Wednesday, October 6, 2010

lucky break

I had a most unusual opportunity this week, serendipity does work. I'd never met Henning Kagermann before, but I was in a session that he moderated at the STS Forum in Kyoto. Afterward, I introduced myself and we began from the Media X relationship at Stanford, for which Ike Nassi and Paul Hoffman at SAP Palo Alto Labs have been stalwart supporters. The D'School at Stanford, with which we work closely, is of course known as the Hasso Plattner Institute. Kagermann and Plattner were the leaders of SAP for many years, Kagermann as Co-CEO from 1998 to 2009. He picked Leo Apotheker as his co-CEO when Plattner stepped into being Chairman, and the two served together for five years.

So, of course, I asked -- "will this guy Apotheker help HP?" His answer was a bit surprising to me. He said ABSOLUTELY, IF THEY'LL LET HIM. He went on to say that the "CEO World" which can mean quite a lot in different circles views HP as a very difficult assignment right now. For three reasons.

First, there is a history of the Board shooting the CEO (he mentioned three, including Lew), and he didn't have any warm fuzzies for the current Board, except he thought Leo A was 'head and shoulders' more mature and stronger than either Fiorina or Hurd when they got the nod. He also had high praise for Ray Lane, but he focused on Apotheker, whom of course he knows a lot.

Second, there is a history of HP employees "thinking they own the place" and being, in his words, "whiners" if asked to change. This is not unlike the Wall Street Journal editor's view, who snottily said "they still believe in The HP Way". Well, Dave and Bill trained a generation to think of it as THEIR COMPANY, so that part is GOOD in my book. I agreed though with Kagermann that this can get carried away, and become an excuse to keep old patterns too rigidly in place even though external conditions have changed drastically. Kagermann's view was that THIS is the tough one, and he said he was hopeful that the company's employees would give Leo A a chance.

Third, he felt that HP had indeed lost considerable momentum in terms of customer perception about the vitality and creativity in their product and service offerings with the administration of the last guy (whose name I've forgotten). This he felt is fixable, especially if the second point can be re-energized. He felt (and said in the session) that ICT is a long ways from mature, that in fact the Cloud Computing metaphor, mobility, and Web 3.0 will make everything we've seen to date look primitive. I happen to agree with him -- so the best very well could be in front of all of us.

Overall, he was very encouraging about Apotheker and his value to HP. He had no specifics re Apotheker's leaving SAP except to say the dynamics of the world meltdown caused a lot of damage and that was mostly to blame. Hummn.

I felt privileged indeed to have him share these perspectives. He has himself retired from SAP, and is Chair of the German Academy of Science and Eng'g (think NSF in America), and also chairman of the EIT KIC ICT directorate of the European Union. Coincidentally, his new CEO in that role is Willem Jonker, our long time Media X partner from Phillips with whom I had dinner two weeks ago in Braunschweig, Germany at the European Research Initiative Council. At that meeting, chaired by Intel, there was precious little positive news or confidence in HP, which both surprised and saddened me. Enough that I didn't blog about it then.

Friday, October 1, 2010

Another surprise.... Leo Who?

Howls from shareholders, question marks from insiders, blogs cranking up all over the Valley, now we have a target

What fun! Who is Leo Apotheker? I'd first of all remind readers that was the same reaction when the HP Board picked Mark Hurd, and the same when IBM picked Lew Gerstner. Not every outsider pick is a bad one, and not every insider pick is good

Apotheker is well known, and well respected, in Europe. Totally coincidentally I spent three days last week in Germany with the Intel/SAP Joint Ventures lead director. No, we weren't prescient enough to guess this selection, but it was a great visit re what is happening in Cloud Computing and ICT. SAP, of course, is the only viable contender against Oracle in the Enterprise Software world, and has done an incredible job over the years head-to-head. SAP has strong presence in Silicon Valley, both with their operations in Palo Alto (headed by veteran Ike Nassi) and the Hasso Plattner D'School at Stanford, started by David Kelley et al.

Several positives:
1. He speaks and thinks globally (fluent in five languages is a major plus these days), unlike the last guy. HP employees are 71% outside the US, as are 90% of their suppliers (this is no longer much of a US company, folks). HP sales are 73% outside US. The Enterprise wins will be elsewhere, not in the States. Every other candidate 'floated' was a US centric person.
2. He is a long-term SAP player, came up through the ranks, and served admirably as co-CEO for five years. The seven months before the sudden resignation can be explained (maybe rationalized) as a power play that didn't work for Plattner, and he was the sacrificial lamb. But this guy knows the industry of Enterprise Servers, Enterprise Storage, and Enterprise Software about as well as anyone out there. Put him together with Donatelli (work hard to keep Donatelli, by the way), and it could be very good
3. Getting Ray Lane to join, and LEAD the Board. WOW! This is blockbuster news actually. Lane was a HUGE part of Oracle success for years, was in fact the only humane face on the place. And he said for the WSJ, he joined HP "because of LEO A". Now that has to be read as extremely positive, from a guy that I have admired for years. The team of Donatelli, Leo A, and Ray Lane can be imagined as INSPIRED if you are betting on Cloud Computing and Enterprise Services as the play.
4. They did not pick someone from the hardware/consumer side (which is a hard business, especially as far behind as they are starting, and with the low margins of most of it).
5. They did not pick someone who was a Hurd clone (need I remind you how angry the employees were at him?)
6. He is not unafraid to be a spokesperson in public (this IS the largest high-tech company on the globe, and the only one of the top ten who had a CEO who would not take speaking engagements or talk to public issues).
7. He has high marks both as a strategist and an operationally sound guy (notwithstanding whatever led to the denouement at SAP)

Several negatives:
1. He is not an insider, nor is the new heir apparent leadership (Leo A, Ray Lane, Donatelli together are all new to HP Way)
2. Probably lose Bradley over the slight (not sure how to interpret this, stay tuned)
3. Half of HP's business, and two-thirds of its profits, come from PCs and Printers. He needs to keep some of the key leaders here
4. He doesn't look or sound charismatic. But then, compare it with Bradley, Livermore, or Donatelli -- not much different.
5. He doesn't sound inspiring (maybe the same point as above?).
6. He doesn't sound "lovable" in the old HP Way sense. And HP employees long for someone who will vote for them too.

All things considered, I would have to say, CONGRATULATIONS to the HP Board. This is an interesting, and bold choice. We're pulling for you!