Turnarounds are tough. Most businesses in danger of collapse don’t survive, and those that do emerge a mere shadow of what they were in their prime. Apple is an exception to the rule.
When Steve Jobs returned as CEO of Apple in the late 90’s, he took a meat cleaver to most of Apple. Gone were the monitor and print divisions. The infamous Newton team were given pink slips. Mac OS licensing that gave birth to clones was terminated. Every project and product was jettisoned overboard except those projects that fit into Steve Jobs neat little four quadrant diagram. One pro desktop an laptop, along with one consumer desktop and laptop. That was it. Jobs move was brilliant, which created the foundation for Apple's turnaround.
Another tech company in the silicon valley is in the midst of their malaise. Marissa Meyer is still working to turn around Yahoo! After three failed CEO’s within three years, Meyer is Yahoo!’s latest hope in bringing glory back to the internet giant. She, like Jobs, did a dance with some pink slips, but she also followed Jobs by revamping Yahoo!’s HR department. Yahoo! was only to hire the best and brightest going forward, not just who might be available for key posts. The jury is still out on Yahoo!, but deliberations are taking far too long. Any sort of massive turnaround seems dubious at best.
And then there is HP. Hewlett-Packard is a company that has struggled to find solid footing since the desktop boom in the 1990’s. Like Microsoft, HP lost a lot of ground during the last decade as mobile and social replaced computers tied to desks. Several times HP dipped their toe into the portable music player and tablet markets — even acquiring Palm for their webOS in an attempt to become an integrated mobile platform. All these efforts were a tremendous drain on talent, time and resources, and to-date have utterly failed.
One thing in HP’s favor was that rivals like Gateway and Dell were struggling even more, solely relying on Microsoft to bail them out. HP also had a booming printing division that once boasted $1 billion in annual ink sales (that doesn’t include their toner and professional printer sales). Ink and toner is like foam on a cappuccino, pure profit. HP also had a lucrative and growing server business, as data centers sprang up and were in need of thousands of servers at each server farm.
However, yesterday Meg Whitman announced a third revision to layoff projections, which increases HP's pink slip production by 11,000 - 16,000, totaling the elimination of roughly 50,000 jobs under her tenure. Whitman is at the 2 1/2 year mark of her five year turn around plan. The layoffs are roughly three to five percent of HP’s 300,000 world-wide work force and being made under the mantra of building a more efficient company.
Comparing HP to that of Apple’s turnaround via Steve Jobs return in 1996 is almost an exercise in futility. In 1998 Apple introduced a revolutionary computer called the iMac. Then three years after that (five into his turn around) Apple launched OS X and soon after that the iPod and iTunes. Whitman is at the point where Jobs was when he announced the iMac. The iMac was colorful, cool, affordable and fun. More importantly it bought Jobs another three years to rebuild the future foundation of Apple — OS X.
Unfortunately for HP, we don’t see a new product that is colorful, cool, affordable or fun from Whitman’s company. Instead we are watching a CEO simply manage the decline. Additional layoffs and promises that everything is okay has become the HP mantra.
Once upon a time Star Wars’ Han Solo had taken control of the detention center on the death star and replied on the intercom that “Uh, everything is under control. Situation normal. We had a slight weapons malfunction. But, uh, everything’s perfectly all right now. We’re fine. We’re all fine here, now, thank you. How are you?” Soon after he yell’s “Luke, hurry up! We’ve got company!” as he knows he can no longer delay a team of storm troopers headed their way.
Does Meg Whitman understand the situation she really is in? Can she turnaround the ship? Maybe. But more likely is she will keep the HP ship afloat, but with a heavy list. HP’s best hope is to retreat into the IT corner, taking on the high-margin world of IBM. Any thoughts of Whitman making HP a revolutionary company the way Jobs turned around Apple? None.
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Jobs, Steve Jobs