Engagement is critical to the success of a firm. Years ago, I did a competitive study between Sony and Dell. Sony had better looking, more reliable hardware; Dell’s stuff wasn’t as attractive and it broke a lot in comparison. Sony sucked at engaging with customers; Dell led the segment. The end result was that Sony failed and Dell succeeded.
Dell’s Annual Analyst Conference (DAAC) is this week and HP Discover is next week. Many of the analysts here at DAAC have decided not to attend Discover because they don’t feel HP is really relevant anymore and the others who are going have indicated that they are going to confirm that the firm is effectively dead. At this same time, I’m getting notes from folks who have left HP for Oracle and are sharing how much better Oracle is than HP, in their opinion.
I can’t believe the experienced executives at HP realize they are sending a strong message that they are effectively managing their company out of business. Nor that if this results, that this is likely their last job because the failure will inevitably stain their resumes. The reason they don’t see this is that they don’t engage, and this behavior starts at the top.
I spent some time with Michael Dell this trip. I follow Meg Whitman and have met with her in person as well and the distinct difference between the two people is like night and day.
One of the things that often distinguishes a pre-public company from a public company is that the CEO actually engages broadly with customers, employees, investors and analysts. I’ll focus on the last group, for obvious reasons. The executive engages with the analysts because we are a leveraged resource. We speak to our financial analyst peers, which is important as the firm ramps to its IPO; we speak to IT customers, who make product decisions based on our advice; and we speak to media (some of us to lots of media), which makes us a leveraged resource.
In these meetings, executives provide information on what they are doing, their strategy, and the stage of execution. We provide information on the market, perceptions of competitors, and our perceptions of the company. These are critical pieces of information, in aggregate, to making decisions as to company direction and the use of resources.
Once a company goes public, CEOs have a tendency to become isolated. They get very wealthy and have trouble relating to people who are less wealthy, they seem to get a self-image that they are almost godlike and have to maintain this image by creating the impression that they know everything, and they believe their folks are keeping them informed. But these folks tend to learn that giving the CEO good information is great for their careers and giving them bad information is equally bad. CEOs in public companies often like to shoot the messenger. In short, they stop looking for information and surround themselves with people who tell them what they want to hear, not what they need to hear. In the end, the result is that the firm starts to fail because the person at the top becomes disconnected from reality and instead increasingly lives in an artificial world where they think they are successful, but they are anything but.
Michael Dell vs. Meg Whitman
One of the things that makes founders different is that they learned to engage while becoming CEO and they sometimes maintain this skill after going public. My first meeting with Michael Dell was almost a disaster. I was sitting in a circle of analysts surrounding Dell and he started to talk about his company. In my head, I went into autopilot, thinking that here is another corporate CEO who thinks he knows everything and is going to wax eloquent on his largely fictional view of his firm.
Except he didn’t do that. Instead, he turned to me and asked me what I thought about his firm and what he should do. Now after about a second of my entire career going up in smoke behind my eyes, my media skills kicked in. I gave myself a moment to consider the question, and provided a decent response. I looked at the faces of my peers. The majority, who had also been on autopilot, had looks that indicated they were furiously praying he wouldn’t call on them. In an instant, Dell changed the dynamic from one of elite separation to one of engagement and he seemed to actually care what we thought.
At DAAC, I had a similar meeting; he didn’t lecture me on what Dell was doing, he asked me how I thought it was doing and we had a discussion. It is refreshingly suicidal to go on autopilot with Michael Dell.
At an earlier HP Discover, I was brought in to talk to Whitman. She asked me what I thought of her talk. I told her that her performance was first rate, but the lack of content in her talk made her look vapid. She spent the rest of the meeting arguing that this was by intent, and then her staff shared with other analysts how stupid I was to have responded to her question truthfully after the meeting concluded. In effect, Whitman’s staff used shame to make sure that no one else answered her question with anything but praise, and, as far as I know, no one else did. I’d dared to say the empress had no clothes and my punishment was harsh. I should also add that Whitman did ask me to write her next speech, but when I asked for the information I’d need to write it, I was told to instead rewrite the talk I’d criticized, which was more like punishment. I declined that opportunity.
In contrast, Michael Dell wanted honest opinions. Whitman just wanted people to worship at her altar. The end result is that Dell remains connected to his business and is able to make effective decisions. Whitman, not so much.
Wrapping Up: Executive Engagement
Engagement is incredibly important to a firm. I first became aware of just how important it was when I wrote the internal paper on why IBM had nearly failed in the late 80s and early 90s. The then-CEO, John Akers, had become isolated and wasn’t even aware of the problems the firm was having. When it collapsed, he was caught with his pants down, becoming the only IBM CEO ever to be fired. I’ve spent this week looking at the various parts of Dell. Not only have most of the executives been here for decades, they are clearly loyal to Michael Dell personally and their efforts tier up into a clear corporate strategy. Put differently, they are a team and Dell is the team captain.
At Discover next week, you’ll see a lot of little kingdoms loosely coordinated under Whitman, with little consistency in strategy and direction. Major parts of the empire are seceding from it and you’ll see an executive team whose tenure at the firm is in the low single digits. You’ll also find a lot of folks looking for jobs and, if my peers are correct, a firm that is managing its way out of business. Oh, you’ll also find a group of analysts who will share their views on why HP is going out of business with you but sure as hell won’t share that same data point with HP because they have learned from my example.
In the end, engagement creates teams. Dell is the showcase of the resulting benefit. Without it, the firm can become disconnected and you instead get a fading empire. Whether you are talking about the HP of today or the IBM of the 1980s, that result is very different.
Rob Enderle is President and Principal Analyst of the Enderle Group, a forward-looking emerging technology advisory firm. With over 30 years’ experience in emerging technologies, he has provided regional and global companies with guidance in how to better target customer needs; create new business opportunities; anticipate technology changes; select vendors and products; and present their products in the best possible light. Rob covers the technology industry broadly. Before founding the Enderle Group, Rob was the Senior Research Fellow for Forrester Research and the Giga Information Group, and held senior positions at IBM and ROLM. Follow Rob on Twitter @enderle, on Facebook and on Google+