The State of HP, As Told by Meg Whitman

Hewlett-Packard is in the midst of a very public turnaround. This week, CEO Meg Whitman spoke to analysts about it. Her message -- and the way she delivered it -- should inspire HP customers and consumers at large.

HP CEO Meg Whitman provided a financial update this week during the firm's securities analyst meeting. It's a pleasure to see someone like Whitman speak; she prepares properly, articulates her points clearly and has been trained to pace a talk.

Often the folks giving financial statements seem ill-prepared. One, they don't rehearse enough. Two, edits are being made right up to show time. These are bad practices that distract significantly from the presentation and from the appearance of capability for both the CEO and the firm.

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Luckily, Whitman didn't reflect either of these problems. As a result, we could focus on the message without struggling to understand the message (or the speaker). Since this was one of the better CEO talks that I've seen, let's look at both its content and the art of delivering a message from a CEO.

Warhol Was Right — You Only Get 15 Minutes

Years ago, when I was doing research for Dataquest, we studied the attention span of analysts. It turned out to be 15 minutes. If you don't get the core message across in that time, you'll never get it across. People will start checking email or distracting themselves in other ways.

Whitman used her first 15 minutes to explain why HP is ahead of its debt reduction schedule, why the people she put in place are best suited for their new roles, and how she was "instrumenting" the business so management had the information it needed to right the ship.

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As the 15 minutes end, the presentation moved to a high-energy video showcasing HP products — personal technology, printers, enterprise storage and analytics — interspersed with customer testimonials. It then moved to big bets, such as Moonshot, which set HP apart. The video did its job, as folks looked up from their small screens to the big screen.

IT Adopting 'New Style' in Changing World

From there, Whitman moved to the bigger message. First up was her new strategy: "To Provide Solutions for the New Style of IT." She argues that there are major changes in the way technology is used and how users connect to it. From the beginning of time until 2003, mankind created 5 Exabytes of information; today, it creates that much information in 12 hours. Only HP, Whitman says, has the breadth to provide solutions that span the device to the data center at scale — to take IT from where it is to where it needs to be in this new world order.

Having created the problem, IT is moving into a "new style" to solve it. This is also a best practice: Articulate the problem and then talk about your firm's ability to address it. In this case, and against this problem, Whitman positions 3Par and Moonshot, HP's most advanced server, against this problem and layers software defined networking on top. Autonomy, convergence and software will also play a role.

Related: Whitman Says HP '100 Percent Committed' to Autonomy Products

Whitman argues that HP's new businesses — both 3Par and Autonomy were acquisitions — are focused on this new opportunity and will see more investment over time than the firm's legacy businesses. The latter will receive some investment, though, so they don't decline prematurely.

And that points to one of HP's biggest problems: Shifting market forces. Intel-based devices are losing ground to ARM-based devices at an alarming rate. Cloud and SAS solutions are rapidly replacing the legacy businesses that form HP's core. Competition is exploding; previous partners such as Intel and Microsoft are becoming competitors, while traditional competitors are tightening their focus. HP has the breadth of resources to face this challenge, but if the firm doesn't focus on execution, it will be overwhelmed.

HP Better at Targeting Customer Segments, Markets

A smart executive frames how he or she will be measured. Whitman is clearly a smart executive, as her talk then moved to how HP should be measured. Customer satisfaction must be at the core of measuring HP's success. HP has missed too many opportunities in the past, she says, and part of her goal is to make sure this problem goes away. Whitman expects her people to be excellent, not just good, and asserts that HP will optimize end-to-end processes and be held to a standard of both timely and excellent products.

The same is true of HP's go-to-market efforts, which have been aligned with customer segments. HP has identified the top 40 country category pairs that deliver the best profit; the firm will focus on these areas, along with its top 15 growth markets. While this sounds like a lot, it's actually far narrower than where HP was.

Commentary: 2 Emerging Markets HP Should Enter to Turn Itself Around

Whitman didn't pay much attention to core management topics such as cost management and traditional back office systems, other than to bless them as areas of focus. This wasn't surprising. CFOs are generally better suited to address financial topics and, frankly, the audience at this analyst meeting doesn't care much about HP's internal IT purchases.

Overall, this nicely frames how Whitman wants HP to be measured and where she's confident HP can execute. This helps assure that HP is measured in a way that Whitman's efforts are seen as a success. This is critical; applying arbitrary measurements to any employee, let alone the CEO, make success on paper impossible even if one delivers an excellent performance. Setting expectations, at any level, is a best practice.

HP Ready to Drive Change, Whitman Says, Convincingly

Whitman closed by saying that HP is a strong company with a proud heritage and huge opportunities before it. The firm has the right employees, as well as customers who value HP's approach, people and products and stand with the company to assure that HP's turnaround will be successful. By 2016, Whitman sees HP as a leader that's driving exceptional technology change. She has enormous confidence in HP's ability to execute.

Whitman delivered one of the best CEO talks I've seen and heard. It covered all aspects of the company, from assets to problems, while praising employees and showcasing customers that stand with the company. She created the impression of a company getting better and a CEO who not only understands a firm's problems but has a plan to fix them. Above all, it supported the conclusion that HP's turnaround plan is working.

That's all you can ask of a CEO presentation. Whitman executed brilliantly. Her talk now sets a high bar for how this kind of thing should be done — and HP should have some more believers as a result.

Rob Enderle is president and principal analyst of the Enderle Group. Previously, he was the Senior Research Fellow for Forrester Research and the Giga Information Group. Prior to that he worked for IBM and held positions in Internal Audit, Competitive Analysis, Marketing, Finance and Security. Currently, Enderle writes on emerging technology, security and Linux for a variety of publications and appears on national news TV shows that include CNBC, FOX, Bloomberg and NPR.

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