The HP Way of applied to start-ups, 50 years later

My long time at HP has been immensely rewarding but it is time to say goodbye. I had the chance of working alongside many smart and dedicated people, from employees in field offices, engineers in product divisions and scientists at HP Labs . I am proud I help launch at least 6 new businesses that impacted positively the lives of millions. These ranged from geographic expansion in Africa, Europe and Middle-East, developping healthcare, clinical information or telemedicine systems, helping to deploy the first mobile networks and support broadband telecommunication services and in recent years piloting mobile multimedia applications. In recent months I had the chance to meet again former colleagues around the world from all these periods and it is great to reflect on our team contributions.

So, why do I leave ? The answer is that it is for the same reasons I joined and stayed on despite two other career temptations : passion for new ideas and great people. Now, I believe that experience of the HP Way will apply even better to technology start-ups than it can to corporate multinationals. The HP Way was formulated by David Packard in 1957 . He summarized it in an exchange we had the last time we met in 1995 in Geneva :
Claude : it has been an honour for me to work at the Company you founded
Dave : not at all, it has been an honour for me to have employees like you serving at my Company

It was just another practice of the HP Waythat Dave described in his book published the same year. The following quotes are very relevant 50 years later and remain benchmarks for young entrepreneurs :
...an egalitarian, decentralized system that came to be known as 'the HP Way.' The essence of the idea, radical at the time, was that employees' brainpower was the company's most important resource....

... nothing has contributed more than the policy of management by objective. MBO is the antithesis of management by control .... it refers to a system in which overall objectives are stated and agreed upon, and which gives people the flexibility to work in ways they determine best for their own areas or responsibility. It is the philosophy of decentralization in management and the very essence of free enterprise.
In more detail, the HP Way included the following 7 corporate objectives
  1. Profit. To recognize that profit is the best single measure of our contribution to society and the ultimate source of our corporate strength. We should attempt to achieve the maximum profit consistent with our other objectives.
  2. Customers. To strive for continual improvement in the quality, usefulness, and value of the products and services we offer our customers.
  3. Field of Interest. To concentrate our efforts, continually seeking new opportunities for growth but limiting our involvement to fields in which we have capability and can make a contribution.
  4. Growth. To emphasize growth as a measure of strength and a requirement for survival.
  5. To provide employment opportunities for HP people that include the opportunity to share in the company's success, which they help make possible. To provide for them job security based on performance, and to provide the opportunity for personal satisfaction that comes from a sense of accomplishment in their work.
  6. To maintain an organizational environment that fosters individual motivation, initiative and creativity, and a wide latitude of freedom in working toward established objectives and goals.
  7. Citizenship. To meet the obligations of good citizenship by making contributions to the community and to the institutions in our society which generate the environment in which we operate.
I noted earlier my thoughts on Bill Hewlett’s approach to product innovation in a 2008 blog and history details are posted here. There is also a lot to learn from HP's founders bottom-up engineering approach. Not always 1st to market with an idea, but definitely adding added value in price/performance or usability. To discuss this, I intend to invite Chuck House, an HP alumni from these early day to present his new book in my region of Switzerland. And I can't help recall that Steve Jobs and Steve Wozniak among others were HP alumni, who learned from these principles and expanded beyond.

So with these lessons from the past, I look forward to my next big thing, a meaningful entrepreneurial activity helping start-ups in Switzerland, on EPFL and beyond as business angel investor and interim management. And I will keep one foot in the mobile communications world as part of my support to Mobile Monday Switzerland.


Surfing the Mobile web, Barcelona

Surfing on mobile web at MWC2010
One more time I attended the mobile industry annual party. It's been over a decade by now, good time to measure the change since 2000 - most of the promises have been held : subscribers grew 10X, smart phones exceed 50% of shipments, bandwidth is finally there with 3G bundles and first LTE deployments live, mobile web nearly ubiquitous (Ovum estimates : 95% of traffic is data, 60% of which HSPA). Not everybody in the industry was partying tough : Google has entered the game, opening the show while Nokia and HP were quietly exited the main exhibition to organize side parties. Overall, business and climate was cold and rainy in Barcelona this year. In summary :
Money and innovation is moving to applications.
Cloud and web players dominate the battlefield.

Money and innovation is moving to applications.
Innovation could be seen mostly at the edge. I attended the Mobile premier awards (MPA) masterminded by Rudy de Waele where 11 out of 49 start-up nominees were awarded prizes by the 500-audience and official judges. Layar won two awards for their augmented reality platform, Taxipal and PercentMobile won awards from the MoMo community and audience respectively. At the Fira, I spent some time in Hall 7 was re-named App Planet, featuring a start-up App Garage and developer workshops. I supported there a HP Labs project Friendlee nominated for an RCS innovation award. The start-up meeting from Finland and Israel organized by FinnMob and IMA was great. At the forefront of user experiences, augmented reality was demonstrated by 20 start-ups at a showcase organized by Vodafone, and PEREY Research & Consulting. VCs were attending these applications events including Accel Partners (check Rich Wong's pres at MPA) , Endeavour vision, Bluenove, Blumberg Capital, Sofinova Ventures . One VC advised on applications in adjacent industries : "these opportunities will exceed those of LTE infrastructure; find them by following your passion". This view is reflected in the drop of VC investment in traditional telecoms in 2009 : $1.6 billion, down 33% from 2008 and only peanuts were served at start-up parties ;-)
On the operator side, 24 of GSMA members anounced the Wholesale Applications Community (WAC), an open industry platform for mobile app developers to reach a market of 3 billion subscribers. They endorsed standards from the The Joint Innovation Lab (JIL) group created by Asian operators in 2008 including SDK, widgets and BONDI . On the vendor side, Sony Ericsson announced their creation platform for facilitating user generated content.

Cloud and web players dominate the battlefield.

Google CEO Eric Schmidt’s keynote, - timidly read from a script as is if uncertain how to address legacy telco audiences- emphasized “Mobile First” strategy, featuring Flash and speech recognition : "the job here is to create magic" . 60,000 handsets running Android system are shipping/day (20 million this year). One Android device I previewed with Allen Prohitis is HP's Airlife 100 smartbook anouncing a 10" touch screen, Qualcomm's Snapdragon-3G chipset and 12 hours battery - interesting departure from Win7 within the HP Mini family. HTC announced 2 Android handsets : the HTC Legend and HTC Desire.
What was the industry reaction ? Nokia's CEO Olli-Pekka Kallasvuo responded with a partnership with Intel to release Meego, the union of 2 Linux platforms – Intel’s Moblin and Nokia’s Maemo . OPK modestly stating "the MeeGo platform is set to revolutionize computing" but you will have to wait : a baseline in March for Intel Atom and N900 but other devices later in the year.
Which wave should a developer surf on, in the Android, Chrome, Maemo, Windows ocean ? Symbian Foundation just launched Symbian^3 an open source platform and a developer forum. And Microsoft announced its Windows Phone 7, a complete new release. Chip vendors such as ARM, Qualcomm, TI will also edge their alliance bets. I am a fan of BONDI, a smaller initiative for the mobile web which aims at reducing mobile browser fragmentation by releasing W3C-compliant widget APIs as the application run-time for mobile devices. They released version 1.1 at MWC on a number of different O/S including Android. And Opera announced Mini 5 beta is support to Android, complete with newest features that had been late to arrive.


Rich communications in the cloud ?

Informa ‘s rich communications conference was held in November 2009. I joined a panel there, and participated to follow-on meetings of GSMA RCS initiative and developer challenge. My findings :
  • Standard-based integration is becoming a nice-to have feature as the cloud provides better ways to reach critical mass and ROI.
  • Several solutions deliver innovation beyond industry standards, to offer the best of both worlds.
  • New devices such as net-book, internet appliances and social network behavior will drive the evolution of next generation communications.
Standards are only nice-to-have features
No one disputes that interoperability made SMS successful and enabled MMS modest penetration (Graham Trickey of GSMA gave an example : "MMS had 50% growth in USA since interoperability agreements in 2008". The challenge is that since the iPhone launch, and Web.20 web solutions, there is not much demand for applications with limited feature set, coming late. Even in emerging markets, users are impatient and tech-savy. So what is the status of telecom industry standard initiatives :
  • GSMA has been promoting applications through RCS pilots, and enabling technologies such as OneAPI for networks and OMTP BONDI in handsets.
    Why did RCS take 2 years before doing pilots ? The investigation was done in 2007, release 1 published at the end of 2008, release 2 adding the support of net books was published for the market trials in 2009. Trials were done in 6 countries : Italy (TIM ; only 50 internal users although TIM has 30’000 of its mobile community bundle Tribu) , Spain (Telefonica), Portugal (Optimus) , Korea (SKT with Pajama5 ) , France (Bouygues Telecom, Orange, SFR ; with 2 handset manufacturers). RCS release 2 offers content sharing (videos, images during a voice call), messaging (chat) and network address book. But only the release 3 will include social network integration. GSMA is currently chaired by Aude Pichelin and in order to get wider adoption of its approach it has launched the RCS developer challenge , supported by GSMA officers including John Darnbrough.
    The technology competition from the Web is huge and many are skeptical about the chances of success of telecom industry standards . Paolo Simoes, from TMN Portugal says bluntly : "RCS delivers the lowest common denominator and lacks any Wow! effect, like previous attempts : Mobile IM, push to talk, ...". Providing another comparion, Roberto Minerva suggested : " developers would prefer the Skype API". My view is that despite rumors of Open source , this is focused on 3rd party scripts and applications to control Skype UI. Alan Quayle provides a summary of challenges in recruiting web developers in his blogs and reports on network APIs. To be fair to RCS, we note that web communication applications are still equally fragmented or often undocumented. And note that web apps still refer to the dial-tone paradigm to describe presence management Twitter, Google Lattitude.
  • Operators have recognized that cloud-based or “over the top” solutions will dominate operator-led solutions.
    Traditional revenue models of operators don’t seem to be valid for new communication services ? Traditional models were based on managed services with subscription and usage fees. Cloud computing, voice services such as GTalk and Skype or social applications like Twitter, Facebook and web social networks have changed the economics. Commenting on this for TMN Portugal, Paolo Simoes commented “SMS and MMS rates are decreasing by 2 digit percentage annually and therefore no business model based on communication usage increase is sustainable; flat rates are going down from 90$ to 20$ and no additional market stimulation is necessary; lastly no monetization of presence is possible when Facebook and MSN status are free”. His advice : “if you cannot beat them [Facebook, Yahoo!, Google,…] join them”. And he sums up his prediction : “ it took 14 years to deploy 3G, 7 years for 3G, it will take less than 4 years for LTE and the move for an all IP application infrastructure – in 2015 China Mobile will acquire Vodafone and the dominant application will be some kind of FaceTube from China ;-)”.

    Vodafone appears to have done a similar analysis, promoting Facebook and other cloud social network but adding value added in the form of service aggregation in the Vodafone 360 application. But again, to be fair, the monetization of Twitter and Facebook is equally challenging, and we have witnessed the 75% valuation drop of Skype, despite their phenomenal growth.
Cool applications : innovation and standards
What makes me optimistic is that the applications coming out are nice. There after all may be a smoother transition from telecom 1.0 industry standards to meet mobile Web 2.0 . Here are some examples :
  • Cross-device social communicator :
    Movial Communicator was deployed by Optimus as part of a youth community services branded TAG, a mobile subscription at a flat rate of 10 Euros . Nuno Lopes Gama from Optimus reported that TAG has 100’000 users in the 15-25 years age group and reports good usage of the PC Webphone for voice and SMS . However there has been little demand for VoIP or messaging from the Enterprise sector, as they already have low prices for voice calls and more advanced professional messaging (from Microsoft). Movial has deployed applications with 15 operators on multiple handsets (Symbian, Maemo, Android) and provides integration with music services, social networks (Facebook), UGC sharing ( Flickr, Daily motion) and participated to RCS French trial (with Bouygues). It also offers a hosted services with Haloya .
  • Smart phone idle screen communications:
    SKT Telecom Pajama 5 was launched after SK Telecom measured that 62 % of calls were to less than five numbers ( 29 % of these to one person and 51% to top 3 called parties). The service let’s you designate 4 buddies and adds : expression with wallpapers, animated messages , A-GPS friend finder , feed from SNS sites (Cyworld, Facebook). The service attracted 350,000 youth subscribers in 3 months and is being extended to more participants in 2010 . For the general market, SKT has launched mobile IM interoperability with other operators, growing usage 20X in 2009 ( 60% of subscribers have mobile IM-enabled handsets but 200’000 use it). This project was part of HP’s open innovation programs and included partners like Eluon .
  • Ambient communications “ :
    HP Labs team submitted Friendlee to the RCS innovation challenge as a concept to demonstrate the automatic generation of a social network. Phone contacts are dynamically weighted by user’s mobile communication frequency, duration and location records. It leverages the mobile network intelligence to shows your friends and preferred businesses on a map, highlighting your closest friends or implicit recommendations. The more the user calls or sends SMS to a friend, the higher up he or she will be on the user’s list. And obviously, this can be linked to Facebook and other SNS.
Usage of devices and social applications
What trends will influence the evolution of these services ?
  • Net books adoption : it is clear that net-books, tablets, photo frames are starting to bring new ideas into the mobile communications space. An estimated 5 million net books were shipped in 2009, a 30% growth rate from 2008. Major manufacturers include Acer, Asus, HP and Samsung ( (the last two entrants growing over 30%). Subsidized prices start around 200$ for models like HP mini 311. This is not yet a big adoption compared to smart phones but net-books are a market catalyst in terms of mobile rich communications functionality.
  • Mobile social networks : Christine Perey authored two editions of Informa’s mobile social network comprehensive worldwide analysis. They forecast that the users of mobile social networking will grow from 8% at the end of 2008 to 25% by 2013, generating over 6 billion $ by that date (from subscriptions, advertising and transactions) . Another trend is that all web communities are mobilizing and that the functionality is “creeping” in every other application category. Perey research is now researching mobile augmented reality, a particular category that also provides a direction for very elaborate form of group interactions using advanced device capabilities together with cloud computing resources.
  • Youth market trends : in recent months I have been working with C:Insight on segmentation and ethnographic analysis of emerging mobile markets like India, Africa and South-East markets which could prove market-changers in the domain of rich communications. Some data on mobile youth users :
  • 300 million in China, Taiwan and Hong Kong
  • 219 million in South-East Asia
  • 124 million in Western Europe
  • 146 million users in Latin America
  • 60 million in Central and Southern Africa
  • Youth users in the US, UK and NL use thier mobile 1.5 hours / day ,
  • Asian Youth use it 3.5 hours / day.
  • 34% of youth bought their mobile phones only to send SMS.
  • Teens are sending/receiving 100 SMS messages 3,000 / month.
  • 16 % of youth subscribers have smartphones.
  • 57% of youth in India browsed on their mobile phones
  • It is interesting to note that even in rural India, users are tech-savy and interested in loading applications. Market-education and communication will be essential to achieve viral marketing . For example campaigns for Vodafone value-added services “ZooZoo” could be as important as the service itself.
  • Network driven innovation : Diane Meyers authored Infonetics research on RCS market in 2009. She estimates there will be over 1 million subscribers in 2010, 5 M in 2011 and M by 2013, deployed over 3G networks with an IMS core. It is clear that there has been some delays and these estimates are quite tentative. In addition one could question whether IMS or cloud services will become core to RCS, perhaps a mix of the two as my discussions seemed to indicate. Infonetics rightly indicated early on that the operators challenges were not only service interoperability but capability to innovate to grow the market.