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Hewlett-Packard splits PC, tech services units (, Tuesday, October 7, 2014, Business section

October 8, 2014

This article was copied by the Time colonist, Victoria, from the Associated Press, New York, indicating that the editors of the Victoria, BC paper consider the splitting issue important. I will not examine what is in the article since you can read it yourself. I brought it up in my blog today because what Hewlett-Packard did, splitting its Products and Services divisions into 2 independent companies, is powerful and common phenomenon that occur when a company believes it can earn more money if it splits, it’s like saying, better 2 than 1. However, the issue deserves a lot more attention psychologically than is given to it is the article from New York or in the business world itself!

I want my readers who work in various businesses to get more sophisticated about the psychological meaning of 3 kinds of interrelated companies you work for in the market place; those companies that sell only products, those that sell only services and those that sell products and services.

1. The 10% Rule (this rule is mentioned in my Peaceful Revolution blog, The more high-tech is a product the better equipped is the manufacturer psychologically to service it at the top 10% level, a level not approachable by others. I have a Toyota Avalon. An independent garage or gas station that accepts Toyotas for service can not give my car the full attention it deserves. Toyota sells more cars than any other company in the world.  Toyota company had sent me Toyota employees to teach them the psychology of automotive relationship for years. When I take my Toyota Avalon today to a Toyota service station I feel secure that my car is being taken care of even better than my dog in a licensed grooming place! Can Hewlett-Packard continue to make computers and printers and have the split “other” company continue to give the 10% top service to the equipment? That is the most important question to me as a customer.

2. The focus Rule (this rule is mentioned here for the first time because it a legitimate concern by Meg Whitman the CEO of HP). When a company splits into a product company and a service company it does give each new company the extra room needed to focus better on manufacturing the product or servicing the product. But this is just theoretical. The actual result depends on whether the new and the old CEO’s communicate at the 10% top-level! If Meg Whitman stays the CEO of both service and product HP the 2 focuses may stay independently great, but what if the 2 CEOs don’t communicate? In my opinion, most splits in companies occur for financial reasons and not for psychological reasons. Caveat Emptor!

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