It's quite possible you'll lose your job as CEO if you are unable to persuasively communicate your company's strategy. Léo Apotheker, the recently fired CEO of Hewlett-Packard, has just learned this lesson.
Mr Apotheker was appointed CEO of HP in October 2010 less then a year before he was let go. Before HP, Apotheker was CEO of SAP at the end of a 20 year career with the German software giant. He left SAP under a cloud and in a memo SAP issued to its employees on his departure he said, "My communication towards you was not always optimal." This should have rung some alarm bells. 1
After about 5 months in the job (March 2011) Mr Apotheker announced the company strategy. They were going to expand into the cloud business, build out its software business, open up an app store and reinvest in R&D. The aim was to lift profit margins. They would move into business analytics. He promised to take a conservative approach suggesting there wouldn't be the massive company purchases like the Compaq or EDS buy outs HP had done in the past. 2
In August 2011 Mr Apotheker announces that HP will purchase British software company Autonomy for just over $10 billion and that he is considering selling the PC business.
In September 2011 Mr Apotheker is replaced with eBay's celebrity CEO Meg Whitman. The HP stock price during Mr Apotheker reign falls from $46 to $25.
Of course this is a high level telling of a CEO's demise which has many more twists and turns including the fanfare announcement of a new tablet to rival the iPad that was eventually withdrawn from sale only weeks after its launch. The important points to note in terms of communicating a strategy are these:
- Massive changes in mind are going to hurt you. Mr Apotheker suggested they weren't going on a spending spree then announces its third biggest purchase. Our Prime Minister in Australia, Julia Gillard, is suffering a similar fate. On election she promised not to introduce a tax on carbon. As of last week the Parliament has voted in a tax on Carbon (something I support by the way) and she has been crucified for it.
- A good strategy means something is going to change. That means there will be people who are strong supporters of the old way of doing things. The misunderstood Machiavelli put it this way, "There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things." Telling everyone you might sell your PC business only creates uncertainty. IBM pursued the same strategy of selling their PC business to the Chinese company Lenovo. IBM, however, sold the PC division before announcing it to the world. Sometimes its better to rip the band-aid off quickly.
The effectiveness of HP strategic story Mr Apotheker told (and there was a good chance he didn't actually tell a story) comes from not just what's in the story, its believability and novelty, but also how it is told and whether it becomes a story worth listening to, remembering, retelling and acting upon. Add to this the importance of consistency. From all accounts Mr Apotheker failed at each step. Now let's see how Meg Whitman fairs.