In November of 2012, HP announced a write down of more than $8B amounting to approximately 80% of the purchase price it paid for Autonomy, the "big data" software-search company acquired in 2011. Autonomy was supposed to help HP reinvent itself – from a last-generation, traditional technology company to one with a new, fast-moving, and cloud-relevant brand. HP wanted this reinvention very much – and paid very dearly for Autonomy as a primary lever in that vision.
The write down – and public charges of fraud and public admissions of soul-searching – have been front and center in the news (New York Times, HP's former CEO blaming board; Autonomy rebuttal; other news). Any large transaction is complex, with lots of data to digest, many stakeholders, and an array of interests. The breathtaking evaporation of value in this deal is leading to charges of wrongdoing, insinuations of incompetence and blatant self-interest, and other unflattering portrayals by respective parties.
But beyond the forensics of "whodunit" in this particular case, the effectiveness of board and executive leadership should be of particular interest for investors, employees, and shareholders in thinking about this work of business reinvention, and of strategy – and all of the important and supporting data-gathering, scenario formulation, and decision-making processes required. In the run-up to doing the HP-Autonomy deal, the stories cited above suggest some dissenting voices, and arguments/data in support of positions which ultimately did not carry the day. HP's former CEO says now that the board's support was unanimous. HP's team and board approved the deal, placing a huge bet – and paid a rich premium for Autonomy at the time. Was this fraud and misrepresentation on the part of Autonomy, as the press is exploring? Was it a failure of due-diligence at HP? Did HP not dig deep enough into the factors that supported acquiring Autonomy, and at such a rich premium? Was this a blind-faith, swing-for-the-fences bet on HP's part?
In time-bounded, decisive moments, how can boards and executive teams rise to the demands of the occasion? To get high-quality decisions from a large and complex group of people, what capabilities are required to:
- create and sustain the kinds of real, deep, rapid, and exploratory dialog needed to effectively evaluate high-risk deals;
- deal with the challenges of potentially disconfirming data; and
- consider an array of robust alternative scenarios for investing and capturing value?
How might HP's board and executive leadership have undertaken to create and sustain a deep, rich dialog that fully acknowledged and valued ALL the data, perspectives, and feedback – and how might they have generated a larger or different set of alternatives? If the board had been able to collectively share a better sense of possibility, and of risk; and had truly been able to create and consider robust alternatives to the decision they ultimately made – how much value might have been saved – and how might outcomes have been different?
Beyond HP and Autonomy
Is your leadership team facing make-or-break decisions about your future, and how do you assess their capabilities in the pressure-cooker of time-bounded decision-making? How should you assess your executive team's abilities under demands to make high-stakes decisions? Here are a few factors to consider:
- What is Past Practice? How much prior practice has the team had in well-rounded, balanced participation, and exploratory, inquiry-focused dialog?
- What Diverse Conversational Styles Can the Team Support? How multidimensional are your team's conversational patterns, practices, and style? How much time does your team spend in exploratory discussions together – compared to highly structured meetings driven by central control and bulleted PowerPoint agendas?
- How Does the Team Deal with Dissent?
– What is the team's history of response to dissenting or disconfirming data and to alternate points of view? Can the team (and the members on it) fully hear, absorb, and process different stories, types of inputs, and alternate hypotheses – or do divergent alternative perspectives become marginalized, bypassed, ignored, or misrepresented: too threatening, perhaps, for the team to explore? Does the team demonstrate sufficient collective attention and patience to really hear the whole story?
– How does the team deal with the tension of conflicting or alternative viewpoints? Is there a rush to resolve the tension – so that all can feel "aligned" and more comfortable? Does the tension dissolve into unproductive conflict? OR, does the team have the tenacity and patience to stay with the tension, until it has fully processed the value and the "energy" that the tension can offer?
- What are Levels of Trust on the Team? What are the objective
(outside the team) and subjective (executive self-reported) levels of
trust and transparency that the team demonstrates – and what do members
- What are Individual Capabilities and Capacities? To what
extent can individual members of the team contemplate and reflect on
their own rational and emotional responses to given circumstances – and
share these with each other?
At the core of any successful change effort in dynamic circumstances, with potentially confusing and contradictory information the coin of the realm, senior teams need extraordinarily well developed, emotionally mature, and information-rich patterns of conversation. These capabilities, behaviors, and patterns require nurturing, practice, and experience; and they are not "individually-owned", but built by the team as a whole with shared experience in dialog – like a foundation, built brick-by-brick, one learning experience at a time.
What are the capabilities, behaviors, and patterns of senior team conversation and decision-making that you see in your organization? Which help support decision speed and/or quality in the work you're undertaking – and which impede these outcomes?