Why HP's Next Leader Should Come from Within the Company

By CIOinsight  |  Posted 05-28-2012 Print Email
NEWS ANALYSIS: With two lackluster quarterly earnings reports under the stewardship of CEO Meg Whitman and 27,000 employee layoffs in the immediate plan, some industry observers are already starting to call for her replacement. Is it time for the company to search within its own ranks for its next leader?

Hewlett-Packard is 73 years old. Until 1999, most of its top leaders had been people brought up through the ranks, like at IBM. During the past 13 years, however, its last four CEOs have not been trained and nurtured in "The HP Way."  This is no longer the company of David Packard, Bill Hewlett, John Young or Lewis Platt, and it hasn't been for most of the Internet Age.

While remaining very profitable in spite of itself, HP has stubbed its toes a number of times since Cara Carlton Sneed Fiorini came from Lucent in 1999. When she was ushered out in 2005 -- with the company losing profitability after the highly controversial, $26 billion Compaq acquisition -- the HP board went outside again and selected NCR's Mark Hurd.

Hurd was proclaimed as the stout leader the company needed. His approach was to play the heavy, cutting back to make ends meet. He pillaged R&D, staff, and, in the process, production, and then got embroiled in a personal scandal with a female contractor that got him forced out in August 2010.

The HP board again went to the outside, selecting former SAP CEO and longtime division executive Leo Apotheker in September 2010 to ostensibly lead it into the 21st century. Eleven months later, having announced that the world's biggest-selling PC maker wasn't going to make PCs anymore and buying a little British software company for some $10 billion, Apotheker was shown the door.

HP's CEO Dance: Four Outsiders in Succession

When Apotheker was sent packing, HP went for yet another outsider, board member and former eBay CEO Meg Whitman. Now, with two lackluster quarterly earnings reports under her stewardship and 27,000 employee layoffs in the immediate plan, some industry observers are already starting to call for her replacement. Forbes' contributing writer Adam Hartung came out with a piece May 25 headlined, "HP Is Broken, And Meg Whitman's Not The CEO To Fix It."

A few analysts are telling CIO Insight sister publication eWEEK off the record that Whitman's an excellent executive but that she still may not be the right one for the job. There's no question that doubt is beginning to surface.

Whitman has said, several times, that production-line problems lie in HP's antiquated internal systems. Whitman said on the company's most recent earnings call that HP's problems are "not the product it's not the market it's not the competition. This is about a classic entrepreneurial company scaling other (read that "internal") challenges. It's a whole different ball game."

Investors have been dumping HP's stock. The company market cap has slipped about 60 percent in the last two years, from about $52 per share to $22 per share. That's a paper total of about $60 billion.

There Must Be Somebody at HP Who Can Lead

Sixty billion dollars could fund the R&D and marketing of a lot of new products to sell. There's true power in the HP brand name, history, product line and its 349,600 employees. Somebody in that group has got to have the vision, confidence, business acumen, charm, grace, and, yes, balls, to lead this company. Chances are awfully good there is somebody already on board who can do this job. Meanwhile, Whitman the outsider incumbent rules, and she deserves all the luck in the IT world. Our hat is off to anybody who dares to claim that job.



 

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