Kevin Gilroy's Legacy

The reorganization spearheaded by Hewlett-Packard CEO Mark Hurd has claimed an interesting casualty: Kevin Gilroy, the company's channel chief who was recently running a centralized small-business initiative.

Gilroy's departure, which was driven by Hurd's simplification of HP's structure by moving marketing and sales initiatives closer to the business units, got me thinking about how Gilroy influenced the company's channel strategies. His exit also offers some lessons for today's crop of channel managers at large or emerging IT companies and for solution providers who build relationships with them.

Gilroy was in the limelight during HP's integration of Compaq and its channel organization and partners. He was forced to compete for the top channel position against a Compaq executive and, at the same time, waged a political battle to keep indirect sales alive inside a company that was suffering from a severe case of Dell envy. He was also working with and for managers from the former Compaq organization who wanted a more direct sales strategy. Gilroy was certainly in a precarious position but set out to accomplish some goals in a very calculated fashion, eventually winning the argument. Gilroy did not win because he was the most charismatic executive but because his financial model to sell IT goods and services through partners was sound. He also found a sounding board in the editorial staffs of VARBusiness and CRN. In many instances, HP had to face a great deal of negative feedback from partners. Gilroy and HP had to decide whether to take a defensive stance or use the information to fine-tune a strategy that was clearly in a daily state of flux.

To keep communications flowing, Gilroy coordinated quarterly channel summits where he invited members of the press and key HP executives, regardless of whether they were channel-friendly. He also worked hard at keeping then-CEO Carly Fiorina in front of the channel at every turn, establishing a connection with the executive suite. That connection would ultimately lead to his departure from HP. Be careful what you wish for is the lesson I suppose.

But the lesson for any executive who finds himself in a similar situation is to not fear airing their issues in the press. Getting the issues in print, on the Web or even bantered about in public is an important part of the process toward building consensus or giving partners an indication of what to expect. In a rather controversial move, VARBusiness named Gilroy the 2004 Channel Executive of the Year--at the time a widely unpopular choice. However, Gilroy deserved it based on his sheer ability to evangelize the channel and his passion for winning the debate on objective terms.

It wasn't long after Gilroy had won that distinction that he took over sole responsibility for the company's North American channel operations. (Today, John Thompson is running HP's channel business and, based on our Annual Report Card results, is doing a solid job.) While Fiorina was still trying to get a better understanding of the channel, she made Gilroy an offer he should have refused. I doubt he was 30 days into a 100-day plan before Fiorina asked him to run a companywide effort to build HP's SMB strategy. At the time, the plan struck me as half-baked. Gilroy was just starting to make progress in the channel. There was no one who had been working in the organization long enough to take it over, so I wondered what motivated Fiorina's decision. I was even more perplexed as to why Gilroy would accept it. So the lesson in this instance is, there are times when you can or should say no to the boss.

Gilroy's relatively short tenure at HP's channel saw the introduction of the Hard Deck program, which attempted to control channel conflict. Still, many partners used the Hard Deck as a pasquinade for HP's shortcomings. Gilroy also ushered in the huge PartnerOne initiative at HP, which consolidated some 50 or so channel programs into one. Under Gilroy's watch, HP's channel sales professionals transformed themselves into a hard-charging group willing to drive sales.

So, Gilroy and his original team deserve a great deal of credit. There is little doubt he will wind up running channels for another major IT company. However, the final lesson learned from his rise from channels to running SMB programs is to determine whether your boss is setting you up for success or failure. For Gilroy to succeed, his CEO would have had to survive long-term, and he would need broad and deep support to slay those sacred cows. Once Fiorina was gone, he was vulnerable.

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