|
In
Search of a New HP Way:
By
Prasad Kaipa, Ph. D.
Download
this article ( PDF file, 84 KB ) ( PDF
Help )
“If
you were to be advising the board of HP, what would you
say,” a friend and a CEO of a services company asked
me. He knows that I am an advisor to CEOs and boards for
the past 17 years. And that I help them to identify their
company DNA and see whether potential candidates for executive
positions have a personal DNA that aligns with that of the
company. “Now that Carly Fiorina has resigned from
the company”, my friend said, “the HP board
has another opportunity to restore the legend of HP. Would
you recommend that they hire Michael Capellas (who sold
Compaq to HP and spent 6 months reporting to Fiorina), now
that he is going to be free from MCI? Or would you recommend
VJ (Vyomesh Joshi, the Executive Vice President heading
up the most profitable printer division in HP) even though
he does not have experience in services business or a low
margin business such as PCs?”
That question got me thinking. It is true that when the
HP board hired Carly Fiorina, she had less relevant experience
than VJ. It is also true that Capellas knows the Compaq
part of HP very well. According to repots, the HP board
wants to hire somebody who can stay the course in terms
of strategy but “accelerate execution”. Who
could be the right candidate?
A clear vision, coherent strategy, clear plan for execution
are extremely important for HP’s new CEO and these
criteria are already on the radar of the HP Board. They
don’t need me to reemphasize it for them. On the other
hand, leadership and other soft issues that will allow the
new CEO to be successful in accelerating execution are not
identified as key issues. I am less inclined to believe
that Fiorina did not know how to execute on her strategy.
I think the real issues are: She could not get employees
behind her. There was no passion and ownership in HP and
it is her leadership that they did not buy into. Once employees
accept whoever comes in and get behind the leader, excellent
execution could follow because managers at other levels
may take personal responsibility and ownership for making
HP successful.
IBM faced issues similar to those of HP in the early 90s.
Louis Gerstner was hired from RJR Nabisco. Gerstner recalls,
"They ran out of candidates and they convinced me it
was a leadership - not a technology - problem. I saw it
as a challenge. (He had been asked to lead IBM three times
earlier and he had refused). It is impossible to change
an institution — be it private or nonprofit —
without changing the culture. The levers you have to pull
are cultural, not directional. It's how people think, what
they value, what they do. IBM was "stuck in neutral
— numb. We needed to convince people to keep it together
to fight for leadership and bring IBM back."
Gerstner ignited the genius within IBM in the next few years.
He did that by understanding what IBM is all about and trusting
IBM employees. Is it possible that HP also has a hidden
genius waiting to be ignited by the right leader?
There are other cases where right leaders were able to bring
out the best from their companies. Take Apple. While Apple
was reasonably successful under John Sculley for a while,
it lost its edge in the early 90s. Michael Spindler, though
he was known for his operational effectiveness, could not
bring Apple back to growth. Dr. Gil Amelio, another board
member who came in with a good track record from National
lasted only 17 months. At one point, everybody thought that
Sun would buy Apple though that didn’t happen. Interestingly,
it took Steve Jobs’ return, for Apple to regain its
past glory and increase its market value. iPod, MacMini,
iMac and PowerBooks continue to enhance the Apple brand
and Apple’s stock has quadrupled in past several months
in value. Why? Jobs understands the DNA of Apple and he
has been able to re-ignite the genius within Apple in the
areas of innovation and product design.
Vivek Paul, named as one of the top 25 managers in the world
by Business Week in 2004 took Wipro from a $150 million
company in 1999 to $1 billion in revenues and $6 billion
in market cap in less than 5 years. He was heading up the
medical instruments division of GE reporting to Jeff Immelt
when he left to take up the top job at the Indian software
services company. Here again, he achieved success not just
through strategy or execution. Paul understood the core
DNA of Wipro, was able to tap into Wipro’s hidden
genius and transform the company into a global leader.
HP is the 11th largest company in the US, according to Fortune
magazine. It used to be the second largest technology company
after IBM eight years ago. It is still one of the best companies
to work for. The name HP, for many years, evoked characteristics
such as reliability, engineering excellence, integrity and
corporate citizenship. They cared for the employees and
the way they demonstrated that care has a name – the
HP Way.
Jim O’Toole, a well known professor at the University
of Southern California says “ it is very difficult
for companies to demonstrate respect to one of its important
stakeholders: employees.” If you don’t respect
your customers, you lose their business and if you don’t
respect your investors, you can’t fund your growth.
But do we really need to respect our employees? Many leaders
are not too sure, according to Dr. O’Toole.
Ms. Fiorina brought marketing focus, bold strategy and star
power to HP. In the process of doing so, she ended up getting
into conflict with the family of the founders, lost the
confidence of a large portion of older HP employees, and
did not deliver the promised value to investors. While the
strategy of a ‘PC superstore’ was bought by
many directors and analysts, HP did not succeed in becoming
a leader in either personal computers (as did Dell), or
providing services (IBM is the leader) and has been losing
its lead in imaging products like printers. Entry into the
camera and TV markets hasn’t helped much either.
From these events, I conclude that Fiorina was not able
to appreciate the DNA of HP and was not able to tap into
the hidden potential or genius of HP. So, while her strategy
might be solid, the employees of HP were not aligned with
her strategy, and execution suffered. She was not able to
get people excited and engaged with her approach. In their
blog postings, quite a few current and former HP employees
(some with their real names) say that they actually celebrated
when Fiorina quit. That says something about her acceptance
in HP.
With this history in mind, I would make the following recommendations
to the board:
- You
need to select a leader who understands the culture
and heritage of HP. He should be someone who can be
trusted by the employees, and who in turn trusts the
employees and ignites their genius.
-
Watch out for setting the ground rules like ‘strategy
is fine but requires accelerated execution’ because
that might not be the issue. In fact, when I surveyed
HP employees informally, some of them blamed the board
and their decisions for the troubles that HP is going
through. Critics say that it is the same board that
approved Fiorina’s decision to buy Compaq that
is now looking for a successor to Fiorina.
-
You need an organization builder and not a turn around
artist to head HP at this time. Does Michael Capellas
have organization building capabilities in addition
to turn around capabilities? Will he stay this time?
On the other hand, does Vyomesh Joshi (VJ) have the
required organization building capabilities and can
he grow revenues in the services business and the low-margin
PC business?
-
It is a leadership issue and not just an execution issue
that faces HP. Leadership in both business results and
in getting people excited and committed. Developing
leaders with a clear succession plan so that those leaders
can then take care of execution in different product
lines and services.
-
Instead of focusing on just the operational experience
of the potential leader, pay particular attention to
the DNA match with HP.
-
Don’t hire a leader who will try to shape HP after
his or her own image. If you do so, you could be facing
the same dilemma in less than 24 months from now!
Summarizing, the new CEO needs to pay attention to softer
issues like understanding the DNA of HP, winning the
trust and confidence of employees and finding ways to
ignite HP’s genius from within. If the new CEO
is savvy, he or she will also plan for smooth succession
by developing other leaders in the company and getting
them to lead various divisions of HP in preparation
for an eventual transition – say, 10 years or
more down the line. Fixing HP is a job but growing HP
is going to be a career. So, find a leader who will
retire in HP several years from now, rather than a leader
who will turn HP around and move on to her/his next
project.
HP is a landmark company with a lot of hidden potential.
It requires a tough, bottom-line-focused and appreciative
leader who will ignite its genius and make it a market
leader again. I hope the board gives HP a chance to
invent the New HP Way by hiring a leader who appreciates
and understands HP’s potential.
Prasad Kaipa, Ph.D. is an advisor to CEOs and Boards,
and has worked with companies in the US, UK, Belgium,
Japan and India over the past 15 years. Before that,
Prasad was a research fellow at Apple University, and
a professor at the University of Utah in Salt Lake City.
|
