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Sunday, Nov 8, 2009
Hewlett-Packard's ousted CEO Carly Fiorina destroyed a great company's creative soul and trashed its business.
Feb 10, 2005 | Carleton S. Fiorina's fall from grace was dramatic, as was most of her career. But don't cry for Carly; her way of doing business remains ascendant, and has already triumphed over that quaint set of humanistic values known as "The HP Way."
I well remember my first meeting with Carly, who from an early date seemed destined to be one of those first-name-only stars like Cher or Madonna. Months before Hewlett-Packard named her its chief executive, the company had invited me and John Markoff, my friend and colleague at the New York Times, to spend a day with the engineers at its legendary research labs. But midway through our morning in nerd nirvana, Carly paid us a "surprise" visit.
She was, of course, charming, well-coiffed and coutured, as nearly every article at the time would mention. And as I watched her perform, amid an awkward group of guys who really were wearing short-sleeved sta-press shirts with pocket protectors, I realized I was seeing the new and old faces of Silicon Valley, up close and personal.
On one side of the hall were these unassuming but enormously bright individuals who came to work each day on Page Mill Road, in Palo Alto, Calif., not to make a killing in high tech, but for the sheer joy of inventing cool things. On the other was the perfect pitch person, singing Wall Street's tune absolutely in key.
From early in her six-year reign, Carly's mendacity was breathtaking, as she methodically eviscerated HP of everything the company once stood for. Is that too harsh? Recall the "invent" campaign, launched soon after she joined, where she plastered billboards and ads with the image of Bill Hewlett and Dave Packard's sainted Palo Alto garage, even as she was slashing the company's research budget and laying off scores of real-life inventors. After all, tinkering with the outer reaches of particle physics may be cool, but it's hardly a bottom-line contributor, not this quarter anyway.
At the same time, the truly inventive side of Hewlett-Packard, as well as its historical heritage, was being spun off as a separate company, now known as Agilent. To be fair, HP's board initiated this thrilling bit of stupidity before hiring Carly, but she had plenty of time to stop it and did not.
HP's test and measurement instruments, direct descendants of the audio oscillators that launched the company in 1939, were and are considered the best that money can buy. Despite increasing global competition, these products command a premium price and maintain high profit margins because they are simply higher performing, better built and more innovative than the offerings of other companies. They are, in a word, "differentiated."
Yet Carly and the HP board chose to dump this profitable business to concentrate on commodity products like printers and PCs. Why? The answer at the time was that securities analysts accustomed to following straightforward companies such as Dell Computer really couldn't understand a complex business like test and measurement. And, to be sure, Wall Street's shills fell into lockstep, praising the divestiture as a brilliant strategic move that would, in that tired phrase, increase shareholder value.
As HP's best and brightest headed for the doors, whether they jumped or were pushed, some of them were not shy about calling a reporter who had covered the company for many years. As I talked to these talented people from every level of the company, one interpretation of events emerged with remarkable consistency. Carly had no intention of sticking around Hewlett-Packard for very long, these folks said. Her real intent was to do a quick, Lee Iacocca-style turnaround, accompanied by the best autobiography money could buy, and in 2004 run for the U.S. Senate, against Barbara Boxer.
It seemed a little far-fetched, but soon the photo-op shots of Carly in the company of high-ranking Republicans began proliferating. Even as Carly's script for HP ran into harsher realities, even as Boxer retained her seat, the story never really died. And in retrospect, it offers the only explanation that makes any sense at all of Carly's biggest strategic move. I'm referring here to the acquisition of the Compaq Computer Corp.
