Ugly boardroom battles are killing great companies

“Really, Hewlett-Packard? This is what’s become of the company of Bill and Dave — not just the founders of HP, but the founding fathers of Silicon Valley? Three CEOs in six years. Two of those CEOs who embarrassed themselves with inept campaigns for elective office. The other CEO who managed to get tossed out of his job by virtue of his (still largely unexplained) fascination with a B-level (and that’s grading generously) actress. Not to mention boardroom soap operas, front-page ethics scandals, and more changes of direction than a surfer in a hurricane.”

WILLIAM C TAYLOR, blogs.hbr.org (23 September 2011)

What on earth happened to HP? Once a dominant force in computing and printing, it is now a running soap opera. Let every successful company look, learn and be afraid.

At the time Hewlett-Packard bought Compaq a decade ago, HP was a confident corporate icon, part of the new technology wave, run by a rock-star CEO, Carly Fiorina, and with money to burn. It not only wanted to become the world’s dominant computer company, it was also making ambitious forays into services – witness its attempt to buy PwC Consulting around that time, and its later capture of EDS. HP was one of the world’s most valuable brands, and a star entry on the Fortune 500.

Well, that was then. As Bill Taylor pointed out in HBR recently, since then the company has gone from one leadership fiasco to another. First, a series of boardroom leaks created huge internal ructions and saw the exit of Fiorina. Next, new chair Patricia Dunn, seeking to stamp out the leaks culture, stepped across the line of legality and authorized illegal access of the phone records of her own board members.

She, too, paid the price – she was charged with misdemeanours and stepped down. A period of brief stability ensued with Mark Hurd taking the reins – until he had to go amidst amazing, unresolved allegations of impropriety. A new CEO, Léo Apotheker, was appointed. He lasted less than one year. And it is now revealed that the full board did not even meet Apotheker – his appointment was sealed by the board’s search committee. Really – other board members did not wish to meet their future CEO?

The explanation, as revealed by James B. Stewart in the New York Times recently, was that board members “were just too exhausted from all the infighting.” Stewart concluded that the HP board, “while composed of many accomplished individuals, as a group was rife with animosities, suspicion, distrust, personal ambitions and jockeying for power that rendered it nearly dysfunctional.”

Wow, perhaps we should not be too astonished at the boardroom shenanigans currently bedeviling our own CMC Motors…

Bill Taylor has a deeper explanation, beyond the boardroom dysfunction. He relates HP’s woes to a loss of values: “HP hasn’t just lost its way in the marketplace. It has lost the “HP Way” — the values and behaviors and principles and commitments that made it more than just another company, but a beloved icon and institution.”

As things stand, HP is in a leadership vacuum. Most damningly, Taylor asks: “Why can’t a company with more than 325,000 people find its new CEO from within its ranks — especially when it’s had three opportunities to do so in the last decade?”

We are now told that ex-CEO Apotheker will receive something like $13m in compensation. For being fired. For failing. For working for less than a year. When boards have designed systems that reward failure, is it any surprise that big companies keep failing? What would be fitting now would be for the HP board to fire its selection committee immediately. And then fire itself.

People sometimes ask me why I keep banging on about values in business. HP tells you why. Values are the glue that hold you together, and the lamp that shines light on what you must do. If you let values go, you will soon be exchanging blows in the dark, and lack the unity to make any meaningful strategic decision.

Once-proud HP now needs rebooting. This ridiculous board must be re-formed from scratch, and huge efforts made to rediscover the HP way. Its shareholders and customers must demand it.

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