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Remembering Carly Fiorina at HP
One of the things most of us are very good at is 20/20 vision … when looking backwards in time. We know what was done wrong, why it was wrong and how it should have been done. We now can say, “Knowing what I do now, I would not have….” But, to borrow from Hillary Clinton, “What difference does it make?” Looking back to dissect past decisions is pretty lame and can never fully capture the knowledge, conditions and circumstances of the time.
So it is with Carly Fiorina’s time at HP, Lucent, or on the church girl’s basketball team. We could claim to know now why she was a complete failure, disaster, job killer, and worst CEO in the history of the world — or worlds if you choose to go further out into the universe. But we miss the nuance and a whole lot more.
Thus, we have now been treated to a host of commentators, ex-employees, and even a Yale professor who has made a career of finding out who is and is not a good “failed” CEO. Turns out the key factor separating a good versus a bad “failed” CEO is whether they admit to a business school professor or someone that they made a big mistake (kind of like a confession, but with a business school high priest). That is what Jeffrey Sonnenfeld of Yale claims determines whether a failed CEO can be a great comeback story. And if you don’t mind me suggesting this, that seems like a rationalization.
The reason is simple. In the rear-view mirror, we can see that HP stock did this, or the Board did that, or sales went up (not apparently a good thing unless profits go up right away). What we do not see is the actual battlefield at each point in the fight. We do not see that HP, a proud company with an engineering legacy, was a troubled company that had been well documented to the point that it was featured as a problem in many Harvard Business School cases dating back almost 15 years before that non-engineer took over. We also forget that HP did not go outside to hire Ms. Fiorina because it was producing great products, profit growth and internal people to lead the company – at least not in the eyes of the Board that hired her. The Board thought there was something missing and Carly Fiorina filled the bill.
We forget there was a cult at HP that was recalcitrant and this was well documented. “I worked at HP,” the operative word being “worked,” was sometimes viewed as an imprimatur on a application long before Fiorina showed up. It showed you got hired, learned, and were ambitious enough to move on. A badge of gravitas.
Insular, hidebound, and untrusting of outsiders might apply to a company that held on to enormous profits from selling replacement ink cartridges for its ubiquitous printers. Its work stations, once its heart, were good. Its software good. The growth rates of these and other businesses did not meet the expectations of the Board. “Great” was not a generic term applied to HP in the decade prior to Carly Fiorina’s arrival. HP was great at some things but not at many others, was more likely how people saw it. And the company seemed to be standing still in comparison to other Silicon Valley competitors. In comparison to the dynamic sectors of the IT business, HP seemed to perform at a slower pace while its own printing division, Apple, Sun, Oracle, and even a reformed IBM seemed to be racing around it. Finally, some felt HP was top heavy with too much expense in the office and with duplicative sales organizations in the field.
So onto this terrain drove Carly the “wunderfrau.” She would be the one who would take it apart, analyze it and put it back together again. Never mind that HP’ers were not that interested in seeing her succeed. They knew the axe was going to fall.
Carly’s first job was to trim. And she did that several times. Name a CEO who eventually lays off tens of thousands because it is essential to corporate survival and then is praised for it. There are not many who will say, I am really glad ol’ Joe fired thousands and transferred some of the company’s manufacturing to Singapore – even if failure to do this would have resulted in closing the business.
She had one goal: spur growth at the company and then consolidate growth into profits. Her background was sales and she was great at it – prepared, well spoken and fast on her feet, and sometimes stunning at improvisational analysis. There were two broad strategies developed by HP staffers, business heads, Wall Street analysts, and outside consultants. The first was to buy a large IT consulting and software business. The second was buy a major PC maker.
HP was already in both segments. It felt it was not large enough to survive and thrive in IT consulting or in PC’s. In PC’s, they believed they needed mass in market channels, product line and development, support, and market segmentation. There were several other players who faced a similar predicament. Asian manufacturers were commoditizing the business. If someone could design the products fast, outsource the production and offer the broadest array to the customers, one might create a winner. Many thought this was possible. Apple and Dell were doing it. HP was too. For HP, it would require an acquisition and then ferocious cost-cutting and the right people to build the winning brand and secure growth and profits. Synergy profits for other businesses from work stations to servers to printers, etc. probably got tossed into the calculation as deal fever rose.
Many, but not all, thought the software play was clearly the best option. There was one serious target that could make a difference, PricewaterhouseCoopers’s IT consulting business. After that, there were a bunch of small, less impressive consulting opportunities that might be for sale. But, they would not have a major impact at a time when HP needed to grow itself and get its top line moving while the profits from printing ink could still be counted on. The HP deal with PwC was underway when IBM swept in with a pile of cash. IT consulting and software would continue to grow organically at HP, but the best alternative was to turn to Plan B.
Compaq was the only logical candidate. HP moved. Carly executed. Merger, cut costs, and then consolidate.
What is now forgotten is how much in decline HP was. Many saw the printing ink business as something that could not sustain the company. That was in part why there was an urgency in hiring Fiorina, a non-technical person. She was a salesperson. There was desire to recast the company culture to be more sales oriented – the way IBM was. There was also desire to move fast and compete on speed. Fiorina was quick. It was the age of dot-com and rapid innovation.
Fiorina did not have 20/20 hindsight nor was she drawing two cards while holding three aces. She was doing what all CEOs who take over a company in decline do. She searched for options, she assessed them carefully, she crafted a strategy, she tried to implement Plan A; when that failed, she moved forward with Plan B. The Board was indecisive and fainthearted, perhaps dominated by those who became captured by their own talk about paradigm shifts and disintermediation. Those were the buzz words of the time.
Comparisons to the NASDAQ, which Fiorina herself has done, are kind of interesting. It is like saying the radishes in a salad are not as sweet as the lettuce. Neither are sweet and both are different things. The NASDAQ was flipping out with overvaluation due to upstart companies and dot-com ventures. It was tulip mania. NASDAQ and HP were two very different things. It skyrocketed and then plummeted. HP kind of missed both extremes. It was held up and down by its size.
What we don’t see is what HP would have looked like had the board not hired her and told her to make something happen. That is the point of comparison only a few inside the company know about. They could see the numbers with and without the Compaq acquisition more clearly. They knew that selling printer ink at outrageous prices would not last forever. They understood that HP’s reputation alone in work stations and scientific or engineering applications was no longer selling the products. There was competition. They had a “feel” which became the basis for urgent action. They were the George Tenets whose “slam dunk” assessments urged on the contest to change HP now.
So professors and pundits can say what they want about who likes Carly, who was a good CEO and what a good “failed” CEO should do. It really does not provide the kind of serious insight that some claim. Only a handful of people who saw all the data, the choices, the urgency, the resources, the inside of the boardroom, and the battlefield at the moment can assess whether her tenure was good or bad. She was bossy because she was the boss. But people underneath her did not quit in droves and there are not a lot Steve Jobs-like stories here, if any.
HP was unique, Carly’s job was unique, and that particular situation was unique. And by now, no two people can really remember what happened in the same way. We all have bias.
All we know is this: Carly was outstanding and landed some big jobs. Some guy at Yale who is a leadership guru cannot say enough bad things about her. She was successful in some things. Unsuccessful in others. She claims to believe certain things. Do you trust her?
Or, who do you trust more?
Published in General
Immelt turned out to be a very weak sister. It seems certain that Jack Welch would like to have a do-over with Immelt. Although, one of the other top 3 went to Home Depot and was fired for poor performance.
Squandering $20B for the purpose of acquiring Compaq and entering a commodity business was a was huge mistake. The opportunity costs were enormous. CEO’s are paid for deciding on the vision of the enterprise, if Fiorina had reported to Jack Welch, she would have been fired by Welch.
Whether or not the merger was a strategically wise choice only speaks to whether or not Carly was a capable manager.
The organizational disarray was a result of brass tacks leadership failures.
Had she been a better leader she wouldn’t have been canned over a risky merger. Risk happens, its called risk. But poorly managing organizational change is a completely different story.
I can get over failure there too, had there been some kind of contrition and growth. No such contrition or growth has been demonstrated. That right there is the hubris that dooms executives and why nobody should support them for serious leadership positions.
I met numerous HP people and former HP people, at levels from individual contributor up to senior executives, during the period before Fiorina became CEO. I’d have to say that in aggregrate, their opinions of their value greatly exceeded the reality.
I just wanted to respond to Carol. I find your comments interesting and thoughtful.
Again look at this chart, HP was turning around under Hurd. He was a very capable individual and came from NCR. But as good as he was, HP was flying too high and too fast after Carly left for her policies not be a factor in the improvement.
It is easy for Wall Street, business professors and even underlings and Board members to take cheap shots, but most of them have never run anything. At the time of the Fiorina firing, the WSJ did a series of articles about the disarray of the Board of Directors at HP. It is no secret many of these people were not pulling together.
My personal position is I prefer two other candidates who I believe can win Ohio, Fla. and Pa. If they do that, we will hold 54 in the Senate and position for 2018 when the Democrats have many Senate seats up for election. However, I like Fiorina’s chutzpah. And the thing I most admire is her experience with cancer & the loss of child. To be a good President requires perspective. Loss and challenges provide that. My best associates were quite often failures or they lost something dear at one time in their lives.
I stand by the point, listen to her, understand her positions, and then decide if you trust her. She is making the right points about the morality of the nation.
There is nothing magical about the opinions of stockholders, either. Many don’t care about extended viability of a company. Many are happy to breakup and sell assets to meet their own quarterly goals.
Sorry EJ, the stockholders are magical, they own the company, it belongs to them, any decision the stockholders make is the right decision.
By your logic there’s nothing magical about what you decide about your house or anything else you own .. your ownership is unimportant.
You’re confusing the absolute right to do something and doing the right thing. I’ve seen entire communities devestated by businesses that shuttered and became mere nameplates because the good reputations they built were thought to be more valuable than the actual quality of the goods being produced. And those were short-term gaines and long-term losses, just not to the locals but the country as a whole.
Try using your absolute ownership rights to turn your house into a bordello or even a a B&B. See what your magic buys you.
Comparing zoning issues with stockholder rights is meaningless, it’s not the same category. Stockholders are under no obligation to make the right decisions according to your preference. If you want you corporate decisions made according to your preference then buy some or all the company, become a stockholder. Otherwise, your views about the corporation aren’t relevant.
Even if the stockholders’ decision causes the company to collapse? (Which I realize wasn’t the case with HP.)
Yes, it’s a matter of ownership. If you prefer different decisions than the current stockholders, buy the stock then you make the decisions.
A B&B bordello? A nascent business model if I ever heard one…
I may be wrong, but I think most stockholders would like to see their company continue and would themselves say they made a wrong decision if the company collapsed as a result of a decision they made.
One thing is certain. If we are to have a woman as President beginning in 2017 I prefer it be Fiorina rather than Clinton. Carly’s record is good enough.
Fiorina earned her place in the race, while Hillary married hers.
To my knowledge Carly has never ruined the reputation of powerless women victimized by her husband, and would find it beneath her to do so. Rather than that betrayal of her sex being a badge of honor and a favor for which she should be handed a Senate seat, a position as Secretary of State, and the power to run the free world.
We shouldn’t be analyzing these people against each other so much as determining if they can do the job, and would they do it in a way that will make the future better for us and our descendants.
I pick Carly rather than Hillary.
She may not be the last man standing to go against Hillary, but if she is, she is worthy.
Please.
Jetstream, can you bring yourself to respond to EJ’s distinction between the absolute right to do something and doing the right thing?
The right thing according to who????
While I acknowledge that the outcome is important, the true question is: was Fiorina’s strategy valid? Would a reasonable person in similar circumstances at least think the decision is sane?
Please.
I am confident you know exactly what EJ is alluding to. Do you really want to be seen running away from responding to the distinction EJ made?
And, of course, attempts to change the subject with frivolous demands for clarifications (e.g., “The right thing according to who????” ) is just going to come off as the evasion that it is.
Of course I cannot blame you for attempting to evade EJ’s distinction; where else could you go?
So, you invest $100,000.00 of you money in the stock of MassComp, a computer company. The stock loses 50% of it’s value. Your is choice is to sell off parts of the company or continue operations and potentially lose all of your $100,000.00. It’s your money at risk, who is qualified to tell you what the right thing is? You’ve already lost $50,000.00 are you obligated to lose all of your investment because it’s the right thing.
Who makes the decision, you or some mystical entity who dictates what the right thing is. Since it’s your money so you get to do what you want, even if I think it’s not the right thing.
Well that wasn’t responsive to EJ’s distinction. EJHill stated:
What you said was, of course, a strawman argument because you substituted some “mystical entity who dictates what the right thing is” for what EJHill actually said, and then proceeded to argue against the point you contrived.
I’m afraid you’re going to have to make an actual argument.
There is no mythical right thing. There are only opinions, that’s why the stock is a market .. people hold different opinions about the value of individual stocks.
Your statement is offensive to reason.
Of course some things are correct while other things are not correct. Engineers, who are trying the best they can, frequently discover some aspects of their designs do not work as they expected while other aspects do work as expected. (Trust me on this.) Each aspect of their design was an expression of their opinion regarding what would be a correct solution for the given problem. Testing a design smokes out which engineering opinions are incorrect in the real world, as opposed to within the engineer’s imagination. (Testing can also embarrass the engineer, but that’s another topic.)
If opinions were the only thing that mattered because “There is no mythical right thing” then all designs would be equally valid and testing would be unnecessary. Consequently, your statement is false because testing is an essential part of the design process–at least if you’re in pursuit of a design that works.
I recommend that you back away from repeatedly using words like “mythical”, “mystical” and “magical” as a modifier; it causes you to appear to be appealing to magical thinking. Again, these words also transform your argument into a stawman because EJ used none of these words–you are the one who dragged them into this argument.
I also recommend backing off from making claims–in effect– that things are cannot be proven to be true or false because it gives your arguments a postmodernist twang. And we all know that the Left invented postmodernism so as to evade arguing on the basis of facts and to facilitate the denial of facts. (Because, nothing means anything, don’t-cha know.) Yes, these sorts of arguments do go on in dorm-rooms, but this is Ricochet and I’d like to think that most of us aren’t here to indulge silly arguments.
By now I suppose you think you’ve successfully distracted me from what I initially challenged you to do: respond to EJ’s distinction: You’re confusing the absolute right to do something and doing the right thing.
By my count you have evaded directly addressing EJ’s distinction four times. You’ve tossed up clouds of postmodernist denials regarding the existence of mythical right things–and other antics–so as to avoid addressing the issue.
The question is still awaiting your response.
Gary McVey,
Alan Mulally, the Ford CEO that went to Washington and then said no thank you to a bailout. I’ve always admired him. Quiet and competent. Ford is still here today and they even leveraged the blue oval.
HP is still here, but so is IBM. GW was a business major, owned the Texas Rangers (who are still here).
I’m not sold on the idea that America can be run as a business. One of the biggest criticisms I have of GW was his TARP idea because he did not want GM to go bankrupt on his watch. That has become a political slush fund for the presidency, something the Constitution did not allow.
I worked in the tech industry in the 90s. Carly saved HP. That company was headed to break-up. It only did one thing well (i.e. made serious money), printers. She stepped on a lot of toes, and really shook things up, angering a lot of people. These people weren’t villains, they were very smart humans, with all the weaknesses thereof (i.e. they couldn’t see the forest for the layers of bark on the trees). They were drowning in their cult of the engineer, comfortably slipping into break-up territory. If she had not shaken them out of their stupor (including the Compaq acquisition), HP would have been dismembered and now be various business units in many other tech companies.
She was the antithesis of the HP type, which is why she saved them. No, she wasn’t an engineer, and they never forgave her for that. As to the wisdom of her changes, it’s worth noting that her successor largely kept executing on the strategic plan she had put together. He used calming, soothing tactics, massaged the engineers’ egos, but he basically kept on the course she had charted. As to the stock, remember Y2K? An awful lot of stocks in the tech industry took a very long time to recover from that.
The bottom line is that if you really want the federal government shaken up and dramatically overhauled, I think she is the most likely candidate to do it. She will step on toes and piss off a lot of bureaucrats, but since when is that a bad thing? On the negative side, she will be brutally attacked by the press, so will have to move fast.
Having said all this, as a cranky Granite Stater, I’m still making my choice for the upcoming primary. But Carly is one of my top 3 choices. I was concerned that she would not be able to defend herself against the obvious criticisms that her HP tenure would generate, because it requires a special communications skill to make these important nuances clear, but she has shown herself to be a very good communicator, hence her being in my top 3.
That really kind of depends on what the objective is. As far as a company is concerned, if the objective is simply to make a profit and stay afloat and the decisions made actually sink the company and cause it to close its doors, I think someone would be standing on firmer ground than opinion if they said the decisions made were obviously wrong decisions. They may have made sense at the time they were made; but ultimately, they turned out to be wrong – no ifs, ands, or buts about it.
To echo some already stated sentiments…
The point of all of this is to ask one question, is she our lady?
Answer: I’m liking her more and more. I don’t want Trump- personal opinion. Bush has name issues- voters’ issue not mine. Walker and Perry dropped out. My serious candidates are running thin. I’m not sold on Carson.
I think I’m coming down to Rubio or Carly. Can she be the one? I think so.
Jetstream – Wait: Didn’t Florin also own HP stock at the time? Shouldn’t you accord her equal stature as a stock holder?
Very good piece. I was not an admirer of Carly when she was at HP. However, I have changed my mind recently.
The most important thing about Carly’s tenure at HP is that HP survived. Digital Equipment, thought – justifiably – by virtually everybody as a staple in the industry, a tremendous contributor of technology, died. So did all the minicomputer companies, which is the type of computing HP was in at the time.
What happened in the 1990’s is that the industry moved from semiconductors as components of computers, thus leaving room for intellectual property at computer manufacturers, to microprocessors, specifically Intel’s X86 design. Suddenly everybody was using the same technology platform. The infrastructure that computer companies had built in designers and designs, in software and operating systems, all vaporized from a value-added standpoint.
It was Armageddon. Most companies did not survive. HP did and even flourished under Carly. That is an amazing achievement.