CRN Exclusive: Whitman's Campaign To Bring HP Back

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Meg Whitman has been doing some remodeling at Hewlett-Packard's Palo Alto, Calif., headquarters since taking over as president and CEO in September. First, she and her executive team moved out of their offices into cubicles. Then she ordered the barbed-wire fence that used to separate the executive parking lot from the HP employee parking lot to be torn down. And, thanks to Whitman, all 49 of HP's campus buildings are now blanketed in high-speed WLAN coverage for the first time.

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These are subtle yet significant signals to HP employees that things are going to be different under Whitman's leadership. She is pushing hard for a more open HP and a return to the egalitarian culture that legendary HP founders Bill Hewlett and Dave Packard fostered decades ago, known as "The HP Way."

"You can see the teamwork already," Whitman said of HP's new open-seating framework. "The conversations over the cubicle are the ones that really matter."

Whitman has brought some much-needed stability to HP, but now comes the hard part: implementing and executing on a long-term strategy. Call it "HP 5.0" -- Whitman is the company's fifth CEO since 1999, an astonishing number considering that HP previously had been led by just three CEOs since its founding in 1939. The executive turmoil was accompanied by plenty of drama, including questionable decisions by HP's board and two major scandals in the past six years. HP had $127 billion in sales last year, and yet there is a sense in the channel that the company has been drifting off course in recent years, said solution providers. Whitman believes that under her leadership, HP can get back to what it does best.

During a recent interview in a small, sparsely appointed conference room at HP's headquarters, Whitman is eager to talk about how she has been restoring order to the chaos created by ex-CEO Leo Apotheker, who was fired by HP's board of directors after three consecutive quarters of lackluster financial results. She describes how she moved quickly to repair the damage caused by HP's infamous Aug. 18 earnings announcement, in which it revealed plans to discontinue its TouchPad tablet, explore a sale or spin-off of its $40 billion Personal Systems Group (PSG), and acquire Autonomy, a U.K-based vendor of information management software, for $10.3 billion.

These three decisions raised questions in the channel about HP's future as a hardware company. While partners understood why HP would consider moving out of the low-margin PC business, many were baffled that the company would choose to reveal this publicly, as doing so would inevitably turn customers away from buying HP PCs. It's obvious that Whitman, too, remains befuddled by the hazy logic behind Apotheker's PSG strategy.

"Uncertainty was not our friend in the marketplace, particularly with our channel," she said with a wry smile. "We made a lot of people in our industry anxious over what we announced on Aug. 18."
After five weeks of deliberation, Whitman decided to keep PSG in the fold. She also threw her support behind the Autonomy acquisition, despite loud grumbling from shareholders about the amount HP paid -- around 10 times revenues and 25 times earnings.

"Right out of the gate, the question I was getting because of Autonomy was: 'What is HP? Who is HP?' And in all of those meetings I reinforced, first and foremost, that HP is a hardware company," Whitman said. "The DNA of this company is product engineering -- printers, computers, servers, storage and networking are our bread and butter."

NEXT: Building On HP’s Traditional Strengths

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