Defensive Strategy

HP’s Valuable Lesson

1 Sep 2011  

When it comes to marketing strategy, there are three critical steps. The first step is developing a powerful strategy. The third step is executing well. The second step, however, is sometimes overlooked: selling the plan.

HP CEO Leo Apotheker recently demonstrated why selling the plan is so important. On August 18, HP announced that it was embarking on a bold new strategy, exiting the PC business and acquiring a major UK software company.

One can debate the merits of the plan, but HP clearly did a terrible job of selling it. Business analysts quickly attacked the moves and investors fled.

HP’s stock collapsed, falling from a closing price of $32.61 on August 16 to a closing price of $23.6 on August 19.

HP executives are now desperately trying to convince people that the plan makes sense. CEO Apotheker is traveling the globe meeting with big investors and HP is running full-page ads in various newspapers explaining the decisions.

With so much skepticism, it will be challenging to execute this strategy. With people questioning the moves, it will be difficult to excite employees and inspire partners. Investors will be slow to come around.

The lesson here is quite clear: selling a plan is critically important. For a CEO, the key audiences are the board, employees and investors. It is almost always a problem if these groups don’t believe in the plan. For company executives, getting senior management and cross-functional peers on board is essential.

A good plan has to be clear and it has to be convincing. HP appears to have missed on both fronts.

1 Response

  1. I recall reading in the Wall Street Journal: “H-P needs to move quickly to remake its business, a point underlined by the weak guidance offered for the quarter ending October.”

    Crafting a paradigm shift is a foresight-driven, in-the-moment, improvised show and cannot be easily stage managed via multiple rehearsals to (in)direct stakeholders apriori to overcome scepticm, which has greater critical mass (in today’s economy) than non-skeptical stakeholders. That said, one cannot predict apriori if the business strategy is going to be overwhelmingly successful until the execution is underway. Apriori predictions in the strategy phase will often conjure up a skeptical bias during chasm crossing.

    This strategic shift is certainly a Big, Hairy, Audacious Goal (BHAG) for HP. The execution needs at least an ounce of the Kellogg brand promise while living in an era fueled by “the audacity of hope”:

    “We believe that business can be bravely led, passionately collaborative and world changing.”

Join the conversation