Can Steve Jobs' Example Help Save HP?
Steve Jobs' skills and quirks made him an anomaly among CEOs. So how can Meg Whitman, who leads the struggling Hewlett-Packard (NYS: HPQ) , replicate Jobs' genius and success? The answer lies not in imitating Jobs' eccentric carrot-only diet, but in emulating the moves he made to pick Apple (NAS: AAPL) back up from the ground.
The power of focus
Walter Isaacson's biography Steve Jobs details one of Jobs' first moves upon returning to Apple: refocusing the product lines and reinvigorating Apple with its competitive advantage of design. He drew a table with two columns and two rows, labeled the columns "consumer" and "professional," and labeled the rows "desktop" and "portable." Instead of multiple product lines with several model numbers, Apple would focus on producing four beautiful products to satisfy these quadrants. This focus allowed Apple to produce museum-quality products, set the stage for the innovation and cross-product integration of the iPod, iPhone, and iPad, and return investors 7,700% since 1997.
What should HP do?
The younger, LSD-using Steve Jobs might have advised: "Simplify, man!" Meaning, HP should focus on core products and its edge over competitors to help recover from its recent stumbles.
What recent stumbles? Well, former CEO Leo Apotheker failed in launching HP's tablet computer, the TouchPad, after acquiring Palm to use its WebOS operating system. Then he looked to spin off HP's dominant personal-computer division -- the division that held the largest market share both worldwide and in the United States. Compared with competitors Dell, IBM, Cisco, and Accenture, HP stock recorded the worst return during Apotheker's reign:
HP'sbBoard replaced Apotheker with Meg Whitman, former eBay CEO, on Sept. 22, and the stock has since gained 17.2%. Whitman gave investors new confidence by confirming that HP would continue selling computers. She also made the WebOS open-source in an effort to help it maintain innovation and re-engage the developer community. Rival operating systems such as Android and iOS possess a huge advantage with their vast network of developers who create innovative apps to improve the user experience. With more WebOS developers and eventually apps, Whitman intends to reintroduce new hardware for WebOS. In short, she is helping HP focus on its core products -- one being personal computers.
Whitman still has mountains of work to do before HP's future is clear. But if she continues to focus on HP's assets, such as market share, and its culture, such as HP's founders' ideology of making "technical contributions for the advancement and welfare of humanity," she may be the next example of great CEO turnaround stories.
The foolish takeaway
Steve Jobs didn't invent restructuring a business to focus on its core? But his example is a clear one for any struggling company, like HP, to follow. And when investors identify that a beaten-down company refocuses on core competencies, it represents a great buying opportunity. These same buying opportunities exist in good companies that operate in beaten-down industries, like the stock that Warren Buffett himself would be looking at if he were a smaller investor. Find out what stock it is in our free report: "The Stocks Only the Smartest Investors Are Buying."
At the time this article was published Fool contributorDan Newmanwas thankful for the pictures to break up Steve Jobs' lengthy biography. Dan owns no shares of the companies mentioned here. Follow him on Twiitter,@TMFHelloNewman.The Motley Fool owns shares of Cisco Systems, IBM, and Apple and has created a bull call spread position on Cisco Systems.Motley Fool newsletter serviceshave recommended buying shares of Dell, Apple, and Cisco Systems and creating a bull call spread position in Apple. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.