This week, the Wall Street Journal is reporting that Yahoo’s CEO Marissa Mayer is soon to be the next ex-Yahoo CEO. But, unless some major changes are made in Yahoo’s board, she won’t be the last. This isn’t an uncommon problem right now; you see the same thing playing out at HP-E. The lack of board support coupled with an inexperienced CEO is resulting in a CEO revolving door, which means getting someone to take the job to replace either Mayer or HP’s Meg Whitman will be problematic.
As we go into the Thanksgiving holiday, let’s talk about the value of an engaged board.
Yahoo and HP: Bad Boards
If the CEO and executive team are a forged team, the board can pretty much kick back and use the board meetings to catch up on current events and drink wine. But if the CEO is brought in from the outside on a turnaround, so you don’t have a seasoned CEO in the top spot, and the executive team is a mess, the board has to roll up their sleeves and do some work.
Particularly for a first-time CEO, there needs to be substantial mentoring. The CFO, assuming he or she is experienced, can handle the reporting responsibilities for a time, but setting and executing against a companywide strategy is new and often, there is no good industry experience, which means setting the strategy is going to be problematic (the case with both HP and Yahoo).
Mayer, who came from Google, had a light marketing and search background and Yahoo was a rudderless mess trying to be a media company. In effect, it was nearly a blank slate. Ideally, given Mayer’s background, she should have taken it toward search and advertising, given that is what she knew. Instead, she went full steam ahead down the media path (ironically, the guy they passed up for the CEO job, who later exited the company as her number two, was the media expert).
Let’s look at HP. Here we had an umbrella technology company. This is where the corporate office sits over a set of powerful divisions, each of which is run like its own company. The skill set for running something like this is rare. Yet instead of pulling from either IBM, which actually trains executives to run this kind of firm, or a firm in a similar industry, a move that worked successfully with Mark Hurd and NCR, the board chose a failed politician who years earlier had helped found eBay, a dramatically different company. And then the board didn’t really back her up. Over the years, Whitman moved software guys into hardware roles, forced out many of her top players, and finally repeated the mistake that IBM made by dividing the company as part of a failed attempt to merge with EMC.
Like Mayer, Whitman just appears to be thrashing, largely because she doesn’t have the skill set to go it alone as CEO.
This is where the board is supposed to step in and ensure that mistakes that have been well publicized aren’t repeated and that successful strategies are emulated. In neither HP’s nor Yahoo’s case is this even remotely evident.
Wrapping Up: If the Board Is the Problem, You’re Screwed
Fixing a CEO is easy. You either mentor them properly or replace them. But once a board goes bad, there is no easy recovery; you don’t typically have a foundation to build a good board. HP’s board, like its CEOs, have largely been on a revolving door, suggesting that someone needs to go in and change the whole thing out for a handpicked team of folks who have the necessary talent and ability to work together. Neither HP nor Yahoo has a foundation to get this done, as the CEOs are also inexperienced. Even if they had the power to replace their boards, they would likely just end up with an inexperienced, dysfunctional mess. This is why it is so important to maintain some kind of sustainable continuity on the board with executive expertise in the same industry and not have boards that are overweight with non-industry executives and investors who lack focused industry knowledge.
This all goes a long way to saying that fixing HP or Yahoo needs to start with fixing the board; only then will there be an adequate foundation to fix the CEO problem. Without it, both firms are likely to get just another poorly trained and poorly mentored CEO, who will fail yet again.
Something to think about as you realize that the real turkeys aren’t on your table but sitting on a couple of corporate boards.
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+