Great Debate: Can Whitman turn around HP?

Summary:Can Meg Whitman turn around HP? Jason Hiner and Larry Dignan debate whether HP's latest CEO can fix all that ails the computing giant.

Jason Hiner

Jason Hiner

Yes she can

or

No way

Lawrence Dignan

Lawrence Dignan

Best Argument: No way

The moderator has delivered a final verdict.

Opening Statements

Restoring business-as-usual is job one

Jason Hiner: Leo Apotheker had the wrong vision for HP and unnecessarily put the company in disarray. The HP board realized it had made a massive mistake and wisely decided to move quickly to restore order inside the company and give the public hope that HP can pull itself together.

Meg Whitman may not be the ideal CEO -- she doesn't have the enterprise IT chops -- but she was one the best options HP had available and she's smart enough to hire or retain the right lieutenants. She'll immediately bring stability and her arrival will give the company a (mostly) positive spin that it could use right now in the wake of the Mark Hurd scandal, the Apotheker disaster, and the overall missteps by the board.

It's a solid short-term move. Whether Whitman can create a vision to lead HP into the next decade remains to be seen. But, for now, restoring business-as-usual to the world's largest computer maker will be enough.

None of HP's problems are quick fixes

Larry Dignan: HP Executive Chairman Ray Lane said that Meg Whitman knows leadership, communications and IT. "Meg was both a large purchaser of information technology for the enterprise, and ran a company that depends on technology to deliver its service," said Lane.  

If only it were that easy. Amazon's Jeff Bezos buys a ton of technology too, but I'm not so sure he could run a hardware and services company. Whitman's experience screams consumer, branding and strong leadership. Only that latter part applies to HP.  

Whitman can stabilize HP, but will be hard-pressed to make it hum. She'll need the operational knowhow of key execs such as Dave Donatelli, who runs HP's enterprise server, storage and networking business. The catch is Donatelli has been passed over as CEO material twice. Whitman also has to figure out the services business.

She'll make some progress, but won't turn HP around completely. Perhaps she sets the stage to hand off to another CEO. 

The Rebuttal

  • Great Debate Moderator

    That's a rap!

    ???and this concludes the live portion of this week's Great Debate. Thanks to our debaters for their quick fingers in the final stretch; and thanks to you, the audience, for your patience during our technical issues midway through. Don't forget to check back tomorrow to see our debaters' closing statements -- then again, on Thursday, for my verdict. (And don't forget to submit your vote in the comments below!)

    Posted by Andrew Nusca

  • Great Debate Moderator

    On to our final question.

    Noted! On to our final question, with three minutes left: which is a greater problem for HP: strategy, or execution?

    Posted by Andrew Nusca

    Strategy with a big "S"

    As I've said, HP's managed printing business -- which is purring like kitten -- shows that there are teams at HP that know how to execute. Of course, there's also the WebOS/tablet team that laid an egg with the TouchPad hardware, but I think that was due to a drastically reduced release schedule. If HP can get a north star to follow, there are still plenty of talented engineers and managers that can make good things happen. Can Whitman deliver that vision? In the short term she'll just need to thread the needle between software and services and the likelihood of remaining in the PC business. For the long term, she (or the next leader) is going to need something more powerful to distinguish HP from just playing a little brother role to IBM.

    Jason Hiner

    I am for Yes she can

    HP's ultimate strategy may take decades to play out

    Today it's execution tomorrow it's strategy. If HP blew out its last three quarters, Apotheker wouldn't have been tossed. Whitman has the problem diagnosed: HP has to execute better. Let's assume Whitman fixes those short term problems. The long term issues revolve around strategy and businesses under siege. Servers are threatened by the cloud. Printers are threatened by the digital age, e-readers and the like. After years of talk about the paperless society folks print less now. Less printing means less ink and a lot of headaches for HP. HP Services needs to move up market, but it's not like high-end consulting comes easy. PCs are under fire from mobile devices. Pick any market HP has and there are secular and competitive challenges. That's why in the end, I think the clock runs out on Whitman. HP's ultimate strategy---assuming one is crafted---may take decades to play out. The best case scenario in my view is that Whitman sets the table for the next CEO, who will hopefully be an internal candidate that can stick to a multidecade theme. The first talkback below sums it up best: HP needs continuity, but it's unclear that the institutional knowhow is there to support Whitman or a long-term strategy.

    Lawrence Dignan

    I am for No way

  • Great Debate Moderator

    Question 5.

    ...and we're back! Next question: CEOs are great, but what constraints do HP's board and Wall Street have on the company's ability to innovate?

    Posted by Andrew Nusca

    CEOs have plenty of room to operate

    With the recent debacles at Yahoo and HP, there has been too much credit given to how much control a board of directors has. The CEO is the quarterback and she or he runs the offense and almost always calls the plays. If you win the Super Bowl, the quarterback is almost always the MVP. If you lose games you shouldn't, most of the blame usually gets directed at the quarterback. That's the price of being a leader. As for Wall Street, when you're a public company, you live quarter to quarter. You have to manage expectations and you have to be a great storyteller to get a bunch of boring bankers excited about your company. The quarterly grind can stifle your long-term planning and investments at times, but almost all of your competitors have to deal with the same thing. That's the game.

    Jason Hiner

    I am for Yes she can

    The burden of proof is on HP's board

    HP's board has been dysfunctional for years. Lane has argued that this time is different and the board is new. The burden of proof is on HP's board. HP has to hit its numbers and that's a constraint. HP's board needs to stay quiet and become a background item. Wall Street is in no mood to hear that HP is going to double its R&D and marketing spend so that's a big constraint. I'd say Wall Street is probably the bigger constraint today. The board loves Whitman---at least for now.

    Lawrence Dignan

    I am for No way

  • Great Debate Moderator

    Looks like we've got some technical issues.

    Larry Dignan is having some connection issues. Bear with us for a minute...

    Posted by Andrew Nusca

  • Great Debate Moderator

    Which begets Question 4.

    We've talked a lot about the company, and we've just talked about the outgoing CEO, now let's talk about Whitman herself. There's quite a bit of discussion in the TalkBack section below about how gender plays a role in all this, but I'll set that aside for now and simply ask: How does Whitman's resume factor in? Which areas of her experience (eBay, gubernatorial run) will she draw from?

    Posted by Andrew Nusca

    Whitman can command respect

    The biggest asset that Whitman has going for her is that she can command respect. She's a big name and because of that when she speaks, people are going to listen -- even if they are initially looking for everything wrong with what she's saying in order to argue it. That's still big, because she's not going to be ignored. Because of the messy divorces with Hurd and Apotheker, the bar is set pretty low for Whitman. She will likely get a honeymoon period where she'll get the chance to win over employees and the public. And then, her biggest task will be becoming a better storyteller than the past two CEOs and telling of us a good, believable story about the kind of company HP can become over the next 3-5 years. She's definitely capable of that. She'll just need some good lieutenants to help with enterprise parts of the story.

    Jason Hiner

    I am for Yes she can

    Resume is a conundrum

    Whitman knows branding from stints at eBay, Disney, Hasbro and Proctor & Gamble. She'll excel at pushing HP. As for the governor run, Whitman knows how to campaign---but obviously needs work given she didn't win---and she will need those political skills to win over HP's employees. On the bright side HP's problems look like a walk in the park compared to California's. At HP she actually has a shot at success.

    Lawrence Dignan

    I am for No way

  • Great Debate Moderator

    On to Question 3.

    We wouldn't be debating this topic today without Leo Apotheker. Tell me: where at HP did Leo Apotheker succeed? Where did he fail?

    Posted by Andrew Nusca

    Right strategy, wrong message

    Apotheker had it right that HP will need to focus on servers, software, and services in order compete as a global technology company over the next decade, but his timing and delivery of that message were poorly done. He needed to lay out a clear vision and HP's path to getting there before he started pulling the rug out from under the PC business and WebOS. Because of the high visibility of PCs and tablets, when Leo made his statement, everyone lost track of the fact that his enterprise message had some merits and instead focused on him sinking the world's largest PC maker and killing a tablet and operating system that has often been considered one of the most capable competitors to Apple.

    Jason Hiner

    I am for Yes she can

    He failed at nearly everything

    Apotheker succeeded at thinking globally and pushing software more at least in theory. He failed at everything else. Communications was a disaster. His last earnings conference call where HP killed the Touchpad, floated the idea of a PC business exit, and announced the Autonomy purchase was probably the most painful executive performance I've seen. It hurt. Apotheker's biggest failure was not learning from his mistakes at SAP. The strategy looked decent, but the delivery and communication of it left a lot to be desired. You can't miss three consecutive quarters.

    Lawrence Dignan

    I am for No way

  • Great Debate Moderator

    Interesting.

    Interesting points. Let's walk the walk and not just talk the talk, shall we? I ask: what assets does HP have now to pursue this?

    Posted by Andrew Nusca

    HP: Printers and enterprise relationships

    As I alluded to in the first question, HP will likely pursue an enterprise course as its main strategy (even if it decides to keep the PC business around as a boutique business). The company has built a solid server business, thanks to its Compaq acquisition a decade ago, and has strength in IT services thanks to its more recent purchase of EDS. Even more importantly, it has a long list of established enterprise and government customers who count on the company for enterprise solutions. That's where HP needs to put its focus. The other big factor in its favor from an enterprise standpoint is the managed printing business. HP has done an excellent job in recent years of providing an end-to-end printing solution for enterprises. Customers don't even have to order toner any more. The printer alerts HP when it's low and new cartridges are automatically shipped. This may be a shrinking business, but the service itself shows that HP knows how to execute when it has a clear vision to work toward. That's what Whitman needs to provide now -- a clear target for HP's troops.

    Jason Hiner

    I am for Yes she can

    On paper, you'd think that HP should be just swell

    HP has a lot of assets. It has HP Labs, which is a historical name and still delivers good research. HP also strong businesses. PC, servers and printers are all No. 1. Networking is No. 3 behind Cisco and Juniper but has enough scale to be dangerous. Software is a small portion of overall revenue, but there's potential. And HP Services needs work, but isn't chopped liver. On paper, you'd think that HP should be just swell. However, Whitman's initial speaking tour focused on telling us that "HP matters." Really?!? Don't we know that already? So why not argue the positive side like Jason? HP lacks the capital and patience to engineer a big turnaround in Whitman's tenure. She has to hit her numbers and build up the political capital to focus on the long term. Unfortunately, she has a pricey Autonomy acquisition to work out, three quarters of disappointment from Leo Apotheker and a strategy that doesn't look different enough. To get HP humming may take multiple decades.

    Lawrence Dignan

    I am for No way

  • Great Debate Moderator

    Welcome to ZDNet's Great Debate III

    Welcome to the third installment of our new Great Debate series. This week, we're debating whether Meg Whitman will drive Hewlett-Packard into future success???or off a cliff. Joining me are editors-in-chief Larry Dignan and Jason Hiner. Let's start big, gentlemen: What kind of company should HP be in the 21st century?

    Posted by Andrew Nusca

    There are two choices

    Well, that's the big question. That's the reason that we've ended up with the Apotheker/Whitman revolving door at HP. The company hasn't figured out what it wants to be all about. There are essentially two choices. Does it want to be IBM or Apple? Does it want to be an enterprise company that fades into the background a little bit but makes a lot of money? (That's the IBM equation.) Or, does it want to be a consumer brand that makes low-margin products but sells a lot of them and is beloved by the public? (That's more of the Apple direction, although Apple can demand better margins.) Apotheker clearly wanted to move HP to becoming IBM. That's not a surprise since he came from another enterprise company, SAP. But, Apotheker didn't communicate that very well to either HP's troops or to the market. This should have been handled much more deftly. That said, Apotheker's strategy could still prevail, or at least aspects of it will.

    Jason Hiner

    I am for Yes she can

    HP needs to get back to its roots

    If I could answer that definitively I'd have one great day rate as a consultant. Another possibility is that'd I'd be CEO---at least until the board threw me out. Seriously though. HP needs to get back to its roots. I've heard that from numerous employees both past and present. The problem: Its roots---science and engineering---may have been spun off with Agilent more than a decade ago. HP somehow thought it was wise to spin off Agilent and double down on PCs. Oops. Whatever HP decides it wants to be when it grows up it needs to focus on research and development and carve its own path. The current model revolves around being someone else---IBM, Cisco, Apple, whoever's next. The problem is that HP has starved R&D at 3 percent of revenue all through the Mark Hurd years. Now HP doesn't have the financial heft to suddenly jump to 6 percent (IBM levels) or even higher. That's why I'm arguing that Whitman can't turn around HP. HP's R&D problems will last longer than Whitman's tenure if history is any guide.

    Lawrence Dignan

    I am for No way

Closing Statements

She will quickly re-establish stability

Jason Hiner

In 2011 HP has become a company suddenly in disarray and surrounded by uncertainty. It didn't have to be this way. While the company came into the year with a number of long-term challenges it needed to figure out -- tablets, the cloud, the low-margin PC business -- the issues should have been handled much more gracefully and with less disruption to existing business than how CEO Leo Apotheker did it. 

 
He had to go. He'd lost the confidence of employees and the public. Meg Whitman isn't a homerun as the new CEO. She doesn't have deep knowledge of the enterprise, where HP is likely to focus its business. But, she's a big name who will command respect and she knows how to inspire confidence in employees, investors, and customers. She will quickly re-establish stability at HP, and then it will be time to look ahead and figure out how HP can distinguish itself in the 21st century.

The clock will run out on Whitman

Lawrence Dignan

Meg Whitman may be the best CEO for HP at this juncture, but she has multiple challenges that may take a decade to fit. HP's challenge is that most of the low-hanging fruit has been plucked and now every one of its businesses have long-term secular and competitive issues. Whitman is a great communicator and branding expert and can win over HP's troops. However, in the long run the clock will run out on her. Ramping R&D, defining leapfrog moves and forming a multidecade vision is a lot to ask from a company that has had seven CEOs since 1999.

The best case is that Whitman stabilizes the patient and hands off to an internal candidate that can take the baton of continuity and vision. I see Whitman as potentially the first CEO of a broader relay for HP.

Larry edges out Jason: It's going to take more than one person to right this ship

Andrew Nusca

This may have been our closest debate yet. Both Jason and Larry made salient points about the good, the bad and the ugly for Hewlett-Packard. These are problems that affect every large company: a lot of innovation tucked into dark corners, but a lot of driftwood, too.

However, this debate was about whether Meg Whitman can turn the company around. And to that end, I think Larry edged out Jason: for a company with 300,000 employees and no direction, it's going to take more than one person -- and many years -- to right this ship.

Jason argued that "too much credit" has been given to the boards of directors of big companies. That may be true in some examples, but I think in HP's case it's clear who is -- to continue his sports metaphor -- choosing the quarterback. (NFL fans, consider the Vince Young-Kerry Collins debacle in Tennessee. Coordination often trumps raw talent.)

Meg Whitman has demonstrated her talent in spades, but the willingness of the rest of the company to change with her -- rise to the occasion, even -- is the deciding factor. Her failed gubernatorial run in California demonstrates that it's not always easy to change people's minds. If her biggest asset is commanding respect, as Jason suggested, she could easily and rapidly lose it. And then what?

Doc's final thoughtsIN PARTNERSHIP WITH Ricoh

Doc

Meg Whitman’s disastrous run for Governor of California may have steeled her for the difficult job she is about to undertake running Hewlett-Packard – she’ll certainly have to handle some defeats along the way.

But I worry less about her particular experience – we live in the era of the celebrity CEO, and Meg Whitman has celebrity down very well. Big customers will be eager to meet with her and won’t have any trouble telling her about the problems at HP and how they think she should fix them (and in many cases they will be right, as customers often are). More than anything she has to be a good listener. If she can listen carefully and resist over-correcting the big ship HP, she may have a stab at effective leadership.

I do worry a bit that just when HP could use someone a little more touchy-feely to help boost staff morale, they’ve chosen to bring in someone known for being a bit distant (despite her famous me-too cubicle at eBay). But then the CEO doesn’t have to be everyone’s best friend (and unlike running for governor, this isn’t a popularity contest) – they simply have to inspire the team by being decisive, insightful and right more than they are wrong. Meg Whitman has a reputation for being a good leader – let’s give her the chance to live up to the hype.

Topics: Great Debate

About

Andrew Nusca is a former writer-editor for ZDNet and contributor to CNET. He is also the former editor of SmartPlanet, ZDNet's sister site about innovation. He writes about business, technology and design now but used to cover finance, fashion and culture. He was an intern at Money, Men's Vogue, Popular Mechanics and the New York Daily Ne... Full Bio

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