What Carly Fiorina's time as CEO says about how she might govern
Experts are divided on whether Fiorina was a success or failure as CEO, but her tenure at HP may offer clues to her decisionmaking process and how she might lead.
Washington — When Carly Fiorina was one of America’s most visible CEOs, perhaps no quality stood out more than her boldness.
She arrived at Hewlett-Packard as a rookie chief executive officer, entered an industry she had never worked in, and almost immediately began crusading for a stem-to-stern remake of a giant company that by many measures was a high-tech success story.
HP wasn’t just any company, either. It was known as Silicon Valley’s original garage start-up, had never had an unprofitable quarter in six decades, and had defined a decentralized culture of grass-roots brainstorming that became an archetype for the rest of the Valley.
Mrs. Fiorina, who today is in the public eye as a Republican presidential candidate with rising poll numbers, arrived at HP in 1999. Then, too, she was a rising star – an East Coast sales and marketing prodigy from the telecommunications industry.
Fiorina took command quickly and didn’t stop. She reorganized the company, sought to harmonize a cacophony of brands within it, slashed costs, implemented big layoffs (the first ever at the firm), and bet the company’s future on a massive merger that remains controversial to this day.
In all this, she wasn’t just acting on personal whim. She had been hired by HP directors who consciously sought a hard-charging outsider, convinced the company needed some significant change.
But the scope of Fiorina’s upheaval shocked many within the firm. Her embrace of the “change agent” role, even if it meant breaking with time-honored traditions, stirred resentment in the ranks. And as HP’s board looked on during her nearly six-year tenure, the directors ultimately decided to force her out.
“She was brought in expressly for the purpose of busting things loose,” says Charles House, a former HP engineering director and author of a book on the company. And as she pursued that, “they gave it to her, both barrels.”
Was she a success or a failure as CEO? That’s a matter of debate, with some saying her big moves were generally right, and others saying she obliterated the storied culture known as “the HP Way.”
But either way, that bold streak stands out, and the way it played out at HP may offer clues to her decisionmaking process and how she might govern as president.
Willingness to take strong stands – even unpopular ones – is a quality that’s arguably essential in good leaders but that, if not tempered enough by wisdom or empathy, can also be risky. In that light, it’s notable that a widely held view of Fiorina’s tenure at HP is that she projected great certainty from the top but failed to build morale and operational success within the ranks.
Although not devoid of humanity or levity, Fiorina struck many onlookers as falling short on the empathy front. Her supporters recall her as an inspiring leader, but her tenure was shrouded in criticism that she was callous or aloof.
'Not a delegator'
“She was not a delegator…. She didn’t ask for help,” says Mr. House, whose view is informed by interviews with hundreds of HP staffers as well as by his own observation of her performance.
House’s view of Fiorina is a nuanced one. He praises her as a strategic thinker and for promoting some women to prominence in a male-dominated industry – and says portrayals of her as an abject failure at HP are far from accurate. It was not an easy job to succeed in.
She presided over an era that included a major downturn for the high-tech industry in general – and anxiety within HP over whether the company had a strategy to remain a leader in the Internet age.
When HP agreed to buy Compaq in 2001, the deal was one of the computer industry’s biggest mergers ever. Fiorina wore a cowboy hat to Compaq’s Texas headquarters when the deal closed. It showed respect for the company’s Texas turf, but it also hinted at her up-welling self-confidence. A new sheriff was in town.
Jerry Porras, an emeritus professor at Stanford Business School who has studied HP, calls the merger “the biggest error she made,” a mistake linked to a failure to understand the organization she was leading.
“She looked at the world through marketing eyes, not through technical contribution eyes,” says Mr. Porras. As he sees it, HP’s engineering prowess would be marred by joining with a company less focused on innovation.
Still, with a decade or more of hindsight, some other high-tech analysts say the merger proved to be a success.
Right move or wrong, by that time it was already clear that Fiorina didn’t care much about ingratiating herself with those steeped in the HP Way.
“Reinvention” was a buzzword she adopted. The idea of invention gave a nod to the heritage of “Bill and Dave” (the Hewlett and Packard who founded the firm), but the “re” up front was a not-so-subtle flag that things had to change.
“We talk about preserving the best, and reinventing the rest,” she said in public appearances.
To Mr. House, there was no doubt that HP’s culture needed a shakeup at the time.
“It was beyond stuck,” says House, who was no longer working at HP when Fiorina arrived.
Where Bill Hewlett and Dave Packard had blended profit-sharing and flexible scheduling with a hard-nosed drive for excellence (and profits), a sense of entitlement or complacency had taken root, say House and others who knew the company.
“I would argue we are already driving some cultural change within HP,” then-CEO and board chairman Lewis Platt said in a 1999 interview with Fortune before Fiorina arrived. “But we are going to be looking for even more. Certainly the HP habit of everybody having a veto over every decision, rethinking things in great detail the way techies do – some of that has to be put aside if you're going to move as quickly as you have to in today's world.”
Fiorina arrived with her foot on the accelerator from day one.
Her fans say she understood that when big changes are needed, you can’t go about things in a nuanced way. She hopscotched by jet to HP sites around the world, and soon it was more to talk than to listen. “When you’re starting a revolution, the first thing you do is seize control of the airwaves,” she told one aide, according to a 2003 book on her by journalist George Anders.
The book, “Perfect Enough,” gave a largely positive view of her efforts, highlighting her emphasis to tilt the company toward greater urgency and less perfectionism.
Her critics, however, saw a failure to balance her love of speed and salesmanship with an equal focus on the nuts and bolts of innovation and execution.
From then until today, though, reviews of her performance have been mixed.
Jeffrey Sonnenfeld of the Yale School of Management drew attention recently by calling her “one of the worst technology CEOs in history.”
But a stock-chart comparison of HP with other high-tech firms like Intel, Cisco, and IBM makes Fiorina look more like an average performer than a wild success or abject failure.
If she had a big ego, Fiorina wasn’t alone. That was practically part of the job description for top high-tech companies. She arrived in an era of celebrity CEOs who embodied the excitement of the dotcom era. Fiorina could do that for HP, while also ramping up the company’s competitive spirit.
And by her own telling, in her 2006 autobiography titled “Tough Choices,” Fiorina saw her role as team player rather than autocrat. While not hiding her own assertive personality, she describes at some length her theory of leadership (making people feel “we did it ourselves”), and her decision to work with HP’s existing top executives rather than bring in a new team with her.
In response to critics who saw too much centralization in her reorganizational efforts, she called her approach “horizontal,” seeking to ensure that HP could serve customers on a company-wide base rather than in separate fiefdoms.
Still, by most accounts employee morale declined under her tenure – and one of the reasons may be that Fiorina didn't show enough empathy for HP workers and traditions.
“She didn’t really take the time or feel it was her obligation to understand that [HP] culture,” says Roy Verley, who met her and observed her arrival in 1999, when he was HP’s director of corporate philanthropy.
Unlike past CEOs, who rose up from within the firm, she didn’t have lunch with employees in the cafeteria or join them for Friday afternoon socializing sessions, says Mr. Verley, who had spent two decades at HP, including as head of corporate communications.
“She decided that that culture, 60 years in the making, deeply embedded in the DNA of the company and the Valley, had to go,” Verley says.
Fiorina invited workers to tell her the “10 stupidest things” the company was doing, not exactly a vote of confidence in its ways.
And some former HP workers say she presumed to know things about the company before taking time to really learn them – a critique echoed by an anecdote in “Perfect Enough.”
'Main secret was her confidence'
The book quotes a British banker, who was in a study group with Fiorina at the Massachusetts Institute of Technology business program in the late 1980s. Arriving at class one day knowing the group was unprepared, he was surprised to see Fiorina leap to the forefront of the discussion, at least initially. “Her main secret was her confidence,” he concluded. “She may not have had a clue about the subject, but she addressed it with such confidence that you would never know.”
Fiorina had arrived on a wave of excitement and even euphoria within the company. She projected energy, a capacity for strategic thinking, and even appreciation for HP’s history. Her early marketing efforts centered around the fabled garage.
“People wanted her to succeed,” Verley says. When he met with her for a get-to-know session, “I can remember how gracious she was.”
But many employees were surprised by how quickly she started to push for deep changes.
Her “reinvention” program extended to a new attitude toward pay and pink slips. In the past, the company had put such a high value on its employee talent pool that it had avoided mass layoffs through thick and thin, albeit sometimes imposing temporary pay cuts to make that possible.
Fiorina spoke the language of a different world. When asked about possible layoffs in 1999, Forbes magazine quoted her saying, “I’m not sure about that, … but if one-quarter of the people in HP don’t want to make the journey, or can’t take the pace, that’s the way it has to be.”
She reframed the profit-sharing program, seeking to push workers toward performance targets but sowing unrest by so doing.
With tough times hitting HP’s earnings, Fiorina at one point asked workers to take voluntary pay cuts (and she took a cut in her bonus). The move was unsettling even as employees generally signed on.
“It seemed to me at the time that she was enriching herself to the tune of some number of millions [in stock options] while asking the little folks to take a pay cut,” Bruce Perens, at the time a senior strategist in open-source software for HP, says in an e-mail interview.
The payroll savings didn’t prevent layoffs – another shock to the HP system when they came. By some tallies, the job cuts during her tenure totaled more than 30,000.
By 2002, HP had dropped from being No. 10 on Fortune magazine’s annual ranking of the “100 Best Companies to Work for in America” to not even being on being on the list.
“Morale was certainly going downhill, ... largely because of layoffs and budget cuts,” recalls Burns Fisher, a software engineer who joined HP via the Compaq merger.
“She didn't seem particularly different from other CEOs that have come and gone,” says Mr. Fisher, who worked at Digital Equipment Corp. before it was bought by Compaq.
Fisher does recall being impressed, when the merger deal closed, by a memo from Fiorina saying HP should serve not just customers and shareholders, but also the communities where the company operated. He liked that spirit, and sent an e-mail telling her so.
“She sent a little thank you back, or her minions did,” he says. But over time he noticed little follow-through on that goal.
Fiorina was scrambling at that time to prove the merger could be a success.
By her own account, Fiorina sought to have some fun and spontaneity amid the push for “reinvention,” but the examples she offers in “Tough Choices” are mission-focused, like asking managers to create videos about the old way versus the new way of doing things.
By the time she departed, Fiorina had been at the helm nearly six years.
The company had about 150,000 employees by that time in 2005. Layoffs notwithstanding, that’s actually a bit more than the combined total of HP (at the time Fiorina arrived) and Compaq (when the merger occurred). But there were also other mergers that added to the payroll, and some jobs moved from the US overseas.
HP’s board wasn’t functioning smoothly at the time – a matter that’s become a long-lasting controversy in its own right. But by some accounts that have emerged since her 2005 ouster, Fiorina was fired as boardroom doubts grew not so much about her strategic vision as about her implementation.
That point echoes the critique of House and others that managing operations isn’t Fiorina’s strong suit. “She can become a zealot on things where she's got half the facts,” House says. And where some big companies give the CEO a sidekick in the role of Chief Operating Officer, she didn’t want that at HP. As House sees it, "she believed in centralizing things."
Business and politics are hardly identical worlds, so how she did as a high-tech CEO offers imperfect guidance on how how Fiorina would do as chief executive for the federal government.
"It could be that she was just in the wrong industry," says Porras at Stanford, noting the communication skills she displays in political debates. Still, in his view, her tenure at HP gives little assurance about her skills at "understanding people and working within a culture."