CEOs Must Know Their Products (or, It Isn’t Just About Numbers)

Last week, HP announced its fourth-quarter results. Apparently, they were better than expected, but revenue still fell. It says a lot that a company can have falling revenue, and still beat expectations. What does it say about HP when analysts expect revenue to fall even worse than it did??

I particularly liked a quote in Australia’s “The Age” on the HP results.

HP, one of the oldest companies in Silicon Valley, was blindsided by advances like smartphones, tablets and cloud computing, all of which have hammered its core businesses…

Blindsided?

  • Simon Wardley, one of the top macro strategy technology consultants, has been writing about cloud’s inevitability for years.
  • The iPhone has been around since 2007, but the Handspring Treo was launched in 2002, the Blackberry years earlier.
  • At least the iPad (and follow-on tablets) were quick out of the gate; HP has some excuse.

I used to do quite a bit of business with HP when I worked as an executive in IT, and especially after their 2001 acquisition of Compaq, who made excellent data centre servers. One of the things I noticed over and over was that HP were, in some ways, like Oracle: aggressive and successful sales staff. But in other ways, they were not: their executives (and their Board) never got or even cared about the core product. I first noticed it during Carly Fiorina’s days, but it was strong during the tenure of Mark Hurd as well as Leo Apotheker; I cannot comment from first-hand experience during Meg Whitman’s two years (so far) at the helm.

Metrics, numbers, financials… they help you report on the state of your business and run it. But your strategy, your future, your ability to do something positive with those numbersmust come from the product! If you don’t get the product, then you don’t get what your customers are doing, why they are doing it, how to respond to or get ahead of your competition, and what fundamental changes threaten your entire business model.

HP is actually getting into the cloud – they are even taking over healthcare.gov, although that is probably a bad bet for HP – but don’t understand how it works and what to offer. They are using the same sales methodology without a fundamental understanding. I am aware of several cases in the last few weeks where they tried to sell customers on add-ons that would have adversely affected their security or manageability… and they want customers to trust them to operate it??

Much ink has been spilled (can we use that phrase if it is all digital?) on Tim Cook’s not being a product visionary the way Jobs was. It may or may not be true that he is not a product visionary, but he does fundamentally get Apple’s products, how and why they are used and by whom.

Yes, HP needed to replace Apotheker with Whitman, and probably Hurd as well. But what they really needed was a change in Board-level and then executive-level mindset, that the numbers are nothing more than a tool to get insight into the performance of the business, but understanding customers and product are the key to using that tool to build the business.

About Avi Deitcher

Avi Deitcher is a technology business consultant who lives to dramatically improve fast-moving and fast-growing companies. He writes regularly on this blog, and can be reached via Facebook, Twitter and avi@atomicinc.com.
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