HP’s Mess of a Board
HP…HP…HP…The big news of today. Slightly overshadowed by Facebook, and Facebook and HP trumping the news of CERN sending Neutrinos faster than the speed of light.
I have no choice but to Facepalm what is going on at HP. As a summary, last year, HP’s board fired Mark Hurd (Mistake #1) the CEO who was doing a great job of turning around HP. They fired him due to some expenses being put on the company, and an alleged affair with a company consultant, which there was no proof of. Now I’m all for transparency, and possibly having Hurd pay back the amount he expensed, but in no way firing the CEO over something like that. And a great CEO on top of that. Being a half hardware/half enterprise software company, they decided to bring on Leo Apotheker. Apotheker had a strong history at SAP, but took over the CEO post in the recession, and wasn’t really given a chance to shine. But the HP board brought him on, without an interview, (Mistake #2) and put him on the job, expecting him to take the company further. Apotheker, did what he knew best, took the company and moved it towards enterprise software, through a number of strategic acquisitions, and the announcement of spinning of its hardware division, and killing the tablets/smart phones business. Yesterday, due to falling shares and the unpredictability of the board, he was replaced by Meg Whitman, the champion CEO of eBay (Mistake #3).
Now let’s break down the 4 mistakes made above:
Mistake #1:
Why fire a great CEO over something so small. Yes, it was unethical. Yes, the policy is in place. But there were obviously some qualms with the Board and Mark Hurd. There could have been a much easier resolution to the problem, which I’m sure is taken care of at numerous companies. Oracle CEO, Larry Ellison said it best: “The H.P. board just made the worst personnel decision since the idiots on the Apple board fired Steve Jobs many years ago…” But what’s done is done, and they had to move on without Mark Hurd.
Mistake #2:
So they replaced Mark Hurd, with Leo Apotheker. Now look, he was a great leader within SAP, but SAP is an enterprise software company. HP is both an enterprise software and a hardware company. If you’re bringing on a CEO, you should at the very least, make sure that he knows what will work and won’t work, and will fit within the objectives of the organization. If the board wanted to go towards the enterprise software market, then perfect, Leo Apotheker is the guy. Give him time, and some free reign to do what he thinks is best, and accept what problems may arise in the meantime. Communicate this to shareholders, and make sure he does the best. But it seems like this wasn’t done. This is a complete assumption, but it seems like they were sick of the drama, let the executive search committee find who would be best, and went with it.
Mistake #3
Now, Apotheker killed off the tablet/smartphone business, and announced the spinning off of the hardware business. It didn’t make sense to him, he’s an enterprise software CEO, and hardware just wasn’t his thing, and he didn’t know how to capitalize off of it. It’s a tough space, with low margins and too much competition. So here’s where my problem comes in. Why bring in Meg Whitman. She knows her stuff, she’s one of the best CEOs of this day and age in the tech space. But her focus is consumer internet products, and she knows how to lead a team to excel in that space. She announced that she will stick by Leo’s announcements, and therefore stick to enterprise software. Now these are two completely different industries. With different products, different customers, different competitors, different development processes, etc. The enterprise software is changing shape, with a lot of smaller competitors providing niche products for verticals which are better than HP, SAP, and Oracle. Her experience at eBay doesn’t correlate with that. She was on the easy side, of everyone moving online anyways. For the sake of HP, and its employees, I hope she can do a great job. But I can’t see how there weren’t any other suitable candidates.
To me, it seems like one of the worst boards in the last few years. Flip-flopping between 3 CEOs, with completely different backgrounds within a year is shocking. What’s needed at HP is a solid business strategy that will product the most value to the brand, the employees, and the shareholders. A strategy that the company can stick to, and bring out the best of its innovative employees. Hopefully, they can find their way. We just have to give HP some time.
