Board watch

Today at 2pm, fireworks?  The major news ahead of the Annual Meeting was the dust-up about getting rid of a couple (or maybe three) directors.  Fueled by dissident shareholders, and too numerous to count stories about "how could this board be so bad?" it isn't surprising that the tom-toms are beating.  Nor is it unexpected that HP would take a low-key, business-as-usual stance.  Bets?

I'm betting that the fireworks show will fizzle.  No change, no clamor, no public rancor.

The main question is -- "Does it matter?"

Boards, while publicly visible and easy targets for shareholder wrath, are seldom loci of key decisions, despite what business schools and academicians insist.  Sure, they have ultimate veto power over who is CEO and for how long; yes, they have fiduciary responsibility for the accuracy of the books and the ethics of the place; and oh yes, they do approve Mergers and Acquisitions and Divestitures, including Autonomy at this place.  

But can they make a difference on the PC industry trends, or HP's competitive stance in it?  Or any other major sector -- imaging, crowd sourcing, cloud services, enterprise software efficacy, mobile phones or cosmetics for Proctor and Gamble?  Unlikely, in anything deeper than a vote of confidence or a wish list directive.   Sorry, Virginia, there isn't a Santa Claus on this one.

HP is caught on the same problem as the US economy -- lack of innovation where it matters, at the consumer level.  The dogs have got to like the dogfood at some point.   And Autonomy products just don't work as well as, say, Attensity products.  Or even those of tiny start-up Argus Insights.  Never mind whether the financial numbers were inflated, or bogus, or Mike Lynch was a blowhard -- all of which were likely true.  A 'vet check' as they say in the horse-buying world (and this, you must realize, was a giant horse-trade) would likely have revealed a lot of chagrined customers already looking for alternatives long before the Board was asked to approve this deal.  

What happens when you don't have innovation, in a world as competitive as our interconnected web-enalbed world has become, is that 'less-than-the-best' products get discovered and replaced.  What Tom Friedman calls, "UP, DOWN, or OUT".  Either the products get more capability, quick, which is UP-SCALE in terms of features; they go DOWN in cost to retain the price-conscious buyer; or they go OUT (the equivalent of outsourcing) and get SUBSTITUTED by another company's product.

And it is hard to maintain the lead -- it is a giant squirrel cage, running faster and faster to stay in place.  The Bigger they are, the Harder they fall is not just a biblical adage.  And HP has $120 Billion annual sales in increasingly mediocre products for increasingly chary customers who actually are looking to other alternative product areas for their next productivity investment.  If we may believe the press.

So, in such a scenario, wouldn't it be better to vote for keeping and empowering Board members who have a track record of reading hi-technology tea leaves -- folk such as Lane and Andreasson -- rather than booting them just becasue they've been there a while?   Maybe this time is different than last time, but Andreasson did 'see' the Facebook phenomenon and Apple did not.  Can he bring it to HP though? And of course, here we stumble again on the central question -- are Boards the primary change-agent for a company at this point in HP's life?  Nope, doubt it -- sorry Virginia....