Wednesday, November 02, 2011

How the Mighty Fall

Leo Apotheker is arguably the worst CEO of the 21st Century (so far).  He was some sort of a corporate terrorist that systematically destroyed the value of HP.  His strategic mistakes were of such magnitude that, really, it is difficult to believe somebody could be so incompetent.

In essence his mistake was trying to convert HP into something it couldn't be.

To better visualize it, here is a sport's simile:

Apotheker managed a Baseball team and when he was hired to manage a Soccer team he thought: the only game I know how to play is Baseball, so I'll make this Soccer team play Baseball.  No matter how brilliant a CEO is (and certainly Apotheker was one of the dullest) this transition is impossible.

For a CEO to try what Apotheker did at HP requires boundless arrogance plus a high dose of stupidity and the result is always the same: a corporate catastrophe.

The antidote to the above foolishness is the book How the Mighty Fall by Jim Collins.  All CEOs recruited from the outside should read this book.  The CEO does NOT have a blank slate to build a strategy.  They need to understand what the people in the company they lead are capable of and then plan accordingly.

Another example of this foolishness is Kodak.  The external CEO, Antonio Perez, decided to abandon its moribund film business and compete head on with Cannon, Sony and Samsung in digital photography.  And then, since he came from HP, made the more asinine decision of competing with HP in printers.  Again, this is equivalent to a water polo team manager deciding that they will now play professional football.  It will never work.

Apotheker was fired before the damage to HP was irreversible.  Kodak was not as lucky.  If Kodak is not bought soon by another company, it will inevitably continue on the road to bankruptcy and liquidation.


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