I am just a dumb developer, so I am probably not quite getting the subtle management logic at play here, but what's with random incompetents being appointed CEOs and paid millions of dollars to make things worse or at least not much better? (Bartz at yahoo, Apotheker at HP)It seems like a systemic inefficiency to me. (btw this is a genuine question, not snark. I'd appreciate anyone versed in how boards etc work enlightening me)
On that note aren't the legions of VPs that infest such companies supposed to be a "bench" for selecting a CEO from in an emergency? If you have half a hundred (or more!) VPs and none of them can step up and be CEO in troubled times, why pay them millions of dollars?
Also, why exactly Meg Whitman? Just because she happened to be available and doesn't have another job? (Isn't that telling about her desirability as a CEO?) How long before they look far yet another saviour on a white horse?
I was with you until you mentioned Bartz as an example. She was actually really good as the head of Autodesk. Yahoo has languished, but at least she didn't make any company killing decisions like Fiorina or Apotheker.
sure (and upvoted) but I was just using "incompetent as incompetent does" as the guiding rule, not really looking at past records etc. What exactly did she do at Yahoo anyway that made the situation there better? AFAIK the good engineers at Yahoo are running out the door as fast as they can. Not sure that is the sign of a thriving company (but then I have zero upper management experience etc and am just a dev and so could be missing something very obvious - and hence the question).
That said, feel free to substitute Bartz with anyone else you consider an incompetent CEO. Doesn't affect my post much. My curiosity is about what the hiring of CEOs at great cost then firing them (also at great cost), and replacing them with even more dubious people, reveals about the system and the forces at play.
For eg: if Apotheker was let go at SAP then what made him a good choice for HP?If he couldn't be an effective CEO at SAP which is an enterprise software company, then how is he a good choice for turning HP into an enterprise software company? I just don't get the logic there.
Why aren't the people who made that decision now being fired along with Apotheker? How are such decisions taken, and more importantly how do such poor decisions survive the scrutiny of investors etc?
I wonder how hamstrung Bartz was by the board of Yahoo, and perhaps the culture of Yahoo itself.
I don't have any knowledge of Bartz's experience at Yahoo, but I can definitely say that it's very hard to make systemic changes when you're not given the tools to do so.
All the reports seem to indicate it was a culture thing that caused tons of infighting and excess bloat in the ranks. People would have 6 different bosses on a project or no one knew who was responsible for anything. This is what I've gathered from all the blogs.
I think at least part of the answer is that research shows groups are, in some instances, shown to make worse decisions than individuals. In groups, individual biases are magnified, and the group process introduces a whole host of potential decision flaws (e.g., information hiding, social loafing) while not consistently compensating for individual decision weaknesses. Groups often make less optimal decisions than individuals, especially in subjective cases.
Because the board in older companies usually consists of people with MBAs from expensive schools who just don't get technology (hint: it's not about cutting costs, it's about building technology).
I think that is a gross generalization, and I think in large corporations like the ones we are referring to, their is room for MBAs. Better there then in start-ups ;)
There is no rule that an MBA can't 'get' technology.
It isn't about building technology either, it's about proving something people need and want, and getting them to pay for it. Technology is only a component of that.
> it's about proving something people need and want, and getting them to pay for it.
HP sells more stuff that people want than almost any other company (printers, desktops, etc.). Yet they're failing.
Successful technology companies (Apple, Amazon, Facebook, Google, Dell, Oracle) have business and technology interwoven like yin and yang. Business fuels technology, technology drives the business. You get there by building your business and your technology hand in hand. If you stop building, you'll fail on both. That's what you don't learn in an MBA.
Thanks for the gross generalization! Some of us are highly technical, began in the technology field, and then got an MBA. Some of us have MBAs and can even code!
I agree with your comments about the 'bench', unfortunately, in many companies, the great people you have on the bench get snatched up by competitors, particularly if you are unable to inspire them with a coherent vision. Tim Cook was lured too Apple from Compaq, and though he was only at Compaq for 6 months, I suspect he was not engaged by HPs strategy there (I'm not positive that this was post-merger, but I think it was).
Theoretically, some companies are better able to keep bench warmers happy waiting for their time to shine. Obviously Apple has done a very good job at maintaining their top people. I think Microsoft has done a decent job as well, though loosing Ray Ozzie I think was a tough one.
Of course, not everybody has the capability of being a great CEO either. Particularly of coming in and operating somebody else's company. So some of the people who are sitting on the bench hoping to get called up have unrealistic expectations.
Bartz was far from genius, but nobody else has come up with a brilliant strategy for the troubled Yahoo! either. Apotheker had a strategy in mind, did a VERY poor job of selling it to the public. We'll never know if it was a flawed strategy or not, though it definitely seems so at this point. I think he is partially being made a scapegoat here as well. The board was sold on the vision and gave him the go-ahead, and now that Wall Street is showing its doubts, the board is getting rid of the CEO. The board needs to take some responsibility here, and from the history, it is obvious the HP board has some serious issues.
HP is in a slightly better position that Yahoo!, but they desperately need to find their next growth opportunity.
They thought they'd rule the world with WebOS, but their execution was so flawed that they blew it. I have a touchpad (got the $99 deal), and you'd have to be incompetent to think that device could compete with the iPad at the same price.
So the problem is two-fold. First off, there doesn't seem to be capable internal leadership to pull from, and external expectations are high for a new leader who will drive change similar to the return of Steve Jobs to Apple. But there was nothing to loose at Apple. The company was almost gone if I recall correctly. Either it would completely fail anyway, or it could come back a success. HP doesn't have the luxury of throwing everything out. They are a successful company, but investors want to see new growth in a very competitive market (both hardware and IT services). So the job isn't a simple one.
Do these CEOs earn their huge salaries? I don't think so. I'd like to see more CEOs put their money where their mouth is and take the majority of their salary in options, and I think the board should require that.
Please don't refer to yourself as 'a dumb developer'. I think your question is completely valid, and I wish I could provide a better answer. Hopefully this gets you part way there.
>I'd like to see more CEOs put their money where their mouth is and take the majority of their salary in options, and I think the board should require that.
That simply incentivizes CEOs to pump stock prices and not create long term shareholder value; moreover, the market can be unpredictable and if the stock price gets manipulated by dear Mr. Bernanke, why should the CEO be punished?
The short version: the skills it takes to become a leader may or may not coincide with the skills it takes to be a leader. And board members are subject to the same irrationalities and social exploits as the rest of us.
What do people think of Meg Whitman's record at eBay? She ran for governor on her record as CEO there, but eBay has always seemed to me like a terribly-led company, sitting on its laurels as first-mover and squandering opportunities to move into new markets while startups chip away at its core business.
Completely agree, looking at it from the viewpoint of a seller before Meg ran it into the ground. Yes, you HN Virginia's, she did run eBay into the ground. A simple Google search will turn up plenty of people on plenty of forums that can fill you in. The stock price tells the same story.
I was doing $40K to $60K of additional income a year selling books back in eBay's prime (late 90's, early 00's), so it was a fairly easy move to the Amazon Marketplace for me. I've been looking for another auction site for a decade now, and haven't found one that compares to eBay in its heyday.
Ebay hasn't been an auction site really ever. Today the vast majority of listings have turned it into a ghetto version of Amazon where you can get tons of awful Chinese junk with "Buy it Now" as your only option. For the few people that actually do forgo the direct pricing option, the vast majority set the reserve at the price they'd list it on Craigslist for (basically fair market value) and hope to get extra money for no reason.
The auction format only really existed for vehicle sales in my experience. Even there dealers have killed the functionality by butting out all the private sellers. I wish there was some online option that only allowed private sellers, even Craigslist is succumbing to the same disease.
Auctions are just one way of arriving at a price for a used good, haggling is another. The question isn't "Where can I auction this old stuff" it's "Where can I sell this old stuff".
An auction is a totally different thing than offering something 'for sale', auction sites typically allow people to make bids and enter in to a contract which requires them to take delivery. If craigslist is the equivalent of ebay to you then that's find with me but I think that craigslist and ebay are substantially different beasts.
Interestingly, eBay is implementing a new policy that requires sellers to offer either no returns at all, or give the buyer at least 14 days. No one except sellers in a couple of narrow categories will be allowed to offer 3-, 7-, or 10-day return periods starting in Q1 2012. So eBay no longer even vaguely resembles a real auction venue where cash, carry, and caveat emptor are the first three rules.
That will obviously kill womens' clothing sales completely, which is a nontrivial part of the company's overall revenue picture.
It also opens up all kinds of amusing arbitrage opportunities (buy gold coins or other assets that fluctuate in value, return them if the market goes down over the next two weeks.)
It also makes me think that eBay needs a good corporate drug-testing policy. Or maybe they're just using the wrong drugs.
What do people think of Meg Whitman's record at eBay?
From her Wikipedia page: During her ten years with the company she oversaw expansion from 30 employees and $4 million in annual revenue to more than 15,000 employees and $8 billion in annual revenue. [1]
Seems pretty impressive to me. It's also easy to forget how many companies tried and failed in this space, including the likes of Yahoo.
The growth is impressive, but did Whitman cause it to happen, or did she manage it as it was happening? My opinion is that she managed it as it was happening. That may make her a competent manager, but I think HP needs much more than just a competent manager. HP should be about technology leadership, especially if the commodity PC business is sold off.
Yes. eBay is a textbook natural monopoly, because buyers want the best selection and sellers want as many buyers as possible to find their stuff. All she had to do at eBay was not screw it up -- which is something, but not the same thing at all as the task she now faces at HP.
You can ask that question about almost any leader, especially non-founder CEOs -- were they just sitting on top for the ride or did they do it themselves. One thing that Meg Whitman definitely executed was the acquisition of PayPal which is now responsible for probably $20+ billion of EBay's enterprise value.
The site is such a 90s throwback. I love getting emails to pay my ebay bill with instructions like "visit the site, login here, click there, then click here, and finally click here." Err, is generating a URL straight to payment such a problem?
Considering ebay sends me other marketing emails with links in them, I'm not sure if its anti-phishing. Ive already been trained to click on ebay links.
OKay, lets assume it is. Why can't I be presented with my balance after logging in? Why do I need to navigate through three menus just to pay them.
Maybe they've fixed it. I havent used ebay in a long time. It became scam central a few years ago and theres no "dont take bids from people with less than 10 feedback" option. Half my shit was bought by someone with zero history who never bothered to contact me.
I agree. The ebay site looked like a throwback to the 90's until a couple of years ago. On top of that it was very slow. Not only startups were chipping away at their business but also Craigslist and Amazon.
The Skype acquisition was simply botched, as someone else mentioned. It is incredible that someone would screw up the legal due diligence on a multi-billion dollar deal.
Also she obviously used the Ebay IPO to get herself appointed on the board of directors of Goldman Sachs.
I completely agree. Meg wasted her time at eBay. eBay is a company and therefore we are not privy to a lot of the internal politics. Their acquisition of Skype made no sense.
When she ran for governor, the method by which she handled the fact that she had hired an illegal immigrant proved to me that she was seriously unfit to be anything but a Senior Manager.
For what it's worth: eBay paid $2.6B for Skype in 2005, sold 65% of it for $2B in 2009, and then made an additional $2.5B selling its remaining stake to Microsoft in 2010. So it turned out to net almost $2B over five years. I'm not an accountant, but I could live with those numbers.
(disclosure: eBay owns the company that bought the company where I work)
"While Mr. Apotheker is going, his strategy, including consideration of spinning off H.P.’s personal computer business from other parts of the company, will remain in place."
ha ha ha WHAT
"OK, let's hire this enterprise software guy, then get mad when he restructures the company around enterprise software, then fire him but make his successor implement the plan the enterprise software guy put together! Can't fail!"
The board wouldn't have hired Apotheker in the first place if they didn't approve of the direction he was going to take HP.
I would guess that his firing, is due more to the way he went about it [1] and his overpaying for Autonomy.
[1] That is: going public with the general plan too far in advance of having the details ironed out. Which arguably did real damage to the hardware division's sales and the process of trying to find a buyer for it.
It sounded like it was more of a presentation issue. He doesn't present well. They didn't say anything about not liking his ideas. "He's just not CEO material" is what I got out of the article.
Aren't "presentation issues" about the easiest thing they could have assessed in advance before they hired him? It's not like he was some anonymous behind-the-scenes VP somewhere -- he was the CEO of a major company in their space.
Of course, if you're right, this fits in nicely with the NY Times' article from this morning, which basically said that the HP board hired Apotheker without meeting him, because the board members all couldn't stand each other and didn't want hang out together long enough to vet him.
This seems like an all up bad move. I don't think I've seen a string of worse CEO positions than HP. The Microsoft board is probably looking around and saying, "We could be doing a worse job".
I wonder if they could get Bob Muglia onboard. That would actually be a good fit for this role.
I think the notion that a company such as HP could be led by someone who is not irrefutably passionate about technology is flawed. http://en.wikipedia.org/wiki/Meg_Whitman Nothing about her bio suggests any sincere interest in technology.
I think this line is interesting "She believed the site to be confusing and began by building a new executive team.", and indicative of how she could bring a new level of suck to HP.
"Whitman organized the company by splitting it into twenty-three business categories. She then assigned executives to each, including some 35,000 subcategories." I might short HP.
It seems more than any one specific CEO, the HP board has proven itself unfit to oversee the company. It's not incomprehensible that the best thing they could do for shareholder value and to protect their employees jobs would be breaking HP up and finding buyers. After all, aside from the earnings shortfalls all the big picture problems the market has with Apotheker have all been board approved.
Perhaps Ellison wasn't just blowing smoke when he said "The HP board just made the worst personnel decision since the idiots on the Apple (AAPL.O) board fired Steve Jobs many years ago" about Hurd.
I was going to write a longer post, but it can be summarized as this: They're Fucked.
Nothing against Meg, but she has never been a visionary of any sort. HP is so terribly lost that they need the reincarnation of Hewlett + Packard + Jobs in a single person that can work 80 hour days for about 10 years.
HP has fallen to the "used to be great" category and now we are going to watch the corpse slowly rot.
Agree. Announcing abandoning products weeks after release, and selling off its primary business without a buyer, and then this. They show they are running out of ideas. Maybe the board needs to get fired too.
When the wheels come off a cart as big as HP, it's pretty awe-inspiring. I wonder who's next? Certainly Dell isn't going to get anywhere becoming a "services" company. Too, how many "services" companies does the world really need?
I wonder why there are no internal talent in HP to replace CEO (you know, the second in command which will take control of the ship if CEO is hit by a bus).
Is there a company which is actively working on internal talent pool capable of replacing the acting CEO? (I can think only of Apple, but they are not typical corporation).
He's had success running HP’s Personal Systems Group, he's a proven leader, he knows the company, he's technology-oriented, etc.
Under Bradley’s leadership, PSG has firmly established HP as the No. 1 PC vendor in the world. During his six-year tenure, the business has added more than $10 billion in revenues and increased profitability threefold.
Prior to joining HP, Bradley was the chief executive officer of Palm. Before that, Bradley was executive vice president of global operations for Gateway.
On that note aren't the legions of VPs that infest such companies supposed to be a "bench" for selecting a CEO from in an emergency? If you have half a hundred (or more!) VPs and none of them can step up and be CEO in troubled times, why pay them millions of dollars?
Also, why exactly Meg Whitman? Just because she happened to be available and doesn't have another job? (Isn't that telling about her desirability as a CEO?) How long before they look far yet another saviour on a white horse?