HP CEO Meg Whitman on Integrity & Courage in Leadership

like thank you for being here today I'm delighted at the chance to have this conversation I have a few questions here on your professional journey your leadership philosophy in your personal life before we open it up to questions from audience and Twitter as dean saloner mentioned you've been incredibly generous with your time at the GSB this is the fourth view from the top session that you are a part of which must be some fall for record since the last time you were here we knew from the top which was in 2011 the big decision that you made was to become the CEO of HP this was not an easy job in fact this is what Falls magazine had to say about it Meg stepped into a mess HP stock had tumbled 42 percent in the year before archrival Dell was gaining ground and HP seemed powerless to stop it HP had squeezed out its four previous CEOs Whitman's immediate predecessor in lasted just 11 months what made you decide to take on the role and I said a good question so I answer as Garth had mentioned I have lost the race for governor and one of the things that's interesting when you lose a political race unlike anything else you do the day you lose the next day you have nothing to do no meetings nothing you're sitting alone and none of your friends call you because they feel so badly for you and so it was February and I was trying to figure out what I was going to do next and it was one afternoon I was sitting at home and my husband has a neurosurgeon here at Stanford Kim into the living room or into our family room at 4 o'clock he got home early and I was sitting there watching Ellen DeGeneres looked at me and goes oh this is really not good it's sort of fairly not good and like as if on cue the next day Marc Andreessen called to see if I'd like to sit on the board of HP and I thought fabulous this is great what what could go wrong 12 minutes from my house incredibly while we're on company you know I'll be on the committee it'll be great fun well of course you know nine months later the company was in a big challenge and at first I said no but was ultimately persuaded by the fact that companies like HP matter in my view they mattered to Silicon Valley I would argue they matter to California they matter to the United States and frankly they matter globally we are an incredibly important corporate citizen across the world in other for example were the second largest private employer in Costa Rica I think with the third largest private employer in the Czech Republic so it matters what happens to this company and I thought you know what maybe I can make a small contribution to reviving HP and its place in Silicon Valley and in the tech world so ultimately decided to take it on and in some ways the probably the biggest advantage I had was I was not a Freshman CEO had I been a freshman CEO I think I might have been completely overwhelmed by what happened here but the good news is I've been a CEO for 10 years I kind of knew how things worked I understood how Wall Street worked and I think was you know more effective than I would have otherwise been if this was my first rodeo and you've spoken about understanding what is going on right within an organization as you join it yes what was going right at HP what had to be fixed so I think this is a very good lesson for all of you when you find yourself in a new situation particularly in a senior leadership role and you're in a new organization your instinct is to go fix what's wrong right make the list of all the things that need to be fixed and go after them my advice now having done this on a number of times is go into an organization and figure out what that company's doing right and do more of it you'll eventually get to your to-do-list into your fix-it list but if you come in and just talk about what's growing wrong you will lose hearts and minds so to your point I figured out immediately what the founder DNA was of HP and despite all the acquisitions all the board drama everything that had happened to this company the founder DNA from Bill Hewlett and Dave Packard had shown through and first of all it's an engineering innovation company that's who this company is and second we're partnering company the DNA of this company is very collaborative we sell for 150,000 VARs and so actually focusing back on collaboration on our channel partners was part of the success of the turnaround and then finally to my surprise this company cares a lot about social responsibility and this was bill a Dave were all about the environment we're all about giving back to communities before this was even remotely fashionable there was no term called social responsibility but it's interesting you can see it around the globe with HP people so we just went back to those three things innovation innovation innovation we focused it we increased our D and we let the engineers do their work and we pivoted hard back to partners so what had to be fixed so there were a number of things that had to be fixed first of all we have to win hearts and minds of HP people because you mentioned did four CEOs in the previous five years or six years and I will say that the workforce was reasonably jaded as you would be my first All Hands meeting we survey everyone at HP on everything all the time I think we're like Survey monkeys largest customer and the first survey was you know how do you think about the new CEO and the number one response was she seems nice dot dot dot meaning like how long is this one going to last and what is she going to do so we had to win hearts and minds of people and get them back on the boat and believing again in the future of HP so that was job number one number two is we had to align our cost structure with our revenue trajectory revenues were falling at sort of eight to ten percent and you cannot you cannot let that happen without making a pretty significant change to the fundamental cost structure of the company and then third is we weren't keeping up with innovation and so we had to actually focus innovation get HP Labs in gear again and attract talent and promote talent from within who could take us to the new you know to a new place from an innovation perspective so whether that was cloud or security or big data or the next generation of infrastructure or our next generation of services we had to we had to go about fixing this right away and frankly we had to unfreeze the frozen middle you know the challenge when you come into these companies is you can usually get your senior executives you either replace them or they get onboard the the early folks young career they're all over it they're like okay this is what we want to do it's what we call the frozen middle that you have to go figure out how you get them on board with the agenda that you're trying to achieve so those were some of the things then we had a few issues like the EDS write down the autonomy situation you know there was like a hundred sort of relatively I would say neither of those were minor problems but they were sort of tactical problems that had to be dealt with along with the strategic challenge of who was this company because you might remember right before I took over the previous CEO had said maybe kinda-sorta we were thinking about spinning the PC business so of course that led everyone in our community of buyers to ask the question what is HP strategy so that's the other thing we had to sort out in the first couple of months and then how did you go about doing some of these things so it was pretty challenging because many of you know my background in technology is more in consumer technology than it is in enterprise technology and HP for the most part is an enterprise company even our printing and PC business 2/3 of our printers and PCs are sold to business as opposed to consumers and so I had to learn the technology business from an enterprise perspective I needed to learn what we did I needed to get my arms around this vast company and so I tried a number of things first is you know assembled a sort of a group of people who I thought could help then I brought some people in from the outside who understood the industry like Scott McNealy then I sort of said ok well that's interesting now maybe I need some external consulting help and it was really a process over a couple year period to figure out what this company did well and then how to achieve the objectives and of course the ultimate decision lay in creating this separation of two companies I think most of you know we are separating Hill and Packard into two fortune 50 companies can you imagine there were two fortune 50 companies embedded in HP HP Inc which will be our printer and personal systems business is a fifty seven billion dollar business and Hill at Packard Enterprise which is our data center business our server storage networking converged infrastructure cloud security software as well as our enterprise services business is also a fifty seven billion dollar company so that freeing of to be more focused to have a capital structure that is right for the market opportunities that both these companies face is going to be a big enabler of the two strategies that we've now crafted for HP Inc and he'll at Packard Enterprise so it's completely the right thing to do but by the way took a fair amount of courage to actually make that decision because there are the law of unintended consequences as you can imagine but we feel really good about it and so the separation occurs November 1st so knock on wood well guess it all separated just going back a bit the last time we were here you spoke about how early on perhaps you were not fully convinced about the ebay opportunity yeah what got you convinced that you had on your hands of inner yeah so I think many people know the story so I was at Hasbro running the preschool division which was Barney Arthur Teletubbies my personal favorite mr. Potato Head and minding my own business my husband was running the brain tumor program at Harvard's Teaching Hospital the Mass General which in the medical world is everyone sort of aspires to the Mass General the MGH the acronym is they'd like to say man's greatest hospital I would argue that there might be another one out on the west coast but in any case and I got a call from a headhunter about joining this no name Internet company called eBay and I said no I'm not moving my husband and two boys 3,000 miles across the company we're not doing this and he called back three weeks later and he said Meg I'm begging you to come meet with the founder and I didn't want to make the headhunter mad I thought I certainly do not want this job but I might want his next job and so I will put myself on a plane and so I came out and spent the day with Pierre Omidyar and Jeff Skoll and at the end of the day I called my husband from San Francisco Airport and I said hon we should do this the reason was what I saw in my long years in the consumer space if you can see two things in a company then you have liftoff number one is does that consumer product or service enable you to do something you could not do before in a real and meaningful way so in my program build a is white or white you know fresher breath cleaner teeth in a meaningful way but what I saw at eBay was it enabled people to make connections and to trade without regard to time and distance so for example if you used to be a collector of civil war memorabilia you could only do that in your town all of a sudden you could collect across the country and across the globe it made an inefficient market efficient and there was price discovery through the auction format so that's one thing so I saw right away real meaningful things you could not do before and then I figured out people had made personal connections they had an affinity for eBay people had met their best friends on eBay they had connected over a shared area of interest you could argue eBay was the first social networking company because there was a deep connection over a shared area of interest and collectors were the first to come to eBay and collectors when you have a passion for something like glass or teapots or Barbies or whatever happens to me people think you're a little weird right you know not everyone understands a passion for teacups but when you find other people who love teacups then you have this incredible connection and so I saw real features and functionality and an emotional connection to the company and I said to my husband I said this thing is going to be big I never dreamed it would be as big as it was but I said this is what you look for in a career in consumer products and services a lot of us in the audience are moving from sort of non technology backgrounds into leadership positions and technology not unlike how you yeah has been into eBay but not a lot of experience in technology businesses what advice would you have for us who try to do that so I think a couple things one is business principles apply regardless of the industry you know I spend a fair amount of time with my CEO colleagues and we laugh because business is business honestly whether you are at Procter & Gamble at Twitter at HP at you know Wells Fargo Bank at caterpillar Tractor the principles are exactly the same what I will say in technology you need to be either end up as a deep technologist or you need to surround yourself with deep technologists because there is an element of being able to see around corners to be able to see what is next and so if you are not from a technology background and you're not an engineer you need to find the people in your organization who will help you plot the technology path and the technology vision and so that's probably the advice and then you've just got to ask the questions you know you cannot be embarrassed to ask question about something and and by the way the technologists will see what you're made of they will they will try to to sort of ferret you out as a pretender and so better not to be a pretender would be my advice I'll tell you a little story so there was the CI the CTO at eBay a really very talented guy named Mike Wilson who had written the second version of eBay who was Skippy on the boards at night was sort of the Community Builder and he was not entirely he was actually enthusiastic when I came but you might recall we had a very severe outage and eBay in June 10th at 5 o'clock in 1999 I remember like it was yesterday anyway early on in my career before that at eBay um I was trying to figure out how much because we had outages all the time and I was trying to figure out how much capacity we had in the system and Mike didn't think about the question that way and didn't really want to answer the question in the way I was asking because I was saying I said I reverted to my shoe company experience I said ok if we had a shoe factory in South Korea the people could tell me exactly how many pairs of shoes we could get through this factory because well I don't think about it that way so we had sort of this little tussle then I get an email not too many days later that starts off by the title of the emails cookies meg is probably wondering if we're a baking company well okay I was like fit to be tied and and so that's where you actually have to take a stand you know and so it was one of those sort of seminal moments in you know where you have to basically push back and and lead regardless of what they're you know what the sort of the entrenched interests are trying to do and to Pierre Omidyar credit he was a defender all the way through that and so it also helps if you've got a founder technologist who is actually helping to remove this company into it into a new area right leading up to eBay is grad school PG Bain & Company yes nian Hasbro as we think about our phones jobs out of school what advice do you have for us yeah so listen I think it's a little different graduating from Business School today than it was in 1979 when I graduated from business school does it seem like a hundred years ago um first of all there was not the startup culture that there is today in Silicon Valley and in Austin Texas and in Boston Massachusetts I mean I don't think anyone really seriously considered starting their own company out of Harvard Business School or joining a start-up it just wasn't what you did it wasn't really in the menu of things and I think many of you will join a startup or start a company so back then what we were thinking was how do we get the very best training for a long career in business how do we like lay the pipe of things that we will need to know through a career and so that's why I chose to go to I was interested in marketing so I decided to go to what I perceived as the very best company in marketing and that was P&G because you have to remember I had no work experience between undergraduate and graduate school so I was all about the training and I have to say you know it's it's really quite fun because I now sit on the P&G board you know talk about coming full circle but what I learned at P&G has stood me in good stead till this day so I was all about going to the best companies to get the best training to prepare for what I believed would be a long career you know today if I was doing it I don't know what I would do I have to say my 9 years of bein with some of the best experience I've ever had you know just learned everything about you know cost competition competitors you know strategy I mean again everything that I learned at Bain those nine years I have I employed deployed at eBay and also frankly at HP because we had to figure out what our strategy was so you know I think you have to sort of live in the times in which you graduate it's a very different environment than it was and you know listen it's hard to it's hard to know exactly what I did today because I don't see the I mean I see the opportunities that you have but it's that balance between showing up at a startup versus getting a little bit more laying a pipe that's going to sit set you up in good stead but the great thing about it is today is there's no harm no foul okay so you graduate from business school you join a startup and it doesn't work it's inconvenient but it's not the end of your life and you know when I joined eBay you know I said look what's the worst thing that can happen it doesn't work out and then I don't get another job so you know I think you have to have the appropriate level of risk-taking for your personal situation for your personality and for what the opportunities are this might be a good opportunity to perhaps pivot and talk a bit about your leadership philosophy do you have the reputation of someone who goes by the maxim run to the fire yeah don't hide from it yes what were the key factors when you were growing up that contributed to who you are today so you mean like K through 12 kind of growing up pretty much so listen I was probably that generation of women who was really at the at the beginning edge of women going to business school and frankly to law school and to medical school yes there were precursors to me but we were the first generation that that sort of arrived in real numbers and but real numbers is a relative thing my first year class at Procter & Gamble had a hundred brand assistants of which four were women and so my mother I think was very instrumental in convincing my sister and I and frankly my brother that we could actually do anything that we set our minds to and I'll tell you a little story some of you may have heard it so my mother during World War two really wanted to you know help with the war effort but there weren't just a ton of opportunities for women so she decided to join the Red Cross and they said this class of women we're going to deploy you to the you know the the Pacific to New Guinea and so she got on a troop ship from San Francisco to New Guinea with like a thousand women on a troop ship they get to New Guinea and the base commander greets this group of women and says hey we have a shortage of airplane mechanics and truck mechanics which of you would like to volunteer okay my mother had never looked under the hood of anything I promise you and but she sort of looked abandoned well seems like this is where the need is greatest and so she raised her hand and the long and short of this is four years later she was a fully certified airplane mechanic and a fully certified truck mechanic and she brought that to us as kids she said listen if I can figure out how to be an airplane mechanic you can do anything you want to do so I think it was that sort of encouragement and then I I have to say team sports was a really formative experience for me I played team sports from the time I was a little girl right through college and it was incredibly formative in terms of I think how I lead so the courage to take on anything was born very early and one would argue that that courage is a really important character I think in business you also have to be smart about it one could argue that the courage to run for governor was not Pro the most informed said of courage so you have to be you have to be careful but I think risk-taking was born early on I mean going to HP was a risk running for governor was a risk frankly going to ebay was a risk some of them worked out one of them didn't let's let's talk about that a bit yeah what led you do um what led you into politics and what did you learn when you didn't win yeah so let's see how much time do we have mom so what let me was that I'd always been interested in politics and had had a chance to work on my friend Mitt Romney's campaign so my boss had been in company for ten years was mitt and I guess he's coming here in three or four weeks um so I had watched him run for Senator run for governor and then ultimately run for president and then what he lost the first race for president city I'd been quite involved with his campaign and I signed on to John McCain's campaign as a business person and so I'd been interested in politics and then I saw what challenges this state faced it's hard to remember but in 2010 we had about a hundred and sixty eight billion dollar budget deficit the school system had degraded here dramatically still hat still is so in 1956 the public school system in California was number one rated in the country it's now number 49 out of 50 states all kinds of challenges around water that we see today it was completely clear in 2010 that we had to take action around the infrastructure in water and so I thought given my business background given sort of the problem-solving nature of what we're all trained to do I actually thought that I could potentially be an example of the citizen democracy which is you go do something and then go into business go into politics and maybe go back so that's why I decided to do it and what did I learn okay lesson number one is you should probably not run as a Republican in a state that is largely democratic okay you actually need to do the math and then believe the mass so that was sort of one problem for those of you who are outside of California it's basically 60% Democrat 40% Republican there's a huge chunk of independence but the independents lean one way or the other so you sort of start with a challenge and then secondarily there is something to be said for people who have spent their career in politics I'm not arguing it's the right thing but just like I have spent my career in business and instinctively I know things by breathing because I've done it for so long when you were in politics there is instincts about that and I didn't have any of those instincts because I had never done it before and so I think it's just important to recognize that experience does matter here and have you noticed the politicians rarely answer directly the question that they are as it is not because they're bad people it's not because they don't know the answer to the question it's because there is no percentage in answering those questions because one way or another you're either gaining or losing votes and so there is a reason the politicians act the way they do as citizens it sort of drives us crazy I made some cardinal errors which I actually answered the question and so listen it was a terrific experience it made me much tougher I have a very thick skin for the press you know when I came to HP this is a great story there was a fair amount of criticism about me coming to HP in fact there was one headline that I remember which is Silicon Valley is howling with laughter that meg is the CEO of HP and the board who had asked me to do this was we had a board meeting that first day and so they're reading all this press and they're feeling a little bit badly for me and I'm reading the press and I said okay do not feel bad because this is the best press I have had in two-and-a-half years so it's all kind of relevant and it's all kind of you know relevant to what your frame of references and I will say we should be very grateful to people who run for office because it is the hardest thing I have ever done it is a hundred times harder than running HP on our worst days running for governor was much much more difficult so we should all celebrate our colleagues and people who are willing to put themselves forward because there is nothing like having your name on the ballot you can't actually imagine it until you do it it's a lot a lot of really really good learnings thank you and sitting back of it how did you think about building a personal brand throughout your carrier was that the conscious crafting process or it just happened by being authentic to who you are how's that work yeah you know I didn't think a lot about this I'm not sure when I graduated from business school there was this notion of a personal brand I just kind of went in and did the job that I was asked to do and I think I made a couple of decisions early which is an epi ng one of my first assignments when I arrived as a newly minted Harvard MBA was got how big the hole in the shampoo cap should be well and I'm thinking okay this is a shampoo company don't they have people who do this and this cannot be the first time that they are encountering this question and I almost went to my brand manager and said okay this is like a really stupid assignment and how about we just skip the formalities here and we get into something that is meeting I went home that night and decided better of it and I actually flipped over I said okay I'm gonna do the very best job that has ever been done figuring out how big the hole in the shampoo counter should be I did focus groups I did quantitative testing and I wrote the best memo that has ever been written on this particular subject and what it taught me was that sometimes you just need to buckle down and do what you are being asked to do particularly early on in your career even though it seems idiotic and what was really going on here is PMG was trying to teach us how to get things done at P&G right they did actually know the answer to the question but they were trying to teach you about how things got done about how to write memos about how quantitative analysis actually did yield I mean a lot of business problems do yield to analysis so I think the personal brand was perhaps just you know actually doing the very best job I knew how to do in it in overtime a reasonably authentic way because you are you guys are all who you are you know you will grow and you will change over the next decade or two but fundamentally you are who you are and you have to double down on those strengths there's a lot of consulting firms will say how do you shore up what is real weaknesses my view is you do have to have some competency and things that are not your core but actually what is your zone of genius what do you do really really well and often that is what you like to do and so actually sort of that authentic knowing what you love to do knowing what you're good at I would say was it wasn't part of my personal brand because I didn't think about it that way but that's actually in some ways what I fell into a lot more personal questions later you were married to array successful neurosurgeon you moved to Boston with your husband when he accepted the position in Massachusetts General later in your family move to California when you became the CEO of eBay how do you balance two successful careers in a family yeah so actually with lots of challenges this has really been interesting and quite a bit of fun but I will say in some ways it would have been easy if I had been married to a sculptor because that would have been a little bit more flexible and actually my husband and I laugh with each other because no sooner did one of us get traction at a job than the other one would have a brilliant idea about what they wanted to do and we used to say we spent much of the first 25 years of being married sabotaging each other's careers and so for example I was at Disney and I loved every minute of my four years at Disney I might still be at Disney but at that time my husband got a chance to run the brain tumor center at Mass General and he really wanted to do it and I really did not want to do it but sometimes in life you have to do things that you do not want to do so we picked up and moved back to Boston and you know you just kind of go with it and I have to give him credit because when I got the job at eBay I was pretty convinced that this is something that we should do but it was not obvious and so I so he said I know why don't you go out and see how it goes for six months I'm like no no no no no no we're not doing that actually I need you to see if you can find a job so he called up - the good news is there's only 3,000 neurosurgeons in the whole country so they actually know each other so he called up Gary Steinberg who runs neurosurgery here at Stanford and a colleague up at UCSF and I know how this conversation went with Gary Steinberg which was my wife wants to go to this no-name Internet company you don't have a job do you any and this is where fate comes in what Gary said is you know what I'm opening a search for the head of the brain tumor program today you can have it if you will so it never actually happens that way so it's a little bit of luck and a little bit of courage and to my husband's credit we had at that time we had saved up about four hundred thousand dollars and what I did is actually took that money and invested it I actually bought my options out Eddie day and I said to Griff doesn't it seem like a little risky he goes listen we have much bigger problems than this if this job does not work out so you know so he was completely gay and until we moved out here and we lived in Oak Creek Apartments you know Oak Creek Apartments and it's we had a two-bedroom apartment and that second bedroom do any of you know those apartments the second bedroom is really small in fact the master bedroom closet is bigger than the second bedroom and our 13 year old lived in the master bedroom closet for a year because it was a bigger room and but I was our 10 year old in the second bedroom in our teenager 13 year old in the master bedroom closet so you know you just do stuff and you know really it's just been great fun I know a lot more about medicine than I ever would have he knows a lot more about business and we just trained it off and you know you can't ever look back and say what it could have should've you know you just kind of go and you always have to remember this is a question we asked each other which is what is the worst thing that can happen okay it's like not that bad you get another job and and so that sort of sustained us but I have to say I mean it's it was wild there are many times where it was just wild in terms of raising two teenagers you know two boys tried to run you know the neurosurgery career or a business career I mean it was there were they were there are always trade-offs here and anyone who tells you that there are not trade-offs is either superhuman where they're not telling you the truth you can decide which one how do you how do you decide when you have Trados again you try to do the most important thing so what I concluded early on in my career was that it was very difficult to be the perfect wife the perfect mother the perfect CEO the perfect hostess the perfect charity person you cannot do this and I decided you know long ago that I would really focus on my job and my family and that I couldn't do a lot of these other things you know my said this many times my house does not look like Martha Stewart just left I mean it's you know everything's a trade-off if I could wear a uniform to work every day I would um I love Elizabeth Holmes do you know Elizabeth home she was exact same thing every single day I can completely relate to that you know you've got ten black turtlenecks ten black pants ten jet black jackets can you just change them out it's like brilliant I wish I'd thought of it oh that's good fashion advice so you know something has to give here and and then we would just make the decisions about what seemed to be the most important and we did make a rule that we tried one of us to be home every night for dinner Monday through Thursday and then we tried to all be home Friday Saturday Sunday and and we would only do things if the kids could come on the weekends so you know you just make trade-offs and you do the best you can and there's there's no perfect there's no perfect way to do it and I have many friends who were in my class at Harvard Business School in my class at Princeton who decided to stay home full-time and you know everyone has to make the decision that you need to make that's right for you and there's no textbook there's no manual you just have to kind of figure it out as you go along so it's hard it's hard but very fun this would be a good time to open up the floor to questions from the audience on Twitter we have two mics on this side and Michelle on the other if you have a question please raise your hand and keep your hands raised so that they can spot you you can also tweet your questions usually using hashtag GSB VFD T especially if you're up there and Caroline up front would ask those questions for you let's actually start with a question from Twitter so Meg you are often viewed as a trailblazer for women in leadership is it more difficult to be a woman in business and technology or a woman running for political office I would say Roman Roman for political office it is very very difficult and I'll tell you why and I as you know I'm a Republican but I have to happen to actually have a lot of regard for what Hillary Clinton has accomplished because in business here's the grilling good news about business there are results okay every quarter you're gaining a losing market share you have a return on invested capital your sales are growing there is a there's something that you can anchor on in politics when you're running and frankly even when you're a politician the results are much less clear so I think it's easier for women and minorities and everyone when there are results that you can point to so I have to hand it to the women who are in politics because the results are not as clear and so therefore there can be the politics there can be the journalism or the reporters of opinion you know there's just it's not as clear and so I think that makes it much more difficult because actually in some ways I serve at the pleasure of the hill at Packard board and that board evaluates me based on the results you know I can a purple hair and do whatever but the results are the results and so that's why I think it's a bit more difficult as I you know sort of look at the landscape which is why I think you know you've got it you've got to actually hand it to a lot of these women in politics who've done really a remarkable job whether it's you know members of Congress here like you know zoloft grin or others they've really done a great job take a question there hi this is Sam from MSX program you had a chance to go back to like ten years ago what do you have done differently in competition with Baba so um I have the scars on my back from two real challenges first let me start with Japan because eBay is not number one in Japan yahoo auctions is number one in Japan and the reason is is we have this very well publicized outage in as I said June of 1999 and we were all set to launch in Japan but then when the site crash we actually had to fix the United States and we were late launching to Japan and in many businesses like eBay like PayPal I would argue like uber like many of these are what's called Network effects that the more buyers you have the more sellers you have and so the first market often gets those Network effects and Yahoo beat us to Japan because we had technology issues so if I had to do that over again I would nail these technology issues much faster than we did the second is China and we bought a company in China called each net the good news for eBay was students like you when everyone saw eBay's trajectory a lot of Stanford Business School students and Harvard Business School students went home to their home country and started eBay look-alikes and actually as an aside a very funny story was Dan in Latin America there was a Harvard Business School group pitted against a Stanford Business School group the Harvard Business School company was dinner Monday and the Stanford Business School student was Mikado he braked and we went down to figure out who to partner with because we had an asset in that we'd acquired through an acquisition in Brazil or Argentina that we wanted to trade for an equity stake in the company and the Harvard Business School students said absolutely not we got this nailed we don't need you I pay the Stanford students were like where do we sign and today as you know that the Stanford Business School students just killed the Harvard Business School students just over which was hurtful to me but anyway the Stanford Business School students totally nailed it and and so then we bought a company called each net and we made one big mistake which is we should have left the each net platform on their own platform in China instead what we did is we put each net onto the global eBay platform because it had worked everywhere it had worked in Western Europe it had worked all of it we'd bought all these baby eBay's and basically migrated them to one common platform which had a lot of advantages one is cost second is speed to market because when you roll by it now you could roll it to 30 countries as opposed to do it incrementally but we made a mistake in China as we moved each net to the eBay platform and China is different and about the same time Alibaba ran into trouble because of the SAR virus and so they focused on Taobao and they had a uniquely Chinese platform and by the way they didn't charge anything for years and years and years and years and they just out executed us and so you know what I would have done is actually left bow Shou in charge and owned the 30% of China that we also that we originally owned and let him do his own thing so that's really the lesson there and you know we we have a PayPal business there but the China business is miniscule so you know what if you look at Japan and China two important markets it's where we didn't didn't strategically actually do the right thing but it was not obvious at the time honestly so more power to Jack Ma what a remarkable franchise he has built and it is really in some way the combination of course of PayPal of eBay of Amazon I mean it's he's done a remarkable remarkable job why do we have high when you spoke about turning things around at HP you spoke about returning to the founders DNA and focusing on innovation what changes did you make to the company internally to really foster that innovation and be conducive to the employees taking charge so first of all we laid out the strategy really really quickly and we basically said these are the things we're going to do well we're going to make hard to do this but we're going to do these things really well so the first thing we did was actually increase R&D spending while we were reducing the cost structure of the company dramatically I mean for those of you who don't know we are down net 55,000 people at HP from the fall of 2012 so while we were doing that we're actually increasing our investment in R&D and that was hard to do right because you've got to save so that you can invest in what actually matters so that was a really important thing the second was reimagine the culture of this company so many of you probably know about the HP way this was the original sort of codification of what the culture was at HP founded by Bill Hewlett and Dave Packard they were all over this HP way and we knew we had to reboot the culture but we didn't want to throw out what made this company great so we rebooted it we called it the HP way now because you can never go back you have to reinvent for the future but we knew we had to take the threads of what it made this company great so we rolled that out across the entire company and the second thing is we aligned the financial incentives to the strategy as it turns out and you all know this but particularly at big companies people actually focus on what they're being paid to do and you can wish it wasn't that way you can wish a lot of things but one of the things we did is we compensated the top couple hundred people on cash flow and we generated remarkable cash flow at this company in fact the repair of the balance sheet is sort of amazing we went from about eleven point nine billion dollars of net debt on the operating company to five point nine billion dollars of net cash in three years that allowed us to get on the front foot to be able to buy Aruba to be able to buy voltage and you'll see us do a lot more acquisitions because we have the balance sheet to do it and so had we not focused on cash flow and had we not paid the people who really had an influence on cash flow because as you know cash conversion cycle as day sales outstanding days payable and inventory and it was just amazing to watch this battleship turn and frankly that's a lot of the reason that our stock went from eleven dollars and sixty-two cents or whatever the low was to close to forty over Christmas now we have a different challenge which is foreign exchange which is a problem that every other big American company has not just in our industry but you've just got to focus on what are the most important things and how do you incentivize that so I would say increasing R&D spending focusing R&D spending celebrating the engineers celebrating innovation pivoting back to the customers and the channels and then you know focusing on the things that will make the biggest difference from the financial perspective because there's a sort of an interesting flywheel here which is if you can improve the results remember back to what I said to the other woman about results actually matter if you can improve the results that gives customers employees and the street confidence which enables you to sell more which enables you to do better which starts this positive flywheel going which allows you to and by the way the sort of external view of how well you're doing is the stock price so going from 11 or 12 dollars to close to 40 made a big difference in sort of the esprit de corps we created 40 billion dollars of market okay so we created Twitter LinkedIn maybe we created one of these in the last three years here and that gave people a lot of confidence including by the way our partners and our customers Kalin do we have a question from Twitter so mag another question from Twitter you've talked about reviving innovation and suggested that many alumni and people in this audience join startups how can startups actually collaborate with HP avowedly so we've just launched a program that we call Pathfinder which is how do we reach out into the valley to find the new startups that are complementary to what we're either HP Inc is going or Hill at Packard Enterprise is going and how do we either create you know an investment opportunity that would be good for startups or the thing that HP does really well is our go-to-market I mentioned we sell through 150,000 VARs we're in 170 countries and we have a direct selling force that is actually second to none so what we're now trying to do is reach out into the valley because we're here and now we're healthy enough to do it to make sure that we've got the right relationships with the venture community and with startups so to the extent there are startups that are enterprise focused on the Hewlett Packard Enterprise side or 3d printing focused on the on the other side how do we make the investments and then decide when it might be the right thing to open our go-to-market now we can't go to market with lots and lots of startups you know we've got a huge portfolio we've got to sell but every once in a while we can make a bet on a startup that enables them to be part of a solution that we sell and allows the startup to take advantage of our go-to-market so that's the way we're thinking about it and for the first couple of years there's when you do a turnaround there is pacing and sequencing there is only so much a company can do even a company as big as HP if you do not focus on the small number of things that matter you are not going to turn your your enterprise around and so wow this was something I wanted to do when I first got here it was literally all hands on deck on a small number of things to make sure that we got the turnaround under way so those that's you know that's how we're sort of hoping we're going to tap into this ecosystem and ultimately they're you know we as I said we have got to acquire more innovation than we do today listen organic innovation will always be number one but we have to be more acquisitive I think as a technology company in one of the greatest technology dislocations I've seen in my career I shall get it ingress Meg thank you for your time my name is Kristen I'm a second year MBA student here earlier you talked about give an example about how one can do to lose hearts and minds I was wondering can you talk about how one can do to win hearts and minds specifically do you think the purchase need to be different when you starting out your career post MBA as a junior person versus someone in the senior position thank you so it's a very good question um so listen I think how you win hearts and minds and how you become a trusted colleague is the same when you're the CEO is when you're a new person and that is do what you say you're going to do and one of the very first things I said I was going to do at HP was I was going to figure out whether we should sell this PC Group and we're going to do it in 30 days and I did and so there was very early on it was here's set him up knock him down and I my advice to all of you is say what you're going to do if you join a startup or you join an established company say what you mean mean what you say and get it done without a lot of stuff and so that's the first thing the second is and this alert from politics when you are trying to win hearts and minds of a big company like HP there's something unlearned in politics and that is called symbolic value so you might remember when Jerry Brown won the election he did something actually that at first I thought was not very smart and then I thought it was genius you might recall he decided to take away cell phones from about half the civil servants in the in the name of narrowing the budget gap in the state of California okay the intellectual the left-brain meg said that is the dumbest thing I've ever seen the cell phone budget for the state of California is 0.001 percent and will not make a difference but actually what he was commuted getting to the electorate is I'm on it and if you had asked a citizen in the state of California when he did that they would have said jarred brownies on this cost thing he is taking cell phones away from the civil servants one could argue you should have unplugged the landlines but doesn't matter the point was he had a lot of symbolic value watch politicians so much of what they do is symbolic value the State of the Union address the guests that the president has in the gallery is all symbolic value so I learnt that so when it came to HP I said what is the thing that we can do that will show the company that this is going to be different and the very first thing we did is tore down the executive parking lot with the commando fence and the barbed wire around it and everyone walks in the front door just like everyone else the second thing we did is I tore out all the wood paneled offices in the executive area of HP and we all sit in cubicles just like every other cubicle worldwide in HP and we never actually had to publicize this 330,000 HP people knew this within about thirty two and a half seconds and so it's not substantial ok ripping out the cubicle or ripping out the wood paneled office didn't actually do anything it just showed the kind of company that we wanted to run and so this symbolic values I think are really really important now it does not substitute for delivering the results but you're trying to win hearts and minds fast you're trying to show that this is a different thing and results take a while to turn right so you've got to sort of say hey here's the kind of company that we want to be and celebrating some of the early innovation one of my executives when I got there had actually gone out to HP labs and said what do you got and we found some incredible things in HP Labs we celebrated those and we brought them to market really fast so the other thing I would advise when you are running a company or doing a turnaround is early wins so when eBay bought PayPal PayPal was not entirely thrilled to be bought by eBay back in the day and so what we did is we immediately integrated the PayPal functionality into the largest marketplace in the world and what happened of course is PayPal volume went through the roof and so the PayPal people said wow this is furthering our mission this is making PayPal more successful being part of eBay is making my job more fun making the company more successful so that early win is really really important and we're running that play again with a ribeye so how do we make sure that the aruba team who is actually quite thrilled to be part of HP but how do we get early wins for Aruba how does the Aruba team feel and six months from now Wow being part of HP was fantastic for us so that's the kind of thing that you think about I'm going to be selfish yes slip in a last question sure this question has become a more recent view from the top tradition and every ethnic inter Stanford GSB is asked to fill an answer for this question their essays so here is it what matters most to you and why yeah so listening I bet there's a hundred answers to this question but in the end the thing that matters most to me and if you think about it I bet matters most to you which is your family and your extended network of friends in the end that is super important so while we get wrapped around the axle of doing whatever we're doing it is really important to remember that that's what matters most I'll say the other thing is perspective and this has been one of the delights of being married to a neurosurgeon okay what we do in business is important it's incredibly important it's important to the employees of HP to our VARs but no one gets hurt at HP no one dies and so remembering what's really important is I think critical and I'll tell you a little story which I've told on a number of occasions so one of my closest friends from Harvard Business School who was in my section had a great career in Los Angeles and has two children who are about the same age as my children and her 24 year old went into the green berets and was killed in Afghanistan in June so when things seem pretty tough remember your 24 year old did not get killed in Afghanistan so I think you've just got to remember what actually matters here and it's great to be wrapped up in work it is terrific but in the end that is the perspective of what is really really important here honestly and I will say when I lost the governor's race it was hard to have that perspective because it's what it could have should have if I'd done this if I'd done that you know maybe it would have turned out differently in the end nothing really bad happened I lost the governor's race and you in you know my family was intact my husband was a menial you just have to remember and then last but not least I would say your reputation you have to be known as high integrity doing what you say saying what you mean because everything can go away and if you still have your integrity intact and so often an eBay of HP you know I often ask what is the right thing to do here and it's challenging because the right thing to do is quite different in different cultures and I always used to say to our teams it may be different in different countries but if your mother or your father or someone you love your children were reading the New York Times and they knew what you were doing would they be proud or if they were sitting in the eve of the conference room watching the decision-making process would they be proud of you and that's the ultimate question whether you're you know from Asia or from Latin America or for Europe usually having that notion of what would your parents think transverses all those cultural norms about what's acceptable and what's not so I think those are those are the three things that I'd point to right away thank you so much from you

Channel: Stanford Graduate School of Business

Views: 84,064

Rating: 4.6771545 out of 5

Keywords: integrity, leadership, meg whitman, hewlett packard, view from the top, leaders, leadership development, technology, risk, risk taking, politics, Chief Executive Officer (Job Title), Success, Personal, Afghanistan, Cash Flow, Paypal, Tea Cups, Students, Procter & Gamble, The Green Berets, Printers, Brain Tumor, Neurosurgery, China, Aruba, Harvard Business School, Auctions, Bedroom, Fun, Japan, Laughter, Guinea, Shoes

Id: gcvX-lNu1bM

Length: 54min 41sec (3281 seconds)

Published: Fri Apr 10 2015

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[u/HPEthrowaway]

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