HP and Google Turn Corners for Future Survival

Rob Enderle

Both Google and HP made blockbuster announcements today. Google announced that Eric Schmidt is moving out of day-to-day management. HP announced that it is losing four board members who were closely tied to the termination of its last CEO and gaining five board members who better represent HP's global reach and internal diversity.

 

Let's chat about both.


Google is Losing Its Training Wheels


Companies that start out of the education system often need professional management to assure rapid growth and to prevent mistakes that students simply haven't yet learned to avoid. However, once the firm's founders learn how to run the company, it is generally better that they take over because it is their vision-not the hired CEO's-that is supposed to drive the company.


In effect, this initial CEO is kind of a combination babysitter/training wheel set that keeps the young founders from making company-killing mistakes and to train them how to navigate the harsh business waters alone. Google reached a point about four years ago when it increasingly seemed obvious that the founders no longer needed either a babysitter or training wheels.


As a result, Eric Schmidt had less and less effective responsibility and more and more time that he appeared to use to further a potential political career. The decision to leave China, for instance, seemed more appropriate for someone who wanted a hardline history against China for a future run for office, rather than a business decision for Google. That decision was overturned, but Schmidt's unfortunate comments on privacy and other missteps made it clear that it was time for the company to step out of adolescence and step up to adulthood. It was time for him to go.


Google faces its most difficult year yet in that it has to fight off a substantially better-funded Facebook and has to weather multiple lawsuits, which, if not managed properly, could kill off its Android and Chrome OS products. The founders are back in control and, at this stage, this is generally a good thing.


HP's New Board



HP replaced the key members responsible for removing Mark Hurd with five new board members including Meg Whitman. Whitman recently ran a failed campaign for California governor but is still recognized as being one of the most successful CEOs in the state. The new board has what looks to be the highest concentration of international board members in its history, which better reflects the makeup of HP's customers, employees and geographic coverage. Plus, the skill-sets now shift to a heavy investment background, which it needs as HP moves to significantly increase its acquisitions. In the end, this board is better prepared for the battles HP has in front of it than the previous board.

 

In addition, the Mark Hurd scandal had become a distraction and the ongoing investigation of both Hurd and the board members who fired him was
becoming a distraction that HP needed to move beyond. The new executive leaders and board better reflect the company's new vision.

 

Wrapping Up: Big Changes Continue


This decade will be full of major changes from massive staffing and executive shifts in major corporations, to massive acquisitions, mergers and divestitures from many of the same firms. Google and HP are both restructuring to better thrive in the coming decade. In the end, successful companies evolve, unsuccessful ones don't. These changes are critical to the future of both companies.



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