HP’s Strategic Shortfall: A Paradox of Choice
fter a long week at his hectic new consulting job in New York, Robert Baron was anticipating a relaxing evening at the new restaurant in town. He was seated quickly upon his arrival and given an amazing table near the front of the establishment. As he settled in to his booth, and opened the massive menu that lay on his table, he quickly realized that something was off, hampering his ability to truly enjoy the experience that he was about to have.
At first, he was unsure of what was bothering him, but something about being a patron of this particular restaurant was causing him to feel overwhelmed and anxious. As he scanned the 60+ different entree and combination choices staring him in the face, he quickly realized that he was suffering from overwhelm, due to more choices than his brain could effectively process.
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This phenomenon has been further examined by psychological studies that have directly correlated the number of choices offered and the inability of human beings to be decisive and confident in their decisions. There are only so many options that the human brain can effectively process and decide upon. Too many options can cause the human brain to enter what experts refer to as “paralysis of analysis,” a syndrome that is linked to having an overabundance of choices.
Unfortunately, this state ultimately leads only to further indecision and overwhelm. In his 2004 acclaimed book “The Paradox of Choice,” author Barry Schwartz argues that by eliminating the number of consumer choices, a company can reduce levels of anxiety and confusion during the shopping process. We believe that a similar challenge has presented itself in the crowded laptop market, and that HP has ultimately suffered from a strategic “identity crisis,” failing to realize the negative consequences of providing an overabundance of choices for its customers.
This over focus on the abundance of choices has led to a long standing debate between customization and personalization. A customized product is built by switching around common components of a product and tailoring it to each customer. For example, some websites allow users to change the background or some of the layout of the web page, which is customization. However, a product is truly personal when someone sees it as extremely valuable and an almost irreplaceable extension of themselves. Take Amazon for example, a company which keeps track of each individual’s purchases and then adapts itself accordingly, providing a list of similar products to offer the customer. This creates a more personal experience because it creates value for the customer by cutting search time for new products. Thus, consumers of Amazon will not want to leave because it feels a personal connection with the company. So, is it customization or personalization that builds a relationship between the company and the consumer?
HP’s fatal flaw in strategic focus is the lack of understanding that a computer is not made personal by customization. Instead, a “personal” computer is related to the emotional attachment that a consumer creates with his computer. It is a relationship that is forged between an individual and machine, almost as if it becomes an extension of the owner. This feeling of connectedness is essentially a marriage between a human being and a machine. HP’s classic misunderstanding has fueled its misguided focus on customization, while not enough emphasis has been placed upon true value creation and personalization for the consumer. Rather, its entire focus seems to rest on making each computer different for each one of its users. This begs the question: Is this the most effective approach for HP to “make the computer personal again?”
If HP wants to understand what “personal” truly means, it should observe one of their customers whip out their laptop in a class, business meeting, or even at the local coffee shop. One needs only to observe someone pull their HP laptop out of a bag, emotionless, and throw it carelessly on the desk, to witness HP’s failed attempt at “personalizing” their products. The company has failed to create an emotional bond between man and machine, and these computers are simply seen as utilitarian tools, to be replaced every couple of years. In contrast to the failed connection between the HP customer and his laptop, HP strategists could learn a lot by observing the distinct experience being had by the typical Apple customer. They normally start by gingerly removing their Apple laptop out of a flashy bag, with an evident sense of pride of ownership. The next step is to remove the laptop from its protective case, almost as if it were a present from Santa Claus on Christmas morning. HP should pay close attention to the Apple owner’s face, typically full of excitement, as he fires up his treasured machine. After much anticipation and ritual, the owner of the computer is ready to start his exciting journey, navigating through endless possibilities of information and entertainment. This process aptly illustrates when a “personal” connection has been forged between man and machine, as opposed to simply a customized, yet uninspired fit for the customer.
Why has HP not succeeded in its campaign of making the computer personal again? There are a few reasons for this conclusion. First, it overemphasizes the customization options of its product to the detriment of its personal connection. There is no question that in the arena of customization, HP is the benchmark for the competition. However, this customization creates little value in the mind of consumer in the long term. It must be concluded that customization does not necessarily translate into a strong personal connection with a product. A prime example of an industry that lacks customization, while producing standardized products that are still extremely personal is the clothing industry. Clothes are homogeneous, yet at the same time extremely personal. They display a person’s style to the world, which creates personalized value for the consumer. However, HP’s fatal flaw in its strategy is that it fails to realize that building a customized computer is far different than building a computer that enhances the experience of the individual by touching all aspects of what the user values.
This flaw is damaging the HP brand immensely. HP seems to be stuck somewhere in the middle and not successfully able to implement the strategy of personalizing the computer. Its efforts to be at the top of both worlds (personal and low priced) are sending confusing signals regarding its brand image. A similar example of a company with a non-congruent strategy is Sainsbury’s, the third largest chain of supermarkets. It found itself in a similar dilemma on regarding which strategy to adopt. In spite of being a market leader in its industry at one point, it lost its competitive advantage by trying to implement opposing strategies; namely against low-priced players such as Wal-Mart and high-end competitors like the Marks and Spencer brand simultaneously. Thus, its inability to accurately define and capitalize on its market has led to Sainsbury’s declining market share and a loss of brand identity. Therefore, if HP is adamant on overtaking competitors, it should pay closer attention to its strategy, keeping it focused, as not to risk losing its brand value altogether.
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I do agree with the author that menu a should be brief and quality rich, and, yes - as a technology decision should be - however with technology, you aren't presented with a whole menu of technology all at once, but, rather, a tiny, tasty, incremental, subset of product specific options. With HP, robust, dynamic and abundant choices mean the tasty subset will be powerful and effective. I find that the joy of it all.
