Monday, September 26, 2011

The Form and Substance Disconnect at HP

More on the CEO Merry-Go-Round
It was just a couple of weeks ago that I wrote about the ham-handed firing of Carol Bartz at Yahoo! (Another Botched Corporate Transition) and now it's here-we-go-again at HP. In the earlier article, I noted that the ouster of Mark Hurd and the poor preparation of HP's Board of Directors was used as an example in chapter 13 of Camelot, Inc. (Passing the Candle: Succession Planning). It was Leo Apotheker who took over from Mr. Hurd less than a year ago and now it's Meg Whitman taking over from Mr. Apotheker.

What was at the core of Mr. Apotheker's failure? Was it a flawed turnaround strategy? After all, his plan to spin-off the $40 billion PC business (hard won by another former CEO, Carly Fiorina, through the controversial acquisition of Compaq) and the deal to buy Autonomy, a software maker, for a hefty $10.3 billion caused a gigantic gasp of concern on Wall Street and among HP's 320,000 employees. No. Ms. Whitman told The Wall Street Journal that she endorsed the strategy. "I think the strategy is right," said Ms. Whitman.*

Apparently, the substance was there but his ability to articulate and communicate the plan was not. In the WSJ article, it was reported that Mr. Apotheker informed almost no one of his business intentions; enormously important decisions were a complete surprise to key people, including the head of the PC unit, Todd Bradley. In addition, he "appeared unable to explain the moves to investors" and the board felt that he "failed to rally his troops well and staffers believed "he was not clear on the strategy, not articulating clearly what the direction was."" Board Chairman Ray Lane said, "We didn't see an executive team working on the same page or working together."

Intellect and vision are hugely important attributes but Mr. Apotheker came up short in other areas of great consequence: communication and team work. As I point out in chapter 6, How to Be the Best Knight: Marrying Method and Manner, we're a package; one dimensional leadership doesn't cut it. It's essential to understand the array of audiences that have a potential impact on success or failure, and to be able to convey information in a clear and timely fashion.

And, lone wolves have no place in leadership roles. Of course, the CEO must ultimately make a decision; it can, indeed, be a lonely job. But leading means providing a forum for sharing ideas and brainstorming others, building relationships and creating an environment of trust, and communicating in a way that inspires others to believe and to follow.

Maybe part of the problem is the lack of incentive to succeed; the CEO merry-go-round has been quite lucrative -- a reported $13 million of Mr. Apotheker and $10 million for Ms. Bartz, for example. (Dear Yahoo!, I'd be willing to be fired for $5 million.) So, while the boards review their CEO vetting procedures and succession plans, they should also take a hard look at compensation schemes and success measures. Failure can be a two-way street.

* Ben Worthen, Justin Scheck, Joann Lublin, H-P Defends Hasty Whitman Hire, The Wall Street Journal, September 23, 2011

Between blog posts, you can follow me @pauloestreicher.

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