I have so many questions—but one of them isn’t whether the Hewlett-Packard board’s recent selection of Meg Whitman to be CEO was a logical one. The facts are with the ayes: Whitman’s amiable exterior masks a toughness and determination—just ask California Governor Jerry Brown. She has the added benefit of seeing the world from a politician’s perspective, which will help in regulatory, global and boardroom discussions. As CEO from 1998 to 2008, she oversaw eBay’s expansion to more than 15,000 employees and $8 billion in annual revenue. She reorganized the business model, the portfolio and, on several occasions, the entire management team. In addition to a degree in economics from Princeton and an MBA from Harvard, her career stops have included Procter & Gamble, Disney, Stride Rite, Hasbro and FTD.
ASSOCIATED PRESS
But skeptics are saying a brilliant résumé isn’t enough; she also needs relevant enterprise experience. Let’s get real. Whitman doesn’t need to know how to write enterprise software to run HP, and in her career she has done little else but run large enterprises. She was chosen at the discretion of an HP board that includes such enterprise and technology luminaries as Marc Andreessen, inventor of the first widely used Web browser; Lawrence Babbio, former vice chairman of Verizon; Rajiv Gupta, former chairman and CEO of Rohm and Haas; John Hammergren, chairman and CEO of McKesson; Ann Livermore, an HP legend who has an insider’s grasp of company strategy; and Patricia Russo, former CEO of Alcatel-Lucent. In short, the “A” team. If the chorus is balking at such an early stage, it may be looking more to the past than to the future. The naysayers need to review not only the bidding, but the caliber of the bidders.
Public vs. Private
Hewlett-Packard’s new executive chairman, Ray Lane, is coming under scrutiny for his role as inside chairman—or, as some wags have called it, a second CEO—and for having overseen the hiring of Léo Apotheker. Take them one at a time. Lane is the kind of director you find in the private equity world: brilliant, brash and brutally honest. You don’t bring his kind on the board to be collegial, but to fix things. Lane knows instinctively that making the wrong decision is one thing, sticking with it is far worse. Second, Lane’s a former No. 2 to Larry Ellison of Oracle, king of the enterprise software geeks, and can provide deep background in the business that Meg Whitman will be able to put to great use. His role as inside chair gives him leverage with the troops, particularly the engineering talent that can make or break a technology company. Unlike a traditional director who might be more concerned about “spin,” these venture and private equity directors think about one thing: value. Create it, and you get more rope. Destroy it, and no one is your friend.
Whitman is the third-richest woman in California and a billionaire. She has nothing left to prove or to earn. If Lane is her inside chair, it’s because she felt convinced that it would be in the company’s best interests. With Whitman at the helm and Lane as her wingman, HP has a chance of a turnaround and a brighter future—not necessarily as the same company, maybe in different pieces, maybe part of another giant, but a future nonetheless, which was a far sight better than only a few weeks ago.
Jeff Cunningham writes about leadership and business, boards and corporate governance. He is the founder of Directorship Magazine and currently serves as managing director and senior advisor to NACD. Previously, he was president of internet venture firm, CMGI, publisher of Forbes Magazine, and managing partner of the U.K. private equity firm Schroders. He has served as an independent board chair or director of 10 public companies.
Jeff,
This is a great statement with lots of ‘governance’ food for thought. Thanks for sharing your thoughts.
Reatha
Reatha Clark King is among the most deeply experienced of public directors and my response to her comment is to reflect our mutual understanding of the boardroom, that in the practice of good corporate governance each situation has to be addressed on its merits and circumstances. To argue, as some governance gurus like to do, for a rules based one size fits all approach is to allow policy to trump ideas.
Board member activism in the management requires a delicate balance. It can only succeed if the CEO and Chairman check their egos at the door.