An Engineer's View of Carly Fiorina's Leadership

prostoalex writes "There is a pretty damning look at Carly Fiorina's leadership while at HP on TechnologyReview.com. The author was working for HP Labs, the center of invention and innovation for the company, only to be told that nothing exciting will happen in the tech market since it's a mature industry. He left the company in 2003. "The lab was never packed with genius marketers. Carly told us we had no business sense, and that every project needed to make a profit within three years or less. She usually said that right before the research budget got slashed again and more lab employees were laid off."" Update: 03/19 03:13 GMT by Z : As detailed on the TechnologyReview page, they have retracted the story on the grounds that they can no longer vouch for it.

Comments

Does this suprise anyone?

[Nimrangul]

Honestly, does this kind of leadership at HP suprise anyone? With the constant garbage they produce and botch-up dealings they make this just explains matters. Alpha anyone?

Re:Does this suprise anyone?

[BWJones]

Alpha anyone?

Alpha? Jeez, what about buying Compaq? Killing Alpha was just part of that whole unbelievable financial screw up. What about when HP cancelled their calculator line? What about getting out of and back into the storage business? What about not paying enough attention to digital imaging when it was exploding? They've got some good consumer level print stuff now, but they are still missing the pro level stuff. What about not capitalizing on HP IP? Jeez, they are buying everybody elses cameras and iPod clones and such. What happened to all of HP's technology?

Re:Does this suprise anyone?

[ezberry]

I totally agree with you, but just for argument's sake... Dell doesn't really do an awful lot of innovating either. They resell almost everything they sell and don't do an awful lot of r&d by themselves, but Dell has a market cap > $100 billion, and hpq is not quite $60 billion... so it just goes to show that innovation does not a successful company make. They seem to be competing on two different fronts against the juggernauts in each industry - IBM in innovation and high end servers, and Dell in lower-end resale of conumer and entry-level business products, and are having an identity crises, so they're losing in both segments.

Re:Does this suprise anyone?

[secolactico]

Sometimes I wonder why bigshot CEOs and other execs get such substantial packages after leaving a company in disgrace.

Then I think that maybe they are simply being bought out to act as scapegoat for somebody else or a group of somebody elses. As CEO, they are perhaps the most visible person in a company and they are natural lightning rods for company's bigger blunders.

This is not to say that Ms Fiorina is not responsible for HP's woes, but maybe, like in Douglas Adams' book, the job of the president is to draw attention away from those who wield the real power.

(I almost typed "draw aggro". Curse you, Warcraft!)

Re:Does this suprise anyone?

[inode_buddha]

Remember, HP got the Alpha by way of Compaq, but AMD got the Alpha engineers. Pure irony in some ways, IMHO.

Re:Does this suprise anyone?

[cluckshot]

Lets be clear, if this $45 million had been chopped into nice neat (average) $250,000 packages to pay house and supply R&D types they would have been able to hire some 180 researchers in a well funded R&D team. Of course the company would rather pay her...

The reality is that this is what is the matter with the whole of US Corporate America. The CEO's who do little or nothing but talk themselves up get the rewards and inventive types get walked down the hall. The reason for this is a simple little bit of US TAX policy which these CEO types demanded and got passed. It seems that the more money you earn for the company the more taxes they must pay or they will have to move the job off shore to avoid the taxes as Ms C. did. Of course if you make any money, you had best sop it up into CEO pay rather than pay stockholders because of US Tax law as well. This is why US CEO's act like companies are their own private cookie jar.

Don't give me any replies claiming that this is Capitalism. It isn't! Capitalism pays its investors. This is Faschism in its purest form. Mods get a life if you disagree because this has everything to do with the sort of thinking that destroys money and not what makes money.

more D than R

[Wansu]

To me, this rabid fixation on short-term profits is a bigger threat than outsourcing -- it is killing our ability to make astonishing things.

This has been the case with many companies since the mid 80s. Their R & D is alot more D than R. Many of the most admired technology companies of the 60s, 70s and 80s are gone because they ate their seed corn.

The rabid fixation with short term profits is a problem cut from the same cloth as outsourcing.

Re:more D than R

[Tablizer]

"To me, this rabid fixation on short-term profits is a bigger threat than outsourcing -- it is killing our ability to make astonishing things."

Actually, they are related. HP and similar companies are moving their R&D to low-wage countries and getting the same research for less money. Experts are far cheaper there and the laws of physics are the same. Thus, it is cheaper to research say new printing technologies there.

What is going to be more cost-effect and productive: A lab of 50 PhD's in the US or a lab of 200 PhD's for the same price in India or Indonesia? And, they don't need to be "close to the customer" because they are researching physical processes, not customer preference.

The US is becoming a big ball of marketing while the "real" work is done in low-wage countries. If you are a true-blue geek who wants to do cutting edge stuff and don't have a family, then try to move overseas. The rest of us better pick up some Dale Carnegie.

Re:more D than R

[Coryoth]

A lot of Japanese companies try and have a 10 year outlook. Yes, they worry about profits in the short term - it still matters - but they also try to have a long term 10 year plan, and are willing to take short term lack of growth if it positions them better in their 10 year plan.

Want a really odd example? Consider "Hello Kitty". It's a silly fad right? Except they've actually been around, continuously, producing "Hello Kitty" products for over 30 years! That's some surprising staying power, and is in a large part due to long term planning to keep the brand relevant in a changing world. Were a similar operation being run by a current US CEO it would have unbelievable growth for 3 quarters, saturate the market, fall out of favour, and be dead 2 years.

Never underestimate the power of long term planning.

Jedidiah.

Re:more D than R

[Fulcrum of Evil]

Actually, they are related. HP and similar companies are moving their R&D to low-wage countries and getting the same research for less money. Experts are far cheaper there and the laws of physics are the same. Thus, it is cheaper to research say new printing technologies there.

The problem there is that you end up training a bunch of tech leaders in some other country who then found companies and brutalize us in the marketplace. You get what you pay for.

Re:more D than R

[dustmite]

It's basically a modern get-rich-quick scheme for CEOs and shareholders etc. Get in, cut out any costs that only pay off in the long-term (i.e. R&D), report increased profits, pay out huge bonuses, get out. Company may collapse or suffer badly afterwards, possibly putting thousands out of work, but you don't care because you retired a billionaire. It's become a kind of plague on western economies during the last few decades. These people are just "cashing in" on the efforts of their predecessors. The problem is most CEOs are not going to be around long enough to reap the rewards of the R&D being spent now, and they know it, so there is no incentive for them personally to manage the company well. In the "old days" this wasn't such a problem because the culture was somehow different, you just didn't do that, you thought about the long-term; the trend of bonuses paid out proportionally to 'performance' seemed to cause a kind of cultural shift in the way people think about running companies. CEOs are paid far more disproportionately now, siphoning off massive amounts of wealth from the economy .. most ordinary "middle-class" workers today can't afford to live as well as their parents did even when both husband and wife work, unlike their parents when probably only the man worked .. why is this? Because more of the wealth is taken by the few at the top, and the economy runs less efficient. In theory Darwin should sort this out, i.e. companies that invest in R&D should have greater survivability in the long term, but for now it seems this problem is just not going away.

Re:more D than R

[ArhcAngel]

And here is where the problem of solving problems lies! You now have 200PhD's solving the problem from THEIR perspective. You ever noticed several people will look at a problem and each one of them will come up with a different, sometimes conflicting, solution? Have you ever had a conversation with someone who believed something so totally absurd to you but to them it was completely rational? Some of the greatest inventions of the last century were complete accident/mistakes that came about because someone was thinking outside the box and dared to try and achieve something great. They may not have achieved what they were hoping for but their inventions changed the world nonetheless. The majority of these off shored PhD's are wrote scientists. They follow the path already etched out for them and ever so slowly etch a little bit more. There is nothing wrong with this approach but it will rarely achieve the kind of breakthrough wanton reckless abandon to scientific principles will achieve in the same amount of time. Hewlett & Packard were tinkerers who thought big and were also smart enough to start their own company. Carly didn't start the process of spinning off hp's true core business unit (now Agilent Technologies http://www.home.agilent.com/) but she did let it happen. For anything to really last there has to be a balance of PR/R&D/BST (Blood Sweat & Tears). She tried to rob Peter (R&D) to pay Paul (PR) and it caught up with her.

Re:more D than R

[nelsonal]

I work for a pension fund and know people at mutual funds and the grand parent is more right than wrong. We (the entire investment community) pretty much expects an investment to grow equity at about 15% annually (it generally has to be faster than the S&P). The reason executive compensation has soared over the last several decades is that the few people who have consistently shown the ability to do this (keep their company on a growth rate of 10% annually) are well worth the money they are paid. However, they are exceedingly rare and you do not want to loose one once it is established that they can do this. Imagine the market impacts if a Jack Welch had been hired away from GE in 1999 to say Honeywell because he was peeved that GE didn't pay him enough. So the practice has become over pay (as if they were a top performer) for a few years while a CEO establishes a record, if they are a performer your investment is golden if they are not fire them and try again. It's a lot like a lottery with tickets that cost a small fortune (but with even bigger payouts--a decent sized company that becomes a consistent returner of 15% over two decades will probably be worth about times what you bought it for (starting at say $1 billion and going to $60 billion--to the big investors in the company paying a CEO even $25-50 million per year is pretty small potatoes, if he can maintain that performance and sell the ability of the comapny to keep up with that hurdle for 20 years or so. Once they have failed they are replaced with the next person. I don't think it is right or fair, but from the viewpoint of the large investors it is more rational.

Re:more D than R

[nelsonal]

I'll agree that boards are not what they should be, and think that most of that arises from two big factors, index funds and the current size of companies. Index funds are big investors and they could care less how any company they own performs, as a result they are usually the largest investors in big companies (no one else has the money to be that big an investor in GE, Citi etc) and they vote based on what ISS (a CYA consulting firm) tells them to vote. A rather relevant case is the HP Compaq merger ISS came out in approval giving about 9% of the ownership of HP to managment.
Also a corporate raider generally cannot buy enough of a big company (say over $10 billion in market cap) to elect his board and change the company's course. While Gordon Gecko is reviled as a worst case guy, someone like him would have bought up HP years ago and sent Carly packing if it were a $6 billion company rather than a $60 billion company.
Hopefully, once the boomers (who blindly believe that domestic large cap equities excess returns will cover their almost total lack of savings) retire and pull money out of the market, I expect that valuations between public and private firms will become much closer and a decent number of public firms will go private. The problem with cozy boards is that the directors are not generally large stockholders (who they are supposed to represent) the directorship of a company should include large shareholders rather than people who get a few thousand shares granted them annuall (and probably sell them pretty quickly). The tricky part is that what benefits the large shareholders may not benefit smaller shareholders. That balance is a whole lot easier to manage than the current managment shareholder balance that has consistently shifted in favor of managment for many years.

No one cares...

[Atomic Frog]

...all they want is money. Look, Carly got something like a $20million package (maybe more)for getting fired. Would _you_ care if you knew that's what you would get for screwing up?
Possibly, if that mucked up your reputation. But inexplicably, IT DOESN'T. Rumors are she's on the shortlist to head the World Bank? WTF???

Nobody on the board of directors (board of fat cats more like it) really cares either. Or possibly they are impossibly dumb.

Look, how many of the "frontline troops" could tell you that the Compaq-HP merger wasn't any good and would amount to not much?

Unfortunately, it isn't just HP. It's nearly every CEO and board of directors.
Hands up those of you on Slashdot who _knew_ the AOL-Time Warner was going to be bust? Yes, those of us in the field and half a teaspoon of wit knew that didn't make sense and was doomed to disaster. Yet the supposedly "wise and experienced" board didn't see it coming?

Fact is, these stupid maneuvers are are win-win-win for the board, CEO's and the stock analysts. They don't give a damn what happens to the company.

Now Mr. Hewlett and Packard, they wouldn't pull this sort of shit because it was their own baby.
Founder of IBM had some pretty good rules too, they treated customers and employees _right_. But since he went, it's been all downhill (except for profits).

Remember Palmer?

[Anonymous Coward]

The rot started long before Carly with Robert Palmer's "leadership" of Digital. Having come from the semiconductor side of the house, it was amazing what he failed to do with Alpha.

Not to mention the unholy tieup with Microsoft - anyone else remember the corporate switch from VAXmail/All-In-One to Exchange on his watch? On the world's largest private network, I am sure that helped Microsoft up the corporate ladder...

Article pretty short on content

[maynard]

But I like this quote:

"Bill Hewlett used to remind us that "The marketing guys said the HP-35 would be a failure because it was too small, and then we couldn't make them fast enough to meet the demand. The marketing folks don't know everything."

Because it was too small. Talk about misreading a market. Computing became ubiquitous entirely because of continuing miniaturization. Of course marketers would argue that they've now learned their lesson. They won't make that mistake again! No. They'll make some other ridiculous mistake. Not because they're stupid people, but because they don't understand current technology limitations and how trends imply change upon those limitations. Presumably, those former marketers thought "bigger meant better". Bigger cars were "better", right? They didn't see the potential utility of a pocket calculator, just as some will miss the utility of some other invention or advancement.

Marketing is fine as a tool for finding products people want. But it's useless for determining if a completely new technology might create or revolutionize a market. See the Dyson vacuum cleaner as another example of marketers misreading how new technology might completely change a mature market. Marketing works best only after the marketers understand a technology and its limitations, in coordination with traditional market analysis. Not prior. --M

That'll happen....

[King_TJ]

It's not unlike Hollywood, where actors and actresses live in their own version of reality - pretty far removed from the daily lives most of us have.

When you earn that type of money, and spend your time around peers that do the same, how can you expect them to see these screw-ups as a "big deal", really? Like you said, it's not their own business, built from the ground up - so they're not coming into things with that background of remembering how tough it was to build it.

A lot of these big-wig corporate types pander more to such things as a peer "taking a big risk". They're going to say "Carly, that was a really bold move you made, merging with Compaq. Didn't really work out, but that's the type of thinking and attitude we like to see in a C.E.O.! I think we can find a new spot for you over here...."

In many ways, I think they approach it like gambling. Sure, the rest of us can say "I can't believe that guy just plunked down a million dollars on the roulette table and lost it all. What a moron!" But if he's got the kind of money where that isn't going to put an end to his lifestyle, and his peers are equally rich gamblers, they're just going to cheer him on. They're thinking in the back of their heads that they're "way above" all those naysayers who aren't "successful enough" to even afford to take those types of risks.

Patnets

[argoff]

I think in a normal world. people would collaberate and fund raise to do RnD - their creations would gain them value and reputation, and that would lead to new opportunities. But we don't live in a normal world, we live in a patent world - a world where companies receive vast rewards for cutting off other companies from new tchnologies. A world where those little inventors (who patents are supposed to help) are premanately locked out.

Yeah, I know the "party line" that one that says no big companies will invent without patent monopolies, but just look at how many items in the average kitchen were really invented by a big company (hint none). Look at the electricity, phone, the PC, the radio, and so on .... (no big companies). I think if people kicked patents the hell out of they way they'd be supprised what happens. It would free up millions of inventions, to millions more inventors, and create a sunami of economic growth and technology. The fact that inventions can be coppied should be treated like a opportunity, not a threat, or even worse a theft. Patents monopolies (and I mean all of them, not just software) simply half to die and calling them
intellectual "property" is simply fradulent.

Re:Google Anybody

[Anonymous Coward]

The difference here is that with Google, the original founders of the company are still in control and thus they have a personal stake in the company (not just financially as its still their "baby"). The other companies that have been mentioned in these discussions, the orginal founders are no longer in control (bit hard to keep control when your dead), and there have been management "drones" put in place. You know the type, completely interchangable between industries because all they care about is the pseudo-science of managment which all boils down to maximise the profits at the end of the quarter. But of course the reason that these management drones can exist is the fact that once a company lists, everything becomes about profit for the quarter. Thus if upper management is just worried about a maximum of 3 months out, all long term thinking/planning is banished as it will most likely have a negative impact on the next quarters results (resulting in a negative impact on the management drones performance -> reduced bonus for them).

Carly wasn't the real problem

[xs650]

Carly wasn't the root source of problem, the boneheads that hired her and let her run the company into the toilet were and are the problem.

I disagree that innovation is stifiled...

[JRHelgeson]

Carly may have killed innovation at HP, but it doesn't mean that innovation in America has been killed - just pushed back to the garage.

There has been a truism that is as true today as when it was coined back in the early 1800's: Americans invent as the French paint, or the Italians sculpt.

It is our nature to innovate. If it is not happening at Lucent, HP or wherever, it will revert back to the garage where countless American innovations have started. Analysts that look to HP and Lucent (Bell Labs) for innovation in the future are sure to be blind-sided by the invention they didn't see coming from some garage or shed somehwere in this great land of ours.

The Carly disease is endemic in America and I'm gl

[midnight2038]

The Carly disease is endemic in America and I'm glad I will be long gone when we follow the path of the Roman Empire. It started a long time before she got there but obviously she is a iconic model of a great many powerful players, otherwise she would have never made it in the first place. Todays business model is exactly that told by the unnamed engineer. Sell, exploit or kill the brain pool by purchasing modest lack luster competitors who sell crappy products but have needed patents.

The 5 year ramp up time of new product development is fast becoming just a dream. I work in RD. Management complains about our average age of 55 years. Unfortunately the majority of younger recruits with new degrees take as much as ten years to develop common sense and work ethics let alone a working vocabulary.

The real problems are deeply embedded in our society and educational system. Even though our productivity remains the highest in the world, time is running out. In twenty years the leaders will be China and India. The US will become a Third World Nation with Nukes.

Damn Straight!

[DesScorp]

" Carly wasn't the root source of problem, the boneheads that hired her and let her run the company into the toilet were and are the problem."

You're pointing out what everyone else seems to be missing; the board of directors backed Aunt Carly, even against the son of one of the founders. They knew full well her business plan was the slash and burn the place and turn it into an IBM-Dell hybrid wannabee. They approved all the way, and fought on her side during the Compaq aquisition.

Good on them for firing her, but if they give a shit about HP and want to own up to their mistake, their next actions should be mass resignations, and an invitation to Walter Hewlett to lead the new board of directors.