What Went Wrong at HP?

Since HP ousted Leo Apotheker in exchange for Meg Whitman last week, there has been lots of coverage on what went wrong during Apotheker’s 11 month tenure as CEO of the tech company. Many blame the board of directors; it has been called one of the worst boards of the past 10 years. Some say that Whitman is a better communicator than Apotheker, a critical trait for a CEO. So what really happened?

Here are some of the theories:

The Wall Street Journal:

• Corporate governance author Nell Minow, “It’s hard to think of another board that has failed as consistently as this one. The HP board is a serial offender. If Apotheker’s vision and execution failed, it is the fault of the board that selected him.”
• HBS Management Professor Rakesh Khurana, “The board’s caught in this infinite loop. They’re searching for an identity in a rapidly changing new market with new CEOs, and it’s not clear that the board has yet solved its own issues.”

Portfolio.com:

• GMI research associate Paul Hodgson, “You would think that competition would inspire excellence, but what it seems to have done is create a situation where panic mode has set in and decisions are being made with a very short-term focus instead of looking to strategy.”

Forbes:

• Carmine Gallo, “In the interviews in read with HP board members, one common theme caught my attention — comparing Apotheker and Whitman as communicators. HP Chairman Ray Lane lauded Whitman’s communication skills. ‘The market’s a little confused because we’re in so many different businesses. This is 90 percent about leadership, communications, and operating execution,’ Lane said…She is a skilled communicator.”

The Daily Beast:

• “The real villains in all this are not the hapless CEOs who have been brought on board, but rather the 14 people who sit on HP’s board of directors, a group of bumblers whose string of stumbles and missteps has earned them a spot on The Daily Beast’s ’10 Worst Corporate Boards of the Decade’ list…’None of these directors should stay on. They should clean house. They have screwed up repeatedly.’”

CRMBuyer.com:

• “The naïve perception of Silicon Valley is of technologists, engineers and other smart people succeeding by dint of hard work, smarts and a commitment to always doing the right thing. Last week’s revelations shake that belief. To my mind, last week is not an isolated incident involving one company and its board. It represents an opening salvo in a paradigm… HP is many things, but it is not a growth company at the moment, and the ouster and infighting reflect distress over the reality.”

Some call it a communication issue; many consider it a board quality issue, but the idea that HP’s ousting of Apotheker is the beginning of a paradigm shift doesn’t seem all that far-fetched. As CRMBuyer.com put it, “the rapid evolution of social computing is the signal event of one paradigm ending and another beginning.”

And this is where CEOs need to pay attention: the failure to adapt to the new technology landscape may really be HP’s downfall. Salesforce.com CEO, Marc Benioff, equates the Arab spring with the future of technology and even predicts that companies who fail to adopt social media, mobility and cloud computing will be opening themselves up for serious failure.

Read: Critics Fault H-P’s Board, Not Just CEO

Read: Did Poor Communication Skills Undo HP’s CEO?

Read: The Yahoo and HP Way: Dysfunction at the Top

Read: HP’s Inner Turmoil

Read: HP Chairman Ray Lane: A Profile in Courage

Read: $3 Billion Reasons to Fire H-P’s CEO

Read: 5 move Meg Whitman needs to make right away