Before Separating Your Company, Ask Yourself These Three Questions

As the technology landscape continues to evolve at a breakneck speed, large companies are considering all options to best adapt and thrive in this environment. For some organizations, that means separating in two.

Making this kind of decision is not easy – believe me, I know. The decision to separate HP into two companies – Hewlett Packard Enterprise and HP Inc. – took the board several months of thoughtful deliberation.

We knew a decision like this would cause an emotional reaction from all of our stakeholders. HP has been around for 75 years. We’re the birthplace of Silicon Valley. But we knew it was the right decision and the best way to accelerate the company’s turnaround.

We were further reassured when we told our customers and partners. They understood it immediately, which is a good sign because, as they say in politics, when you’re explaining, you’re losing.

During our deliberation period, we asked ourselves a number of questions. Here are three important questions that any business leader should ask themselves before deciding to separate.

1. Does a separation make strategic sense for your company? If there are clear dividing lines between your business units, customers, competitors and cost structures, a separation could be a natural extension of that division.

1. Will being two smaller companies create an advantage for you? Scale has its perks, and you have to decide whether you’re ready to lose some of those, or come up with solutions that allows for both scale and flexibility. For HP, we knew that becoming two simplified, agile, and focused companies would us the ability to compete in rapidly evolving markets. But Hewlett Packard Enterprise and HP Inc. put supply chain agreements in place to maintain our leverage.

1. Is your company strong enough to undergo a separation? I cannot emphasize enough the amount of work it takes to separate a company, particularly such a big, iconic company like HP. The legal, IT, tax and HR implications were each major undertakings, and we would not have been able to tackle all aspects of this separation if we didn’t have a strong foundation in place.

As of this week, the separation is now complete – but our work is far from done. My job this year, as President and CEO of Hewlett Packard Enterprise and Chairman of HP Inc., is to ensure that both companies are off to a good start so they can continue to be successful in the long term.

Earlier this week, I stopped by the LinkedIn office in New York to talk about the experience of separating HP and what lies ahead for Hewlett Packard Enterprise. You can see my discussion with LinkedIn’s Dan Roth in the video above.

Click here to read Dan Roth's post: Meg Whitman is Turning HP's Painful Split Into a Sales Tactic