Tuesday, September 18, 2012

HP Chief Meg Whitman Illustrates What is Wrong with Having Political Minded People Run Real Businesses

In Politics Form Over Substance Works – Business, Not So Much

Meg Whitman is one of those business executives who appears to have been more lucky than good.  Ms. Whitman was a senior exec at e-Bay and by the time she left the company had done great and she walked away with a lot of money, maybe a billion dollars or more.  This success naturally anointed Ms. Whitman as miracle worker and so she ran for Governor of California, a state whose government needs a miracle worker.

But voters saw through her Republican style philosophy and saw a person that was not likely to succeed in a challenging role.  So they rejected her in favor of Jerry Brown, the former Governor now in his 70’s.  Ms. Whitman, her star not diminished by standing up for Republican values was then hired by Hewlett Packard, a once great technology company facing declining prospects.

So far Ms. Whitman’s tenure has been far from successful.  Like the good Republican she is, she immediately fired a bunch of people, maybe 30,000 maybe 40,000, who knows, the process is not over yet.  But now Ms. Whitman is taking a positive step.  At least what constitutes a positive step in the world of people who see products that are sold on hype and marketing, not on what they do or how they perform.

she has pledged to defend her company's standing as the world's largest PC maker by volume, which it is on the brink of losing to Lenovo Group Ltd. 

As part of her plan, Ms. Whitman is counting on better-looking PCs, hoping her company might one day rival Apple Inc.  as the industry's standard bearer for sleek design.

"I don't think we kept up with the innovation," said the 56-year-old CEO. "The whole market has moved to something that is more beautiful."

See Ms. Whitman thinks that the reason HP is losing out to Apple and others is that HP’s products don’t look sleek enough, or smooth enough or classy enough.  She is cluelessly unaware that the reason Apple products are doing so well is that they perform so well.  They aren’t the lowest price, in fact they command a price premium because of their features and reliability. 

But people like Ms. Whitman don’t see the world like that.  They think that with enough hype, enough spin, and enough marketing people can be convinced  to pay higher prices for inferior products.  Guess what, voters didn’t buy it in California and consumer won’t buy it either.  It’s a pretty simple world HP, make products that have better features than Apple at lower prices or continue the slow inexorable decline of the company.  But don’t worry, if HP doesn’t turn things around Ms. Whitman will get a nice severance payment, maybe $20 million, maybe $50 million.  We don’t know, but we do know it will be  millions more than the 30,000 people she fired got,

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