION PROCESS
Now let's talk about how technology is transforming the value-creation
process. I'm going to use online trading communities and exchanges
as an example.
Although these electronic marketplaces are relatively new,
they have the potential to wring the efficiencies out of manufacturing
and supply-chain management processes because they facilitate
the real-time matching of supply and demand. At HP, we've
participated in online auctions to sell excess inventory and
buy parts in short supply. Through this process, we've been
able to trim our inventory cost by 30 percent.
Think about the near future, when information will flow
freely so that all participants in a market have access to
the information they need. When these e-marketplaces enable
true, real-time commerce where all goods and services are
traded, creating spot markets for everything, we will create
what economists have been dreaming about and teaching about
for decades: perfect markets.
TRANSFORMING ENTIRE INDUSTRIES
All you need is one company in an industry to catch on to the
power, the potential, of inventing at the intersection of information
appliances, e-services, and an always-on Internet infrastructure
and they can become the tipping point for their entire industry.
If one car manufacturer masters the model for turning cars into
mobile portals, all of the manufacturers will follow. The first
broadcast company to link printing to television content in
a meaningful way will transform this medium, creating value
for viewers, for advertisers, and for broadcasters.
So those are just some quick examples, a quick view of what
I see as the transformation of power and opportunity of this
next Internet era for businesses. What we must keep in mind
is that in this new world, transforming customer experience,
transforming the value-creation process, and transforming
industries are all interrelated. And they are about more than
simply bringing efficiencies in these processes. One transformation
triggers the other, and they are all part of a larger digital
Now, of course, another part of this grand transformation is
that many of us have been through, or are now undergoing, major
organizational change. The bad news is, it's just beginning.
The good news is, a whole universe of opportunity is being opened
up by this necessary evolution of our companies.
I'd like to bring the focus a little tighter now, down to
changes in my own company, to illustrate how we're going to
anticipate and incorporate these larger systemic changes into
the DNA of HP itself.
I share this with you because at HP we're taking on the
process of evolution or revolution holistically, across a
whole set of dimensions at once. Our approach to the reinvention
of HP is grounded in the belief that companies are really
living systems. And companies that aspire to be market leaders
must align and optimize those systems simultaneously.
A system is made up of four things. The first is strategy.
This is about what we choose to do and why - as well as what
we choose not to do. And strategy, of course, includes making
the tough portfolio choices that focus resources on the best
opportunities for profitable growth.
Our strategy, as I said, is driven by the conviction that
the real promise and power for businesses and consumers lies
in the linkages, the connections, the intersections of information
appliances and e-services and an always-on Internet infrastructure.
It is by understanding the relationship between them that
we have the opportunity to use technology and to truly transform
the customer experience, the value-creation process, and entire
Second, are structures and processes. A company's structures
have to be aligned to deliver on the strategy. Processes are
what knit companies together. They are how work is done. And
they need to be integrated and streamlined and working at
world-class efficiency to deliver quickly and cost-effectively.
Then there are performance metrics and rewards. Simply put,
what gets measured and rewarded is what gets done. Over the
last year, we've implemented pay plans and incentive drivers
that encourage and support the behaviors that are required
to win, and win big. For us, they come down to three questions:
How well are we doing in the eyes of our customers? How well
are we doing in the eyes of our shareowners? And how well
are we doing against our competitors?
And, finally, a reinvented company needs to foster and nurture
the right culture and behavior. Interestingly enough, in times
of great change and in times of great challenge and opportunity,
behavior is the ultimate test of a company's people. People
look first at how you act and then to what you say. And if
you do not walk the walk, then they will not listen to the
Change is always hard, although it can also be exciting
and exhilarating. In periods of great change, employees look
first and foremost at how people act and behave. Do their
words align with their actions? Because if there is no alignment
between the walk and the talk, then there will be no transformation
and no reinvention. We believe that in order to make great
progress in our reinvention - for this great, historic company
to fulfill its potential - we had to reinvent the whole system:
strategy, structure and process, rewards and metrics, and
culture and behavior. And we had to do it all at once.
So how are we doing? I'm happy to report that we are making
great progress. We just completed our fiscal year for 2000,
in which we had record revenue growth of 15 percent and record
profitability at 16 percent earnings growth. Yet, in our last
quarter, while we exceeded our revenue objective, we missed
our own profit objectives - which says we still have work
Our reinvention journey is just getting started, and there
will be other bumps along the way. No journey of any magnitude,
no transformation of any importance, comes without some pain
along the way. So the lesson in the area of organizational
transformation is that first, I think it requires taking on
the whole system if you are really going to achieve meaningful
change. Second, it's never finished. And third, you have to
expect the hard times along the.
Now, I'd like to move on to the next theater for transformation
- beyond individual experience, markets, and organizations -
and that is the transformation of whole countries and economies.
I'd like to focus tonight on now the digital renaissance
applies to Japan. I believe that Japan is a country that understands
the rules of competition underlying the new digital economy,
the global digital renaissance.
I said earlier in my remarks that inventiveness was the
prime virtue of the first renaissance, and I believe it is
true of this second, digital renaissance as well. I would
argue that in Japan there is much inventiveness and energy
and knowledge in your companies, in your economy, and in your
nation. And if you tap that inventive spirit, you will continue
to prosper in this next era. While Japan, of course, is dealing
with formidable challenges like corporate accountability,
financial transparency, bank liquidity, and manufacturing
over capacity, you also have an industrial and financial base
that for 50 years has excelled at globalization. In a digital
economy, these experiences translate into a global awareness
and a mindset that's a requirement to identify and realize
Another key asset - is that Japan is a global leader in
consumer electronics and hardware technology. Let's look at
Sony's PlayStation 2, which I was very fortunate to have been
given. PlayStation 2 has completely caught the attention of
Silicon Valley - not so much because it's a pretty cool toy
developed by Sony and Toshiba, but because its graphic computing
power is double what's available in commercial workstations
that cost much more. And Sony, of course, views this device
as an eventual gateway for all sorts of Internet-based e-services
into the home.
What this means in terms of the digital renaissance, I believe,
is that Japan is already a leader in understanding customer-focused
information appliances, which, as I've said, are one of the
three emerging forces at the core of this next digital renaissance.
Another digital renaissance asset is that Japanese researchers,
schools, and R&D institutions have cutting-edge expertise
in foundation disciplines for e-commerce. And your government
spends massively on nonmilitary R&D.
In terms of the digital renaissance, I would equate R&D
to fueling invention as a strategic national priority. How
many other countries do it on your scale? How can it fail
to pay off for you in the long run?
This year, of course, the Japanese government announced
it was beginning a five-year plan to surpass the United States
at high-speed Internet infrastructure. While we can debate
whether a government-driven plan is the best way to build
an Internet that serves consumers, not bureaucrats, I do hope
that when it comes time to spend the money they'll call on
Seen through the digital-renaissance lens, this new government
initiative demonstrates your national recognition that an
always-on Internet infrastructure, powered by open standards
and interoperability, is the underpinning of the new economy.
The final thing you're doing right may be the most important
in positioning you for leadership. I'm talking about your
leadership in mobile wireless technology. To put it simply,
Japan is inventing the world's most advanced mobile culture,
and it is becoming a laboratory for the rest of the world.
The mobile arena is one of the best theaters for inventing
at the intersection of e-services, information appliances,
and an always-on Internet infrastructure.
I cannot place too much emphasis on the importance of the
mobility revolution: the mobile Internet, mobile e-commerce,
and mobile e-services. The impressive thing is that you are
already blazing a trail for the rest of us. Next year, you'll
be rolling out the most advanced high-speed wireless phone
system on the globe. Already, your NTT DoCoMo's "i-mode" is
the fastest-growing mobile Internet service, with 10 million
subscribers in just 18 months and 50,000 new users a day.
Industry analysts say it will take the United States and Europe
a full two years to catch up.
What better example of the world of the future that HP talks
about? A world where useful e-services and Internet services
are accessed through simple, personal, intuitive information
appliances supported by an always-on Internet infrastructure.
We are proud to call NTT DoCoMo both a partner and a friend.
This mobile world is a world where individuals - walking or
driving or sitting, in classrooms or on the beach - can access
services or information on the other side of the globe.
But I would argue that, finally, to make this world of the
future become a reality on a broad scale, we need to transform
more than companies, more than markets, even more than countries
and economies. We need to transform how we lead companies,
how we lead organizations, even how we lead countries. And
I am no longer referring just to Japan, I am referring to
every company, every country, every organization in our new
connected world. Because without transformed leadership in
business and science, these other things won't happen on the
scale that is possible.
First, let me tell you what I think leadership in the digital
renaissance will not be. Leadership in the digital renaissance
will not be simply about controlling decision making. We leaders
don't have the time and capacity to control every decision,
though clearly there are some decisions that only we can make.
Leadership in the digital renaissance will not be about hierarchy,
title, or status. These things in the end will be as irrelevant
to progress as titles of the nobility were when the Industrial
Leadership in the digital renaissance will not be about
bragging rights or battles or even the accumulation of wealth.
Wealth will be only as beneficial and relevant as the ability
of purpose behind it. Leadership in the digital renaissance
will be about encouragement, enablement, and empowerment.
Leaders will no longer view strategy and execution as abstract
concepts. They will realize that both elements are ultimately
Of course, traditional aspects of leadership and business
- like understanding your business, understanding the financials,
and pushing the right levers to drive results - will continue
to be important. But the most magical, intangible, and, ultimately,
most important ingredient in the transformed business landscape
is people. The greatest strategy in the world, the greatest
financial planning, the greatest turnaround in the world is
going to be only temporary if it is not grounded in people.
Finally, leadership of the digital renaissance will be about
the realization that everyone on this earth is born with the
potential to lead. This will be a deep and fundamental shift
and this will be a shift worth celebrating. The realization
will stem from the fact that there are large and small acts
of leadership. And small acts of leadership can change the
world as surely as large acts. Ultimately, they can have as
much effect on people's lives and business success as big
ones. This brings me full circle to my conclusion and the
transformed world that I see coming.
This is a world where the individual entrepreneur, the inventor,
the one-on-one sumo wrestler can aspire to have the global
impact of the geopolitician. I started by talking about my
conviction that the digital renaissance will be about the
empowerment of the individual: his or her empowerment to participate
in the global economy and in the global exchange of ideas
and invention. I also spoke about how this era requires the
transformation of companies, industries, markets, countries,
economies, even the very nature of leadership.
But I think perhaps the most important lesson we can learn
from the first renaissance was that it was fundamentally about
a belief in human potential, the notion that an open society
is actually what fuels progress. The first renaissance was
not triggered by a single act of bravery or ingenuity. It
was a collection of acts by individuals of many different
talents. It was not fueled simply the bold acts of a few,
it was fueled by the everyday acts of many. So, tonight, I
ask all of us as business and government leaders, as patrons
of this digital renaissance, what can we do to fuel the progress
of this next renaissance? Thank you so much for your attention,
and thank you for bringing us together this evening.
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