Harvard Case - Hewlett-Packard Company: CEO Succession in 2010
"Hewlett-Packard Company: CEO Succession in 2010" Harvard business case study is written by Jay W. Lorsch, Krishna G. Palepu, Melissa Barton. It deals with the challenges in the field of Organizational Behavior. The case study is 21 page(s) long and it was first published on : Oct 18, 2010
At Fern Fort University, we recommend that Hewlett-Packard (HP) prioritize a comprehensive and transparent CEO succession plan that addresses the company's unique challenges and fosters a culture of leadership development. This plan should prioritize internal candidates, emphasizing a strong understanding of HP's core competencies, its global operations, and its evolving technology landscape. The selection process should be rigorous, encompassing assessments of leadership qualities, strategic vision, and the ability to navigate complex organizational dynamics. Furthermore, HP should invest in leadership development programs to build a pipeline of future leaders capable of driving innovation, managing change, and fostering a high-performing culture.
2. Background
The case study focuses on Hewlett-Packard's (HP) CEO succession process in 2010, following the retirement of long-time CEO, Mark Hurd. The board faced a critical decision: whether to appoint an internal candidate, Leo Apotheker, who possessed deep knowledge of HP's operations but lacked a strong track record of leadership, or an external candidate, Meg Whitman, a seasoned executive with a proven track record in leading large organizations but lacking familiarity with HP's specific industry.
The case study highlights the complex dynamics of CEO succession, including the interplay of organizational culture, leadership styles, power and influence, and the impact on employee morale and performance.
3. Analysis of the Case Study
The case study provides a rich context for analyzing the challenges of CEO succession and the impact of leadership on organizational performance. Several key frameworks can be applied to understand the situation:
Leadership Styles:
- Mark Hurd: Hurd's leadership style was characterized by a focus on operational efficiency, cost control, and a strong emphasis on performance metrics. This approach, while effective in driving short-term results, potentially stifled innovation and long-term strategic thinking.
- Leo Apotheker: Apotheker's leadership style was less well-defined, but he was known for his deep technical expertise and his ability to navigate complex business environments. However, his lack of experience in leading large, complex organizations raised concerns about his ability to effectively manage HP's diverse operations.
- Meg Whitman: Whitman's leadership style was characterized by a strong focus on strategic vision, customer-centricity, and a commitment to innovation. Her experience in leading large, global organizations made her a strong candidate for the CEO role, but her lack of familiarity with HP's specific industry could have presented a significant learning curve.
Organizational Culture:
- HP's culture was characterized by a strong emphasis on engineering and technology, but it also had a history of internal political maneuvering and a lack of transparency in decision-making. This culture could potentially hinder change management and innovation, particularly under a new CEO.
Power and Influence:
- The board of directors played a crucial role in the CEO succession process, but their decision-making was influenced by a variety of factors, including the need to balance short-term financial performance with long-term strategic goals.
- The executive team also wielded significant influence, with different factions vying for control and advocating for their preferred candidate.
Decision-Making Processes:
- The board's decision-making process was characterized by a lack of transparency and a focus on short-term gains. This approach could have led to a suboptimal decision, particularly in the context of a major leadership change.
Change Management:
- The CEO succession process presented a significant opportunity for change management, but it also carried the risk of resistance and disruption. The new CEO would need to navigate these challenges effectively to drive successful change.
4. Recommendations
HP should implement a comprehensive CEO succession plan that addresses the following key areas:
- Prioritize Internal Candidates: HP should prioritize internal candidates who possess a deep understanding of the company's core competencies, its global operations, and its evolving technology landscape. This approach would help ensure continuity and minimize disruption during the transition.
- Rigorous Selection Process: The selection process should be rigorous and transparent, encompassing assessments of leadership qualities, strategic vision, and the ability to navigate complex organizational dynamics. This process should involve input from a diverse range of stakeholders, including employees, customers, and investors.
- Leadership Development Programs: HP should invest in leadership development programs to build a pipeline of future leaders capable of driving innovation, managing change, and fostering a high-performing culture. These programs should focus on developing leadership skills, strategic thinking, and cross-functional collaboration.
- Transparent Communication: HP should communicate the CEO succession process transparently to all stakeholders, addressing concerns and fostering trust. This approach will help build buy-in and minimize resistance to change.
- Culture of Innovation: HP should foster a culture of innovation that encourages experimentation, risk-taking, and a continuous learning mindset. This approach will help HP remain competitive in a rapidly evolving technology landscape.
- Diversity and Inclusion: HP should prioritize diversity and inclusion in its leadership development programs and succession planning processes. This approach will help ensure that HP benefits from a wide range of perspectives and experiences.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core Competencies and Consistency with Mission: The recommendations prioritize internal candidates with a deep understanding of HP's core competencies and its mission. This approach ensures continuity and consistency in the company's strategic direction.
- External Customers and Internal Clients: The recommendations emphasize the importance of transparent communication and stakeholder engagement. This approach helps build trust and buy-in from both external customers and internal clients.
- Competitors: The recommendations encourage a culture of innovation and a focus on long-term strategic goals. This approach will help HP remain competitive in a rapidly evolving technology landscape.
- Attractiveness ' Quantitative Measures: The recommendations focus on building a strong pipeline of future leaders, which will contribute to HP's long-term financial performance and sustainability.
6. Conclusion
HP's CEO succession process in 2010 presented a critical juncture for the company. The board's decision to appoint Leo Apotheker, an internal candidate with limited leadership experience, ultimately proved to be a misstep. The recommendations outlined in this case study solution provide a roadmap for HP to address its leadership challenges and ensure a more successful CEO succession process in the future.
7. Discussion
Alternative options for HP's CEO succession process include:
- External Candidate: Hiring an external candidate with a proven track record in leading large organizations could have brought fresh perspectives and new ideas to HP. However, this approach could have resulted in a significant learning curve for the new CEO and potential disruption to the company's operations.
- Joint Leadership: Appointing a joint leadership team consisting of both internal and external candidates could have combined the strengths of both approaches. However, this approach could have created challenges in coordinating leadership and decision-making.
The key risks associated with the recommendations include:
- Resistance to Change: The recommendations may face resistance from employees who are comfortable with the status quo.
- Lack of Transparency: The recommendations emphasize transparency, but achieving this goal may be challenging in a complex organization.
- Time and Resources: Implementing the recommendations will require significant time and resources.
8. Next Steps
HP should take the following steps to implement the recommendations:
- Develop a Comprehensive CEO Succession Plan: Within the next six months, HP should develop a comprehensive CEO succession plan that outlines the selection process, leadership development programs, and communication strategy.
- Implement Leadership Development Programs: Within the next year, HP should implement leadership development programs for high-potential employees across all levels of the organization.
- Conduct Regular Reviews of the Succession Plan: HP should conduct regular reviews of the CEO succession plan to ensure its effectiveness and to adapt to changing circumstances.
By taking these steps, HP can ensure a smooth and successful CEO succession process that positions the company for long-term growth and success.
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Case Description
Mark Hurd resigned as the CEO of Hewlett Packard in 2010 after the board discovered that he had misfiled expense reports and paid an H.P. contractor for unsubstantiated work. After Hurd left H.P., he joined Oracle, an H.P. competitor. Soon thereafter, the H.P. board appointed a new CEO following an eight-week search.
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