Meg Whitman and HP: Most Likely to Succeed

After a run of unsuccessful CEOs, Meg Whitman appears poised to greatly boost HP’s fortunes.
Posted December 14, 2011

Rob Enderle

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As we look back on HP over the last decade or so, we see a company that has moved to the #1 or #2 position in each of its chosen markets, despite the fumbles of the last four COEs. Current CEO Meg Whitman is different: she wasn’t selected on narrow criteria like Fiorina or Hurd, or in the panic like Apotheker. She was a more measured choice with skill set uniquely suited to the problems facing HP.

To examine her chances at HP, let’s first take a trip down memory lane at the past four CEOs and what each has done to damage HP, and then match Whitman’s background to the task at hand to see if it is a fit. I think you’ll find, as I did, she is the perfect CEO for HP at this critical time.

Past CEOs

It is interesting to note that until Meg Whitman it appeared that every CEO wanted to exceed their predecessor in terms of how much they unintentionally hurt the company. We’ll start with Lewis Platt, the last internal CEO hire and work forward.

Lewis Platt was a solid HP player but, similar to John Akers (the only CEO fired from IBM), he was unable to see the trees for the forest and was unable to cut, what had become a lumbering company with massive entitlements, down to fighting weight.

Carly Fiorina, who was brought in to shake the company up, was able to cut and provide a vision but she was almost like royalty and didn’t take care of her people. In addition she wanted to move on to a political position and fancied herself as the first woman US president – and started working aggressively toward that goal before finishing at HP.

In what appeared to be an attempt to forestall her termination she undertook a dangerous merger with Compaq, alienating the founding families and creating one of the most damaging proxy fights in the tech industry. Not to mention a mess of overlapping products and lines, many of which still exist today.

Mark Hurd was a cutter, having recognized that to make financial analysts happy you could constantly cut costs as long as you held revenue. He’d actually gotten his tires slashed at NCR before joining HP for similar behavior and was apparently deeply hated by the HP rank and file.

He crippled HP marketing, R&D, and almost put the company so deep into a hole that it couldn’t dig out. He was fired for falsifying expense reports in an alleged attempt to cover up an affair with another HP employee who was also a soft porn actress (you can’t make this stuff up). He left with employee loyalty scores lower than I’ve ever seen them before.

Leo Apotheker was a fast hire to try to cover up the HP board’s bungling of the Hurd termination. It was consistent with a strategy that mirrored the one that killed Sun: to turn HP, a hardware company, into a software company, with a likely similar outcome. Leo could neither speak well on stage or individually to analysts and while he actually often said the right things he wasn’t at all qualified to run HP.

In what has to be one of the worst bone-headed moves ever he panicked after HP’s signature tablet sold poorly and nearly destroyed the $1.2B Palm acquisition. He then appeared to massively overpay for Autonomy – a company that Oracle indicated they’d turned down for a fraction of what HP paid.

To add to what became an historic number of mistakes he announced HP was thinking of spinning out its PC unit which, after a decade of saying HP would never do this, torpedoed trust in the company and nearly cratered HP sales. He single handedly did more damage to HP in his 8 months than any competitor of record over the same period that I can recall.

The company that was left after this mess of different strategies, self-dealing practices, and bureaucratic bungling was a mess internally and in desperate need of rebuilding.

HP After Apotheker

So the HP that Whitman inherited was a mess. It still was dominant or near dominant in most of its markets but still hadn’t reconciled all of the products from the Compaq merger. R&D was at or below survival levels, employee satisfaction was at an all-time low, and infighting (particularly in the PC unit where the head has been in the process of leaving the unit for 3 years) at an all-time high. One recent billion-dollar acquisition (Palm) was in shambles, and the company’s board was brand new, thanks to the Hurd scandal.

Oh, and to add to all of this, corporate marketing was in turmoil (having been cut to near nothing and having revolving door executive management), and trust in the company was at an all time low.

Servers are in good shape, services have been heavily cut, software is in mid transition and reported to be a mess, PCs have a leadership uncertainty problem, and networking (thanks largely to the 3Com acquisition) is hitting Cisco harder than expected. Printing and Imaging, while dominant, is seeing declining growth and is missing the move to electronic books and media.

Finally customers were fleeing the company, thanks to the handling of the PC unit and the CEO revolving door, and because most of HP’s partners were now competitors or, worse, at war with HP. Oracle and Cisco had been changed from partners to competitors with Oracle wanting HP dead and Microsoft (thanks to the Palm games and some screwy stuff between them and the HP PC unit), was treating HP more as a competitor than a partner.

Meg Whitman’s Skills

HP needed a turn around, which is similar to the transition phase when a company moves from startup to corporate entity. Meg Whitman’s background at eBay speaks to this problem and she recognized the need to get the company back into growth mode and away from the crisis of the hour.

She did this by reinstituting HP’s internal advancement mentoring and selection process so that the next HP CEO could come from inside rather than outside, and in meeting with the employees to hear grievances and address them. I’ve met with several of the HP divisions and in passing they indicate that Whitman has begun the process of restoring employee loyalty and getting employees focused more on HP’s future than their own resumes.

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Tags: HP, Meg Whitman

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