Can Hurd fix HP?
Published: 30 Mar 2005 17:30 BST
They didn't select a rock star CEO this time around, but HP would like nothing more than for Mark Hurd to turn back the clock to a blander, more predictable time in the company’s history.
Hurd has the huge advantage of being the anti-Fiorina, a distinction that should buy him valuable time. He'll need it, but more about that in a moment.
For all her flash and sizzle, former CEO Carly Fiorina was despised by many insiders who considered her a huckster. She never delivered on the promise of a better future for HP — even after shaking up a decades-old corporate culture and ordering the dismissal of thousands of employees. Then there was the mother of all mistakes symbolised by the wrong-headed takeover of Compaq.
That's enough excitement to last a lifetime. After news of the appointment leaked, the online bulletin boards greeted Hurd with a cautious embrace. Investors know there's nothing wrong with being a boring company — as long as it's boringly profitable.
Under Hurd, NCR was such a company. This company lifer was not a publicity hound like Oracle's Larry Ellison or Sun's Scott McNealy. But after Hurd became CEO two years ago, a once-ailing NCR flourished and its stock price quadrupled. Hurd may have been a relative unknown, but he came to the job with the gimlet eye of an operations ace.
The question I have is why any successful CEO would trade his comfortable cushion for the tech equivalent of straightening out the Winchester Mystery House.
This wouldn't be the first time a computer industry giant in distress pinned its hopes on a man on horseback. The situation was equally grave when a deteriorating IBM plucked Lou Gerstner from RJR Nabisco in 1993 to become its new chief executive.
Like HP, IBM's board was desperate for a strong hand who could rescue the company. Before Gerstner replaced John Akers, IBM was in shambles. Beset by clone makers, IBM was losing market share and bleeding red ink. Outgoing CEO Akers was so under siege he thought he should break IBM into so-called "Baby Blues". That harebrained scheme convinced the board of directors it was time to find a CEO who had a clue.
Like Gerstner, Hurd knows how to bend a bureaucracy to his will. That's where the easy comparisons end. Will he be given carte blanche to shutter or sell off losing businesses and merge organisations? Doubtful — not after the sturm und drang that defined the Fiorina era.
HP apparently believes Hurd can get things back on track by making the current system work better. But if HP’s malaise was simply a question of better execution, this would be a relatively easy fix. The problems go a lot deeper. It's the strategy that needs a rethink.
Gerstner had months to think about where he should take IBM. Hurd has neither the luxury of time nor the latitude to do anything unpredictable because the board needs more immediate results or shareholders will revolt. Fixing the company under those conditions becomes something on the scale of Mission: Impossible.
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