HP's Hurd Had To Go

A top executive charged with sexual harassment or violating company policies is hardly a rarity in today's business world. Yet, the news Friday that the laser-focused Hewlett-Packard CEO Mark Hurd was effectively dismissed for such allegations has rocked Silicon Valley.

As the story played out over the weekend, and no doubt will continue to do in the coming days and weeks, some argue HP's board should have looked the other way, given the fact that the company's market cap has doubled and the company has substantially and consistently grown revenues and profits since Hurd took the reigns five years ago.

It's bizarre that the woman at the center of the scandal, marketing consultant and "actress" Jodie Fisher, charged Hurd with sexual harassment and hired the celebrity attorney Gloria Allred to represent her only to release a statement expressing regret.

"Mark and I never had an affair or intimate sexual relationship," she said in a statement released Sunday. Fisher went on to say that she has reached a private settlement with Hurd, who also denied any intimate relationship. "I was surprised and saddened that Mark Hurd lost his job over this," Fisher said. "That was never my intention."

Are you buying this from either party? Even if all that is true would HP have let go a CEO who turned the company around merely for fudging expense reports or having a few ill-advised dinners? Perhaps it would have given the company's strong focus on requiring employees to uphold ethical standards. HP reportedly has let go numerous employees who had violated HP's rules of conduct and it would have been hypocritical to look the other way when Hurd did so. In the end, Hurd no longer had the confidence of HP's board. While Wall Street loved him, employees and many in Silicon Valley detested him, according to analysts.

Suffice to say, it appears there's much more to this story. But the bigger question is what's next for HP? Even those who argue that Hurd was to HP what Steve Jobs is to Apple, let's not forget that Apple did just fine during his six-month leave of absence last year. Hurd's departure is an opportunity for the company to bring innovation forward and strengthen its partnerships.

Internal candidates to replace Hurd include Todd Bradley, who turned around the company's once-struggling PC business. Ann Livermore, who runs HP's huge services business is another oft-mentioned possibility. Outside candidates include two Softies: Microsoft COO Kevin Turner and Stephen Elop, president of the company's Business Division.

Others include EMC CEO Joe Tucci, IBM executive Michael Daniels, and former Compaq CEO Michael Capellas, The Wall Street Journal reports. Netscape founder and Silicon Valley VC Marc Andreessen is leading the search committee. (Could he be a candidate too?)

HP's board should be looking for a CEO who can execute as well financially as Hurd did -- no easy task -- but also someone who will bring technical and product leadership that companies like Apple, Google and (yes, even) Microsoft are demonstrating these days.

If not, those companies, along with the likes of Acer, Cisco, EMC and IBM, just to name a few, will further erode HP's effort to lead in markets that range from tablets to PCs to communications devices to enterprise infrastructure.

The new CEO will also have to look at its partnerships, including the one Hurd extended with Microsoft back in January to develop and bring to market advanced data center technology. While there has been some progress, that partnership looks a little cold these days.

For example, HP phoned it in when it came to endorsing Microsoft's Windows Azure appliance. At Microsoft's Worldwide Partner Conference last month, Dell and Fujitsu had executives front and center to talk up their plans to deliver an Azure appliance. At WPC, HP was nowhere to be found, though Scott Farrand, vice president for the company's Industry Standard Servers and Software business told me not to read anything into that.

"It was a simple matter of logistics for trade shows and availability of key executives for that kind of time line," said Farrand, who also gave telephone briefings at WPC. "There was no specific message in there that's of significance relative to HP's attitude here. We've had a longstanding partnership with Microsoft."

Also, while HP is now planning to deliver a Windows-based tablet PC, that was not a sure thing following its April announcement that it was acquiring Palm for $1.2 billion. In the months that followed, HP went dark regarding the future of the Windows-based Slate PC that Microsoft CEO Steve Ballmer highlighted earlier this year. It appeared DOA only for the company to recently disclose it will deliver the Windows-based Slate targeted at high-end enterprise users.

HP needs a leader who will not just give lip service to advancing its wares and its partnerships. It's not only important to the future of HP but to the ecosystem that surrounds the company.

What's your take? Drop me a line at [email protected].

Posted by Jeffrey Schwartz on 08/09/2010 at 1:14 PM