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HP Analysis: "Ding, Dong, the Witch is Gone" - Why Was Fiorina Fired?

Roger Strukhoff Asks the Key Questions As Carly Exits After 6 Years

SYS-CON West Coast Bureau Chief, Roger Strukhoff, writes: And the long knives come out. Or, keeping the metaphor intact, water has been thrown all over HP's grand experiment.
 
(Please go to www.rssblog.linuxworld.com and answer our quick one-question poll, "Why was Carly Fiorina fired?")

The wicked paraphrase in this story's headline comes from an former high-level HP executive from the "old days" at HP, one who firmly believes that the HP Way and all it entails was obliterated under the six-year regime of Carly Fiorina. "Bill [Hewlett] and David [Packard] really would come around and visit with as many HP employees as possible over the course of a year," this ex-exec said. "But Carly, despite what her various skills and acument might have been, never tried to have any sort of common touch with the people who were working to implement her vision."

Fiorina's firing - and a firing it was - was announced first thing Ash Wednesday morning, heralding a period of reflection and perhaps abstinence on the part of an HP board that created its own problems by gambling on the former Lucent exec rather than an experienced internal choice. The AP report stated that the board dumped her because " she failed to execute a planned strategy of slashing costs and boosting revenue as quickly as directors had hoped."

Those seemingly bland and banal words lead to the question of exactly who would have been able to accomplish this task. "Slashing costs and boosting revenues...quickly" sounds like a statement from a badly-written press release that adds no value to any conversation. If it were easy to "slash" costs and "boost" revenues "quickly," then every company would always prosper and we could all be treated to a nice Hollywood ending as we rode into the sunset to our warm homes and happy families.

The Real Sins

Fiorina's apparent real sins can be stated much more directly: she was imperious and she shouldn't have bought Compaq.

Imperious works for folks like Donald Trump (he of the manic self-referential branding and major debt re-structuring) and Jack Welch (he of the relentless executive turnover and nasty divorce), but worked less well for Fiorina. The purchase of Compaq has failed in that that the combined HP/Compaq PC market share has shrunk dramatically since the acquisition, and there seems to be no clear product positioning or differentiation within the product lines.

However, those that remember the years 2000-2002 will also remember that Compaq had completed its own unsuccessful acquisition (that of failing minicomputer giant DEC) and was flailing around at the time with stagnant market shares and no capacity to innovate. Compaq looked just weak enough to be a good takeover target but still strong enough to add significant benefits to HP.

It is at this point that we ask our loyal readers to complete the analysis. Please take a few seconds to consider these questions in your comments to this article:

1. Was Fiorina fired because she was a bad CEO or because she was a woman?

  • Bad boss, no two ways about it.
  • Imperious chick got shafted by sexism.

2. Should HP have hired someone from the inside?

  • Yes. Bringing Carly aboard was a bad decision
  • No. Right decision at the time. She just couldn't handle the job

3. How about that Compaq merger?

  • An idiot could have seen it was the wrong thing to do.
  • It was the right decision. But the dot-com meltdown and 9/11 has ruined everyone's plans over the past years.

4. And the $64BN question: Who should the new CEO be?

  • Another outside hire.
  • Someone from the inside.
  • Someone from the inside, preferably male.

More Stories By Roger Strukhoff

Roger Strukhoff (@IoT2040) is Executive Director of the Tau Institute for Global ICT Research, with offices in Illinois and Manila. He is Conference Chair of @CloudExpo & @ThingsExpo, and Editor of SYS-CON Media's CloudComputing BigData & IoT Journals. He holds a BA from Knox College & conducted MBA studies at CSU-East Bay.

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Most Recent Comments
Sad 04/09/05 11:24:12 PM EDT

It's really sad to see what's happened to HP over the Fiorina reign of terror. HP is dead and about the only option left for the next CEO is to clean it up enough for a sale before the books really start to look bad. I think HP is at a profitablity peak right now and it's all downhill from here. HP is very poorly positioned right now due to shortsightedness. Carly made profits at the expense of the brand name.

With the loss of engineering talent and focus on quality, all of HP's competitors have been cleaning up at HP's expense. The talent Carly threw away during her tenure is the type of talent that takes decades to create. After what Carly did, I don't think they'll ever be able to get the cream of the engineering crop they were able to attract before her reign.

IBM is the clear winner now at the high end. Dell is the winner at the low end and Dell is now making significant inroads into printing area with their Dell branded Lexmark printers.

HP printers, which used to be indestructable tanks, are now cheaply built from outsourced parts and expensive to maintain. The cost of printer parts over Carly's reign doubled, or more, making HP printers uncompetitive. This, along with the imperious attitudes of the HP support organization, is causing customers to look elsewhere for printers. Since HP's profits mainly come from printers, this is not a good sign for the future.

Carly completely missed the point. HP was never about being cheap; it was about being good.

Carly was fired because she was incompetent. She just didn't have the experience to lead a company the size of HP. Her imperious nature certainly didn't help her. Unfortunately, this imperious attitude has spread to the rest of the company and customers have noticed it.

Carly has created a host of enemies for HP. The customers, employees, former employees, and supply chain all hate her and her name has become synonomous with HP. With the Compaq merger, I think the corporate treasury is too empty to patch the hull on this ship.

noname 02/26/05 12:56:01 PM EST

There is no such word as "acument."
I think you mean "acumen."
No go change it so this comment will look stupid. Then delete this comment.

Charles Maier 02/19/05 11:09:10 AM EST

Hewlett Packard was once known for innovation and engineering excellence and commanded high prices because their products were worth every penny spent. Personal computers and printers were just accessories for their superior test and measurement equipment. Volume and market share were not an issue because the margins were good. Their products did not belong on the shelves of mass market, consumer electronics stores like CompUSA, Circuit City and Best Buy but somehow they ended up there. In that environment price and volume pressures will always displace quality as the principle business objective. That was the big mistake IMHO. Carly Fiorina is merely one artifact of that basic business decision.

George 02/15/05 02:01:00 PM EST

There was really no surprise about HP after they did what they did to the DEC Alpha and supported the Intel Itanium.
HP like many, many other US companies suffers from bad management from the board level on down thru middle management. Couple this with the A.D.D.-like attitude companies exhibit in response to Wall Street and you have all the making of an entity that will always be less than the sum of its parts.

America-The_New_Russia 02/13/05 02:28:48 AM EST

HP, and the PC Electronics is suffering from the same problem almost all of America is, Greed. People are selling out everywhere and the majority of our manufacturing in the US are moving oversea's completely or to Mexico at the least. Simple math. cheaper work, cheaper product to sell, prices so low that we don't bother to even pay to have it fix "Which also kills another job line (Service Companies)" The upper levels are literally riding the marking to it breaks" Pull out, Rinse - Rename - Repeat. Within a few the US will have absolutely No market with a stable enough foundation to support itself not to mention its ventures outside the US. About the only thing with any stability here will be the steel / iron market and there slowly being bought up as well, thus leaving us no practical relation with their control.

After being present during two business's doing this exact same process HP appears to be following the EXACT same script, product becomes stale then over expenditures into another sinking ship supposedly then start cramming poorer grade products into the market at prices they literally stand to take a loss on with no attempt to improve. Doing all this while raising their production of the same worthing products that are severely outdated.

Is it male or female? Not a chance just the females can do it and leave you feeling good about getting shafted till the next payday.

Should they hire and promote from the inside Yes, but only from the Line level employee if that got the Education for it, that or from a young and showing but not yet confirmed and trying to make a name genre.

At this time the only strategy I would use is to go in New "Clean the entire board out unless you see one or two that are True/Blue but simply over powered which you can keep for their knowledge of the company and their familiarity with the employees who generally have a better idea of the future then the executives. Simple common sense listen, learn, process & discard. You learn and use all that you can and let the rest fall elsewhere. Or everyone can do the usual find someone to blame on another scape goat to place on the fire, and let the hole in the ship go on as it has been, rather the retro fit the ship and commence a new crew.

worksforaliving 02/11/05 08:50:32 AM EST

Oh, please. In these days of political correctness, women executives (not to mention managers, supervisors, and employees) get three or four chances where a man gets only one. Believe it or not, women can screw up just as badly as men; Ms. Fiorina began screwing up right from the start, but it took six years to fire her because no one wanted 1) the bad publicity from hundreds of clueless cluck-clucks who have never managed as much as a lemonade stand and 2) the risk that Ms. Fiorina could crook her finger and call in a flock of eager EEOC seagulls just itching to crap all over a major tech company. $21 mil was a payoff, pure and simple, and a cheap one considering all the damage the seagulls could have done.

Bjorn 02/10/05 06:58:28 PM EST

I've worked with H-P and DEC people before and after both mergers, and worked for a company that was aquired by Lucent, and I was skeptic to all aforementioned mergers, and turned out to be right in all those cases so far.

Massive mergers are always painful, even bank mergers where all jobs are identical, and you can move over the whole customer base almost with the push of a button, there is always a fallout of departed customers and disgruntled employees, no matter how many smiling classes and motivational speakers they jam down your throut.

The Compaq/H-P merger is the worst I ever heard of. Compaq had nothing that H-P needed. The existing DEC vax and alpha customers didn't have any reason to go with H-P servers, so all product lines had to be maintained anyways, except that instead of going in and fighting tooth and nail to get in the door, they instead had to go in and fight to convince a customer to switch their million dollar investment to another platform. A stupid move that only benefited Sun and IBM. The PC division, same story. Competing product lines. Loyal customers on both side who became alienated. If it hadn't been for the fact that H-P had a lucrative printing business, the company would probably have close to bankrupcy now because of Fiorina's Follies.

The Compaq/h-p merger alone convinced me that Fiorina was all glam and no wits. And that has nothing to do with her being a woman. She's a socialite being bred in the corridors at Lucent, where anyone with a penny worth of business acumen stands out like a genious compared to the rest of the "phone company beaurocrats".

The sad thing is that incompetent management is still being rewarded with golden parachutes. If she was so bad, why not tell the truth, and strip her of her ill-gotten gains.

Regular employees have 2 weeks notice, and can be terminated with or without cause. The argument that executives need parachutes to allow them to take risk in their decisions is hokey. They get paid the big bucks to take the risks in form of salary and stock options. The parachute puts the company in one boat, and the executive in a different boat, and the only thing it achieves is attracting incompetent and unaccountable executives.

Marco 02/10/05 03:40:33 PM EST

I had been working for Agilent Technologies and I had the chance to come in touch with the HP's Way while talking with some of my team mates... Some of the "old" ones still had that spirit that came to them from the old HP... Unluckily I saw this spirit slowly fade during my working experience in Agilent... and I heard the same from my friends working in HP... HP's Way has been thrown in the trash can by some top level managers with no vision, no charisma and interested only in their own wallet: it's really sad to see that none of these folks can compete with Hewlett and Packard.

HPcustomer 02/10/05 02:28:22 PM EST

I know some HP employees. They all bemoan the death of their culture. HP used to be about superior engineering. It was one of the few that understood how to make engineers proud and attracted the best graduates. HP had prospered by going their own way and being creative, not by doing whatever some overpaid Wall Street kid with an MBA and no real-world experience said they should do. That culture is gone. HP became just another short-sighted company focused on quarterly results and salesmanship. If and only if HP puts long-term insiders back in charge, they have a chance to rebuild their culture and reputation.

The Compaq merger was a huge mistake. The only good thing HP got from Compaq was the remains of DEC. Compaq had already lost their focus and was on the way to losing their relevance. They had fallen from the position of leading portable computing to being just another commodity box builder churning out cheap products. Some of their consumer products had cut so many corners they were no longer fully compatible - an unbelievable sin from the original compatible clone manufacturer.

"The New HP" was just a bunch of PR double-speak, smoke and mirrors, all hat and no cattle - meaningless from a customer's point of view (unless you're the kind of customer that values salesmanship over superior products). Sadly, it seems their board wants them to be like any other idiot American business eager to please Wall Street - disrespecting the loyal employees in the trenches while being looted by the overpaid short-timers in charge.

Jeff G 02/10/05 12:21:07 PM EST

There was a book that HP employees were given and asked to read which outlined "The HP Way". Carly came in and wrote the book "HP Has Lost It's Way". They should have spend her severance on tar & feathers.

Fat-Cat 02/10/05 11:04:36 AM EST

Talk about institutionalized sexism you lot. HP had stale DNA, more outsiders need to brought in to shake up the status quo in these dinosaur businesses. Was Carly anymore "aggressive" than Mike Bloomberg, Steve Balmer or Larry Ellison? Don't see you all suggesting they should take "soft skills training". Wall Street wants PR and glamour, she gave 'em what they needed. REmember it was the shareholders that agreed (just) to the strategy. They could have said no but maybe they were so greedy that they forgot that most mergers fail.

choy 02/10/05 10:22:43 AM EST

HP is listed as one of the model companies in "Built to Last." Two features of companies the book identified as built-to-last are (1) promote within and (2) cult-like culture. In this case, they hired from outside and allowed her to ruin the culture. Hopefully, HP promotes someone to the top spot from within. But it will be difficult to restore the culture. I suspect that the damage may be difficult to undo.

Another thing mentioned in the book is that successful companies "try a lot of things and see what works." Well, HP tried hiring a hero from the outside and they saw that it didn't work. Hopefully they've learned their lesson.

NIK 02/10/05 10:19:56 AM EST

SEEMS TO ME A COMBINATION of the boys club dubbing of a dynamic femme, the first female to be received by over 600 CIO'S in chauvaunistic China..not even achieved by US Presidents.

Carly had an incredibly difficult job in melding the sluggisg uninspiring culture of HP(GROWN FAT and uninnovative off years of self sell)with that oif the go..getting culture of Compaq..the merger was good for synergies which did not evolve for many reasons..some of which may have been internal mobbing / sabotage.

Carly spun a fantastic PR job internationally to map THE NEW HP..unfortunately many within..esp. those around for yrs...may not have had the same energy or enthusiasm to keep up.

She may have rubbed some the wrong way in execution of strategies..but do wonder how many of those same HP employees can get off theirs to make it in this new competitive environment...its no longer the 60/70/80's.
WAKE UP HP..YOU LOST A DYNAMO..maybe some counselling on soft skills would have made the world of difference????maybe!!!
ex male HP staffer..got it on 12/01/05..like Carly suddenly...like Carly..a top rated performer.
no respect for their cliquish/inner circle/xenophobic/unimaginative culture..
get em Mike D.

NIK 02/10/05 10:19:33 AM EST

SEEMS TO ME A COMBINATION of the boys club dubbing of a dynamic femme, the first female to be received by over 600 CIO'S in chauvaunistic China..not even achieved by US Presidents.

Carly had an incredibly difficult job in melding the sluggisg uninspiring culture of HP(GROWN FAT and uninnovative off years of self sell)with that oif the go..getting culture of Compaq..the merger was good for synergies which did not evolve for many reasons..some of which may have been internal mobbing / sabotage.

Carly spun a fantastic PR job internationally to map THE NEW HP..unfortunately many within..esp. those around for yrs...may not have had the same energy or enthusiasm to keep up.

She may have rubbed some the wrong way in execution of strategies..but do wonder how many of those same HP employees can get off theirs to make it in this new competitive environment...its no longer the 60/70/80's.
WAKE UP HP..YOU LOST A DYNAMO..maybe some counselling on soft skills would have made the world of difference????maybe!!!
ex male HP staffer..got it on 12/01/05..like Carly suddenly...like Carly..a top rated performer.
no respect for their cliquish/inner circle/xenophobic/unimaginative culture..
get em Mike D.

sniper2k05 02/10/05 03:13:29 AM EST

The Carly announcement is just the beginning of a series of corrective actions to improve HP business. There is still a lot of uncertainty about their strategy and execution towards a possible Printer business spin-off, Servers and Storage, consumer electronics, and Professional services.

colonel_kurts 02/10/05 03:02:21 AM EST

The board were a bunch of liberal west coasters who just had to hire a woman. Who cared if she was qualified or if she was an old AT&T dial tone salesperson who cooked the sales books at Lucent. She was a woman.

msft_must_die 02/10/05 02:59:22 AM EST

She is only one component of HP's troubles, which are unfortunately more formidable than getting rid of one idiot at the top.

The main problem is the board itself. It has proven completely incapable of asserting proper judgement and organization fighting controversial decisions which posed long-term harm to HP. They invited Fiorina in, then watched as she divided the board and used the system against the very people who hired her. Board membership reads like a who's who of uninnovative, got-lucky-once bureaucrats and over-the-hill spoiled rich kids with absolutely no panache for running a dynamic technology company. These people should be running state services like busing and garbage collection, not important stuff like technology companies.

Was the merger a good idea? Probably not. HP continues to lose marketshare to DELL. IBM got rid of its PC business, it didn't try to expand it. The merger was a great idea for Carly, though, who has proven that she has what it takes to bring hostile, disinterested, bloated cultures together in megamergers. Mrs. Fiorina would be an excellent candidate to lead the reconstruction effort in Iraq.

There was nothing inherently wrong with HP before the merger that went beyond a cyclical downturn: certainly not anything that warranted megamergers with similarly-afflicted corporations for improvement. The board ran the company as though it were a 747 cruising at 25,000 feet whose landing gear would unexpectedly fail to retract on touchdown. At least wait to shore if you're going to land in the water: the middle of the Atlantic is no place to wait for help.

3 years ago, Walter Hewlett was effectively ousted from the board of the company his own father founded, fighting the Compaq merger. He was right, BTW. Today, Fiorina finally tasted payback.

When will members of the board finally pay for their misjudgements?

james_stock_007 02/10/05 02:56:33 AM EST

Carly was only one problem. Now that she is not at HP any longer, I wonder what will happen to those who financially profited from her reign and joined her in abusing the HP employees. Some of Carly 'followers' also must go!

cr7234z 02/10/05 02:53:10 AM EST

Now that the house landed on the wicked witch of the west, I wonder if Dorothy can save Munchkin land (Computer peripheral companies), by getting rid of the wicked witch of the east, Ann Mulcahy (Xerox CEO) and free all workers from U.S. corporate greed.

...And in the name of the lolly pop kids, we wish to welcome you to Munchkin land ....

rickyratturd 02/10/05 02:41:13 AM EST

Carly has 4 million shares of HP, fully vested. I wonder how much she would have ended up with, if she had been successful.