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Board Management: Quiet Revolution at HP

A great many chief executive officers have looked at their boards as, well, unfortunate necessities. They don't truly value the expertise and insight that can be gleaned from a board. So they've tended to work with their nominating committees to stack their boards (that term is only slightly too uncharitable) with people who are loyal to the CEO--and his or her pay package.

But Mark Hurd has a different idea and has done a quiet but remarkable job in rebuilding his shattered board. His philosophy about doing so is quite instructive. He took the slightly counterintuitive move of bringing on an East Coast banker, Ken Thompson, CEO of Wachovia, based in North Carolina. But there was a very clear reason--HP is targeting the financial services arena. So who better can help HP crack that sector than the CEO of a major bank? Smart.

Then as HP gears up to compete against IBM in the corporate software market, who did Hurd bring on his board but former IBM executive John Joyce. I asked Hurd whether this was aimed specifically at competing against IBM.

His answer from an interview I conducted with him: "John is an experienced member of the technology sector. We didn't bring him on for his knowledge of any one specific company. He's been a chief financial officer, which brings expertise to us, and he knows the services industry. He brings a series of capabilities to the board. That's the hallmark of how we're trying to build our board."

So Hurd has filled five seats on his board, completely remaking it. It's an example every CEO in the country should be studying. And here is the heart of Hurd's philosophy.

I asked him: Many CEOs seem to think of boards as necessary evils, but you seem to want to engage in active collaboration with your directors. Why?

His answer: "The board has the requirement to ask: Is the company's strategy roughly right? Is the direction of the business and the appropriation of capital in the interest of shareholders? I don't know whether that's a popular view of a board, but it is my view. I think a board plays a key role in helping the CEO drive the company."

I would say that the quiet steps Hurd has taken to rebuild his board are going to be hugely powerful in HP's future. Count on it.

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