Hewlett Packard is searching for a new CEO, and some analysts say the company should find itself a growth maven instead of a cost cutter.
After all, take a look at the chart: the stock was looking a little limp even before the board shocked investors a week ago with the forced resignation of CEO Mark Hurd.
But is revenue growth the biggest problem? Hardly. Sales grew 32% under Hurd, faster than IBM . Hurd did it by slashing costs and freeing up cash to reinvest in sales force expansion and acquisitions like Mercury Interactive, EDS and 3Com.
So here's a different take: what HP really needs is another cost-conscious CEO if it's going to avoid running off the rails again. Before Hurd showed up, every business unit had its own I.T. systems and HR, practically its own P&L.
But sales and marketing were centralized so the divisions had too much influence over their bloated costs, and not enough over their stagnant growth. HP cant afford to go back to that.
So here are three things the hp board needs to keep in mind as it shuffles through those CEO resumes:
One: Cost discipline is still job one. HPs latest annual operating income was about $10 billion on $115 billion in revenue. IBM did about $18 billion on $96 billion in revenue. How do you get HPs number to look more like IBMs? Higher-margin software and services, sure, but cost controls have to be there, too.
Two: Growth initiatives should bubble up. HP is not Apple . One CEO cant drive growth strategies across the entire company. And don think a brilliant strategy in smartphones and tablets will move the needle much for HP: more than half of revenues now are to businesses, not consumers.
Three: no warm and fuzzy people. A couple of years back, I talked to HP board member Marc Andreesen about why he was such a fan of Hurd. He quoted his old Netscape boss Jim Barksdale, who used to say, I want this to be a good place to work, but not necessarily a nice place to work. In other words, treat people right, but don lapse into the old consensus-driven culture.
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