HP just did a major reorganization and one of the things you look for after a new CEO comes on board is whether he or she attempts to change the company's structure to assure loyalty and optimize it for their vision.
Mark Hurd, HP's prior CEO, was focused on cost containment and distributing responsibility to HP's divisions. He was largely executing on the incomplete strategy created by Carly Fiorina. For much of his time, Cisco and Oracle were partners and his biggest problem was merging EDS into the company.
Leo Apotheker faces a different world. Oracle and Cisco are competitors and his biggest problem is that Oracle is breaching its agreement to support their shared customers. He was likely, at least partially, selected because Oracle's CEO attacked HP's board personally.
CEO 101: Consolidating Command and Control
The first textbook things a new CEO needs to accomplish are to consolidate command and control and assure the people most critical to the firm's strategy are loyal. Given the war is against Cisco and, to a greater extent, Oracle rather than Dell or Lexmark, the PC and printing and imaging group were left alone in the shuffle and the large systems, services and software groups were shifted underneath the office of the CEO so they could be better coordinated. Because the office of the CIO is going to be critical to demonstrating HP's technology and because that leadership was handpicked by Mark Hurd, it was adjusted to assure loyalty.
Let's cover the details.
Ann Livermore, who is the head of HP's enterprise group, is leaving HP's day-to-day operations and is joining HP's board. HP's board has lacked a strong HP presence since the shake-up that put Mark Hurd into office. He'd apparently wanted a board subordinate to him and had replaced the chairman with himself as well, undoing the correction that had been made when Carly Fiorina, his predecessor, had been in the role. Livermore has had health issues and this was a way HP could retain her talents while allowing her to reduce her day-to-day stress and not have it feel like a demotion. This was elegantly done and you often don't see this kind of care for a well-regarded existing executive by a new CEO.
CIO Randy Mott resigned and likely was allowed this in order to prevent the impression that he had been fired. The reason was likely the concern that he, as a handpicked executive by Mark Hurd, represented a security risk given where Hurd ended up and given that the CIO role at HP is critical to the firm's message. HP uses its technology heavily as an example of how well it works and having someone that visible be an intimate of a CEO who was both fired for cause and had ended up at a competitor's shop was just too much of a risk. Just the likelihood that Oracle might have successfully recruited him would have been enough to drive this change regardless of anything he did.
Pete Bocain resigned and also was allowed to do this in order to prevent the impression that he had been fired. In Pete's case, he became redundant as Leo's style is more hands on while Mark Hurd delegated much of his job to others. A chief administrative officer is largely redundant to an active CEO and allows that CEO to focus on other things. There is no good place to put someone in a role like this if the CEO wants to take control back and this likely reflects more on Leo's management style than anything Pete did in the job.
Bill Veghte will now report to the office of the CEO. Bill, who was one of the most well-regarded Microsoft executives, is missioned with building HP's software unit and to reverse Mark Hurd's starvation of software. In order to better position against both Oracle and IBM, HP needs massive additional strength here and this unit moves from non-strategic under Hurd to most strategic under Apotheker and thus now reports into the chief executive's office.
Dave Donatelli will report to the office of the CEO. Dave runs the large systems group and is one of the most well-regarded executives out of EMC. This unit is strategic to the battle with Cisco, Oracle and IBM and remains one of HP's strongest assets with new initiatives like its EcoPOD and highly integrated data center (storage/servers/networking) coming out of that group.
Jan Zadak will report to the office of the CEO. Jan is the head of global sales and always should have reported into the office of the CEO in my opinion. This really made it look like Hurd had delegated nearly 90 percent of his job to others and that needed to be reversed. It is my opinion that global sales should always, without exception, report into the CEO because it is the life blood of a corporation. So this was simply the correction of what may have been a critical mistake by Leo's predecessor.
CEOs tend to set a tone early in their tenure. Carly Fiorina set a tone of someone who was brilliant but didn't care that much about the care and feeding of her people, and spent more time working on her next political job than being CEO and therefore got fired. Mark Hurd appeared to spend much of his time delegating his job and cutting employee benefits as kind of a CEO/emperor and he got fired as a result of misbehavior. Leo Apotheker is defining himself early as a guy who is deadly focused on his competitors, who wants those close to him to be loyal and someone who takes care of those who have shown long-term loyalty. In many ways he appears to be avoiding the mistakes of his predecessors.
While financial analysts may prefer the excessive focus on cost that Mark Hurd showcased, customers and particularly employees will likely prefer Leo's focus on the business and getting the job done. In the end, this path should lead to an HP that is stronger strategically and better able to weather the coming storms.