A new look at extracting value

HP of late has enjoyed stunning growth under its new leader Mark Hurd. However, as with any big company, growing revenues is always a challenge. With $100 billion in sales, it is hard to keep growing at 10% every year. One of the drivers for HP's growth is its research labs. The new head, Prith Banerjee, has an interesting way to ensure that the HP labs generate value add ideas to generate growth. Basically he is narrowing the focus, getting resources allocated on high impact projects and making projects justify their value. "Value methodology" as I call this is the same justification for the business case and benefits management process. Realize the benefits by focusing on high impact areas thereby maximizing the utilization of the scare resources.

Here are some relevant excerpts from the article:

- "HP Labs today does a lot of cool things — about 150 research projects – but it does so many things that none of the projects get enough resources to have a high impact," says Banerjee. "My message was, let's try to narrow the focus."

- Banerjee's vision borrows heavily from the culture of Silicon Valley venture capital firms, which fund fresh new ideas and try to nurture them into the next Intel (INTC) or Google (GOOG). Traditionally, HP Labs scientists have had little incentive to transform concepts into products. But in the future, research efforts that fail to meet benchmarks won't get more funding, according to HP executives; instead, more resources will go to larger projects that are meeting goals and are likely to mature into profitable new businesses.

- Likewise, it will take years before investors can be sure whether HP's revamp of its labs is bearing fruit. Many of the research areas that the company identifies in 2008 won't yield products until 2013, though the new model could produce some benefits sooner. For instance, HP's personal computing group has set up a team called the Innovation Program Office that seeks to grab good ideas from inside and outside the company and turn them into products more quickly.


The full article can be found at : http://bigtech.blogs.fortune.cnn.com/2007/12/17/turning-an-idea-farm-into-a-hit-factory/?source=yahoo_quote