HP's history revision restarts with Hurd
August 17, 2010
Ten days have passed since HP canned its CEO Mark Hurd, but the reasons why remain a mystery to most journalists including me. What's better-known is the pattern the Hewlett-Packard board has taken since the HP 3000 was excised from HP's futures. The journalists who know the old HP -- that one of beer busts, collegial career paths and a company shy about waving the best-in-class product flag -- can see the trend toward company leaders who always consider shareholder benefits first.
The last CEO asked to leave, Carly Fiorina, was a charter member of the Customer Second school of management. Customers were tossed overboard in the Fiorina era if they relied on HP's less flashy, slow-growth products. You didn't want to be a VAX user, have built a strategy around Alpha, or carry a tally sheet of HP 3000 purchases once Fiorina jetted in to jettison what HP happily called legacy products. She rubbed out seemingly indelible tenets of the HP Way while pointing the company at an outside-engineered tech future. Along the way tens of thousands of talented HP employees lost jobs. By the end of her reign, employees were sending thrilled emails about how a scourge had been lifted. Others mourned her, for reasons related to remaking HP.
Mark Hurd's ouster has been so lurid and swift that some journalists claim the Fiorina Era now looks much better in this summer's aura of change at the top. Nothing could be further from the truth of what happened to HP for more than five years that started the 21st Century -- and not any more true than the "best man" label Hurd was touting as HP's CEO for the second five years. Hurd didn't do anything to harm the HP 3000. That mortal wound fell off the sword of paring back product lines to accomodate Fiorina's HP-Compaq dream.
But Hurd's harm can come when the company casts about in the sea of competition for in-house R&D. Not Invented Here used to be the kiss of death for an HP partnership; outside innovation needed not apply. Now NIH is HP's norm, something that should concern the 3000 user who hopes HP's enterprise prowess can extend to non-MPE environments. How reviled was the man who collected a $23.9 million bonus for '08 while he froze wages across the company? Have a look at a 2009 blog called FU Mark Hurd to sample some of the vitriol.
Fiorina was lashed by the employees the same way internally. Then she had her legacy revised on her ouster. (She's attempting to whitewash her HP era while running for the US Senate.) Revising history at HP has become a boardroom-level act by now, starting with then-chair Patricia Dunn's "Pretext-gate" privacy sins in 2006 to flush out those who'd report on the true spots of a board clashing with Carly. HP paid $14.5 million in court fines after that chairman's ouster. The bill might be even higher in terms of Hurd's cost to HP invention, once jobs become easier to find.
The computer industry journalists with shorter memories are attributing Hurd's maniac axing of employees to his demise, as if Fiorina has no record of gutting technical labs and entire business lines. At The New York Times, Joe Nocera sums up Hurd's rep with the rank and file.
Then there were the company’s employees. The consensus in Silicon Valley is that Mr. Hurd was despised at H.P., not just by the rank and file, but even by HP’s top executives. (Perhaps this explains why [interim CEO Cathie] Lesjak was so quick to denigrate him once she took over.) “He was a cost-cutter who indulged himself,” was one description I heard. His combined compensation for just his last two years was more than $72 million — a number that absolutely outraged employees since their jobs were the ones being cut.
We've heard from a few employees too, ones more closely related to the 3000 enterprises which were still operating inside HP over the past decade. They don't pin the blame on Hurd alone. Instead, they indict a management mantra at Hewlett-Packard that has produced three chairmen of the board who have been hounded from HP's top spot. The problem is with the "management class," one said, not Hurd. Even inside HP's tech realm, the engineers understand the company is no longer the beacon of R&D it was when 3000 users adopted their systems.
Maximizing cash flow and profit are top of list, they say, seeing the focus flow away from what HP makes, and how it makes stuff, and where it makes stuff, all to drift down to pure dollar accounting. Where people get into trouble is to make an assumption that HP is an R&D company. Hurd's doing nothing that most other non-founding company managers are trying to do right now across America and the world, say the sharpest cynics -- at least those who still have a job tending HP's technology.
Hurd's maniac cost-cutting pleased shareholders and curried kudos from the financial press, but it's a house of cards ready to tumble as much as Fiorina's boondoggle of a mega-HP that couldn't expand the businesses it was buying. The board fired Fiorina over her inability to execute or share power. Her successor got himself canned with sketchy relations with an actress playing with him in a marketing role. But Hurd's departure was really due to pulling HP even further away from a company DNA -- some called it the Jedi Force -- that built a legendary firm relying on innovation and invention, and institutional devotion to employee careers.
Hurd had his acolytes throughout HP in executive positions, and these leave-behinds will continue his policies until an all-clear sounds from a new CEO. HP grew its business by $40 billion in the Hurd era, but it also bought EDS -- which generated $22 billion in revenue in 2007 and even more by '08. At the same time that PC revenues increased [nothing like losing IBM as a competitor, while it sold off PCs to Lenovo] the printer growth engine stalled out. Printers were a spearhead of HP innovation, and still are today.
HP 3000 customers sticking with the vendor need HP to court innovation because a mission-critical enterprise is best run, most efficiently, with leadership technology and devotion to those who can create it. HP didn't right its listing ship while it hired Hurd, but seems to have gained a captain who'd throw crew members overboard to cut ballast, even while hiring heavy talent like CIO Randy Mott [$28 million compensation] away from WalMart. Thousands of IT pros in HP received move-or-else orders during the datacenter consolidation of Hurd's era. HP wore out its "85 datacenters reduced to 6" boast at places like the Technology Forum big-tent talks. If your IT plans are to reduce spending and cut costs, then Hurd was a man for your season of slicing.
Meanwhile, the employees who built HP into its legendary state never shared the boardroom dream of leaving hardware innovation to other companies. The Superdome successor and the newest ProLiant line has got tech innovation to help you plan less accurately and scale up suddenly, yes. But as far back as 1990 HP's media reps talked about a company driven by software prowess, and integration expertise. "The vision of HP becoming a software and services company was never clearly spelled out to rank and file employees," I heard from one recently-separated tech staffer.
Once HP gets beyond the EDS acquisition lift of its business, and the economy recovers to enable employee escapes, watch out for roadmap plans in slow-growth segments. Enterprise Storage, Servers and Networking has posted grim quarters for about half of Hurd's tenure; this week's numbers will be notable. HP is struggling to sell its invented-here technology by now because so much else, not-invented-here