Friday, September 23, 2011
Lessons of HP
As an academic administrator and sometime techie, I’ve been following HP’s death spiral with fascination. It actually offers some lessons for colleges, if they’re paying attention.
Over the last decade or so, HP has played musical chairs with its CEO position. By itself, that’s not great, though not necessarily fatal. But with every new CEO, it has set out in an entirely new strategic direction. It tried to be huge in pc’s, then in software, then in pc’s again, then in mobile, then in enterprise, and now in whatever direction Meg Whitman will take it. (On the bright side, it keeps her out of politics.) At each juncture, it has tried to make a big splash in its new specialty by overpaying for some high-profile acquisition, and then proceeding to hollow it out to save money. Its most recent face-plant -- the “buy it and sit on it until it’s dead” acquisition of Palm -- will probably be a case study in business classes for years to come.
The common denominator seems to be a Board with a messiah complex. It keeps thinking that the next CEO will have the answer that will restore the company to its golden age heights. Rather than knowing its direction and hiring someone to fulfill it, the Board hires someone with buzz and expects her to work miracles. When that doesn’t happen, or some human flaws surface, they just hit the “eject” button and hire the next savior. Repeat as necessary.
It’s a genuinely stupid strategy. Any new strategic direction brings with it a learning curve; you can’t just buy your way out of that. By changing direction every year or two, the company guarantees that it will always be in the high-effort, low-payoff part of the learning curve. And the lack of a clear identity doesn’t give talented people much reason to stick around.
Higher education isn’t the computer industry, certainly, but it does have Boards and Presidents subject to the same failings.
A good Board will understand the identity, and niche, of a particular college. That will vary from one college to another, and rightly so; the niche of a denominational four-year school in a rural setting will be very different from the niche of an urban community college, for example. The identity will usually pre-date the Board. Identities aren’t necessarily seamless or timeless, but they can’t be changed dramatically over and over again. They can be nudged, and sometimes need to be, but successful change takes time and focus.
Some Boards will fall into the HP trap and try to rebrand the college with each new President. Each new President will raise graduation rates, academic standards, diversity numbers, community standing, tuition revenue, philanthropic giving, and the level of campus technology and discourse, and will do it without generating anxiety or conflict. When that fails, which it has to, the Board turns to the next white knight.
(The anti-HP trap is even more common. Lacking much sense of identity, the Board will hire a President it considers personally acceptable, and reduce her role to fundraising. The entire Presidential role boils down to “more.” This, too, is a failure of leadership.)
Given resources and the requisite arrogance, the world of options can appear infinite. But a Board has to have the sense of its mission to understand that CEO’s serve the mission, and not the other way round. That means not turning the entire college upside down whenever there’s CEO turnover. It means having the fortitude to say “no” to some proposals that make sense on their own terms. And it means sticking with the core of who you are, even when it’s out of fashion.
Thanks, HP, for demonstrating the sheer idiocy of the “CEO as Savior” approach. Now, about WebOS...
If all of HP's products were this reliable -- from experience, I am well aware they're not, not by a long shot -- it wouldn't matter who their CEO was.