Does the 9Stucks diagnostic tool apply to companies of all sizes?
Does 9Stucks work in determining if large, established public companies, like Hewlett Packard are stuck?
HP is a perfect example of a long-term, dysfunctional, stuck company. It wasn’t stuck in the garage…
Over many years at HP there has been conflict within the Board, conflict at the CEO and C-suite level, conflict in the rank and file, an unclear business model and many other conditions noted below that have caused it to be perpetually stuck. A once great company has plummeted down; today the big question is whether Meg Whitman can lead a comeback.
Fortune Magazine writers James Bandler and Doris Burke are the authors of a recently published and well-written article that documents “How Hewlett-Packard Lost Its Way” (May 21 issue). I have extracted content from their article (all the italicized quotes below) that relate to the six of my 9Stucks that I think apply to HP (Ditch, Moment, Slow Lane, Another World, Fog, Maze, Rough).
Stuck in the Ditch: there is a significant, persistent problem within the organization’s leadership ranks. Ditch is caused by one or more of these six conditions -
- Weak, uninspiring leadership
- The CEO does not command the respect of the organization.
- The CEO’s behavior causes constant anxiety throughout the organization
- Corporate governance is broken
- Meddling by the Board
- No hands on the wheel (i.e. formal governance)
HP has or has had 5 of the 6.
Here are some examples:
- “For a decade now the company has sometimes seemed more like a tawdry reality show than one of the world’s great enterprises.”
- “There was a board riven by feuds — so out of control…”
- “Dr. Phil could fill a month’s worth of shows just examining HP’s board…”
- “It was a combustible mixture: long-term threats to the business combined with an impaired board and an ill-chosen CEO in Léo Apotheker.”
- “From the slapdash hiring of a man with no experience in HP’s biggest lines of business…”
- “…to the half-baked ways in which the company tackled major strategic decisions…”
- “…Andreessen had gone so far as to skip an entire board meeting so he wouldn’t have to be in the same room with Hyatt.”
- “Directors were shaken. Lesjak was considered a voice of sobriety, and here she was on the verge of insubordination, directly resisting a key element of her boss’ strategy.”
- “But the company will never come close to reclaiming its former glory unless she and the board can find a way to function together.”
Stuck in the Moment: the company’s focus is on the here and now…there is no long term outlook. HP always seems to be trying to figure out their strategy. Today, it appears they are hunkering down…“For now, anyway, Whitman and Lane’s strategy boils down to do what we do — better.” Other relevant strategy quotes are:
- “…a mortifying public waffling over whether to spin off the company’s giant personal computer business, and then the drumming-out of its third CEO in less than seven years.”
- “HP had been operated with an eye toward the short term.”
- “Let’s execute better while we figure out our long-term plan.”
- “Whitman faces a daunting, though surmountable, challenge in devising a strategy that will put HP on the path to recovery or reinvention.”
Stuck in the Slow Lane: the company’s team is weak, the organizational structure is cumbersome and the overall culture is negative.
The HP culture is dysfunctional.
- “But just under the surface was a very different reality: HP was traumatized, its employees disengaged.”
- “…morale had cratered.”
- “There was little incentive to cooperate. It sometimes seemed as if the printer and computer teams were from separate companies.”
- “To say the audience, a group of software engineers and managers, was sullen would be an understatement. As Whitman spoke, many of them glared at her.”
- “You all have taken leaking to a new art form,” she said. “It’s a sign of an unhappy company. You wish HP ill.”
- “The employees’ open contempt for the head of the company and Whitman’s acknowledgment of their misery were signs of just how dire things had gotten…”
- “It’s back to Bill and Dave’s culture,” Whitman says…
- Exorcising HP’s demons — in its boardroom, in its executive suites, and among thousands of dispirited engineers and staffers — will be another matter entirely.”
Stuck in Another World is caused by three major factors. The company:
- does not recognize or react to the changing industry forces and emerging trends
- has lost their uniqueness and competitive advantages
- has products/services that have become uncompetitive commodities
HP is clearly Stuck in Another World. Here are some examples:
- “HP was barely innovating. The company didn’t boast a single hit consumer product even as 67% of its revenue stemmed from hardware.”
- “But there were no iPhones or iPads in HP’s bland array of products.”
- “The servers generated more than $1 billion in profits for HP. Now the business was imperiled.”
- “The threat to the Itanium business underscored HP’s vulnerability…”
- “But before they could make any decisions, calamity struck:HP’s tablet was an unmitigated disaster.”
- “The iPad was eating into the growth of the PC market, raising questions about its future.”
Stuck in the Fog: the business model is convoluted and muddled. A Confusing Business Model = Disarray.
Tell me, what is HP’s business model?
- “HP was No. 1 in PC shipments, No. 1 in printers, No. 1 in servers.”
- “Apotheker started to believe that what HP needed was a transformation on an IBM scale, but conducted in a much shorter time frame.”
- “…Apotheker and the board tackled an even bigger decision, one that went to the very heart of what HP is all about: Should they jettison the company’s $41-billion-in-sales PC division?”
- “…and, most important, until she can answer the real question: What is HP?”
A company is Stuck in a Maze when management reaches a point where they don’t really know where they stand financially, don’t know how they got there, and they don’t know how to get out of the situation. For such a supposedly financially driven company, the signs are ominous for HP:
- “Faced with pressures on every side, HP had seen its numbers begin to slide. After nearly doubling in Hurd’s first three years, for example, free cash flow sank from $12 billion in 2008 to $8.4 billion in 2010, his last year.”
- “Meanwhile HP’s revenues, margins, and cash position continue to deteriorate.”
When an organization has high blood pressure, it most likely is Stuck in the Rough. Rough’s high corporate high blood pressure results from the company being critically disorganized (business practices, methods, work processes and outdated systems) and/or having lots of junk around (outdated equipment and facilities).
HP overdid it with the cost cutting:
- “The headquarters of the tech company did not have Wi-Fi.”
- “Decay had begun to show in some HP offices.”
- “Upon arrival, Apotheker was informed that HP was missing 85,000 chairs. The figure was so farcical that he had to check to make sure it was right. It was.”
- “But the Hurd era’s external success had concealed internal deterioration.”
Is it too late, or will a new group of Stuck Warriors finally make the necessary lasting changes at HP?
Contact Jim or add a comment below