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

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

[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

[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.

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...

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.

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).

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.