Yahoo vs. HP: Turn Around Efforts by the Numbers: Page 2

Both companies face big challenges. Which one is better equipped to improve its position?
Posted February 9, 2012
By

Rob Enderle


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HP is holding but will likely need to begin making peace with some of these competitors in order to husband its resources effectively. If not, it will need to become far more agile than it is to move on the threats these firms represent in aggregate. Yet assuming Whitman still has political aspirations, large layoffs could be as problematic for those aspirations as they were for Fiorina, who largely lost her bid for the US Senate due to her HP staffing policies.

In short, hemmed in and with massive complex competitive pressures and potential increasing executive retention challenges, HP faces an unprecedented level of stress. Making sure this doesn’t exceed HP’s tolerance for stress will be a prime element of Whitman’s success or failure.

Yahoo Drifting

Yahoo was clearly drifting under Carol Bartz, whose skills as a packaged software CEO ironically would have likely been more valued at HP than at Yahoo. Yahoo wasn’t an umbrella company like HP and that means that the CEO needed to have the company reflect her skill set. And it clearly didn’t, suggesting the mistake wasn’t Bartz but with the board that selected her. That said, Thomson takes over a demoralized firm that is struggling to articulate a present, let alone craft a plan for the future.

While HP faces the complexities of multiple markets and a change in focus, Yahoo doesn’t even start with a focus and lacks the executive backstop that HP enjoys. This puts far more pressure on their new CEO, who while closer in skill to Yahoo’s core properties, is still a better match to a financial services firm than a digital publishing company.

Currently Thompson is building his board, something that Whitman was the result of at HP, so he can even begin to make a change in direction. And he also lacks the clear choices that Whitman enjoyed.

HP and Yahoo Contrasts

This sharply contrasts the problems of the two CEO’s. Whitman needs to watch her conflicts but her direction has been preselected by Ray Lane. Thompson faces far less competitive pressure (he doesn’t have a Larry Ellison trying to put him out of business for instance) but he hasn’t yet determined, and needs to, the direction to take the company.

He still needs to determine whether to package the company for sale or turn it around. A turn around can take 5 to 10 years as Steve Job’s successful effort at Apple proved, and Thompson will be lucky to get 24 months. A sale, given Yahoo burned Microsoft (the last highest bidder), is problematic as well because it seems that no one wants to buy the entire company anymore.

In short, at HP the pressure is massive but shared, at Yahoo it may be less but with the CEO-directed board changes the Thompson owns it potentially making it higher on him than on Whitman. And excessive pressure can quite literally break a CEO.

Wrapping Up: The Keys to Success

The keys to both efforts are similar and are grounded in past successful practices. Both CEOs need to ensure they balance resources with efforts, cutting those they can’t afford to do well to fund those that are more strategic.

But, in both cases, the first big step will be to assure the company is on a course that it physically can complete. This is because if ether firm is taken in a direction outside of the company’s scope, it will fail regardless of execution. So the priority is to find a course the company can complete and then assure that course is resourced to assure it arrives at the predetermined destination.

Carly Fiorina was strong on destination but sucked on execution. Mark Hurd didn’t care about the destination, he seemed to focus on optimizing his compensation (which is a board level problem) and had far too much free time to get into trouble. Carol Bartz was mismatched to her company. And Leo Apotheker, like Whitman, had help with the destination but couldn’t execute.

Whether it is captaining a chip or a company, you need the right skills, a destination that can be reached, and proper resource management so the goal/port is reached.

Both Yahoo and HP are at the start of their journey. HP has a course; Yahoo is struggling with picking one. HP is struggling with resource management due to complexity, and Yahoo may not yet have the skills it needs to reach or pick a viable destination. We’ll be watching both companies for a while.


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Tags: HP, Yahoo


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