Are HP’s Board and New CEO Headed in Right Direction?
Updated – Dec. 31, 2011
Not to be gauche, but it wouldn’t be surprising if Harry S. Truman were perplexed by the judgment and performance of the board of directors at the world’s biggest-selling tech company. That being the Hewlett-Packard board of directors over the past decade.
Indeed, many people might be wondering if the company might be better-served if the board adopted the former president’s famous mantra, “The buck stops here.” Because the question is, have they acted like it?
It’s unfortunate – the tech company has a rich heritage. That’s not to conclude that the board has ruined the company, because in 2010 it had an enviable $126 billion in sales. It employs 326,000 workers.
But HP has lost more than half its market value. Meantime, the board doesn’t appear to understand the Link between Financial Performance and Succession Planning.
Questions have once again recently risen over the board decisions and strategies, while many analysts approve of recent developments. The storied company plans to continue with its strategy of cloud-based services and enterprise software solutions.
Based on past developments, HP fans, and I’m one of them, might wonder about HP’s long-term strategic planning.
Consider:
- The board hired Carly Fiorina as CEO in 1999. Her performance proved to be unsuccessful, as she apparently didn’t understand a basic principle about mergers (If Mergers & Acquisitions Tempt You, Consult HR Pros). She persuaded the board to force a merger with Compaq – despite all kinds of red flags. At the time, as a media columnist for Belo Web sites, I wrote it would never work because the cultures of the two companies were vastly dissimilar. My predictions proved to be accurate. The merger resulted in the layoff of 17,000 talented people and HP’s financial picture worsened. She was fired in 2005.
- Soon, the board’s chair, Patricia Dunn, hired firms that used illegal methods to try to stop leaks of proprietary HP information to reporters.
- Mark Hurd was hired to run the company. While he did have some success, many analysts believed HP suffered from his lack of vision and poor judgment leading to his forced resignation – over sexual harassment of a marketing consultant, who was actually an actress, and his inconsistent expense-account reports.
- They hired a CEO, Léo Apotheker, who made his own controversial decisions, including plans to change the company’s mission – from world-class hardware to software and cloud computing. Some board members voted to hire him without even meeting him. Mr. Apotheker’s actions prompted declining shares and a shareholder lawsuit.
- The board hurriedly hired a new CEO, Meg Whitman, who had joined the board after she lost to Jerry Brown, Jr. in running for California governor. As head of eBay, she was successful but known for questionable acquisitions. You might recall her 2005 purchase of Skype for $4.1 billion, but eBay ultimately sold it for $2.75 billion four years later.
- Ms. Whitman recently said she supports Mr. Apotheker’s decisions, including the proposed$10.3 billion purchase of commercial software-maker Autonomy, but she will not forego HP’s hardware business. The latter is ostensibly is one the most logical public decisions to come from her office.
- Ms. Whitman’s first announcement that her priority will be to get HP strong financially. But again, HP’s finances were hampered by negative Wall Street reactions to Mr. Apotheker’s actions, which she mostly supports. So how can she achieve such goals, especially since she doesn’t have any enterprise experience?
Ms. Whitman knows she has to make some strategic decisions about hardware, as the company initially indicated it might jettison its PC division. HP’s biggest customers balked at buying PCs until they got clarity on HP’s plans. Savvy consumers were probably hesitant, too. That was my thought when I spotted some flashy HP notebook computers in recent visits to retail stores. Fortunately, HP decided to stay in the notebook computer business.
Following weak sales, Ms. Whitman’s predecessor stopped marketing smartphones and tablets with webOS software, an HP product. She also needs to waive her magic wand in combating the popularity of iPads and smartphones to use the Internet.
Meantime, HP has other complicated matters to solve, including what to do about its services business, its slim profit margins in servers, and slower sales in printers. The latter two might very well be approaching the end of their product life cycle.
Ms. Whitman also promises to get more teamwork and cohesiveness out of her management team. That’d be a good move, too.
Before making any rash irreversible decisions, Ms. Whitman needs to conduct an in-depth SWOT analysis – of strengths, weaknesses, opportunities and threats – followed by a strategic action plan to anticipate emerging trends and capitalize on them. A sophisticated look to the future is prescribed here.
Let’s hope Ms. Whitman comes up with better strategies and communication than she did in her failed gubernatorial campaign and questionable acquisitions at eBay. She also has to be successful working with a board that’s made so many anemic decisions.
HP is a fine company and deserves a better future than its performance of the last decade.
From the Coach’s Corner, here is a related link: Leadership, HR, Marketing Lessons from HP’s Executive Turmoil.
“One of the biggest responsibilities of management is to look after the corporate DNA.”
- Andrew Rolfe
Columnist Terry Corbell is also a business-performance consultant and profit professional. Click here to see his management services (many are available online). For a complementary chat about your business situation or to schedule Terry Corbell as a speaker, why don’t you contact him today?
Leadership, HR, Marketing Lessons from HP’s Executive Turmoil
Updated – Dec. 31, 2011
A court ruling puts former Hewlett-Packard CEO Mark Hurd and the company’sproblems back in the spotlight.
That means HP CEO Meg Whitman will find it advantageous to solve three salient corporate issues – long after the sudden exit of Mr. Hurd. At issue, are perceived quagmires in leadership, human resources and marketing.
Mr. Hurd was widely credited for HP’s recent success. But his forced resignation over a sexual harassment case and inconsistent expense-account reports is the company’s third tumultuous event involving key executives in just five years. Analysts were unimpressed with his lack of vision.
His accuser, Jodie Fisher, a 50-year-old actress and former reality television contestant who was hired has a marketing consultant, introduced him to key customers and kept him company. She said she was sorry he lost his job.
Especially, this week since a court approved publication of a letter sent by Ms. Fisher’s attorney, Gloria Allred, to Mr. Hurd – the letter detailed his alleged sexual advances toward Ms. Fisher.
For example:
“At times you would behave professionally seemingly ‘getting’ that she was not going to have sex with you,” wrote Ms. Allred. “At other times, not, and you would relentlessly attempt to cajole her into having sex with you.”
The first unsavory HP event, of course, was the 2005 firing of CEO Carly Fiorina following her lack of financial success and her questionable, contentious merger with Compaq resulting in heavy layoffs.
Then, there was the 2006 controversy surrounding Patricia Dunn, who as chair of the board, hired firms that used illegal methods to try to stop leaks of proprietary HP information to reporters.
So, it’s not surprising that published reports indicate employees now have huge morale issues after Mr. Hurd’s tenure.
Ms. Whitman will need substantial leadership skills because HP still has to improve the employee morale and marketplace position.
HP’s share price plummeted by 10 percent in just the first day after Mr. Hurd’s firing. It fell another 8.4 percent the following Monday to a 52-week low. Obviously, many investors are nervous. On Friday’s close, the share price was $25.76.
Certainly, employees feel betrayed. Improving employee morale necessitates a strong internal communications program with empathy and appreciation for the employees’ contributions to the company. Certainly, from the C-suite on down, HP’s HR and training initiatives are being tested.
It might seem like a bit of a stretch, but the marketing should tout the rich, storied legacy of the company’s origins in a garage. That’s what occurred to me after being reminded that Americans love an underdog following release of a 2010 study by the Simmons School of Management in Boston.
“Across contexts, cultures, and time periods, underdog narratives have inspired people,” according to the study co-authored by the school’s Jill Avery. “Stories about underdogs are pervasive in sports, politics, religion, literature, and film.”
In using the term, credibility, she implied in an interview with BusinessNewsDaily that trustworthiness and integrity are salient principles to inspire customers to buy.
“Underdog brand biographies contain two important narrative components: a disadvantaged position versus an adversary and passion and determination to beat the odds,” wrote the study’s authors.
In addition to Dr. Avery, the authors include Neeru Paharia and Anat Keinan of Harvard University, and Juliet B. Schor of Boston College.
They found that the respondents identified with underdog brands and were more likely to buy them.
“The American Dream, the fabled American myth, is built on the stories of underdogs who came to the United States with virtually nothing and pulled themselves up from their bootstraps to achieve success,” wrote the authors.
When the study of products that included the branding term, underdog, they were preferred in 89 percent of the cases by participants. Companies with a humble history are very appealing to consumers.
In fact, as a reward for participating in the study, respondents were given their choice of a chocolate bar. Seventy-one percent chose the underdog candy bar.
Meantime, to be fair — HP makes great products. My firm has had numerous laser printers; both black and white, and color. Some have only lasted a year or two. But two of the most reliable are the discontinued HP LaserJet 4P model printers from the early 1990s. They’ve produced reams upon reams of quality documents without fail. Sadly, they were finally mothballed in 2011 when it the drivers were no longer available for updated computers.
Let’s hope HP finally gets this leadership problem corrected. It’s past time for inspiration and vision for success with customers.
Related link: Are HP’s Board and New CEO Headed in Right Direction?
From the Coach’s Corner, if you have customer loyalty issues, don’t worry because you’re not alone: Bank Woes Provide Lessons for All Companies Seeking Growth.
“Leadership is solving problems. The day soldiers stop bringing you their problems is the day you have stopped leading them. They have either lost confidence that you can help or concluded you do not care. Either case is a failure of leadership.”
-Colin Powell
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Columnist Terry Corbell is also a business-performance consultant and profit professional. Click here to see his management services (many are available online). For a complementary chat about your business situation or to schedule Terry Corbell as a speaker, why don’t you contact him today?
