Just weeks after being defeated by Jerry Brown in the 2010 California gubernatorial race, Meg Whitman agreed to join Hewlett-Packard's board of directors. "What could go wrong?" the former eBay CEO asked herself. As it turned out, quite a bit.

Nine months later, HP fired CEO Leo Apotheker, the third chief executive to be shown the door in just five years. Whitman was initially hesitant to head the troubled company but eventually signed on, betting that her 10 years of experience as a CEO would help her succeed. "I knew how things worked. I understood how Wall Street worked, and I think I was more effective than I would have otherwise been if this was my first rodeo," she told a group of Stanford Graduate School of Business students at a View From The Top talk on April 6.

Two and a half years later, HP's turnaround is still a work in progress, but its stock has rebounded strongly since hitting bottom a year after Whitman took over, and her plan to split the iconic computer maker into two companies garnered high marks both on Wall Street and in Silicon Valley.

Unlike her predecessors, Whitman had little experience with enterprise technology and had joined a company whose staff was demoralized and somewhat skeptical of her ability to lead. "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," she says. Whitman shared the lessons she's learned while turning around a troubled technology business.

Dislodge the Frozen Middle

Managing existing senior management is not a difficult task for a new CEO, says Whitman. "You either replace them or they get on board," she says. And younger people are "all over it, they're, like, 'OK, this what we want to do.'" But those in between can be problematic. "It's what we call the 'frozen middle' -- that you have to go figure out how you get them on board with the agenda you're trying to achieve."

Focus on What the Company is Doing Well

It's tempting for a new CEO to fixate on all that is wrong with a struggling company, says Whitman. But that can be a mistake.

"My advice, having done this a number of times, is to go into an organization and figure out what that company's doing right, and do more of it," she says. "You'll eventually get to your to-do list and to your fix-it list, but if you come in and just talk about what's going wrong, you will lose hearts and minds," she says.

Don't Try to Fake It

"You cannot be embarrassed to ask a question about something. And by the way, the technologists will see what you're made of," she says. "They will try to ferret you out as a pretender."

No matter what type of industry you are leading, the business principles remain the same, she says. "You know, I spend a fair amount of time with my CEO colleagues, and we laugh because business is business. Honestly, whether you're at Procter & Gamble, at Twitter, at HP, at Wells Fargo bank, at Caterpillar Tractor, the principles are exactly the same."

Symbolism Matters

The first order Whitman issued was to tear down the barbed-wire fence protecting the executive parking lot. "Now everyone walks in the front door just like everyone else," she says. Next Whitman tore out all the wood-paneled offices in the executive area of HP. "And we never actually had to publicize this; 330,000 HP people knew [it] within about 32.5 seconds."

Those actions "showed the kind of company that we wanted to run. And so those symbolic values, I think, are really, really important," even though such decisions are no substitute for delivering on the bottom line, she says. "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?"

Align Financial Incentives to Strategy

Whitman quickly realized that HP needed to improve its cash flow. To make that happen, she crafted compensation plans that rewarded several hundred executives whose management contributed to better overall cash flows.

"People actually focus on what they're being paid to do," she says. The incentives worked: HP's balance sheet shifted from nearly $12 billion in debt to $5.9 billion in net cash in three years, allowing the company to make key acquisitions.

This story was originally published by Stanford Business and is republished with permission. Follow them @StanfordBiz

Published on: Apr 30, 2015