Why HP May Need to Find One of Its Own to Lead

NEWS ANALYSIS: With its fourth consecutive outsider in the CEO's chair, is Hewlett-Packard making a mistake not hiring someone from within the culture to lead it?

You have two choices when you're hiring a new CEO at a company: You either hire an insider or an outsider.
The CEO€”not the chairman, not the board of directors, not the founders€”sets the tone for the entire company. He or she is the face of the enterprise to the media on a 24/7 basis. When the CEO makes a statement, it is microscoped like something in a Petri dish by Wall Street, competitors, analysts and media folks.

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CEOs, like politicians, members of the clergy and salespeople, also have to be actors as well as cheerleaders. They absorb the energy of the company and present it to the evening news, press conferences and large customer events. They have to soothe people's souls when a problem is cooking, and they have to shout hallelujahs when things are going well. They have to do this whether they feel like it or not, and they have to look good doing it for the cameras. Thus, they get big bucks for this work.

It really, really helps if the CEO has been in the company long enough to absorb all the important aspects of the culture, because the job is a trying one, and the person in it needs all the resources he or she can access.

Has HP Lost Its 'Way'?

HP is 73 years old. Most of its previous top leaders have been people brought up through the ranks, like at IBM. During the last 13 years, however, its last four CEOs have not been trained and nurtured in "The HP Way." This is no longer the company of David Packard, Bill Hewlett, John Young or Lewis Platt, and it hasn't been for most of the Internet Age.

Interestingly, HP, while remaining very profitable in spite of itself, has stubbed its toes a number of times since Cara Carlton Sneed Fiorini came from Lucent in 1999 to become the first female CEO of a Fortune 20 corporation.

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When she was ushered out in 2005 with the company losing profitability after the highly controversial $26 billion Compaq acquisition, the HP board went outside again and selected NCR's Mark Hurd. Hurd was proclaimed as the stout leader the company needed. His approach was to play the heavy, cutting back to make ends meet. He pillaged R&D, staff and, in the process, production, and then got embroiled in a personal scandal with a female contractor that got him forced out in August 2010.

Apparently not learning its lesson, the HP board again went to the outside, selecting former SAP CEO and longtime division executive Leo Apotheker in September 2010 to ostensibly lead it into the 21st century. Eleven months later, having announced that the world's biggest-selling PC maker wasn't going to make PCs anymore and buying a little British software company for $10 billion and change, Apotheker was shown the door.

He probably cursed the HP board in all five languages he speaks, but he also made out like a bandit with a golden parachute that will fund his family for the next six or seven generations.

Four Outsiders in Succession

Now we're in present day, and not much has changed. When Apotheker was sent packing, HP went for yet another outsider, board member and former eBay CEO Meg Whitman (pictured). Is Whitman a competent business executive? No question; she had been very successful at several corporations for years leading up to her unsuccessful run for the California governorship in 2010. It is true, however, that her last several months at eBay were pretty dicey; the macroeconomic climate of 2008-09 was generally blamed for that. eBay is back doing quite well now.

Chris Preimesberger

Chris Preimesberger

Chris Preimesberger is Editor of Features & Analysis at eWEEK, responsible in large part for the publication's coverage areas. In his 12 years and more than 3,900 stories at eWEEK, he has...