H-P CEO Follies: Let the games begin

So another CEO, this one a high performing, successful operator, has bitten the dust due to character flaws. In typical form, the gaggle now is about who will be former HP CEO Mark Hurd’s long-term replacement. Candidates galore are mentioned with rampant speculation. Following the normal and expected playbook, the company’s board says it will search far and wide or both “externally and internally” according to the Wall Street Journal. A shootout among major search executive firms will soon take place. Turn the volume down a bit and you might be able to hear an echo.

Ok, let’s stop for a minute and acknowledge a few truths. First, H-P will not be able to replace Mark Hurd overnight with someone from inside or outside the company. There’s no one who knew the culture, people, strategy/execution and how that coalesces together to produce results more than Hurd. Not an interim CFO, not the lead director, not anyone presently identified in the mess. Ironically, Hurd was known as a great developer of talent, according to someone with direct knowledge of H-P. But unfortunately that skill evidently has now left the building, leaving the H-P Way under direct assault.

Number two, Hurd’s departure with no clear successor, or no publicly defined succession plan*, means this situation will remain in crisis mode indefinitely. Which stacked against their recent troubles with previous CEO Carly Fiorina and board chairwoman Patricia Dunne begs the most important future looking question that no one seems able to ask — much less answer.

What did Hurd and the board do to ensure someone could eventually take over when the current CEO could no longer serve? The CEO’s primary responsibility is to lead the company and make sure it’s well positioned for the future. That includes, along with the board, identifying who will lead when the current occupant no longer can. The story here is the board’s inability to map out an effective succession strategy; not all the superficial stuff that drives day-to-day palace intrigue.

According to the New York Times, the H-P board was so concerned about the Hurd situation that they hired the public affairs behemoth, APCO Worldwide, to measure what impact the “sexual harassment without the sex” charges would have on H-P’s reputation. What they evidently failed to measure was how much not having a contingency in place in case something happened to the CEO would drain the company’s equity value. Friday’s 10 percent drop in share price ought to answer the question with or without a hypothetical study.

Strong cultures know what to do when the proverbial s*&^ hits the fan. For a recent example, consider McDonald’s Corp., which effectively dealt with the death of not one but two CEOs on their way to a new leadership regime under current CEO James Skinner. Granted the company has stumbled a bit lately with other potential internal successors exiting. But the basic point remains: McDonald’s has a succession strategy and H-P evidently does not. They’re not alone. At least a third of all major companies don’t have formal succession plans. Based on events over the past week, H-P and their board must be wishing right now that they didn’t fall in this category.

*Efforts to confirm whether H-P has a CEO succession plan were unsuccessful at blog posting time. The company did not return requests for information.

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