Fiorina’s record at HP defines her candidacy — which could be a problem

27 Sep 2015 | Author: | No comments yet »

Fiorina As CEO: ‘Colossal Failure’ Or ‘The Right Leader’?.

At a polished New York press announcement in 2001, Hewlett-Packard chief executive Carly Fiorina, then the most powerful woman in American business, unveiled an immensely risky mega-merger whose success she promised with her signature showmanship: “If you don’t believe it, watch.” But 3 1 / 2 years later, after HP had shed half its market value and slashed more than 30,000 jobs amid what rivals called “the dumbest deal of the decade,” Fiorina was quietly fired from her first and still only job as a CEO. WASHINGTON — Businessman Donald Trump remains the front-runner for the Republican presidential nomination in a poll that has political outsiders occupying three of the four top spots.Before we compare and contrast Hillary Clinton and Carly Fiorina (obviously, because they are the only two women running to be president), let’s discuss the Keystone XL pipeline. As Donald Trump saw his support drastically diminish following the second GOP debate, the businesswoman swiftly rose to No. 2 with 15 percent of Republican support. But in the corporate world, another debate remains: Fiorina’s business record. “The head of the Yale business school, Jeffrey Sonnenfeld, wrote a paper recently (calling it), ‘one of the worst tenures for CEOs that he has ever seen,'” Trump says.

Some say they shouldn’t be trusted, yet polls continue to be flaunted by many presidential candidates and are carefully monitored by political pundits. On the same day Vice President Joe Biden, a Catholic, got to meet Pope Francis, Clinton, a Methodist, decided to reverse her position that she had no position on the pipeline and announce her opposition, saying the pipeline is a distraction. The Republican candidate was impressing on the trail and gaining traction with voters, much like she is now as a Republican presidential contender. “Thirty thousand Californians lost their jobs,” the narrator of an ad released in mid-September said of Fiorina’s legacy as CEO of the Silicon Valley tech giant Hewlett Packard. “Fiorina tripled her salary, bought a million dollar yacht, and five corporate jets.” As Fiorina rises through the polls and emerges from the crowded GOP field, those looking to defeat her in will look to 2010 for a playbook of how her liabilities and strengths play in a race.

Fiorina, the daughter of a law professor-turned-judge, rose quickly at AT&T, becoming its first female senior vice president, then later president of its spinoff, Lucent. So let’s take a look at what the latest numbers say: Hillary Clinton continues to lead the Democratic pack, according to a Quinnipiac Poll that also confirmed Donald Trump as the GOP front-runner.

But the stakes and the race are very different: Fiorina lost in a deep-blue state in 2010, and she’s running in a far-right primary field five years later. Most Americans surveyed by Bloomberg (72 percent) agree with Trump on the United States’ lost greatness, are “fed up” with politics and think the country is going in the wrong direction. Supporters defend Fiorina as a strong-willed bomb thrower tapped to give a staid company a wake-up call, and they say her talents helped enliven the khaki-clad workforce of innovators and engineers. And the layoffs that hit close to home in California are thousands of miles away from states like Iowa, New Hampshire, and the other early voting states that will help determine the 2016 GOP nominee. Another poll, this one by Gallup, suggested that Hillary Clinton’s favorable ratings have weakened, “though it remains to be seen if fatally,” Andrew Dugan wrote.

While the nation waits with bated breath for Biden to decide whether he will run against Hillary for the Democratic nomination, let’s get back to Clinton and Fiorina. However, the survey’s most interesting nugget is that Clinton’s positive rating has remained relatively stable with women, but it has declined with men.

In a memo last week, deputy campaign manager Sarah Isgur Flores offered a 10-point defense of Fiorina’s business record at length before going on to try to discredit one of her most visible critics for a disputed — and largely debunked — vandalism charge. “Carly saved 80,000 jobs and grew to 150,000 jobs by 2005,” Flores wrote in part. “During her tenure, Carly doubled revenues to more than $80 billion, tripled innovation, quadrupled cash flow and more than quadrupled the growth rate. He says the highly controversial, strategically misguided deal she muscled through dragged the company and its stock down. “Leaders go through adversity and we benefit from their failures because they come back from it and tell us how to get through it.

HP went from a Fortune 28 to a Fortune 11 company.” While Hewlett-Packard profits did grow substantially, in 2010 the Los Angeles Times struggled to back up Fiorina’s claim that she’d added U.S. jobs, instead finding indication that she’d more likely created jobs overseas. Republican presidential candidate and Wisconsin Governor Scott Walker’s campaign kickoff rally in Waukesha, Wisconsin, United States, July 13, 2015.

Her campaign has defended her record by saying the company doubled its revenue and “grew jobs” under her tenure — but that’s because it purchased a large rival. A fact-checker declared Boxer’s ad “Outsourcing” as “mostly true,” adding notable context on the charges that hurt her campaign, like that her salary fluctuated dramatically every year, so much so Fiorina can also make the argument that it was 15% lower when she left the job than when she started.

Under Fiorina, company shares collapsed more than 50 percent, far worse than those of competitors such as IBM and Dell and the tech-heavy Nasdaq composite index. Flores fired back. “Barbara Boxer is part of the political class that has failed Americans on every festering problem in this country,” she told MSNBC via email. “These are the games the political class plays. Americans are sick of it and they are ready for a leader who will challenge the status quo.” “We’re at the same point of her trajectory in the Senate campaign.

Carson had 5 percent in the earlier survey and Fiorina, who distinguished herself at the preliminary debate in August and on the main stage earlier this month, had 1 percent. Because it was her only time leading a company, Fiorina’s 5 1/2 years at HP offers an unmatched view of how she could handle challenges as commander in chief. Fiorina’s claim during the second debate to have seen a video produced by an anti-abortion group showing Planned Parenthood staff members looking at an aborted fetus with a beating heart was rated as “mostly false” by the independent fact-checking website Politifact. Fiorina never misses a chance to skewer Clinton, to the delight of fellow Republicans, although she insists it’s not personal. “If you want to stump a Democrat, ask them about Hillary Clinton’s accomplishments as secretary of state,” Fiorina said in the last GOP debate. At an event this week in the key early voting state of South Carolina, she was asked to explain the wide criticism of her business. “Yes, some tough decisions were called for in very tough times, and honestly I think the American people want some tough decisions made in Washington as well,” Fiorina said with a steely tone. “But I will run on that track record all day long,”

The survey of 1,001 adults, which included 391 voters who were registered Republicans or leaned toward that party, was taken Sept. 18-21 and had a margin of error of 3.1 percentage points. As Brad Whitworth, an 18-year HP veteran and former senior communications and marketing manager, put it, “Carly has never let facts get in the way of her being able to tell a story.” Fiorina’s extraordinary rise in business got off to a slow start. Fiorina tries to obscure these harsh realities with a blizzard of her own ‘facts,’” writes New York Times columnist Steven Rattner in an op-ed. “On the campaign trail, for example, she speaks of having doubled her company’s revenues. Sonnenfeld argues her contemporaries — now IBM CEO Ginni Rometty and former Xerox CEO Anne Mulcahy — have better records. “I do think that there are some added challenges that women CEOs have had, but it doesn’t seem to be relevant in the particular case of Carly Fiorina,” Sonnenfeld says. At 25, after earning an MBA from the University of Maryland, she joined AT&T as a sales representative, refusing to sign on for the telephone company’s savings plan because she believed that she’d be gone within two years.

The hyper-growth firm would crumple after her departure, but not before bolstering Fiorina’s reputation as an aggressive dealmaker with a golden touch. Clinton supports Planned Parenthood and accuses Republicans, correctly, of misrepresenting the group’s position on abortion made in a politically skewed video. Founded in 1939 in a garage in Palo Alto, Calif., the grandfather of Silicon Valley had over the decades become revered as much for its inventive legacy as its laid-back corporate way of life.

Despite that it’s the only substantial executive experience she can present to her voters, it certainly hasn’t been the highlight of her campaign speeches. In a recent interview with People magazine, Fiorina said: “I think there are many, many Democrats who find it impossible to admire a woman that they politically disagree with.

Years before Google bought its first beanbag chair, HP was inviting workers to drink Friday afternoon beers at the office, play in its after-hours orchestra or chat with executives who practiced a breezy leadership style called “management by wandering around.” But as smaller start-ups seized on the Web, HP’s hardware-heavy business model fell behind, seemingly lured into complacency by the easy ink-fueled profits of selling printers but innovating less and less by the year. Later, even Fiorina would tell a Stanford University commencement crowd that she “was an unexpected choice.” In July 1999, Fiorina was tapped to lead a company with $40 billion in revenue and sights on becoming the biggest computer maker in the world. The board gave her a $3 million signing bonus and stocks worth $65 million, and agreed to pay to ship her 52-foot yacht from the East Coast to the waters near San Francisco Bay. The business media was captivated by her pluck and power in a male-dominated industry: In a 1999 BusinessWeek profile, she said she swore by Giorgio Armani suits and liked waking up at 4 a.m. to work out and feed wild birds. (“It’s good thinking time.”) But for all the story lines, Fiorina seemed to reject the most obvious one: Her achievement as the first woman to run a Fortune 20 firm.

Fiorina, too, went on tour, posing for TV ads and introducing herself on HP stages in 10 countries. “Leadership is a performance,” she told Forbes in 1999. Employees grumbled when her portrait was speedily hung in the lobby beside those of founders William Hewlett and David Packard, and some whispered that the flashy promotions seemed to have little to do with the company’s workhorse home-office product lines. As business author Jim Collins wrote then in the Wall Street Journal, “Whose brand was she building anyway?” Supporters say her early campaigns were aimed at a colossal task: Make nimble a sprawling workforce, reinvent a moribund brand and confront six decades of corporate habits, some of which had gotten HP in trouble in the first place. And she could be charming: One day when Gilles Bouchard, then HP’s chief information officer, was walking the halls with his son Yohan, who had a mild disability, Fiorina paused her preparation for a hectic analyst call to invite them both in for a tour of her office. “She knew my son by name,” said Bouchard, now chief executive of Livescribe. “A lot of CEOs couldn’t care less about this stuff.” But some employees remember Fiorina as far more detached with her rank and file.

Where her predecessors were known for small-talking with workers over french fries at the HP cafeteria, Fiorina struck some as standoffish, holed up in her office and seemingly disinterested with the engineering and employees behind the sale. She bulked up one old company chestnut — that Walt Disney Studios had bought HP’s first product, an audio oscillator — by falsely saying that Disney himself had invited the founders to his studio and asked for a special design. “It took away credibility.

She was a fabulous presenter, but that’s all she was about,” said Karen Lewis, HP’s former corporate archivist. “It’s like prima facie — just the face you see. Behind it, she didn’t know much about the business.” Beyond marketing, Fiorina struggled early in dealing with the bursting of the tech bubble, even as she pledged sharp improvements to the company’s bottom line. HP’s stock plummeted amid reports of slumping sales, and many investors started to question whether Fiorina was the right leader to turn things around. As HP faltered, Fiorina masterminded the deal that would define her career: HP’s payment of $25 billion in stock to acquire computer giant Compaq, then the biggest merger in American tech. The timing did HP no favors — Fiorina’s New York unveiling came during the dot-com downturn and the week before the Sept. 11 attacks — but Fiorina would later say she had little choice. “Neither the market nor the organization,” she would tell Fortune, “understood the difficulty HP was truly in.” Both companies had been gutted by the increasing commoditization of computers, whose cheaper production and growing ubiquity had decimated profits.

But Fiorina said she believed the “decisive” joining of forces would bulk up HP’s foundering computer division, save billions in redundancies and give it the size to win over clients from rivals such as Dell and IBM. Fiorina clashed with members of the HP founders’ families, who toured the country hoping to dissuade investors from approving the deal and funded national newspaper ads calling it “a $25 billion mistake.” The stakes couldn’t have been higher for Fiorina, whose employment was on the line: Walter Hewlett, the founder’s son, said, “We don’t need someone training on the job, not this time.” But in 2002, after an eight-month free-for-all, the merger won in a cliffhanger, with about 51 percent of shareholders’ votes. Fiorina quickly consolidated power, folding 83 business units with their own budgets and staffs into six mega-divisions, centralized under her control. The turf battles between Fiorina and deposed executives grew heated: In her memoir, she likened them to “a thousand tribes.” Her autocratic methods, critics say, grated on veterans of a consensus company known for not making big decisions without everyone onboard.

Susan Bowick, the former global head of human resources, said she remembers Fiorina’s attempts to soften the blow: When an executive suggested immediately revoking computer and security access, Fiorina pushed for more time so they could clean out desks and hold farewell parties, saying that “we had trusted these employees for many years, and we were not going to flip a switch and treat them differently.” Publicly, however, Fiorina did not seem to flinch. She averaged $3 million in salary and bonuses every year, not counting her tens of millions of dollars in stock options, company proxy statements show. Dre, Alicia Keys and Matt Damon, who joked, “I think I’m married to Carly, I’ve thanked her so much today.” In the post-merger years, HP routinely undershot investors’ projections and Fiorina’s promised targets. But Fiorina refused, saying “the magnitude of challenges” facing HP meant “a CEO better have his or her hands on the wheel.” Larry Sonsini, a Silicon Valley superlawyer and HP’s general counsel at the time, says Fiorina’s tight grip highlighted her commitment to the job. “She never delegated a problem,” he said. “At 2 a.m., she’d be in the war room, so to speak, redrafting press releases with us.” But her fierce resistance to letting go, for fear of losing control, prevented others from potentially slowing HP’s nosedive. “She was strong on vision but crap on execution,” said Rob Enderle, a business analyst who has followed HP for nearly two decades. “The board really wanted her to have a strong number two, but she was worried she’d be replaced.” In early 2005, as the company’s stock continued to stumble, HP’s board pushed for Fiorina’s ouster.

Fiorina has blamed HP’s performance on a troubled board and the “worst technology recession in 25 years” and said she made the “tough choices” needed to revive a teetering bureaucracy and keep the company alive. In 2001, Google was slugging it out with larger search rival AltaVista, Mark Zuckerberg was in prep school and a declining Apple was staking its turnaround on an unproven new product, the iPod. Its stock price is a third what it was at its 2000 peak, and last year the company announced that it would spin off its computer and printer business, a final rebuke to Fiorina’s long-term goal of computer dominance. That has not stopped Fiorina from making allies out of former enemies, including Tom Perkins, the venture-capital billionaire and former HP director who voted for her termination. That message is a far cry from what Perkins said in 2007 about Fiorina’s demise: “The employees were in the parking lot singing, ‘Ding, Dong, the Witch is Dead.’ And she still doesn’t understand that she bears some responsibility for that.

Even now, a decade after her ouster, some in the founders’ families attest that Fiorina’s time at HP left a deep scar. “She did a real disservice to a great company,” said Packard’s grandson, Jason Burnett. “It’s in large part because of her time at HP that it is no longer the same company my grandfather founded and ran successfully for decades.”

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