The Only Constant in Unified Communications Is Change

Rob Enderle

One of the advantages of being an externally hired CEO is that you come in knowing you don't know much of anything you were just hired to run. Internal candidates often assume they know things about areas of the company that they have never touched, or feel the need to cover up the fact they didn't get much breadth, and those assumptions and behaviors tend to bite them in the butt. Of the companies I fallow, only IBM currently has an institutionalized CEO training program. The problem with externally hired CEOs is that they can often make really bad initial assumptions based on their last job as CEO, or the need to do something (Carly Fiorina and the Compaq merger, for instance), and the result can be catastrophic. We saw that happen in painful slow motion with Carol Bartz at Yahoo as her turnaround effort died a painful death.

 

So it was with some trepidation that we waited to see what Meg Whitman's first major moves would be. So far, they look promising and certainly better than her predecessor. I think this reflects her time at Bain Capital more than it necessarily does her time at eBay.

 

Whitman's Dilemma

 

An umbrella company structure is supposed to be designed to provide synergy between the different divisions, but that rarely happens. Sony is the poster child for how bad this structure can get, as each division in that company seems to actively work to hurt their sister divisions. Only IBM has consistently shown you can have a structure like this and see that synergy, and even they stumbled in the 80s and 90s.

 

Whitman took over a company that had largely been crippled by her predecessor. Synergy was hard to find even within divisions and employee morale was at a long time low. One of the division heads had somehow become a strident voice for HP and leaks from the company were the rule rather than the exception.


 

However, number problems rose above the rest. The Personal Technology division was bleeding revenue in double digits and had just destroyed another acquisition, the Printing and Imaging group was bleeding revenue in double digits, and the pool for the next CEO was so shallow that the board turned to Meg Whitman rather than an internal candidate to run the company. Todd Bradley had been in line for Whitman's job but was seen as not broad enough and his massive failure with the $1.2B Palm acquisition was clearly troubling. This gave her a rival and likely a public critic to deal with as well.

 

So Whitman got creative.

 

Whitman Gets Creative

 

What Whitman did was brilliant. She takes all three problems and puts them in the same bucket. This gives her a more viable future choice of spinning out the rest if the revenue slide isn't reversed. Bradley knows virtually nothing of large-scale industrial printers, which is where the Printing and Imaging division has been having the greatest success and given the replacement for printers is likely tablets of some form, it gives him access to the technology he'll need to build a bridge product. This will, at the very least, focus Bradley on something other than Whitman's job. If he succeeds, he will be more viable CEO candidate and if he fails his support is likely to dry up and he'll be gone. Whitman wins regardless of the outcome because Bradley is a known Whitman rival and likely there over her objections, so his failure is unlikely to be hers while his success will exemplify this as a brilliant Whitman move.

 

Wrapping Up: Whitman's Gambit

 

Taking the job at HP, while lucrative, comes at some risk. If she pulls this off, she'll be one of the few successful large-scale turn-around CEOs in the world and typically this is a "name your own price" job skill. In addition, should she ever want to go back into politics, she'll have the HP employees and customers largely behind her and that alone could be enough to swing a state-wide election. On the other hand, if she fails this same resource will work against her and she'll likely need to retire or go back to being a consultant. Carly Fiorina showcased that failure has a very expensive personal price.

 

I think Whitman understands that she is in a fight for the rest of her life. As a result, she is clearly taking this very seriously and her moves so far, from not spinning out the Personal Technology Division, to pushing HP more solidly into software, to this latest reorganization, appear well measured and strategic. One other thing to look at is the consolidation of marketing and communications, something she likely learned from her time in politics, and that is if you can't control the message and image, you won't win regardless. Restoring HP won't be simple nor will it be quick, but Whitman's made a strong start. Let's hope she can finish as strongly.



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