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“Capability, character and collaboration”
Excellence in Enterprise Forum
Vancouver, Washington
July 22, 2004

© Copyright 2004 Hewlett-Packard Development Company, L.P
All rights reserved. Do not use without written permission from HP.

Thank you very much, Beth.

Before I go any further, I want to acknowledge Beth, who has been not only a great contributor to HP, but also, I know from speaking to so many of you this afternoon, a great contributor to this wonderful community. Beth represents the very best of HP; she has great capability, she has great character and she collaborates with both her colleagues and members of the community. So Beth, thank you for all that you do.

And I appreciate very much the very warm welcome I received here in Vancouver. It is a great privilege for me to be here today, particularly because Vancouver has been a part of the HP world for 25 years. We celebrate our 25th anniversary this summer, and our employees will be commemorating that event with a great barbecue at the site in July.

We now are a company that operates in 178 countries around the world, with over 145,000 employees. And on behalf of all those employees around the world, it's great to be here with you today, and I certainly want to say a special thank you to the Greater Vancouver Chamber of Commerce, the Columbia River Economic Development Council, Identity Clark County, and The Columbian as well, for co-hosting this event.

It really is an honor for me to be able to join you when we are celebrating our 25th anniversary, and I must tell you for HP, Vancouver has always been a very special place.

There used to be a time when businesses had to locate on supply routes, transportation routes or in financial centers to be successful. But, as was intimated in Scott's opening remarks, the trade routes of the information age run through every community. With the right technology, we can do business from anywhere. And that means more and more for a company like Hewlett-Packard, the question we ask when we think about where we do business isn't just where is the best place to do business, but more and more, where is the best community to live in?

And for HP, that's a huge part of the reason we've been here for 25 years. Southwest Washington is not only a great place to do business; it's also a great place to live. And we know that quality of life is a little bit like oxygen for innovation, and ingenuity, and imagination and creativity. And for a company like HP - a company with "invent" in our logo and innovation as our life's blood - that kind of oxygen matters to us. And when you combine a great quality of life with an educated and diverse population, good research institutions, an active local chamber of commerce that is very much dedicated to the community and to the advancement of that community, energetic local officials who are committed to promoting the region - and I must say that over lunch, I learned the mayor's secret: he bikes around the community every afternoon. Now we know where he gets all those great insights.

And when you combine all that with a great investment climate, you of course have all the ingredients for business magic to use. I think it is no accident; indeed, it is a tribute to all your efforts to keep this community vibrant and strong, that Vancouver, and Portland, and the Pacific Northwest are considered among the cutting edge high tech communities in the U.S. today.

All of the elements that lend themselves to an entrepreneurial culture, to innovative success, are present right here in Vancouver, and we think this is one of the best places in the world to do business. I believe we will be doing business here 25 years from now, and my successors will as well. I know the successors of Hewlett-Packard CEOs will be able to say to all of you, as I am able to today, "thank you for being a wonderful community to be a part of. You have been a great contributor to our success, and we look forward to another 25 years."

Today, HP is a Fortune 11 company. We will exit 2004 as an $80 billion company. Today we are virtually number one or number two in every product category in which we compete, every region, every country and every segment. And, as has been true for the past 20 years, one of the true stars of the HP story today is our imaging and printing franchise, which as you know, has one of its main centers here in Vancouver. In 2004, HP will generate about $7 billion of organic growth. To put that in perspective, that's a little bit like creating a company the size of EMC in a year. And out of that $7 billion of organic growth, $2 billion of it comes from our imaging and printing division, which of course, has so many employees right here.

To put it in another perspective, last year we shipped about 43 million printers. We are shipping now a million printers a week, which means in 2004, there is a customer who is buying an HP printer about once a second somewhere in the world. That's why I'm quite sure we'll be here another 25 years. But I'm telling you this actually not to brag about HP, not to brag about our printers, but to brag about Vancouver because much of the innovation that goes to market with our printers, goes with the words "dreamed up, designed and invented in Vancouver" stamped all over it. The work that happens here is absolutely fundamental to the success of our company.

All of which is perhaps a bit too easy a way of saying that we at HP are delighted to be part of the last 25 years in Vancouver, and we are equally committed to being a great contributor and a great corporate citizen here in Vancouver for the next 25.

Now of course, HP today is much more than a printer company and we have had our share of change and transformation to be able to stand as a leader today in the information technology industry.

So, I was asked to talk a little bit about the current state of HP, and what we think is going on in technology, and then I'd be happy to take your questions. I do believe, and I think all of my predecessors at HP have believed as well, that great organizations are defined not just by their capability, but by their character - who they are, what they believe, and also by their collaboration - collaboration with colleagues, with customers, with partners, and with communities in which they do business. Capability really is all about what are you able to do. Character is all about what you do with it, and collaboration is all about who do you do it with and how.

So, let me start with capability. We have seen incredible progress over the last 100 years in science and technology, but I actually believe that the last 100 years has been the warm-up act, and we are now entering the main event of technology's ability to transform not just business, but life. I think that the dot-com boom and the dot-com bust were the end of the beginning, and we're now at this main event, where technology truly will transform every aspect of society and life and certainly business.

The reason I say that is because I think we have entered an era in technology now where every physical process and all analog content will go from physical, analog and static, to digital, mobile, virtual and personal - personal in the sense that an individual can control it. Think, for example, about the changes that have taken place in photography. Photography used to be a physical, chemical process. You took a picture, something happened in your camera, you took your film down to your neighborhood drugstore. Something physical, chemical happened; you returned to the store, you picked up your prints, you took them home. You sorted through them; you probably threw half of them in your bottom desk drawer. Maybe you got around to putting some of them in an album or mailing them to family and friends. That's a physical process - it's fairly inflexible, it's fairly time intensive.

And photography today is a digital process; it's also become a mobile process. So you create digital content - a digital camera really, if you think about it, is a computer with a lens. You are creating digital content, and then you are transmitting that digital content, storing that digital content, editing it, networking it, sharing it, and in a way, you are transforming that digital content into a physical print. Now hopefully, you do that all with our equipment, but whether you do or not, the reality is that it's an example of the transformation of a process from physical to digital, now mobile - the camera phone is rapidly becoming the most ubiquitous digital camera in the world.

Of course, that transformation is underway in virtually every process, every industry - from healthcare, to financial services, to communications, to education. And we believe that the challenges and opportunities in each of these industries will be addressed by the innovative application of a wide range of technologies, solutions and services that helps transform processes from physical to digital, mobile, virtual, personal. And by the way, that is why we have built the company we have built. We have worked hard to create a portfolio with capabilities that is unlike any other technology company's in the world. I refer of course to the fact that we're imaging and printing, and personal systems, and high-end computing, and storage systems, and software and professional services, because it takes that kind of portfolio to transform a process from physical to digital. In fact, it is what digital photography takes.

Now, when technology becomes the main event, when technology can transform, not just business, but life - if you'd like another example of the transformation from physical to digital, think about what's happening to music or entertainment. But when technology becomes a main event, then customers can't make tradeoffs for technology any more. It becomes so central to life that compromises can no longer be made. And of course, that inability to make compromises over requirements is what causes industries to consolidate.

I was speaking to our employees this morning and made an analogy between the automobile industry and the technology industry. The automobile industry started out as a lot of little companies doing some interesting things, but it was basically a fringe technology. When the automobile became a mainstream technology, consolidation occurred because customers were no longer willing to experiment with that technology; they wanted a level of reliability, and that level of reliability takes scope and scale, and that same thing is happening in the information technology industry.

If you are running a business as most of you are, or you're running a school district, or you're running a city as the mayor is, you have to be more demanding about your technology because it is at the heart of everything that you do. Every project that we have in our local communities, or in our nation - education, healthcare - these are problems that will be solved over time through the application of technology.

So, technology can't be a science experiment any more; it can't be as simple as the killer app or the hot box, the language of the dot-com boom or bust; it isn't a marketing slogan or the 'dot' in dot-com. Technology is vital because innovation matters more, not less, but it also has to be innovation that's reliable and relevant and comes at a price that customers can afford.

We think in information technology today, if you're not leading, you're losing. And we think therefore it matters that HP is now the industry leader in virtually every category in which we compete. We think it's also why innovation is so important to us, and we have now achieved the fastest rate of innovation in our company's history. We are generating 11 patents every day today, and have become one of the top five innovators in the world. But we couple that focus on innovation - which we think is key - with a determination to deliver innovation at a price our customers can afford. So, we talk about the combination of high tech, low cost - because we are a company that delivers technology for the masses, for everyone, whether they are in India or they are in Vancouver - combined with a great total customer experience.

I'm not going to run through every one of our businesses now, but what I will say is that the value proposition that we offer - high tech, low cost, best total customer experience - we think is winning in an era when technology is mainstream, and also to say that this era of technology that we're moving into when every process will become digital, mobile, virtual, personal is an era that requires the portfolio capabilities that we have built. I only say that because some of you may remember that building this company over the last three years has not been without its controversies.

Now as important as our capabilities are, what is equally important - and probably more long-lasting, because technology changes and so over time, strategy changes as well - issues of character are even more important. I think in addition to entering a new era of technology, when the leading technology companies have to have different capabilities than technology companies that led in the 20th century, I also think we are entering a new era of company leadership; that now more than ever, business leaders have an opportunity to redefine the role of business on a world stage to leverage our ability to improve the lives of people, the lives of communities, and nations for the better. And I do believe that winning companies of the 21st century will be those that not only increase shareholder value, but increase social value at the same time.

Now this is obviously something this community has believed in deeply for a long time, and it is a belief and a commitment that Hewlett-Packard shares with you. It was one of our founders, Dave Packard, who said that, and I'm quoting, "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. Profit is not a proper end of management but it is what makes all the other ends possible." And that philosophy still is at the foundation of what we do.

I think it means on one hand recognizing that what we do - our actions fit into a much larger ecosystem of cause and effect. At a minimum, we believe it means upholding the highest possible standards of integrity and conducting our affairs with the highest possible standards of transparency and accountability; it means, for example, living up to the best standards in environmental performance, privacy or human rights; and sure it means being a company that a community can be proud of.

On the environment, for example, we believe it means being good environmental citizens; leveraging our supply chain to reduce the environmental impact of our products and services. And we do that by deigning products that use fewer materials, are more energy efficient and are easier to recycle while maximizing overall value for our customers; it means taking responsibility individually for challenges we all face collectively.

And that is the message that the people of this community have preached to the world and practiced for a long time. It also means, I think, taking a direct role in the communities in which we operate to empower people and make this world a better place. I said at the outset that we operate in 178 countries and have now over 148,000 employees. That makes a company like ours among the top 25 nations in terms of GDP in the world - which means we can use that presence, that power, that leverage for good.

A big part of the reason I do what I do every day was - and people at lunch were commenting - I got my undergraduate degree in mediaeval history and philosophy, so I didn't actually start out as a technologist. What attracted me to technology is what technology makes possible. And what attracted me to technology as well is that inventors, innovators, are by their nature optimists, because inventors and innovators every day seek out to do what has not been done before. You have to be optimistic to work every day to create something that wasn't possible the day before. The reason I do what I do is what I see every day when you take technology and combine it with the aspirations and capability of people all over the world and focus that on real human problems and what can be done.

Let me give you just one very simple example: Two women in India named Saraswati and Gowri live in a rural community called Kuppam, India, and it's about 200 miles from Bangalore. It is a place where one in three citizens is illiterate, more than half of the households have no electricity, and most of the able-bodied adults are HIV-positive. Now, these young women were forced to leave school after the fifth and seventh grades respectively, because their families could no longer afford their schooling.

Another question we ask at HP is how do we bring technology to communities like Kuppam? As I said earlier, we are a company that focuses on technology for the masses - for everybody, not just for the elite. So, we had a number of inventors who were in this village in Kuppam because we have a long-standing relationship with that community, and they came up with the idea while observing the village around them of a solar-powered digital camera and a solar-powered printer. And they fit all of this equipment into a backpack, and we chose these two young women among 10, and trained them as village photographers, and gave them this digital solar-powered camera and other equipment, and after two weeks of training, they were able to serve as official photographers for a lunch event that we did with the region's Chief Minister.

And after seeing how people loved having their picture taken, these two young women seized on a business opportunity: they decided to follow the Minister on his rounds selling inexpensive photo ops. In less than a week, they had earned more than the equivalent of a month's income, and to both of them, it meant that they would be able to better educate their children and finally bring tap water into their homes. And today, not only do these two young women - who were empowered and enabled by two HP inventors - not only can they photograph engagement ceremonies and many other family occasions that used to be not recorded at all because of the lack of opportunity, they are now working to set up a fund that other young women can use in their village to start their own businesses.

And these two young women, I might add, have been so successful in their village that their husbands now come along with them to help them grow the business. Now to me, this is just a small, maybe it's even a prosaic example of the ways that science and technology can and will change lives and solve problems in the 21st century.

For HP, this isn't just the right thing to do; it's the smart thing to do. We are in an industry in which just 10 percent of the world today can afford to buy the products we make. If we're going to continue to grow - not just in the next quarter, but for the next quarter century - there is no question that a good deal of the ideas, the customers, the markets, the employees of the future are going to come from the other 90 percent of the world. And I would argue that the winning companies of this 21st century, whether they're 80 billion or 80 million, the winning companies of this century are those that understand that community development objectives are not separate from business objectives, they are fundamental to business objectives.

Many times, the best way to free up potential and enable possibilities comes through collaboration. Part of our strategy over the last five years has been to focus our innovation where we can make a unique contribution and lead - which is a high bar - and partner for the rest, which makes us a collaborator by strategy, by design. And of course, partnership and collaboration are vital to our community involvement and community service.

One thing that we found, whether it's here in Vancouver, or in that village I talked about in Kuppam, India, is when we make a commitment, a commitment to invest human talent, not just money or technology, then we're able to catalyze and be a part of a whole set of collaborations. This is a community that has taken the responsibility upon itself to provide a great atmosphere, a great environment for business and so we have a responsibility in turn, and we have been privileged to partner with so many great organizations here in Vancouver over the past 25 years.

We are very proud, for example, of the decade-long collaboration between HP, Washington State University-Vancouver, and the Educational Services District 112 to support the Science and Math Education Resource Center - I will be visiting that center later this afternoon. We're proud because one of our most important objectives in our community activity is to reach out to underprivileged, under accessed, undeserved members of the community and help train them in the language of the 21st century. And math, and science, and engineering are the language of the 21st century, and there is no question that talent is evenly distributed.

So, just because people don't have opportunity doesn't mean they don't have talent. Part of our role is to find - working with so many of you - find those talented people and help give them the tools that they need to succeed in the 21st century. The more we can help together develop those skills, the more this community will continue to be a magnet for 21st century investments, and a great talent pool for HP, as well.

It's the same reason that we sponsor partnerships like the Southwest Washington Center for the Deaf and Hard of Hearing, and why it means so much to us that we have the opportunity to work with Southwest Washington Boys and Girls Club, and the YWCA of Clark County. For too many years, I think it was perhaps too easy to assume that just because people didn't have opportunities that they didn't have talent, and I think what is clear to us when we work with organizations like the Boys and Girls Club, or any one of the others I mentioned, we help prove that those stigmas are wrong. Every single person has vast potential inside of them, and the right opportunity, married to the right use of technology, with the right collaboration can help unlock that potential and take the world to places we haven't been before.

What I think what all of this comes down to in the end is the right combination of realism and optimism, and I think that is what you have here in Vancouver. You have to be realistic that success doesn't always come right away. You have to be realistic that success requires choices, and tradeoffs, and sacrifices, and sometimes difficulties. Success and progress require realism that not everything happens exactly the way we wanted it to, or thought it might, or even planned for it to happen. And we have to be realistic about the fact that none of this ever happens with any of us acting alone. Whether it's a person or a company, it takes collaboration, and it also takes the realism that sometimes you take three steps forward and two steps back before you can take three steps forward and one step back.

But I also believe we have great reason for optimism; optimism because this is a century that has tools unlike any other time in human history; optimistic because this is a community that has demonstrated its commitment to its future and the ability to collaborate imaginatively and creatively to build that future.

If you've seen our ads, you know that some of them end with the tag line, "Everything is possible," and I think some cynics would say it's a marketing slogan. But I actually believe everything is possible. I believe we are living in an era of unprecedented opportunity to change the world for the better, not withstanding the very tremendous challenges that we face in the world today. I believe we are living in an era where we have the opportunity to include more people in more places around the world in what is possible, and I truly believe that through the right combination of capability, and character, and importantly, collaboration, that this is a time in the history of this community, and in the history indeed of our nation and our world, where we can make more things more possible for more people in more places.

It has been a great privilege to be part of this community for the past 25 years; it is a great privilege to be part of your future as well.

Thank you very much.

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