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Incoming HP CEO And CCO On Big Moves To 'Grow Faster Through Partners'

The executives, who will assume their new roles on Nov. 1, spoke with CRN about the company's plan to launch a new organizational structure that aims to have major benefits for solution providers.

Enrique Lores

The past week has seen a whirlwind of announcements from HP Inc., with a series of major changes disclosed at the PC and printer giant that will take effect Nov. 1.

Those include changes in CEO, printing business president and channel chief, as well as the launch of a new organizational structure and appointment of the company's first-ever Chief Commercial Officer.

[Related: HP’s Lores And Schell: New Structure Will Help Both Transactional Deals And Services]

The new commercial organization will be led by incoming CCO Christoph Schell, president of the 3-D printing business at HP and former head of the company’s Americas business. The move coincides with HP printing business president Enrique Lores taking the reins as CEO on Nov. 1, as current chief executive Dion Weisler steps down due to family reasons.

In an exclusive interview with CRN, Lores and Schell spoke about the goals of the new organizational structure, the executive changes and the implications of all the moves for the company’s partner community.

What follows is an edited portion of the interview.

What does this organizational change mean for HP channel partners?

Lores: Everything that we do is with our partners at our heart. They are 90 percent of our business. We have grown our business through the channel by more than $10 billion since 2016. And really, all our agenda is about how do we grow, and how do we grow faster through partners ... What we are going to be explaining is really how can we move to the next chapter in how to reinvent our ourselves, to continue to serve both customers and partners.

We are embarking on a multi-year transformation. And some key elements of the transformation are the need to simplify our operating model to simplify how we work, to become more digitally enabled—while at the same time evolve our business models, so we can deliver a better value proposition to our customers. The first decision we have made in order to become simpler, and to accelerate our evolution, is to create a commercial organization where we are where we are going to be integrating all the activities that we were doing individually until now. So we are going to go from a three-region model to a 10-market model.

And I'm really happy to announce that Christoph Schell will now become the Chief Commercial Officer of the company, and he will be running that organization. He's an HP veteran, as I am. He also started as an intern, and he has been working literally in every region, in every business of the company. And he has fantastic experience that will help him to really lead this group in a very successful way. I'm really excited to have the Christoph leading that group. That is going to become one of the most fundamental jobs in the company.

Schell: For me, it is kind of a logical consequence of what we've been working on over the last years. We've been looking at, how can we simplify our engagements with countries. How can we make it more consistent. You can't operate in isolation anymore, one country to another. And so this idea of grouping countries into 10 markets and then having these 10 markets be managed at a worldwide level of HP, it's going to take layers out. It's going to increase the speed of decision-making. And it's going to help us with our digital transformation. The idea really is to drive forward in this digital transformation, make data-based decisions and be very consistent.

I think it helps that I've been operating internationally at HP. I've operated in all of these markets at some point. And It has also helped me to having been exposed in in a role, the Americas region, to a change in our in our channel structure where we went from a very traditional landscape to a landscape that is a mixed bag between traditional partners and omnichannel partners. And that was an important experience to have had, that will help me in this endeavor.

What are some examples of ways this will improve life for your partners?

Schell: What we are building is a very consistent way of how we are going to market. That is really required, because any inconsistency immediately creates a disconnect in value proposition to our customers. And our partners have been at the receiving end when there were inconsistencies in the past. So I really believe this is going to make it much more transparent, and much more consistent to work with HP. There has been feedback [on this] from our partners--we do yearly surveys, where we get this feedback in particular with partners that are operating with us across more than one country.

No. 2, we're going to make significant investments in tools and processes that are going to help us with digital transformation. And that is something that we are driving together with our partners. So how do we engage in marketplaces? How do we move our business from transactional to contractual engagements? How do we use the data that our partners generate and our products generate in the market together, to basically manage a value proposition that matters to customers? So all of this transformation will be fueled by this change, and we will bring our partners into this change.

The third piece I want to mention is, we're not really driving a massive change on who and how our partners are engaging with us today. So the disruption at a country level is really minimal. The change that we're driving is that we are reducing the distance, if you want, for a partner to operate with us at a country level, but also have access to the executive team.

Lores: Also for partners that are doing business across multiple countries, this change will help them to have a more consistent approach with HP and simplify what it means to do business with us.

So you are going to be appointing new managing director positions that don't exist right now, is that right?

Schell: We are moving from three regions to 10 markets, so there are 10 executive positions that we don't have today. These 10 markets' managing directors will have an opportunity to manage, in a very consistent way, the countries that are part of their markets. And their visibility inside the company is going to be taking layers out that we have today. And we think that this will help us to make more customer-centric decisions.

As far as North America goes, will there be a U.S.-Canada market -- is that how you're breaking it down?

Schell: The region that includes the U.S. will be called North America, and it comprises of Canada and the U.S. And we actually found a managing director for it that holds a passport to both countries. So that's [HP Americas channel chief] Stephanie Dismore. She shouldn't be a stranger to the channel community in the U.S.

Lores: She has been leading the channel effort [in the Americas], so she will really be a very important champion for them.

Schell: This is not a channel job now. She basically will have a change as of Nov. 1, when she will become the managing director of that North American cluster. And she will have, in her team, a team that will manage the channel partners that we have.

Are there things that partners will have to adjust to? Will their contacts be changing?

Schell: We are trying to keep the disruption at a partner and customer engagement level to an absolute minimum. The idea is to manage the change at a worldwide and at a regional level.

We're not changing our programs to a large extent. We're not changing the way we run our businesses. So the metrics will stay the same. And then I think over time what [partners] will get out of this is really a faster approach on how to deal with HP--an approach that is more digitally informed--at the same collaboration levels that we have today. But we need to evolve our go-to-market in order to move into new business models. And I think at the heart of that, changing our organization model is the very first step.

Lores: The partners should see almost no changes immediately. But over time, as we're able to invest more in tools, capabilities, simplifying our services--they will start seeing the investment.

So there will not be a reduction in partner-facing roles?

Lores: We announced last week that we are going to be looking for opportunities to significantly reduce our cost structure. We announced that during the earnings report last week, and we also said that we will be providing more detail in our investor meeting at the beginning of October. And this is something that we're still working on.

As we go through this change, we are going to protect all the customer- and partner-facing people. Because we think that to continue to grow, we need those people. These are areas where we need to protect. We are looking more at areas where it is about how we work internally, duplications that we have across businesses, across countries--things that we think we can do without impacting the customer or the partner experience, but that will help us to to be simpler and leaner.

Schell: I think about this as a back office type of things that need to happen.

How do these moves help with the expansion to contractual services?

Schell: Enrique and I have agreed that we will actually have one end-to-end team managing our contractual engagements. So think about this, from product creation, to go-to-market to service and support, under one leader--I think that's a very good first step. The second piece is, we are not differentiating between contractual models that are indirect through channel partners and direct. Which basically means that we have one organization in that regard, as well. We like the indirect channel engagement--these are actually still the fastest-growing ones that we have in the company.

The third piece is, when you drive a service-led business, you cannot throw headcount at this. You need to make the whole engagement smarter. So this whole idea about digital transformation—and managing digital engagements with an installed base of hardware that we service—that will really be a very big deal. So when we talk about digital transformation, that is a very big part of it. That will help us to pivot to contractual engagements much faster.

What sort of tools are you looking to bring to partners as part of this evolution?

Schell: What you will see us invest into is really getting an idea of how to monitor pricing at a very sophisticated level, and how to make sure that we give and provide tools to those partners that are investing with us. So it is, for me, a correlation between access to tools and the certifications that a partner has—the commitment that the partner has with HP.

Then I think on the contractual side, we are looking at how to automate all the services-led engagements that our partners have with the customers on an installed base, on a managed print service deal, or on a Device-as-a-Service deal. There's going to be a lot of investment into those tools. And we want to make them available to all of our partners, because it basically helps them to take costs out of their engagement and to be more competitive.

Enrique, besides the organizational change, what will be your two or three other top priorities as CEO?

Lores: We need to continue the process to simplify, so we can create the capacity to innovate. At the same time, you are going to see us continue to evolve our business models, so we offer a better value proposition to our customers. And you will see us also continue the expansion into new markets. It's going to be the balance of those three things that will enable us to continue to succeed going forward.

What are the new markets you are most focused on -- 3-D printing, VR? Are there other areas?

Lores: We clearly have a big opportunity in 3-D, which as Christoph has been emphasizing is more about digital manufacturing. The opportunity is really about how do we transform the whole manufacturing industry into digital … We have opportunities to grow in the contractual space in office, where with A3 and with managed print services we have only started to grow. We have opportunities to grow both in the services space of personal systems, and also in exploring new compute models. So we clearly have a lot of opportunities there. And this is why we are investing in the future by creating capacity, by simplifying, while getting closer to our customers so we can provide a better experience.

What can you say about the appointment of Tuan Tran as the incoming president of the printing business?

Lores: He's also an HP veteran. He knows the print business. He has run the consumer, the commercial business [in print]. He actually invented Instant Ink. He has been managing partner print services in the last year. He was instrumental in the Samsung acquisition, in the Apogee acquisition. I think it's going to be extremely good for Tuan and also for the partners, because he's very well known by all our channel community in the U.S. and outside the U.S.

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