HP Split a Tribute to Leadership, Business Planning

Under the careful direction of CEO Meg Whitman, Hewlett Packard has become two separate entities. The process was smooth and orderly, and it holds many lessons for other businesses.

By Larry Walsh

In September 2011, Hewlett Packard, the once-proud titan of Silicon Valley, was reeling from a string of self-made disasters. Its Playbook tablets were DOA. The acquisition of software vendor Autonomy was dragging it into a quagmire of unforeseen depth. And mismanagement of the company under CEO Leo Apotheker, who had taken the helm from the embattled and disgraced Mark Hurd the previous year, was tearing the ranks apart.

After less than 12 months with Apotheker as CEO, HP’s board of directors made a fateful decision to oust him. The board rightly thought that Apotheker was steering the company in the wrong direction.

Enter Meg Whitman, a board member and former CEO of eBay. She was tapped to take Apotheker’s spot as CEO. Many analysts, partners, and customers thought of Whitman as an interim chief, as somebody to take charge until the company could figure out what to do. Some thought Whitman’s job was to oversee the controlled implosion of the company. In fact, there was a time when many didn’t think HP would survive its turmoil.

Four years later, HP is now two companies. The vendor spent three years rebuilding and refocusing under Whitman and today was officially reborn as two separate entities: Hewlett Packard Enterprise (HPE) for business hardware and applications, and HP Inc. (HPI) for personal computers and printer products.

Splitting a company in two, particularly one as large as HP, is no small task. For the past year, HP’s management teams have been working out the logistics and operational details of the split, the result of which is two Fortune 500 companies with more than $55 billion in revenue each.

Unofficially, most of the systems and teams split months ago. Since the summer, HPE and HPI have been operating as they will be from now on. This pre-split division gave the management and operational teams time to work through kinks in the systems, make adjustments, and anticipate problems that might arise.

Is everyone happy with the end result? Change is hard. Partners, customers, and even HP employees are still wondering how this massive breakup will work out. Skeptics are there, as they always are, wondering why the PC business had to split from the server, storage, networking, security, and cloud business units. The split is a gamble, but the bet is made on the presumption that it will unlock value and make the two companies agile in a dynamic technology marketplace.

The smoothness with which the split proceeded is a testament to two things: thorough business planning and Whitman’s leadership.

Too often, incomplete and loose business plans sink mergers and acquisitions before they ever get a chance of getting off the ground or producing any benefit. HP knew this, as it was, after all, a lack of thorough planning that got the company into trouble in the first place. Company execs made detailed plans, conducted thorough reviews, and made quick course corrections to ensure a smooth and orderly transition.

All of this was done under the direction of Whitman and her management team. Before Whitman’s arrival, HP was riddled with operational fiefdoms and petty management squabbles. Whitman changed the management direction and culture. She got everyone on board with the management plan and strategy. And she made people believe in the vision.

Whitman’s accomplishment in straightening out this listing giant was manifested in how nearly everyone at HP cited her leadership as the root of the company regaining strength. You couldn’t talk to anyone at HP who wouldn’t mention Whitman’s direction and leadership. She instilled confidence in managers, employees, and partners. No, she didn’t have her hands in every operational detail, but she did instill pride and confidence in people to make them believe anything was possible.

Will the division of HP into HPE and HPI be successful? Will the two companies produce better technology, innovations, and results for their partners and customers than the whole company could? Will the two disconnected companies be able to stand on their own? These and many more questions are worth asking. But what’s clear, for now, is that solid, confident leadership and sound business planning made HP healthier and its breakup smoother. It’s a lesson all companies should internalize.


Larry Walsh, The 2112 GroupLarry Walsh is the founder, CEO and chief analyst of The 2112 Group. Follow him on social media channels: Twitter, Facebook, LinkedIn.