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MAY 9, 2003

© Copyright 2003 Hewlett-Packard Development Company, L.P
All rights reserved. Do not use without written permission from HP.

Thank you, and good afternoon, everyone.

Your former board chair, Roberta Achtenberg, has a favorite saying that I find particularly meaningful for us here today. She likes to say that when you're trying to effect positive social change, "if you have government and nonprofits involved, but no business, you have a sailboat, but no wind." And for more than six decades, we at HP have been doing what we can to provide that wind — to be a catalyst for community development and economic opportunity.

And I'd like to talk a little bit today about how corporations can play a real role in effecting social change, and what HP and other companies are doing to create a paradigm of leadership for the 21st century.

But before I do that, I want to say thank you. At HP, we have always believed that great organizations are defined not just by the company they are, but also by the company they keep. And for more than three decades, it has been our privilege to be both a partner and a patron of Coro Northern California.

I must admit — in part for selfish reasons — sometimes I think we have gotten more out of the relationship than you perhaps have gotten from us. And today in this room, there are a couple examples of what I'm talking about. One of them who we recognized earlier is Gary Fazzino — a Coro alum and a member of your board. Gary, as you may know, did his Coro Fellowship more than 20 years ago. Two of his rotations were at HP and the City of Palo Alto. It is surely no accident that he went on to become Mayor of Palo Alto, and today, he heads all of our government affairs activities and community activities worldwide.

Another Coro Fellow who is making a difference for HP today but who wasn't introduced earlier is Leslye Louie. Leslye is one of our industry's great leaders in focusing on the environmental challenges associated with the supplies market and making sure that HP continues to be a leader on environmental issues, and we're very proud of her.

Finally, if our intern this past semester, Akhila Kosaraju is any indication, Coro is still turning out graduates as talented as they have ever been, and we're lucky to have Akhila, as well.

Now, people often ask me what I think are the most important lessons of leadership, and I think there are three.

The first lesson is that values matter and character counts, and that no matter how much things change, fundamental values shouldn't. And for those of you who are just starting out your career, you will find that in leadership — as perhaps in life — the most important decisions you make, and the toughest decisions you make are often the decisions you make alone. And when you make those decisions, there is an opportunity to be buffeted about by all kinds of things: conventional wisdom, and popular emotion…and maybe cynicism and doubt.

And in those moments, you need a strong internal compass — a strong sense of your own true north. And that internal compass comes from your values. Values like trust, and honesty, and integrity, and accountability, and responsibility need to be a fundamental part of any organization — whether it's a government, or non-profit, or media or business. And that first lesson of leadership — that values matter and character counts — those are the lessons that Coro teaches us so well.

Another thing that Coro teaches us is that values need to be constantly reinforced in any organization to be real. We've learned through the last of couple years in particular, that any organization can write a high-minded statement of values. Enron's, it turns out, was one of the best. But living those values is something very different. If you don't have values coded into the DNA of your people and your organization and reinforced every single day from the top all throughout an organization — it's going to be impossible to project those values on to the outside world.

The second lesson of leadership is that leadership is not a destination, just as success is not a destination. Leadership is a journey, and from our experience in many ways, this is what Coro Fellows understand better than anything else, and I think what the three wonderful Coro Fellows that we heard from earlier expressed so eloquently, each in their own way.

The only constant in any of our lives, whether you're running a company or running a family, or running perhaps a war against terror, is change. But change has never been as constant and as fast as it is today.

To me, the dividing line that will increasingly separate winners from losers in the marketplace, the dividing line between those individuals who truly make a difference and a contribution in the 21st century from those who don't — is the line between those who embrace change and those who run away from it. It will be between those who seek to lead change, and those who find refuge in the status quo or in their comfort zones.

One of my favorite quotations, actually, one that I've used at HP a lot, is from Charles Darwin, who said "It is not the strongest of the species that survives nor the most intelligent, but those most adaptive to change."

The third lesson, and one that Coro knows well, is that real power comes in the connections between all kinds of things; but most importantly, the connections between people. That power comes not from those who stand alone, but from those who can work best with others, and reach out to others to achieve a desired outcome. And as Coro teaches us so well, finding those connections and recognizing those connections is part of what leadership is all about.

I spend a lot of my time listening — either to our customers, our partners, our suppliers, our people, our competitors, even. Or to minority entrepreneurs, or environmental leaders, or community-based organizations and NGOs when we are thinking about how we can make a contribution in the world. And I must say, one of my most important roles as a chief executive is to help our own people inside our own company make those important connections to each other to discover more power. As Gary Fazzino has said, inside HP, the opportunity to learn alongside individuals representing different perspectives and entirely different points of view — whether it's labor, or journalism, or business, or government, or social organizations — and appreciating those differences, is not only incredibly important for a company, but it is probably the greatest benefit of the Coro experience.

So the lesson of values, and success, and leadership is a journey, not a destination, and the power being in connections — those are the lessons that Coro teaches. And, of course, I have tried to use these same lessons to lead HP.

What are our fundamental values?

Our fundamental values today are the same that have defined HP for six decades: trust, respect, teamwork, collaboration, integrity, invention, innovation. We added speed and agility in the last couple years to that list of fundamental values, but throughout all our changes over these many decades, those values have stayed the same.

What was our journey as a company?

It was clear as we exited the '90s that the market in which we compete was changing. The era of pure standalone products was being replaced by an Internet-driven era of solutions in which customers increasingly understand that technology is at the core of success and business; and they expect technology to deliver more and more, and they expect technology to work together. In other words, customers increasingly are focused on the connections, and it became clear to us that only those companies with the depth and breadth and product line to provide those solutions would survive.

Only by connecting all of the parts of our company together — to reach across traditional lines and work together in new ways, would we be the company that we needed to be. And, of course, that is the journey that we have been on and continue to be on. Given a choice between change and the status quo, the people of HP chose to lead, and of course, the most visible culmination of that journey was the merger with Compaq a year ago. And today, we deliver more of the power and promise of technology to one billion customers in more than 178 countries.

Now, throughout all this change, one of the fundamental things that hasn't changed and should never change is that HP has always been a very good corporate citizen. Everyone who comes from this area knows that HP has never been a company that has thought conventionally about itself or its role in the world.

One of our founders, Dave Packard, put it best when he wrote that "many assume, wrongly, that a company exists to make money. The real reason HP exists is to make a contribution…to improve the welfare of humanity…to advance the frontiers of science. Profit is not the proper end of management. It is what makes all the other aims possible."

But Dave Packard was also a pragmatist. And the first corporate objective of HP has always been profit, because Dave knew that without profit, all of those other contributions were not sustainable. But I think what Dave Packard was trying to say in that quote is that business leadership and community leadership go hand-in-hand. Today, at HP, we talk about doing well and doing good…about prospering and making the world a better place.

Over the past six decades, HP's commitment to corporate citizenship has revealed itself in a number of ways…

HP was one of the first companies in the world, nearly 50 years ago, to give its employees paid time off to do volunteer work, a tradition that we continue to this day.

And Dave Packard and Bill Hewlett led HP the same way Maureen McNulty leads Coro — by example. Dave Packard didn't just praise education — he served on the Palo Alto School Board. He didn't just advocate for children's health — he held dinners at his house for years to raise money for the local children's hospital. And Bill Hewlett didn't just preach conservation — he spearheaded dozens of projects to preserve our air and water.

When it came to corporate philanthropy, like many corporations, HP traditionally looked at disparities between underserved communities and more affluent communities, and asked two fundamental questions: How do we use our money to provide people with the resources they need? And, how do we use our talents to make sure that citizens in underserved communities have the training to use the technology or equipment we facilitate once they've got it?

But where was that journey taking us, and are those still the primary questions of the digital age? So we began asking is that the best role we can play, or can we do something more? And over the past three years, we have realized that we can do more.

If we have learned anything from organizations like Coro Northern California and the many partners that you've worked with over the past decade, we have learned that in every community in America, and, indeed, in every community around the world, there is hidden power and talent and potential that is just waiting to be untapped, waiting to be unleashed.

And if we can tap into that power, we can take this community, any community, and this country and any country — to places we have never been before. And what we've also learned is that we can no longer blame lack of opportunity on physical things. We can no longer say the railroad doesn't run through here. Or highways don't come through here. Because the trade routes of the information age run through every city, every town, and every community. We no longer have an excuse to leave people and communities behind.

For too many years, it was easy to assume that because people didn't have opportunity, they didn't have talent. And what I think the digital age is helping to prove — and what you all are helping to prove — is that those assumptions and ugly stigmas are wrong. Not only does every single person have the potential to lead inside them, but the right use of technology can help unlock that potential and create those opportunities for everyone.

Now, particularly for a technology company at a time when technology was increasingly separating winners from losers in the new economy, it was becoming more and more clear to us that traditional philanthropy was no longer enough.

We realized that if we could connect our people to our communities in deep and meaningful ways, that we could create more value. If we could connect our people to communities, we could learn new things, like developing locally relevant products or sustainable products.

We could tap into new power in those people, and we could also teach those people new skills — management skills — the skills of setting goals and achieving them. In other words, we've learned that financial capital alone — products and money — although they're important, are not the greatest wealth that companies can bring to underserved communities. It is human capital. It is experience, and knowledge, and the ability to transmit that into capacity building.

About three years ago, I announced that HP was changing the way it did philanthropy, and we kicked off a campaign to help close the gap between technology-enabled communities and technology-excluded communities. And we called our campaign, E-Inclusion.

We announced that we would begin with a commitment of $5 million per community, but even more, we announced that we would be committing teams of our best and brightest employees on the ground in different communities for a period of up to three years to work with local citizens — to set goals and to create solutions for the challenges that the community thinks are its most important challenges, and then work together with the communities through the enabling power of technology to get those goals achieved.

We called these communities Digital Villages, and they're all about learning from change and using connections and technology to manage that change. And we figured the perfect candidate for our first digital village was right here in our own backyard in East Palo Alto.

We didn't think it was right for the technology boom that was happening in Silicon Valley to pass our neighbor in East Palo Alto by. And I'm here to tell you that the people of East Palo Alto did not let us down. And I'm very proud to tell you that thanks to absolutely wonderful work on the part of wonderful people in that community, and also wonderful HP people, that last week, we celebrated the third anniversary of the East Palo Alto Digital Village. It is an anniversary that East Palo Alto is not celebrating just with cake and balloons — they're celebrating through the creation of more jobs and more business.

Just listen to what they have done…

The people of East Palo Alto have taken the HP commitment and created a small business development initiative managed by visionaries and a non-profit called Start Up. From a small business base that was sitting untapped three years ago, they have worked with more than a hundred businesses, created more than 150 jobs, and generated almost $3 million in revenue for the community, just in two years.

They also took the HP commitment and targeted schools. At one school, Bellehaven Elementary, that meant 400 laptop computers for kids in grades four through eighth, and with our help they not only trained the teachers, they trained the parents. And for me, the proof point comes at recess time when it is not an uncommon sight to walk through the schoolyard and see kids with their jackets pulled over their heads — not to hide from other students, but to block the glare of the sun so that they can work on their computers.

And, incidentally, if you travel out of East Palo Alto and you drive a little bit further south to East San Jose, you can also see what technology grants helped students do.

Downtown College Prep is a school that targets the children of immigrants with D and F averages who don't speak English as a first language, with the sole intention of getting them prepared for college. In just two years' time, the use of information technology has helped increase the grade point average by nearly a point, and the average reading level has jumped by three grades.

Back in East Palo Alto, they've also taken the HP commitment and worked with local non-profits to create an online resource center that provides residents with information about their city. And they built three technology access points to help citizens to gain access to that information.

And they've also helped more than 30 small non-profit organizations within the community that had limited access to technology. And the community is now working to create a community academy with state-of-the-art employment skills training.

Now, it's very important to understand that this is not imported success. This is not imposed success. These are not goals and objectives that were brought from somewhere outside of the community. The talent was there. The drive was there. We just helped provide the tools and the opportunity.

Now from our perspective, the learning that we've done in East Palo Alto allowed us to take that model to two other cities; first in East Baltimore, and second, with a tribal council made up of 18 Native American villages in San Diego. And each of those communities came with a $5 million commitment as well as the tremendous talent and passion of the people of HP.

And the learning we've done in these three digital villages has helped guide us applying our resources elsewhere. For instance, we've taken the success of the East Palo Alto business startup and launched a micro enterprise development initiative, focused on helping local business incubators and others help small businesses to improve skills and create jobs. And among the grant winners was a local recipient, the Renaissance Center, in Bayview Hunter's Point.

We're also partnering with the Magic Johnson Foundation to build innovation centers in a hundred communities across America, and our experience is now allowing us to take this learning abroad, where we're developing the next generation of digital villages in India and South Africa.

And here again, teams of HP people are working with local residents to create scalable, replicable models of development, and we call this next generation I-communities.

What we're doing in these communities is working on the ground with local governments, NGOs and other corporations in new ways. What we're learning is that when we actually have people on the ground in a hands-on way, we can leverage our involvement to bring other partners into the equation so that, for example, if the community decides that wires need to be strung, or roads need to be built, we can work with local governments to help get them built. Or if health needs are going unmet, we can work with the local NGO to meet the need. Or if the community prioritizes areas of need outside of HP's core expertise, like water or agriculture, we can leverage our presence to contract with another company that specializes in water or agriculture to get that need met.

Now frankly, we don't think this is a paradigm that applies just to IT companies. It's a model that can work equally well for health organizations, or energy companies, or agriculture companies, or really any multi-national with the resources and the depth and the talent to make a contribution and make a difference.

While we seek to lead in communities around the world, we realize that leadership must begin in our own community and our own company first. And with our roots here in the Bay Area over the past three years, HP has been proud to provide E-Inclusion-related grants to nearly 30 local partners. And we're also delighted to work with so many organizations that are doing such great work for the community.

Now, it may be a strange question to ask this group, but I ask it anyway... Why do this?

I think the simple answer is that this is not an argument for compassion — it is an argument for enlightened self-interest; first, because poverty anywhere undermines stability and progress and opportunity everywhere; and second, because as leaders, we must look beyond the next quarter or two. In our particular industry today, only ten percent of the world can afford to buy our products. So we have to understand that many of the people, the customers, the partners, the employees, the ideas, the markets of the future — will come from today's underserved, under-accessed, underprivileged communities.

We no longer view corporate citizenship efforts as separate from our long-term business success. I believe they are fundamental to our long-term business success. Doing the right thing also happens to be doing the smart business thing.

So to return to the three principles of leadership as demonstrated by Coro, what is the fundamental value of this kind of collaboration and connection? The fundamental value is to create opportunity — both community and corporate.

What is the journey? To help use our talent, our resources, our passion to create positive change and to close the opportunity gap.

And what are the connections? The connections are to form partnerships between governments, between NGOs, between corporations and communities — to learn from each other, and leverage our collective resources, and power, and possibilities — to change lives and to change futures; in other words, to be both the sailboat and the wind. And if all that sounds familiar, it should, because that is exactly where Coro has been for more than six decades. There are very few organizations in America who have better identified the changing needs of communities and helped evolve the very concept of leadership along with it.

Whether it was working to provide our state with trained and able public servants in the '40s and '50s, or working to train women as strong leaders in the '70s, or working to train great labor leaders in the '80s and beyond — Coro Northern California has made our communities, our organizations, and our world, better.

Speaking as one of the organizations that you have helped make better, we at HP feel fortunate to have Coro graduates and Coro Fellows helping to lead the way. Together, I believe we can help make real what this organization has aspired to create for more than 60 years — a future where strong, principled leadership can create a better future for everyone. And our future and our world are waiting.

Thank you.

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