I read Ann Rand’s novel, the Fountain Head, in High School and loved it. I had intended to go on and read the book she wrote after that, Atlas Shrugged, but just never got around to it. However, I never stopped thinking that the title was just so perfect. It’s so evocative. Two words that encapsulated so much and presented such a clear image in the mind’s eye.

A giant colossus stands with the world held steady on his tremendous shoulders. Beads of sweat on his face. The strain in his body palpable. Then, without warning, the strain becomes too much. He shrugs, and the stability of the world he balanced on his shoulders is forever shattered.

The Start of Our Tale

In 1993 I joined Hewlett-Packard as a financial analyst working for Corporate Financial Reporting. Four years later I was on my 3rd role at HP working for HP’s General Counsel (Chief Lawyer) in the capacity of Senior Director responsible for IT and Finance Operations of HP’s Legal Department. At that time HP’s Legal Department included some 300 individuals and spent about $50M in outside counsel fees. It was essentially a mid-sized law firm inside a large company.

The event in this story, I believe represents the start of the HP’s slide from greatness. A fall that resulted in multiple spinouts and splits over the course of a decade and a half. I further believe that this decline was not inevitable and first and foremost stems from what can only be termed a crisis of confidence.

HP as Colossus

When I joined HP there were three major business groups. The Test and Measurement business was the oldest part of HP. It went back to the founding of the company in the 1930’s. HP’s first product was an audio oscillator and one of their first customers was Walt Disney. Disney would go on to use these oscillators to test audio equipment in the 12 specially equipped theaters that were to show Fantasia in 1940.

In 1966 HP entered the computer segment and this became the 2nd major business line that made up the company. The last major business that made up HP was printing and imaging. They produced both laser and ink jet printers. Most people at the time knew of HP because of their calculators, computers or their printers. Few knew it anymore as a leading test and measurement company though it still was.

In the early 90’s, HP was a Fortune 25 company. It had been around for nearly three quarters of a century and it had been able to adapt and thrive despite continuous technological change. Though not equal, revenues were nicely distributed across the three major business segments, and all were solid, growing businesses.

HP’s revenues had been growing in double digits for several years before I joined and would continue to do so for several years after I joined. For a Fortune 25 company, this kind of multi-year double digit growth in revenue and earnings was not a common occurrence.

The company was thought of as one of the best run companies in America. There had even developed a bit of mythology over its management practices. Dubbed the “HP Way”, HP’s management practices were held out by the business community as an exemplar of what a great company culture should look like.

For my part, on balance, I thought it lived it up to its reputation in those days of being an extremely progressive company. It was ahead of the most other companies in both how it managed its people and how it executed business operations.

Creeping Doubts

Around 1997, when I was working for the General Counsel, HP engaged a major global consulting firm in a multi-year project to help them think about the question: “What happens to very large companies that have experienced significant growth for multiple successive years?” This is an oversimplification of the scope of the engagement, but I believe that it was the fundamental question that weighed heavily on the minds of senior executives of the company at that time.

Among many findings and recommendations, at the highest level, was an assessment that the decade long trend of double-digit growth was unlikely to continue. The consulting firm recommended that the company begin to plan for much slower growth in the future.

At one level this finding wasn’t surprising. Looking back over history it made sense that most companies which had experienced a similar situation, were unable to sustain extraordinary levels of growth. However, I believe the way that HP’s senior executives internalized these findings sowed the seeds for a two-decade long slide.

Changing Behavior / Changing Culture

When I first joined HP in the early 90’s as part of Corporate Financial Reporting, I got to see up close how aggressively HP’s business leaders pushed back against expense and investment guidance’s issued by the companies CFO. Especially when they believed that following that guidance would undercut their ability to achieve their business objectives.

It was clear to me that these business unit leaders felt strongly that they had net positive investment opportunities in front of them, so they were willing to fight hard to ensure that they had the resources to pursue those opportunities. There was an extremely healthy back and forth between HP’s business General Managers and HP’s CFO.

After the report was issued, it felt to me like HP’s business leaders had lost their will to fight. They appeared to have fully embraced the idea that the future held slower growth. That shift in thinking had deep and profound effects on how the company operated. Rather than continuing to be obsessed with how to win in the market, increasingly the focus became how not to lose.

The behavior I saw is similar to what you sometimes see in sporting events. A team has a comfortable lead and then rather than continuing to play the way that got them that lead they start to play not lose. You often see the team that was behind roar back, taking advantage of their opponent’s newfound caution.

A Very Different HP

HP finished the 90’s with big and momentous changes. Changes that I believe have their roots in a change from “let’s win” thinking to “let’s not lose” thinking. HP spun out Test and Measurement as Agilent Technologies in 1999. In the early 2000’s Agilent was rocked by layoffs as it faced a significant downturn in the Telecom marketplace. Perhaps it would have fared better had it been part of a larger organization, more able to weather the storm.

Lew Platt retired from HP right after the Agilent spinout and was succeeded by Carly Fiorina as CEO. While Platt “retired’ from HP he didn’t retire from being a CEO. He went on to run Kendal Jackson winery for a year and then Boeing several years later. Perhaps after spinning out Test and Measurement, the part of the company where Platt had spent so much of his career, HP no longer felt like home.

Carly Fiorina succeeded Lew as HP’s CEO. Fiorina, a veteran of Bell Labs and Lucent, didn’t gel well with the more laid-back HP culture. The HP / Compaq merger, a combination that Carly fiercely championed, was like bringing together oil and water. At best, the Compaq merger could be characterized as an unnecessary distraction. At worst it generated tens of thousands of layoffs and severely damaged trust between the rank and file and HP’s leadership.

Carly was in turn succeeded by Mark Hurd. Hurd severely cut back investment on R&D, a trend that had started while Carly was CEO. After Mark was unceremoniously fired for misconduct, the debacle of Autonomy under CEO Leo Apotheker rocked HP. Finally, in 2015, PC and printer business units separated from the server and enterprise services business units to form HP and HPE respectively.

One Key Takeaway

There is no way to tell whether HP would have been better off or worse of had executives continued to have a more positive business outlook in the late 90’s. The end of the 90’s and the early 2000s were incredibly chaotic as the dotcom bubble expanded rapidly and then just as rapidly deflated. At the turn of the century, the pace of change took a dramatic upturn, and it has done nothing but continue to accelerate since then.

In thinking about those times and how HP fared it’s important to keep in mind that “HP shrugged” its shoulders, not because it was hit by external market forces but because it had let self-doubt enter into its psyche. It may have gone on to stumble in the future irrespective of what it believed or didn’t believe but that’s not what happened. HP initiated the stumble by doubting its ability to continue to be as successful as it had been during the past decade long period.

Looking back on this time, I feel that there is at least one key takeaway irrespective of what happened to the business. That takeaway is simply this: if you think you will not succeed then you pretty much guarantee that you won’t. If you think that you will succeed, the odds may still be against you, but at least you have a chance.

Playing to win versus playing not to lose will also have a positive effect on the employee morale of those that have to deliver on the mission of the organization. That better morale will almost certainly translate into a more motivated work force – which in turn should further increase your chances of success.