I spent last week at HP’s Printing and Imaging division and the employees raved about (as opposed to rave at) their new CEO, Meg Whitman, who appeared to be hitting all the right notes with them. This week the rumor is that she has revisited and reversed the decision to spin out the HP PC unit. This suggests that unlike some predecessors, she is less interested in covering up a bad decision than she is in correcting it.
I think this initially bodes well for her tenure at HP. Let me explain.
HP is an umbrella company. This means it is made up of a few loosely coupled divisions, which are managed a lot like wholly owned companies. The division heads have power similar to a CEO. And the umbrella CEO, if effective, manages the group as if they are individual assets and helps drive synergy and cooperation between them.
This is a unique skill, more common in Venture Capital companies than in most businesses and enterprises. Often the problem with folks in this job falls into three areas, either they know too little about most of the units and focus excessively on the part of the company they do know, letting the others languish. Or they become isolated and the divisions slide into decline underneath them.
The third mistake, which was made by both Carly Fiorina and Mark Hurd, is to delegate the job to subordinates and get into personal trouble with their free time. Fiorina used this time to get into politics and focused on getting George Bush Jr. reelected rather than running HP. Mark Hurd appeared to become a little too connected to an attractive HP employee/hostess (the release of the details of this story is still being fought by Hurd in court).
John Akers, the IBM CEO in the 1980s, was an example of an isolated CEO. He was properly trained but became isolated. Similarly, you could argue that Steve Ballmer’s problems at Microsoft are largely tied to his tight and excessive focus on the Enterprise side of Microsoft, in which he spent much of his time.
An interesting side comment is that Ballmer, from a company performance perspective, has actually done very well and is getting a raw deal. Microsoft’s slide appears to be tied to the difference between a consumer product company like Apple and an enterprise company like HP, which typically trade lower. This piece in Venture Beat is a really an interesting read in that regard, but showcases that for Steve to be seen broadly as successful he’ll need to restore that consumer focus.
This means that the best umbrella CEO operates more like Venture Capitalist or someone that is good at overseeing companies. They know when they need help while otherwise not mucking them up and staying engaged.
Coincidently that is what Ray Lane (disclosure I’m a fan) has been doing for the last decade. Ray is HP’s new Executive Chairman of the Board.
The Building Meg Whitman Story
What you look for in initial behavior is someone that will listen and learn what the problems are, as well as where the jewels are before jumping in and fixing the wrong things. I think that was the problem with Leo Apotheker, his software background had him too focused there. He made massive mistakes kibitzing on the hardware side, first with killing Palm prematurely and then with his idea bout spinning out the PC company. My personal sense was he was played by someone who wanted his job and then left to hang. But it was his lack of balance that made him vulnerable.
Reports on Whitman indicate she is asking intelligent questions but not yet stepping in and fixing anything. She has already seen some of the major problems at HP that were missed by Mark Hurd, like the lack of a succession program. This is something that Carly Fiorina had effectively killed (and hadn’t been working all that well anyway). That one point could help turn HP into the kind of steady performer that IBM has become and help assure it could last 100 years, as IBM has done.