How a bad board of directors could kill HPE

How a bad board of directors could kill HPE

Columnist Rob Enderle writes that the trouble with HPE stems from its board of directors. Just replacing a CEO, if the board lacks core skills, just changes the problem.

Meg Whitman - CEO, Hewlett Packard Enterprise

Meg Whitman - CEO, Hewlett Packard Enterprise

It is hard to look at Uber and not ask yourself WTF, but yet another case where it is very clear core skills, in this case core business skills just don’t exist at the top.

Look at Uber’s board, how many nonemployees have a background in apps, services, or personal public transportation? (The guy from Google (Alphabet) is an attorney). Though I think the big problem there is a lack of multi-national skills, image management and marketing at the top.

HPE’s board

If you look at HP’s board you can see the problem. They have Dan Ammann, CEO of General Motors with virtually no background in HP’s business, Marc Andreesen who both created and helped kill Netscape in an ill-advised pivot to the enterprise with no hardware background (partially credited with both the Apotheker screw up, and Whitman’s selection); Mike Angelakis an investment expert in media and telecom with no hardware or software expertise; Pam Carter out of Cummins with a background in energy and transport but nothing in any HPE related business; and Klaus Kleinfeld out of Alcoa and Siemens AG (which is as close as we get to an HPE related background, and it isn’t that close).

Then you add Whitman who was out of PayPal and you see that the only consistent skills are in general business and investment, which is why they have so much executive churn below Whitman and their strategy is based on cutting costs not growing business.

This is a long way of saying replacing Whitman likely wouldn’t fix anything because the board lacks the skills needed to understand what skills are needed in the replacement.

It starts with the board

If you see a company in trouble, look to its board members to see if they have the skills needed before you blame the CEO. Just replacing a CEO, if the board lacks core skills, just changes the problem it doesn’t fix it.

Look at Yahoo, another firm that recently failed a turn around. It is in the online mixed media business now, but I challenge you to find one person on their board who has a background in this including their now departing CEO who came from Google.

They had Ross Levinsohn who had the needed background and the idiots, sorry, poorly founded board, forced him out in favor of Marissa Mayer and now Verizon is buying the company for pennies on the dollar.

So, why do you care? You are likely investing millions into tech companies’ products and you have no idea whether the company is truly being, or will continue to be, well run.

I suggest you take a hard look at the board. If the board lacks any knowledge of the industry or business the firm is in, and particularly if it is heavy in financial types they will undoubtedly screw the company up and you’ll be left with a problem you don’t want or need.

So I’d recommend looking for three things in the enterprise company you choose:

  1. Related experience on the board
  2. Stability in the executive staff
  3. Sustained performance in the segment you are depending on them to execute in

Bet you don’t do that now, but I bet you will eventually regret it later.

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