HP CEO Leo Apotheker's First 100 Days Ends in Disaster
Posted by Robert Hargrove
In the Selection Process, Most of the HP Board Declined to Even Interview Him
Leo Apotheker? Who is he? When HP fired Mark Hurd (who had performed brilliantly in his job, but was suspected of a sexual tryst with a porn actress who he hired as a consultant), they had to find a new CEO in a hurry.
Like most boards, they had not considered how to replace their CEO if there was a sudden departure, like being hit by a truck walking across the street. In this case there was no “truck” candidate.
The task fell upon the board to select a new CEO. The problem was that, according to Ray Lane, a former HP board member and CFO of Oracle, “The HP board is probably one of the most dysfunctional in the history of corporate America, which resulted in them selecting a candidate for this venerable company who the majority of board members had never even met.
As the story I have been able to piece together reveals, a single member of the board was in charge of finding a CEO candidate. The board selected Leo Apotheker, the SAP CEO who had just gotten the axe in part because he was a stranger to them and, therefore, had not been involved in any past rivalries with the rest.
At the same time, the board was so exhausted from the political wrangling in the selection process that the majority of members refused to meet, let alone even interview him. Leo Apotheker received absolutely no executive on boarding except being handed his badge and being pointed toward his office.
As he was brought into the job in a hurry, he didn’t spend much time doing due diligence. He was unable, therefor, to come up with a strategy that matched the company’s situation (or even its business). He used his first 100 days to try to turn HP into SAP.
He announced shortly after joining that HP, a high tech hardware icon, was getting out of the hardware business (its strength) and becoming a software service business, much like his former employer. It didn’t seem to matter that HP had never been in the software business. He made an immediate play to buy Autonomy, an SAP-like company, for a price many believed was twice what it was worth.
He also announced that HP was dropping its iPad-like tablet just coming onto the market, a product many thought would compete well with the iPad (a product whose technology the company had just bought from Palm.)
He failed to do the three things a leader must do in their first 100 days:
1) He didn’t succeed in getting his message through on his long term vision;
2) He didn’t attack ‘A’ level priorities like building as team of ‘A’ players or marketing the HP tablet, which was flying out of Best Buy at $99;
3) He didn’t secure any early wins that are critical to establishing a virtuous circle of increasing personal credibility and momentum.
He missed the first quarter’s earnings, then the second, then was on his way to missing the third. At that point, the stock started falling off the shelf and investors started calling for his head. After 11 months, it was over.