The H-P-Compaq Mess Isn't All Carly's Doing
By MICHAEL MALONE
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Manager's Journal: Carly Fiorina was hired to be a torpedo aimed at a becalmed Hewlett-Packard. But when H-P sinks, as it likely will, she will go down with it, her reputation destroyed. But of greater importance now is to ask: who shot that torpedo?
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As part of its campaign to woo shareholding employees to its proposed merger with Compaq, Hewlett-Packard management put together a glossy road show. A high point of the extravaganza was the appearance of Richard Hackborn, H-P board member, former chairman and company hero, who solemnly announced that "unless this has the full commitment of employees it's not going to work."
The vote, as we know, passed thanks to some last-minute wheeling and dealing with institutional investors by H-P CEO Carly Fiorina. But H-P management not only didn't get the near-unanimity it was seeking, it didn't even get a majority of H-P employees. In what was certainly the single most important decision in the company's 65-year history, the CEO couldn't get half of the company's employees to support her.
That's not much of a mandate for a company about to embark on one of the largest and most difficult mergers in American business history. We can only wonder how many anti-merger activist heads will roll in the forthcoming round of 15,000 layoffs.
Hewlett-Packard is exhausted. In the last year it has bled away thousands of employees, smeared one of its own board members (and son of a co-founder) with vicious ad hominem attacks, watched Wall Street give a thumbs down to the merger and seen its own employees hold a protest rally at the polling place.
Worst of all, Ms. Fiorina has destroyed the H-P Way, the most celebrated of all management philosophies. This bottom-up/trust people attitude was the main reason most people worked for H-P instead of casting their lot in the riskier, but potentially more rewarding, world of Silicon Valley just outside.
Ms. Fiorina has replaced this rich culture with ... well, nothing really, except a few empty symbols like the Packard garage, and a half-baked Jack Welch philosophy of periodically shooting underperformers. CEOs all over Silicon Valley must have spit out their lattes when they read that Ms. Fiorina spends a whole half day each month in the labs. So much for H-P innovating its way of this mess.
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Now Ms. Fiorina is asking H-P to undertake the assimilation of Compaq, an even more dysfunctional company. It is a task that, even on a smaller scale, has destroyed companies that actually had good morale and a competent CEO.
In a wiser world, Ms. Fiorina would have been fired soon after Wall Street sneered; or at least when it became obvious that the merger was more popular with H-P's competitors than with its own employees. But then, the closest most H-P employees have ever been to Ms. Fiorina is watching one of her videos.
It's easy to blame this whole disaster on the hapless Carly. She is a classic bad boss for our time: brilliant enough to dazzle the old men on the board of directors and the young technicians at the brokerage firms -- but devoid of the imagination, humility and empathy that are the hallmarks of true leaders. Bill Hewlett and Dave Packard used to sit with everybody on a bench in the cafeteria.
But then, Ms. Fiorina was hired to be a torpedo aimed at a becalmed H-P. When Hewlett-Packard sinks, as it likely will, she will go down with it, her reputation destroyed. But of greater importance now is to ask: who shot that torpedo?
The bizarre answer is that it was H-P's greatest hero, Richard Hackborn. It was Mr. Hackborn who passed over a generation of young H-P executives, including the redoubtable Ann Livermore, to go outside -- to Lucent, of all places -- to find his candidate. It was Mr. Hackborn who extolled Ms. Fiorina's qualities before the board, and who stood behind her the last two years as she dismantled the H-P Way, alienated employees, and embarked on the disastrous merger with Compaq.
Hidden behind his Teflon reputation as the Company Savior, Dick Hackborn has quietly become H-P's Alcibiades: the beloved leader who peevishly betrayed those who entrusted their lives to him.
Mr. Hackborn is best known for two acts -- one moment when he showed great leadership and one when he declined it. The first was Mr. Hackborn's brilliant career at H-P Boise, where, as the company's leading maverick, he launched the firm into the printer business, a stroke of brilliance. The second was when Hewlett and Packard, facing retirement, searched within H-P for a new CEO to lead the company into the future. Not surprisingly, Mr. Hackborn was offered the job and turned them down. He preferred Boise to the hot seat in Palo Alto.
After such an extraordinary decision, most people would have left the company. Silicon Valley is, in fact, filled with ex-H-Pers (including myself) who esteem the H-P Way but couldn't live under it. But Mr. Hackborn once again did the unexpected -- he stayed at H-P, becoming the most senior possible corporate maverick: chairman of the board.
That's when he brought in Ms. Fiorina. One reason the board accepted her as CEO was the belief that Mr. Hackborn would act as a check on Ms. Fiorina's personality. Instead, he stepped down, handing over the keys to the most complex corporate culture on the planet to a newcomer constitutionally incapable of understanding it.
Once more Mr. Hackborn spurned the hot seat. Only this time he left H-P with an unchecked, unfit chief executive under whose management the company will almost certainly fail. But, as his words to the retirees show, Dick Hackborn already knows that.
--Mr. Malone, editor-at-large of Forbes ASAP, is author of "The Valley of Heart's Delight" (John Wiley & Sons, 2002).
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