Scroll down on this interview with the CPQ CEO and see what he has to say about CMGI...
CEO Discusses Last Six Months at Helm of Compaq
Jan. 25 (Houston Chronicle/KRTBN)--QUESTION: What's the status of the
search for a new chief financial officer?
ANSWER: The obvious question is, "OK, so what's taking so long?" We
have set very, very high standards for who that person is going to be.
We have had a number of interesting candidates, we have had a number of
good candidates, but we want a great candidate. I will tell you it is a
very, very difficult market for the CFO now.
You've had a huge run-up on just the market in general. The CFOs
traditionally, of the kinds of companies and of the kind of stature we
are looking for, are in a deep (stock) option position. And so, with
some of the numbers going up, there are a lot of people with very large
equity stakes.
The second (factor), and probably the most important one, is the huge
pool of talent that's gone to the Internet start-ups. There are an
unbelievable number of start-ups coming on.
Q. The morning after you were named CEO, at the managers meeting, you
talked about "cool products." You talked about them almost as though
Compaq wasn't doing cool products. Do you think they weren't, and are
they doing them now?
A. I don't believe we had unleashed innovation. My daughter has a
poster in her room of a Dalmatian, and it has pink and blue spots on it
and it says "Dare to be different" underneath it. I don't think we had
created an atmosphere where we dared to be different -- that being
innovative was really a priority. I believe the fundamental nature of
Compaq was to be innovative and somewhere along the way we had lost the
edge on that. It is a different environment when you actually say, "I
believe being innovative is one of the most important things we do."
That changes the mindset of people.
I don't believe we were being innovative in our designs. I don't
believe we were being forward in our designs. And I believe we have
changed things to really get people to show some of their creativity.
Q. What do you think caused Compaq to not be innovative?
A. Let's take the external factors first. Let's face it. The market
moved to the middle of acceptance. You have to give Mr. Jobs credit for
the iMac and reintroducing style.
The second thing is, for whatever reason, I do believe we became very
conservative, through some period of great success and at some point
Compaq became a little complacent. And as things started to get tough,
I think we got a little conservative.
I am not going to psychoanalyze why that all happened, but we became
conservative and set in our ways.
Q. When you need advice, who do you turn to?
A. If you are saying do you have one particular confidante who really
stands out -- Ben (Rosen). If I am really troubled about something I
don't feel that I can really talk to anybody else about, I talk to Ben.
It is almost always generated by me. "This one bothers me." Might be a
Sunday night. He is a very, very good sounding board.
Q. What about the announced layoffs? How are those coming?
A. I am very pleased with the progress we are making. We set out with
a very clear plan. Targets were set down, people understood them and
they are managing to them. We are on target.
Q. What's been the biggest frustration of the job so far?
A. The largest frustration has been, and it is the nature of the job,
is the number of stakeholders you have to serve. You have stakeholders
which are certainly employees, customers of course, stakeholders with
financial considerations, shareholders. And you have to service each
one. So part of the frustration is that you have to maintain some
balance.
There is the old statement that you have to be a mile wide and an inch
deep, because you can't be a mile wide and a mile deep at the same
time.
Q. What's been the biggest surprise?
A. The most surprising thing to me has been how few surprises there
are. In fact, that actually shocks me. I never felt that I was naive
about things. I expected there to be more shocks, more surprises than
there have been.
The biggest surprise to me is there has not been anything that came to
me where I said, "Oh my God, I had no earthly idea."
Q. Do still feel that buying Digital (Equipment Corp.) was a good idea?
A. The strategy of buying Digital was absolutely the right thing. The
Internet has moved to where high-performance computing matters. We got
the service capabilities, which is still a differentiator in the
market. We got with it the capabilities to really extend the direct
sales force. We have a sales force who understands how to sell into the
complex sale. We draw on a great heritage of understanding network
computing -- remember Digital was the original distributing computing
company.
If you look at the capitalization value of CMGI, plus what will also
be the value creation that comes out of our 15 percent stake in
AltaVista, plus the other assets that they have, from a financial point
of view, the valuation of Digital will be paid in total by simply the
creation of the Internet properties surrounding AltaVista.
Q. Compaq's stock has languished in the 20s for months. What do you
say to the guy who bought in at $50 a year and a half ago?
A. As is always the case, what I can't say is why it did what it did.
What I can say is what we are going to do to improve the valuation.
What I tell somebody like that is, here are the things that we believe
needs to happen to make the stock very attractive. We understand there
was some credibility that needed to be rebuilt with the analysts, with
Wall Street, with employees, with customers. We will start off by
saying we will create that credibility with an open and honest culture.
We believe we have done that.
The second thing we say is that we also understand that credibility
will come through performance. Performance comes from being
predictable, so we are doing the things that make us predictable.
The third thing will come from getting your costs and infrastructure
under control and we will do that.
Q. Since last spring, Compaq has lost a lot of talented people. You've
had a kind of brain drain. Has that been stemmed?
A. We are a living in an unparalleled time of people moving into
(Internet companies). You have to accept that there are going to be a
lot of talented people going off to Internet start-up companies.
And, by the way, I think that any company right now that is not losing
a bunch of talented people to the Internet start-up space, has a bigger
problem than the ones who are.
We are a strong technology company that grows entrepreneurial people
that know how to make things happen. So, I accept to some degree the
fact that we are losing people is a positive sign.
What you have to do is say, "I accept this for what it is, now I have
to do more development, have to take more chances with younger people,
I have to really understand the recruiting and development of people."
But that explains only the reality of the market. We had a problem
that was bigger than the market.
Q. The business PC division, which is Compaq's core business, is your
most troubled division. What are you doing to turn that around?
A. This is not a declaration that there is not a whole lot of work to
do yet, but I absolutely believe it's on a rebound. I look for
attitude, I look for clarity of direction, and I look for signs that
execution is improving.
(Senior Vice President) Mike Winkler has gone in and made some very,
very significant changes to his management team. He accepted that it
was time to do some things differently.
We built that management through bringing in some people from the
outside We have said business as usual is not good enough. We have a
new management team, which is really energized. And then, we have
allowed the organization to look at the things they needed to do.
I see the group being re-energized. I really feel the difference in
the positive attitude. I see them making the moves they need to make.
This is opposed to saying, "Gee, I'm looking over my shoulder." I am
starting to see more of the atmosphere: "We are the world's leader, we
have the best brand, let's not forget that we have a commanding
worldwide market share lead." It's time we come up spitting blood.
Q. Apple revived itself because of the success of one product. Is the
iPaq the iMac for the PC group? Is this its K-car?
A. One of the reasons why we command the largest market share in the
world for personal computers is that we service almost the entire
market.
If you look at the market Apple served, it was a much tighter market.
One product could shift the market. You are seeing us narrowing our
product lines, fewer products, a much clearer focus, simplified
products and design. But we will continue to service a very broad
market.
The problem with being No. 1 is that the silver bullet is a little
harder to find. The iPaq will take a market space, it will be a
commanding product, it will be a great product. But it is not going to
be one home run. We will hit four or five singles and score some runs.
Q. Compaq has tried various things to get into the direct business,
all of them kind of hybrid systems using both direct and indirect. Why
didn't previous shots at direct work?
A. If you look at the historical success of Compaq, it is a phenomenal
success story. It is always very difficult to change something that has
been phenomenally successful. It is very difficult.
You are forcing yourself to change something that worked so well, and
that's a difficult thing. So, we were never fully committed. We only
had one foot in the direct camp.
The other reason is, we have great skills. We do a lot of things
unbelievably well. For example, as a volume manufacturer, we are
without parallel. But these were some new skills, but I think we
sometimes underestimated the sort of skills it took to understand the
end-to-end process. We were learning something new.
It was part of the commitment to a model that had been so successful.
By Dwight Silverman
-0-
To see more of the Houston Chronicle, or to subscribe to the
newspaper, go to chron.com
(c) 2000, Houston Chronicle. Distributed by Knight Ridder/Tribune
Business News. CPQ, CMGI, AAPL, END!A3?HO-COMPAQ-CEO |
