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If there was ever a company that should at least consider that it has a CEO problem, it should be HP, now HPE. Over the last 16 years, it has had five CEOs, four of which were effectively fired. You’d think the lesson there for any CEO would be just to keep your head down and focus on the job.
For some, politics may be attractive. But CEOs are the faces of their firms and most know that there is no upside to being politically active while also holding that top job. That’s because customers and buyers are unlikely to choose a firm because they agree with you but are very likely to avoid a firm if they don’t.
We’ve had reminders of this when Tim Cook, Apple’s CEO, was hit a couple of times for doing things like fundraising for Paul Ryan. In a way, given how Apple and the federal government have been at odds of late, I can see a business reason for this. But given how it seems to have backfired, it instead becomes a showcase for why not to do this.
Currently, HPE CEO Meg Whitman, who ran for the office of California Governor as a Republican, has come out against Donald Trump, using language that is highly inflammatory, and pledged her support for Hillary Clinton in the presidential election. Given that one of the reasons ex-CEO Carly Fiorina was in trouble at HP was because she was spending too much time on the reelection campaign of George W. Bush Jr., you’d think her successor would know better. Apparently not.
Let’s explore why business and politics don’t mix well.
The Whitman HPE/Trump Problem
At the heart of this is that there is no real upside for HPE. However, just as we saw when Ted Cruz didn’t endorse Trump at the Republican Convention, a move like that from someone who has identified as a Republican appears as a party betrayal. This is very different from supporting someone from your own party (which is also ill advised, by the way). This has the potential of upsetting Republicans and, because Whitman is seen as a Republican, it doesn’t garner any long-term trust from the Democrats. It simply looks opportunistic, and people generally don’t buy from firms that they don’t trust.
Depending on the depth of coverage and what Trump does, this has the potential of dramatically affecting HPe’s and HP Inc.’s sales adversely (because folks likely can’t tell the difference). And given that this looks like a betrayal, suggesting that she could change sides again, even a marginal offsetting positive bounce seems unlikely.
So, for a moment in the limelight, Whitman has likely done millions of dollars of damage to both of the companies she oversees. Even if she now plans to run for office on the Democratic ticket, it is unlikely she’ll be trusted enough to get elected because of the way she did this.
Given her history of bad-mouthing Republican candidates she did support, I’m kind of surprised the party keeps her around, but that’s another issue.
Why Politics and Business Don’t Mix
Most CEOs in Silicon Valley do support the Democratic Party and some do have fundraisers for candidates. But there is a big difference between relatively private fundraisers and being on a government advisory board where you are working to gain influence and insight and actively participating as a proxy, or jumping with both feet into a campaign. That difference is that suddenly you have brought the company with you into the fight, and firms aren’t set up to fight political battles in public. Their tools are lobbying and funding and, if Trump now goes after HP directly, HP’s marketing organization will have to respond. The controversy will detract from HP’s offerings. And in this case, given that HPE and HP Inc. are no longer tied together, the lack of coordination between them could become a problem in and of itself.
Wrapping Up: One Reason Why Hurd Was a Better CEO Than Whitman
Mark Hurd, at least while he was at HP, significantly outperformed both Fiorina and Whitman. Granted he, too, was fired, but not because of bad management. He also focused on fixing the company and didn’t get distracted by politics. You see, politics doesn’t just put the firm at risk. It can also become a huge distraction for the CEO, particularly when running a firm like HP likely takes more time than that person has to begin with. While Whitman has struggled with the HP turnaround and is currently executing a strategy of bleeding out the assets to hold up stock prices, Hurd took a nearly destroyed hardware unit from Sun and made it viable while at Oracle.
I think the lesson here is twofold. CEOs should focus on the job, not on any other major task like politics. When the CEO, not the company or products, is the center of attention, it will be a bad thing. Steve Jobs, felt his own fame detracted from the job and extreme focus on product and company was part of what made him the most successful tech CEO of all time. Bill Gates was much the same way and, in the end, I think their examples, not Whitman’s or Fiorina’s, should prevail.
Over the years, I’ve seen politicians try to be CEOs, mostly unsuccessfully, and CEOs try to become politicians, also mostly unsuccessfully. But one thing that I think is certain: Trying to be both just never seems to end well for the CEO or the company.
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+.
