5 moves Meg Whitman needs to make right awaySeptember 23, 2011: 11:37 AM ET
She's a seasoned executive, but there's a big difference between running e-commerce firm eBay and one of the largest, trickiest technology companies in the world. Here's what she needs to do on Day One.
FORTUNE -- It's not easy being CEO. That's especially true if you run a massive company that doesn't quite know what to do with itself. HP's Leo Apotheker learned the hard way when he was ousted to make room for Meg Whitman barely a year into the job.
It's been a rough ride for HP (HPQ). The company's stock has tumbled as much as 47% since Apotheker took the reigns and effectively slashed and burned his way through the company, killing off a recently launched line of mobile devices, putting the WebOS operating system on ice and announcing the potential spin-off of the Personal Services Group. Meanwhile, a $10.3 billion decision to acquire British management software firm Autonomy raised plenty of eyebrows. Sources inside HP also told Fortune Apotheker suffered for not having former-CEO Mark V. Hurd's aptitude for numbers. It's no surprise his informal employee approval rating plummeted to just 25%.
Now the job is all Whitman's. During the company's conference call announcing her appointment, new executive chairman Ray Lane said, "Meg is a technology visionary with a proven track record of execution." Perhaps. Whitman, an HP board member and director, knows the road ahead is a tough one -- she admitted as much during her first interview as CEO with All Things D. "I am resolved to restore it to its rightful place," she said. Here are 5 moves she needs to make right away if she wants to have a chance of making that the case.
Sort out the PC business.
Last month, the company dropped a bombshell, announcing it might spin-off or sell its Personal Systems Group, which sells PC hardware. The division is one of HP's largest revenue sources, but also its least profitable. (It happens to be what most people know HP for as well.) Lane has said the company would not sell it off, insinuating that if a spin-off were to happen, HP might turn the group into a partially owned, independently operated company. Whitman seemed to be on both sides of the issue, expressing support for her predecessor's strategy but also saying she'd take a second look at the move. That left analysts totally confused.
A decision should be made sooner rather than later. If HP wants to refine its focus, make enterprise and software services its bread and butter like IBM (IBM), get it over with.
Make a plan (for Web OS). Any plan.
One of the worst casualties of Apotheker's aggressive plan to retool the company is WebOS, the critically acclaimed operating system HP inherited when it acquired Palm for $1.2 billion nearly a year ago. The discontinuation of WebOS devices like the Touchpad tablet and Veer phone puts its future in doubt. First, it was dead. Then came news that HP was debating partnerships and licensing options. Since then? Not a peep. "That asset is aging fast," says Forrester analyst Frank Gillett, who believes HP should have a clear story with where they're going with WebOS, even if it means a sale. "If it's going to have any value, they have to deal with it quick."
Get to know the employees.
"I have been on the board for eight months, but I really need to get in there and meet its people," Whitman has said. Gillett believes doing so is crucial to stem any potential company turmoil or morale issues among the company's nearly 325,000 employees. "The last thing she wants is any kind of exodus, a management or key skills exodus that would make her start more difficult," he says. Recruiters from competitors like Dell (DELL) and Oracle (ORCL) are already likely making calls.
Case in point: Executive Vice President Todd Bradley, who led the acquisition of Palm last year. According to a report from tech blog Boy Genius Report, Bradley has been mulling over his departure from the company for months. Whether that's true or not, losing an exec like Bradley would be a major blow for the company, particularly during this transition and, clearly, Whitman realizes that.
Bring back the trust.
"In terms of trust, HP's bank is in serious deficit," says Michael Robinson, a senior vice president of Levick Strategic Communications based in Washington, DC. Indeed, after so much turmoil what HP needs badly is leadership that Wall Street, in particular, feels it can trust. The stock jumped radically when Fortune first reporter news of Apotheker's ouster; that's a bad sign for any company's executive management. Luckily, Whitman's profile is a big help in this department, according to Robinson. "The Whitman brand is sterling," he says. "People trust Meg Whitman; hers is a name you know. HP has more or less been brandless."
Break with the past.
Finally, Whitman needs to make a clean break with the past. For years, HP has been plagued by stumble after stumble. Hotly debated mergers and acquisitions, executive scandals and reversals of strategy have worn on customers, employees and shareholders alike. Robinson argues that Whitman needs to find symbols of the troubled past and demonstrate how they will persist no more. "Breaking with the past requires [drawing] a real line in the sand to say that was then this now," he adds. What could Whitman find that might fit the bill? A few drama-free months might be a good start.