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IP: Editorial on HP ...
From: Dave Farber <dave () farber net>
Date: Tue, 12 Mar 2002 19:52:34 -0500
To: Dave Farber <farber () cis upenn edu> Dave, Please identify me only as a former HPer as you did on the first one. I believe that this is ready to go (everything below the line of =s). -- ====================================================================== "Image versus Reality" I have a friend, a pioneer in the computer world, and a former HP employee such as myself. A couple of years ago, I asked them what they thought of Carly Fiorina. Their response was, "She says all the right things." A few months ago I repeated the question. Again came the answer, "She says all the right things." Two years ago, I thought it was a comforting statement. Now, I'm not so sure. Saying all the right things is a great place to start. Where it runs into trouble is when there is a complete disconnect between what is said and what is done -- between image and reality. After all, Joe Isuzu says all the right things. It's his credibility that causes the problem. Sadly, saying the right things -- or image creation -- has been the main positive aspect of Fiorina's leadership of HP. If Fiorina had followed through on those right things, it's very likely she would be an extremely popular head of HP and there would be little or no opposition to her leadership. Give us some examples you say? Well, here we go. Fiorina's initial promise as CEO of HP was to return HP to its inventive self. In beautiful TV commercials that started running the week of December 1, 1999 her voice told us: "Inventors are not interested in politics or bureaucracy. Those are ridiculous in a garage. And if for one moment the company these two men founded ever forgot the rules of that garage, we won't forget them now. Because the company of Bill Hewlett and Dave Packard is being reinvented." To drive home the point, she commissioned "The Rules of the Garage," rules that essentially restated the HP Way. For the TV and print ads, as well as the posters that showed up around HP, a replica garage was conjured up to resemble the original HP garage. She had the HP logo changed to emphasize the word invent. On the surface, things seemed to be looking up. However, the fake garage -- the once again symbol of HP -- was merely a shell. A friend of mine from HP entered the one outside HP headquarters. The outside looked rustic -- the inside was the cheapest high tech shell imaginable. It was a facade for advertising, so fake that Sun Microsystems has made a wickedly funny parody of Fiorina's garage ads that has leaked into the outside world. The fake garage would not have been a big deal had the rules not been as much of a facade. "Rule 5: No politics." During Fiorina's reign, HP has become incredibly political. Just take a look at the attack campaign run against Walter Hewlett both inside and outside the company. James Carville would blush at this stuff. "Rule 4: Share -- tools, ideas. Trust your colleagues." Under Fiorina, HP has become a closed place where people don't know who they can trust. Open debate has been squelched. The individual who has demonstrated the least trust in their colleagues is Fiorina herself, replacing the open door policy of her predecessors with armed body guards. Her trust in her colleagues was demonstrated in December when prior to her giving a talk in the Vancouver division cafeteria, china cups and metal silverware were replaced with styrofoam and plastic. Chairs were cable tied together. So much for trust. "Rule 11: Invent." Ah, the last rule. The bottom of the new HP logo. The centerpiece of many of HP's pro-merger ads. To bolster the claim that HP has improved during Fiorina's tenure, that inventiveness is alive and well (EE Times, 1/7/02; Business Week Online, 12/24/01) HP's top brass points to an increase in patent filings: up between 67 and 100 percent, depending upon who is making the claim. How did this happen? Very simple. HP gutted the internal patent review process. In early 2000 management was given a new directive, to raise the number of patent filings substantially. It turns out that HP's ranking was no where near that of other tech firms including IBM, and the spin off of Agilent would only make it worse. To raise the numbers, employees were encouraged to file just about any idea and let the US Patent Office decide the matter. The net result is more patent filings, but it proves little about HP's inventiveness. Still not enough? Well let's look at some more recent Fiorina contradictions. A flier mailed to shareholders with many of the white proxies has an investor briefing Fiorina gave at a Goldman Sachs Technology Conference (2/4/02). Talk about saying the right things. In it Fiorina claims, "Today, all of the printers we make are Web-enabled, capable of connecting directly to the Internet so that a printer can access digital content from any device, anywhere." However, a quick look at HP's printer offering on their web page (www.hp.com) reveals that this statement is patently false. HP still sells many dumb printers which can only connect to the Internet via a computer. [ As a Mac owner let me assure you the above is true as it has been for many other HP printers even on PCs Dave F] Fiorina talks about 15,000 layoffs in the combined company due to "synergies" with Compaq (i.e. overlap). Yet in that same flier, she tries to entice analysts with: "We have built a conservative case for synergies. We have estimated cost synergies of $2.5 billion by 2004, but frankly our initial numbers were substantially higher, and the business plans we're currently building in our final phase of integration planning are higher as well." Higher synergies means more layoffs -- "substantially higher" by Fiorina's own words. Once again we have a contradiction between her claim of 15,000 layoffs once the transaction is completed and her "final phase" "business plans." The HP board members who support the merger send us letters saying that the Compaq deal is the result of 2 1/2 years of careful planning. Now, I'm no board member, but I still can't figure out how an abortive attempt to buy PricewaterhouseCoopers fits into that careful planning. "Okay, we really want to buy Compaq. So what we're going to do is negotiate for PricewaterhouseCooper, get close to closing the deal, and have it fall apart. Then and only then, Compaq is ours!" Right. Finally, we come to the HP Way. In a clear marketing coup, Fiorina's pro-merger web site is at www.votethehpway.com, a clear attempt to imply that supporting the HP Way means supporting her. In a recent interview in the San Jose Mercury News (2/28/02), she claims to love HP. Yet when asked about corporate cultures, she is quick to say that there is a lot that HP can learn from Compaq. How come we never hear the other part? It seems that someone who admired HP would also think that there is a lot that Compaq can learn from HP. The silence is deafening. Why does all this matter? Because how you vote on the deal pretty much depends on who you trust. For that, you have to compare what they say to what they do. Back in the 1980s television show, "Sledge Hammer", the incompetent detective played by David Rasche would gaze at the audience with his blonde hair and blue eyes and say, "Trust me. I know what I'm doing." Those familiar with his track record would know to expect a comedic disaster. Now, Fiorina looks us dead in the eye and says, "Trust me. I know what I'm doing." Looking at the track record of following through, we know what is going to happen. Only it's not funny anymore. 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