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Meg Whitman, the HP Board's Next Blunder-in-Waiting

Hewlett-Packard (HPQ) has become the poster child for ensuring that failure only has consequences for subordinates, never for higher-ups. CEO Léo Apotheker is about to learn this lesson, as HP's board just dumped him and named Meg Whitman CEO and president (and not interim). Apotheker is the third CEO in a row to get the heave-ho from the board. But then, what do you expect from directors who apparently hired the guy without having even met him?

At least HP found it easy to meet with the new CEO, as the former eBay CEO and current HP director was in the same room. Pros: the company won't have relocation costs from Germany. Cons: quite a few. In fact, Whitman could turn out to be yet another blockbuster of a blunder by the HP board.

Resume looks good
Not that Whitman is a lightweight. Her experience at Disney, Stride Rite, Proctor & Gamble, and Hasbro eventually landed her at eBay, two years after the company was founded.

That's where she built her image of serious tech management cred. Between 1997 and 2008, she oversaw the company as it grew from $5.7 million to $8 billion in revenue and 30 employees to 15,000.

It's nothing to sneeze at, but it's also not Google or Amazon, which started around the same time. It's also a fraction of the size of HP, which in 2010 had 324,600 employees and $126 billion in revenue. Whitman benefited from dot-com frenzy, which helped fuel eBay's growth, but that's not enough to run HP.

So why are people nervous?
Management cred is one thing. Actual rep is another.

Her decision to buy PayPal was perhaps the smartest thing she did during her stay, as it's become eBay's main engine of growth. Acquiring Skype, on the other hand, was a waste of time, as eBay would only sell it off for about what it paid in the first place. More importantly, Whitman missed shifts in the market that saw Amazon take over business with fixed prices. By the time she left, eBay's stock had slumped to about $10 from its high of $58 in 2004. It was a long hard slide down.

Whitman has zero experience in the enterprise software, hardware, and service markets that are HP's core business. That will require a bigger adjustment than Apotheker, who came from SAP, had to make.

Morale? Who needs stinkin' morale?

Given the current state of HP, even more important is that Whitman doesn't have the best personal reputation in the industry. After losing an expensive bid to become a governor of California, fellow Republicans called her arrogant and someone willing to say anything to anyone to get elected. That's quite a statement coming from professional political operatives who are used to outsized personalities (and egos).

She failed to connect with the very people she wanted to vote her into office. Whitman may be used to being in the spotlight, but she doesn't always use it well. Unfortunately, success at HP will depend heavily on making personal connections with executives and employees.

HP had a heavy morale problem that grew under former CEO Mark Hurd. Under Apotheker, discontent continued. Whitman has to connect with everyone and bring them along to support a vision. It's not clear that this sort of skill is in her tool set.

This is starting to sound like history repeating itself, with the board trying to find a new CEO when it has created an atmosphere that scares off the best candidates. To paraphrase Woody Allen, why would HP want to hire any CEO who'd be willing to take the job?

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Image: Flickr user whiteafrican, CC 2.0.
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