Line of Succession

HP's new CEO Leo Apotheker has a tough road ahead.

Image: Mal Langsdon/Reuters

Transitions are never easy. And when a company has to abruptly switch CEOs due to scandal, the turnover can be even tougher. That’s what HP is seeing, as Wall Street fails to respond to the computer maker’s new chief, Leo Apotheker, formerly of SAP.

It could be because Apotheker is a Silicon Valley outsider, but he does have experience—albeit troubled—in the field, having run German software maker SAP before abruptly resigning himself amid customer complaints.

U.S. firms know that the number one rule in business is that the customer is always right, and to that end, a manager with a good run at customer service would have been a good choice. But at this point, HP is sticking by its new man. So what can the company do to assure investors that it’s on good footing going forward?

1. Make sure that the CEO’s support team is strong and experienced. Companies know that they’re only as good as their weakest link, and if that weak link is the man sitting in the corner office, a solid, experienced team can do wonders. If Apotheker lacks in creating an excellent customer service experience, an easy solution can be as simple as finding the highest-rated rep and promote him so he can have the chief’s ear, but the power to implement initiatives that he knows have worked.

2. Talk the talk. It’s essential that Apotheker speaks to Wall Street in a language investors understand. He needs to show vision and a realistic way to accomplish that vision. Saying that the company is healthy is not good enough. Talking about risk and competition in a sober tone that still conveys confidence is a tough skill to master, but it’s essential that it become a key tool in Apotheker’s arsenal.

3. Take time to adjust. HP’s former CEO Mark Hurd is a tough act to follow. True, he resigned amid a cloud of scandal, but he was popular with Wall Street and he kept the company lean through tough times, ensuring its survival. Apotheker needs to settle in, and he needs to start proving that he’s the right man for the job. But that doesn’t happen overnight. The best tactic the new chief can take is to study his business inside and out and make some tough decisions. That will surely make its mark.

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