NIKKEI GLOBAL MANAGEMENT FORUM
OCTOBER 29, 2002
"BRAND: A GUIDING LIGHT IN TUMULTUOUS TIMES"
© Copyright 2002 Hewlett-Packard Development Company, L.P
All rights reserved. Do not use without written permission from HP.
Thank you very much. It is a great honor for me to join you here today, and I must say on behalf of now 140,000 Hewlett-Packard employees in more than 160 countries around the world, we appreciate very much the opportunity to be a voice in this important conference.
I had the honor recently of giving a keynote address at an event celebrating the 50th anniversary of the friendship treaty between the United States and Japan. In that speech, I said that even though different histories and different cultures had brought us to that day, the one thing that allowed us to transcend those differences over time was commonly held values. And in times, both good and bad, both of our nations have used those values to guide our actions in an ever-changing world. It was those values, I said, that allowed us to walk into the 21st century not just as long-time partners and allies but as trusted friends. And as old friends, we would be facing future challenges together.
Now I know that we are here today to talk about a very different subject, namely, the importance of strong brands, particularly in a tumultuous world. But in a manner of speaking, it is the same subject because I believe, at its heart, we are also here to talk about values and old friends. In a very real way, I think about strong brands in the same way that I think about lasting, trusted friendships.
What are those qualities? Trusted friends know you as well as you know yourself. They are interested in what you think, what you feel and what you have to say. They know what's important to you and they want to know what is going on in your life. Whether you've been away for a week or a year, you know you can count on them. You know they have your best interest at heart. You know they won't take advantage of you. You know they won't take you for granted. You know they'll try to go the extra mile for you. You know they'll try hard not to let you down. Above all, a trusted friend is one who makes promises and keeps them. If they tell you they're going to do something, they do it. And that's where trust and reliability and respect and all those things that create strong relationships come from.
Now if those qualities sound familiar here today, they should, because the qualities of honor, integrity, respect and tradition are at the very heart, of course, of Japanese families and Japanese society, but they also are at the heart of all the lessons we have learned about strong brand and strong branding over the past two decades. What we have learned from the great brands, whether they are Japanese like Sony or American like Coke or European like BMW, is that for all the techniques that go into creating a great brand, for all the advertising, the marketing, the packaging, the product placement that go into defining a great brand, at its heart, brand is not a process; a brand is a promise. It is the same promise that one trusted friend gives another: "I will be there for you. I will go the extra mile for you and I won't let you down."
In a business world where everything is changing around us, where all of us have so many options and so many difficult decisions to make every day, there is one easy decision: to trust the strong brand that has never let you down. And that, of course, is the promise that turns strong brands into guiding lights in tumultuous times. And it is that promise that I would like to spend a few minutes on.
First and foremost, of course, a brand is a promise to customers. There are, of course, some traditional questions that we ask about brands. A commuter glances at a wall of posters outside a subway. Does he know which one is yours before he sees your logo? A small business owner dashes into a consumer electronics store. How long will it take her to locate your product on the shelves? A hot prospect is highly impressed after speaking to a sales rep. Will he lose interest after he reads your brochure or will his interest grow? Now these are the kinds of questions that the traditional tools of branding, things like tone and manner, graphics, color, logo, font can help answer.
But these traditional tools can only help answer them at a superficial level, because it is not the projection of a company that makes a brand. It is the people of a company that make a brand. The interactions, the attitudes, the beliefs of the people inside a company have more to do with how a customer experiences a brand than anything else.
To use a simple example, just imagine if you wanted to go out and convince people that the sky is green. You could hire the best ad agency in the world; you could spend millions coming up with a wonderful campaign with all kinds of testimonials to your idea; fabulous photography and make the most persuasive argument possible. But in the end, of course, all the convincing in the world won't work if people can still look up and see that the sky is blue.
What we've all learned about the science of branding is that you can spend millions on a campaign to create a brand. You can make all kinds of claims about what your product can do, about where your company is leading. But at most, good branding will get customers to try your product once or maybe twice, if you fail the first time. In the end, branding can only help introduce you to a partner. You have to win them over once the introduction is made. And ultimately, if the customer's interactions with your company doesn't match the ads, if the product doesn't work as advertised, if your solution doesn't solve their problem, if customer service representatives aren't responsive, if sales associates are rude, if your guarantee turns out to be worth less than the paper it's written on, all the branding in the world won't make a difference. In other words, great brands are authentic brands, and this authenticity must be substantial and long-lasting.
The cosmetics of a brand are not the same as the culture and values of a brand. And ultimately, it is the performance of the product backed by the performance of people that makes the difference. At HP, our values are: trust, respect, integrity, passion for customers, teamwork and collaboration, speed and agility, innovation and contribution. We understand these values, which have guided us for decades, must be reinforced every day. And if our people do not embrace these values every day, then our brand cannot fulfill its promise. Ultimately, brand is not a question of creativity; it is a question of culture. If you do not have strong values and ethics coded into your corporate culture, if an environment of trust does not inform everything your company does, I think it is difficult to project those values on the larger market.
I emphasize trust because I believe it is the foundation of strong companies and strong brands. After all, what is trust? In a phrase, it means being counted on to do the right thing when nobody is watching. It means doing what you say you are going to do. It means that your word is your bond, and in the end, business practices are not driven by corporate culture; business practices reflect corporate culture. If a brand is to be authentic and substantial, then its promise must be aligned with the real values of a company as lived by its people. In the end, trust is knowing that a company is what it says it is.
A brand, of course, is not just a promise to customers. A brand is also a promise to partners, to investors and to the communities in which we do business. And I think those promises as well must be founded on trust. Our whole free enterprise system is based on agreements and understandings between two or more parties. For the system to work, consumers must trust retailers and businesses that the products and services they receive are dependable. Manufacturers must trust that suppliers will deliver quantity orders on time, and investors must be able to have faith that the information they are receiving from corporate leaders is complete, accurate, timely, comprehensive and clear. That trust is crucial to building a strong brand. And in every case, trust can only be maintained and markets can only work if information is honest, the rules are clear and people do the right thing.
Now, as all of you know, America has struggled with this issue since Enron fell a year ago. I believe the vast, vast majority of companies are doing the right things, but of course, it is important for all of us to lead by examples, and good values have to be reflected in everything we do. At HP, we practice trust, respect and integrity in many ways. But one way is what we call the "open door policy." And the open door policy means that anyone anywhere can raise any issue with anyone.
We reinforce this policy in some interesting ways. Our employees are free to contact anyone, including any board member, on any issue, and they do. In the three years that I have been at HP, one of the things that has impressed me the most is that in all that time, I have received thousands and thousands of e-mails from employees. And in all that time, only one was unsigned. Interestingly, that one unsigned e-mail was actually a compliment, and the individual said that if he signed his name, he was afraid that it would be treated as a fawning gesture and the compliment would be ignored.
Now I must also quickly add that there were some of those signed e-mails that I wished I didn't have to read but, nevertheless, it reinforces the point that if you want an environment where anyone can be free to raise any issue, then you must encourage people to raise any issue, and you must accept, not punish.
Why do I bring up this open door policy? I bring it up because I think it is actually important to brand because trust and respect and integrity inside a company breed trust and respect and integrity outside a company. Transparency of communication and practice inside a company helps build transparency outside a company.
A brand is a promise to partners that you will do all you can to be a good partner for many years to come, to work to find a solution to their problems. And I believe a brand is also a promise to the communities in which we do business, and that promise is to create jobs, that you will be a positive force for change, that your company will uphold the highest standards on issues like the environment and human rights and labor rights. And I think, increasingly, world-class brands reflect companies that are truly citizens of the world, engaging in communities around the world. Part of our brand promise is to make technology and invention accessible to all. Part of our brand promise is to be democratic and open and human and optimistic.
Ultimately, strong branding is not just a promise to our customers, to our partners, to our shareowners and to our communities; it is also a promise to ourselves. It is a promise to ourselves to make our company something we are proud to be associated with, to show a positive, inspiring face to our employees around the world, to conduct ourselves with honor and integrity, to be the embodiment not only of our highest goals, but our greatest aspirations. In that sense, it is about using a brand as a beacon, as a compass, for determining the right actions, for staying a course, for evolving a culture, for inspiring a company to reach its full potential. And it is actually that compass, the promise of our brand that we relied upon most during our merger with Compaq.
When we first thought about the merger with Compaq, and actually, I first thought about it in December of 1999, we knew the technology industry was going through fundamental transformation. We knew that to lead into the future, we needed more than we had. We knew to lead into the future, change was required. And so at HP, we had to make a choice. We could stay focused on the future and fulfill our ambitions to build the company we thought HP was capable of being, or we could retreat into the past and let the company slowly slip into irrelevance, because history is not a guarantee for the future. History is something to be built on. And so we made our choice. We chose the future and we chose leadership.
The management team working together with the board of directors decided that the fastest way to accelerate our strategy and strengthen the company was to acquire a rival: Compaq. And as I mentioned, this is something that I had been thinking about for long before we announced it because we knew that the two companies were an ideal match in so many ways. What HP needed, Compaq had, and vice-versa. The move would catapult us in terms of size, scale, customer base and reach, and position us at the very center of the changes sweeping our industry.
This new company would boast 16,000 patents and an annual R&D budget of over $4 billion. This company would have a product breadth from pocket PCs to supercomputers. It would be the number one storage company in the world, the number one server company in the world, the number one imaging and printing company in the world, a leader in personal systems and in professional services. This new company would have global reach and financial strength.
Now we knew it was a brave move in tumultuous times, although, in many ways, it was a very pragmatic move. But we also knew that it would be a controversial move. We were prepared to face a fair amount of skepticism, but we did not foresee the struggle that lay ahead. And in many ways, it was a struggle between those who said we can only honor our past by protecting the status quo and those who said we can only honor our past by preserving our future.
I don't know how much you know about American-style proxy contests, but they are a bit like American-style political campaigns. They can be nasty and negative. On one side, we had paid advisors and professionals who made a living fighting proxy contests, and on that side were paid professionals who stood to gain personal wealth, millions of dollars in personal wealth, if only they could kill the merger. And on the other side, you had company executives and managers and employees, including the CEO, who had never done anything like this before in their lives, and who had to fight the battle but who also had to protect the company. And during that contest, the brand played the role of moral compass.
Our guiding principle throughout the campaign was to focus on the positive case for the merger and why it was essential to the company's future. We could not compromise the trust and respect the HP brand had established over the past 60 years with our customers, our employees, our communities, our partners and our investors even if it meant we would lose the contest. And there were many experts and many critics who said we could never get shareowner approval if we behaved in this way. But despite those experts and despite those critics, ultimately, we did win. And it reminded us, I think once again, that if you do the right things for the right reasons in the right ways, then ultimately, the right outcomes can be achieved.
And today, we have emerged with a stronger brand, a more global presence, an employee base that is committed to the new company, a leadership team that went through battle together and emerged more unified, and a product, services and technology mix that is extraordinary. And above all, we now have the opportunity to point the incredible talents of this company at the worthy goal of using technology to help unlock human potential and solve some of humankind's most challenging problems. We are more able to deliver on the promise of our brand to make the benefits of technology and invention accessible to all.
In the end, I think, that is the last promise a strong brand makes. It is a promise to the future to do all we can today to make the future everything it can be for our children. And for a technology company in particular, that promise to the future is important. Because for all the billions of people who came before us on this planet, we are now part of a generation that has greater tools and greater technology to do more good things for more people in more places than any other time in history; to solve problems that have plagued the planet for centuries and to honor our past by preserving our future.
A brand is a promise founded on trust. It is a promise to customers, to partners, to investors, to communities. It is a promise to ourselves. And while the promise can be brought to life in creative advertising and clever product placement, a brand can only truly be fulfilled if it is lived every day by the people behind the brand.
Thank you very much.
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