2 Books on Hewlett-Packard Chief
By STEVE LOHR
eople tend to have strong opinions about Carleton S. Fiorina, the chief
executive of Hewlett-Packard. Some greatly admire her brilliance, drive and
achievement, while others dismiss her as mainly a shrewd corporate
politician and a self-promoter. The fact that she is the highest-ranking
woman executive in America certainly adds to the attention she attracts.
She is the subject of two books now heading to bookstores, and both
chronicle her rise and her role in one of the most costly and vituperative
proxy fights in history — her campaign to buy Compaq Computer last year, a
fight she won by the narrowest of margins. To say that the two books take
different sides is something of an understatement.In "Perfect Enough: Carly
Fiorina and the Reinvention of Hewlett-Packard" (Portfolio), she is a
Thatcherite heroine, steady and unflinching under fire. The author, George
Anders, a senior editor at Fast Company magazine, writes, "Day by day,
Carly Fiorina was fighting her way through problems that would have
destroyed most other chief executives."
In an interview, Mr. Anders called Ms. Fiorina "a tough and aggressive
leader in times that demand that," and he said she had been "totally right"
about the wisdom of the Compaq merger.
In "Backfire: Carly Fiorina's High-Stakes Battle for the Soul of
Hewlett-Packard" (John Wiley & Sons), she is decidedly less heroic —
brilliant and steely, but shallow. "She had an electric presence, and an
ability to adapt to any audience," writes the author Peter Burrows, a
department editor at Business Week magazine. "And it all sounded so right."
In an interview, Mr. Burrows called Ms. Fiorina "quite a marketer, and
she's done a good job of marketing herself." Mr. Burrows said that in his
book he had set out to present "a complete picture of her" and that her
tenure as chief executive since 1999 had left Hewlett-Packard
"strategically, operationally and in terms of corporate culture worse off
than before."
Ms. Fiorina helped with the research for "Perfect Enough," taking time for
six interviews with Mr. Anders. She refused to cooperate with Mr. Burrows,
who had covered the company for Business Week and interviewed her several
times before. Ms. Fiorina was displeased with a critical article he wrote
during the proxy fight, Mr. Burrows said.
It appears that Mr. Anders's book will arrive in most bookstores a week or
two ahead of the competition. "We're on schedule, but they moved their date
up," said Airie Stuart, an executive editor at Wiley.
F Comany
Someday, there will be books written about what we're doing, Carly Fiorina
declared in 1999. She had just joined Hewlett-Packard as its new chief
executive, the first outsider ever chosen to run the high-tech giant, the
highest-profile female CEO in the United States. Her strategic and
operational mandate: to breathe new life into a proud but aging company and
to successfully execute one of the most audacious business transformations
of all time. Over the past few years, Fiorina's tenure at HP has become a
case study in more ways than she ever expected. Early on, the new boss
seemed to be conducting a master class in leadership, winning allies and
taking steps that made HP nimbler, leaner, and more exciting. Then the
economy turned south, and some of her boldest bets misfired. She was held
up as a paragon again, this time of hubris and insensitivity to the
company's deep-seated culture. Then she masterminded HP's $20 billion
acquisition of arch rival Compaq Computer Corp. in the face of fierce
resistance, a strategic move that was packed with lessons about crisis
management and the changing future of the high-tech sector. All along the
way, Fiorina has sat in the celebrity-CEO chair, competing in a high-stakes
industry, leading a time-honored company, working in the intense
environment of Silicon Valley -- and doing it all with the added scrutiny
that comes with being a woman at the top.
In Perfect Enough: Carly Fiorina and the Reinvention of Hewlett-Packard (
Portfolio, 2003 ), Fast Company senior editor George Anders pieces together
the full story of Fiorina's epic struggle to navigate HP toward a viable
new future without renouncing its storied past. This excerpt presents five
crucial scenes along the way, dramatic moments that illuminate both the
challenge that Fiorina has faced and her approach to tackling the task. The
story begins with an inside look at Fiorina's candidacy for the job and
culminates with her candid views on the tech sector in the years to come.
Carly Wins the Job
In October 1998, a burst of publicity made Carly Fiorina a prime candidate
for a CEO job. She was a top executive in the telecom industry then and one
of the new faces of female leadership in the United States. Her boss,
Lucent Technologies chairman Henry Schacht, offered her some pragmatic
advice about recruiters' calls. "It's not disloyal to think about
alternatives," Schacht said. "But you owe it to yourself -- and to our
company -- not to get distracted by the wrong kinds of offers. Decide very
clearly what you would pay attention to. Don't talk to people about
anything less."
Over the next seven months, Fiorina ignored a drumbeat of recruiters'
pitches, tossing their message slips into the garbage. Finally, a
persistent caller reached her office line in the evening, after all of the
secretaries had gone home, with a breathless message: "Hi, this is Jeff
Christian. Don't hang up. I'm calling about Hewlett-Packard." Fiorina
paused. She savored his opening line for a moment. Then she said, "Well!
You've got my attention."
A few days later, Fiorina and Christian lunched at a back table in an
obscure New Jersey Hilton, seeking to avoid attention. Christian was in the
early stages of screening 100 candidates for HP's board as it sought to
pick outgoing CEO Lewis Platt's replacement, and he wanted to hear about
each one's career challenges and triumphs. Whenever candidates abandoned
their corner-office reserve and began telling rich, dramatic stories from
the heart, Christian knew that the allure of a new job was magically taking
hold. Partway through the meal, Fiorina entered that zone.
"What struck me," says Christian, "was that in her career, she constantly
had been sent into troubled situations. And at every junc- ture except one
( a Lucent-Philips joint venture to make telephone handsets ), she had been
able to fix things. She had a methodology. She would go into an area and
spend a lot of time listening at first. She was a big believer that
organizations already contained a lot of the right ideas. People just
didn't feel as though they had the authority to get them done."
Two months later, Fiorina emerged as one of four finalists for the job. The
crucial interview would be with Richard Hackborn, a key director and
retired HP executive who had built the company's enormously successful
printer business. They met at Chicago's O'Hare Airport, at a restaurant
decorated like an imitation speak-easy. Within minutes, they were talking
about HP more bluntly and more affectionately than either had expected.
Hackborn guided Fiorina through HP's business challenges that needed
fixing: The personal-computing division was acting as if fast-charging
rival Dell Computer Corp. didn't exist. The sales force was tripping over
itself. The company was losing ground to younger rivals, such as Dell,
Lexmark, and Sun Microsystems, which irked Hackborn greatly. "We're in
danger of losing everything that made this company great," he said. Fiorina
listened carefully and explained her work at Lucent, where she had built an
industry-leading sales force. She had come to the lunch regarding Hackborn
as the company's Yoda: the elder figure of supreme respect and the true
decision maker in the search for HP's new CEO.
Several hours into the meeting, Fiorina began speculating about who should
be chairman if she became CEO. She wanted some wise-uncle support early on.
Departing CEO Platt had signaled his desire to remain chairman, and she
thought he could help. But she quickly realized that Hackborn didn't like
that idea. At that moment, an idea popped into her mind. Looking at
Hackborn, other people might have seen a wrinkled retiree with sunken eyes
and white hair. She saw something different: a special counselor. Rather
than get tangled up in a Platt conversation, she looked at Hackborn and
said, "Actually, Dick, I think you ought to be chairman."
The idea startled Hackborn. He had been seeking to wind down his
commitments to HP. But as he and Fiorina continued talking, he warmed to
the idea. When their meeting ended and Fiorina headed toward her plane, she
told herself, "I've got him hooked!"
Soon afterward, Hackborn briefed the entire HP board on his chat with
Fiorina. "I could see he was dazzled by her," fellow director Patricia C.
Dunn recalls. "He was really excited about her vision for the company. She
had a feel for the company's strengths and weaknesses. It corresponded with
his feel." Hackborn expressed mild concern about Fiorina's lack of a
technical background, but that wasn't a top-priority worry for him. "We may
be getting one of the top two or three CEOs of our generation," Hackborn
declared. "She could be the next Jack Welch."
Carly Goes Back to the Garage...Sort of
Once she took office at HP, Fiorina followed the newcomer's creed that had
served her well for more than a decade. She hunted for good ideas buried in
the bureaucracy while identifying inane practices that could be stopped
right away. She declared war on brand clutter, pointing out that a
profusion of minor brand names -- Chai, Tape Alert, Vectra -- was confusing
customers and weakening what should be the best brand name of all:
Hewlett-Packard.
Fiorina quickly identified her rallying point: the original Palo Alto
garage where Bill Hewlett and Dave Packard founded the company in 1939. To
change HP's culture, "we had to go back to the roots of the place," she
later said. She engaged a local ad agency, Goodby, Silverstein & Partners,
to reposition HP to the world. Goodby creative manager Steven Simpson sat
down with Packard's autobiography, The HP Way, and, working from the text,
produced a manifesto that he called "Rules of the Garage." It contained 10
maxims that had guided the men who had built the early oscillators,
voltmeters, and atomic clocks of the 1930s, 1940s, and 1950s. "Perform more
than you promised," Simpson wrote. "If the person at the next bench sees
what you're working on and doesn't say, 'Wow!' start over." He arranged the
rules in front of a photo of the original garage and sent his draft to the
company for review.
Fiorina loved the concept. But she and Susan Bowick, HP's head of human
resources, decided the draft rules didn't capture the company's current
direction. Soon the allusions to next-bench engineers and topflight
performance had disappeared. Newly coined rules had taken their place,
notably "The customer defines a job well done" and "Invent different ways
of working."
More rejiggering lay ahead. Goodby and HP executives wanted to showcase the
garage in HP's new television commercials, but Packard's old house had
changed hands multiple times, and the shed in back was being leased for
$100 a month by a florist. So the ad team picked out a back corner of HP's
corporate campus and built an ersatz garage. The lawn in front of the
building was made to look like a rutted driveway. Sport-utility vehicles
rumbled back and forth until they wore down a 100-foot stretch of grass.
Ad-agency camera crews arrived and ultimately produced a dazzling
commercial with Fiorina herself telling people, "The company of Bill
Hewlett and Dave Packard is being reinvented. The original startup will act
like one again. Watch!"
By crafting the garage commercial as she did, Fiorina was turning HP's
heritage into a fable. The ad included black-and-white footage from the
'30s, shared by the Packard family. But as Fiorina stood in front of the
faux garage, HP's birthplace was becoming something akin to Abe Lincoln's
log cabin. Reality and imagination now blurred together. If HP could
redefine itself faster by taking liberties with its own history, well, so
be it. Everyone involved in the "Rules of the Garage" project nudged
Fiorina that way. The rules didn't need to be literal precepts from
Packard's writings. As the company's chief mythmaker, Fiorina now possessed
extra-ordinary powers. It was up to her to use them wisely.
Carly Meets the System
Less than a month into her new job, Fiorina held an off-site at the
Seascape Resort, near Monterey, California, where she argued for greater
centralization. "We aren't growing fast enough," she declared. "We aren't
profitable enough." Unconnected divisions were driving customers crazy.
Ford Motor Co. and Boeing were grumbling that HP pestered them with dozens
of separate sales teams, each pushing a narrow line of products rather than
addressing their total needs. HP's executives were saying that various
operating units had great potential to help one another, but it just wasn't
happening. "We're leaving diamonds on the floor," she declared.
As a remedy, Fiorina borrowed a page from her Lucent playbook. Instead of
letting each division handle its own research, manufacturing, sales, and
marketing, she decided to reorganize HP into quadrants. Two vast
sales-and-marketing groups -- known as the "front end" -- would take
command of customer relationships. One group would talk to mass-market
consumers; the other would focus on the Fords and Boeings of the world.
Meanwhile, the research and manufacturing for all of HP's products would be
redefined as the "back end." That would be split in two as well, with
printing and imaging making up one-half, and all of the computer
initiatives the other half.
Those ideas looked great on a whiteboard, but some sub-ordinates shuddered.
"I was a deer caught in the headlights when she described the front and
back end," the longtime head of laser printing, Carolyn Ticknor, remarked
in mid-2000. Before long, it emerged that HP couldn't precisely allocate
costs between the front end and back end. As a result, some salespeople
raced to beat quotas, only to saddle the company with unprofitable orders.
Fiorina retooled her system to meet employees' concerns. She was right that
HP needed to show a better face to its customers. She was wrong to think
she could transform a company so rapidly without creating new snarls.
Fiorina was running into the hardest challenge of all: the inevitable
tug-of-war between a radical new CEO and a skeptical workforce. Mid-level
managers and rank-and-file employees didn't openly attack her new ideas.
They just meandered around them. In public forums, Fiorina appeared to win
support. Then managers huddled privately to decide whether they liked what
they heard. They softened goals, adjusted timetables, made some exceptions.
By the time they were finished, they had gutted whatever it was that
Fiorina was trying to achieve. Resistance was so subtle and pervasive that
she couldn't accomplish anything by getting angry. There was no obvious
opponent. It was just the system.
Carly Finds Her Voice
In mid-2001, Fiorina and HP's directors bet everything on a giant merger
with Compaq. The deal was supposed to shore up both companies' computer
operations, permit major cost cutting, and give the combined enterprise a
better shot at competing against IBM. Everything had seemed logical in the
summer's secret boardroom negotiations. But once the acquisition plan
became public, shareholders, employees, and customers balked. Fiorina was a
chief executive in peril. Her early efforts to win supporters misfired badly.
What Fiorina really wanted was to change the conversation, infusing
audiences with her conviction that HP could be a stronger, bolder company
by acquiring Compaq. She needed to win loyalty with a vision of better
times ahead. When fellow director Walter Hewlett -- the oldest son of
company cofounder Bill Hewlett -- announced his opposition to the deal,
Fiorina found her voice.
She recast herself as a brave woman, alone on a podium, crusad-ing for the
dreams and aspirations of her entire company. If people thought she was
vulnerable, all right, she was. Before her opponents fully realized what
had transpired, she had turned that appearance of vulnerability into her
greatest asset. In a major speech, she declared, "To the skeptics who say
it won't work, it won't sell, it won't succeed, it's not the HP Way, I say,
'You don't know the people of the new HP.' "
In her most audacious move, Fiorina began invoking the early careers of
Hewlett and Packard as justification for the HP-Compaq merger. With the
late founders' heirs strongly opposed to the merger, it seemed
mind-boggling that she could lay claim to the patriarchs' intentions. She
latched onto a legendary Packard quote -- "To remain static is to lose
ground" -- and made it the centerpiece of two-page newspaper ads. And not
only did she appropriate the founders' language for her cause, but she also
scripted dialogue for them, using her new ideas for the company as their
text. Fiorina created plausible -- but unsubstantiated -- conversations
from long ago, in which the founders spoke her language. Her tactics
infuriated Packard's son, David Woodley Packard, but she didn't back down.
She had framed her message.
Carly Asks Three Questions
By late 2001, the HP-Compaq merger seemed doomed. The foundations aligned
with the Hewlett and Packard families both opposed the deal. During her
first two years on the job, though, Fiorina had cemented superb relations
with all nonexecutive directors on her board except Walter Hewlett. These
board members regarded her as their instrument, charging into work to make
HP a more modern business. No matter how bleak it looked outside the
boardroom, Fiorina believed that she could draw strength from her directors
and ultimately prevail.
A key moment came on Sunday, December 9. Fiorina sat in a small,
first-floor study in her home and began a conference call with a half-dozen
directors, led by Hackborn. Fiorina didn't plead for their support.
Instead, she did something both innocent and ingenious. She asked each
board member to give her a yes or no answer to three questions: Should we
stop? Should we go on as is? Or should we go on in a modified way?
Decisive answers came back, almost in unison. "We're going on!" the
directors told Fiorina. No one was more adamant than Dick Hackborn. "Let's
get back to the question, 'Why are we proposing this in the first place?' "
he remarked. His answer: "It's the best solution for fixing the whole
computer business." By the end of the call, the directors were so confident
in what they were all doing that they could afford to worry about Fiorina's
well-being. They asked if she felt comfortable proceeding in what would
surely be a long struggle. When she said yes, the board's support was sealed.
Carly Carries On
Last spring, the HP-Compaq transaction finally won shareholder approval by
a razor-thin margin and withstood a court challenge, giving Fiorina her
long-awaited chance to reshape HP. She now runs one of the world's largest
enterprises, with at least $70 billion a year in revenue and the number-one
position in a half-dozen key markets. HP can bulldoze its way past smaller
rivals, simply because it has more salespeople, more advertising dollars,
and more reinforcement from consultants and friendly third-party vendors.
The company can win just by showing up. Fiorina had played that game
effectively at Lucent; now she could do the same at HP.
What's more, the Compaq acquisition brought 65,000 fresh faces into the
company. Most of those employees didn't mind redefining HP Carly's way.
They had job-hopped already; they were comfortable settling into new
assignments and getting the job done, without agonizing over each cultural
adjustment. As Fiorina acknowledged soon after the deal became effective,
"part of what we've done in the merger is inject new DNA."
Yet winning the battle to acquire Compaq had exacted a toll on Fiorina. In
the new organization, she found herself straining to update her own
leadership style to the demands of the job. She wasn't the fast-paced
outsider anymore, or the daring rebel. She had become the face of
established authority. In her first three years at HP, Fiorina had been a
strategic whirlwind, creating most of the opportunities and the problems
that she now faced. In her fourth year, it was time to repair her own
mistakes and exhibit the day-by-day precision of a skilled operating
executive.
"I always thought it would be nice if Carly gathered some scar tissue,"
says Richard Munro, the retired chairman of Time Inc. He had seen her
swagger earlier in her career, when they were outside directors of Kellogg,
the Michigan-based cereal company. Now, Munro welcomed Fiorina's newfound
caution. "She had overwhelming self-confidence then, and she was probably
right most of the time," he recalls. "But she had a sharp edge. When she
got to Kellogg, I said to myself, 'Someday, Carly, you're going to get
yours. You'll encounter the same frustrations that all the rest of us face.
And if you're lucky, it will make you a better person.' "
Given enough time, Fiorina believed, she could fix everything. HP's
earnings and stock price were down since her arrival, but that was true of
almost every high-tech company. She was withstanding the industry slump
better than most. In the abstract, founders Hewlett and Packard were still
her heroes. But after the HP-Compaq merger battle subsided, she largely
stopped talking about the founders. It was as if she had put them back on
the mantelpiece, protected with dust covers. Instead, she cited two
different companies, unbidden, as examples of enterprises that got it
right. They were Microsoft and IBM, the powerful pragmatists.
"Technology is more than an engineer's game," Fiorina remarked. "That's
where Microsoft has been brilliant. If you think about technology companies
that have really led, they didn't fall too much in love with the
technology." Someday, she believed, the rest of Silicon Valley would
understand.
Fast Company senior editor George Anders ( [EMAIL PROTECTED] ) is the
author of two previous books, Merchants of Debt ( BasicBooks, 1992 ) and
Health Against Wealth ( Houghton Mifflin, 1996 ).
http://www.fastcompany.com/online/67/carly.html
