Thursday, August 19, 2010

My gawd, the HURD story is still alive?

These things usually abate fairly quickly; sexual pecadillos, robbing the till, and egregious acts of other kinds have a titillating capability for hours or a few days at most. Why is this one still going strong two weeks in?

Perhaps because it still seems surreal, even in the Cheshire Cat world in which we live. Hurd hand-picked seven of the ten directors who voted unanimously to have him resign immediately, for 'piddling offenses' (a wonderful phrase used yesterday by WSJ apologist Holman Jenkins Jr , who had the gall a year ago to inform his readers that the Wall Street meltdown of late 2008 was 'our fault' because we panicked, rather than any culpability by the banking/Wall Street community). Hurd's cronies -- unanimously? For no reason at all? Come on. Get real.

One columnist said "let's look back at his track record at NCR, before coming to HP." The finding: NCR has stagnated ever since -- for the same reason that HP has been stagnating for 34 months -- costcutting, especially when it cuts into bone (i.e. the innovation engine) cannot succeed in building long-term strength. You can build efficiency, but not momentum. And it usually quits working, especially in the brainiac high-tech world when your talent walks out the door. That is why it became double-edged when R&D is slashed so far and key resumes are flooding out of the place. Jenkins calls this "the sickly moanings of the vaunted HP-Way", demonstrating fairly clearly that he hasn't a clue what that 'vaunted idea' meant or means.

No one in this recent brouhaha has resurfaced the cover story for Business Week October 9, 2006 which noted that Hurd was so popular with his NCR employees that they repeatedly slashed the tires on his car in the NCR parking lot, and the company had to hire bodyguards to protect him at home from his 'team'. Wow! And no one has focused really on just how hated this guy was by his HP team -- 34% approval by "the home team" when even a Larry Ellison can garner 78% at Oracle. To blame this on "sickly moanings" of archaic nostalgia for "the HP Way" is seriously demented.

The problem with such drivel is that there is a germ of truth in it, and WSJ readers are not in a place to appreciate the nuances, especially when a too-clever by half editor picks up the cudgel. The HP Way did calcify under Lew Platt; Carly Fiorina was brought in to shake it up; she was resisted mightily under the guise of "protecting the HP Way", and she did ultimately fail. In part, that failure was due to passive compliance, if not outright resistance, to her ideas and leadership -- and "the HP Way" was invoked time and again as the stalking horse for such antics. But just as the bankers might have had just a spot of culpability for the Lehman et al debacle, it is just possible that Carly's leadership style had a little bit to do with all this.

Similarly, there is no question that Hurd did some -- even a lot of -- necessary and valuable 'tough leadership' to 'right the HP ship' in terms of operational effectiveness. That is to be applauded -- UNTIL it crosses the line. To become unethical -- with vendors, customers, employees, shareholders, investigative journalists, and even the board -- is OVER THE LINE. This guy, plain and simple, was and is a thug. There is no place, in the HP Way, the American Way, or in a Fortune 500 leadership company, for such a person to be exonerated, let alone exalted. Jenkins owes the HP Way an apology.

Thursday, August 12, 2010

Oldtimers think Carly is when HP went over the cliff -- and certainly her Public Relations engine was in overdrive. But most folk we talk to think she started the corporate raiding of the till. The Proxy Statements on file show a different story.

There are two meaningful comparison sets of years. 2000 was the height of the boom; 2001 the bottom. 2008 (before the Lehman collapse) was the "best year", 2009 a disaster. I left out imputed stock option values, since those are remarkably hard to understand, thanks to your Federal Government's arcane FASB rules. I figured CASH PAID OUT is a good comparable.

In the 'good year comparison', Hurd and team made 700%, 266%, 1790%, and 1920% more money for CEO, CFO, PC Chief, and Services Chief than the Fiorina team. The next year for each, all took 'cuts' on both teams -- but for 2009, Hurd and team made 1400%, 368%, 970% and 1011% more than the comparable Fiorina team. The employees didn't fare nearly as well.

The Board did better too, averaging 320% more in 2009 per director than in 2001. Each full-time director, for a few meetings per year, made on average $328,000. Pretty good hourly rate.

To the best that I can figure, Mark Hurd's severance pay, for a "profound lack of judgment" that caused IMMEDIATE RESIGNATION, exceeded John Young's lifetime earnings. Young, CEO for fourteen years, gave 32 years to HP, and never had, so far as we know, any sexual harassment suits filed against him. He grew the company by a factor of sixty from his first organizational impact time until he retired WITHOUT ACQUISITIONS of consequence; Hurd grew it by a factor of 1.4, buying all of the growth in acquisitions, and the amount that he added in profit was less than the amount of R and D that he took away. The amount of debt that he added, to a company that never had any, is hard to calculate on a percentage basis.

But he did take away something akin to $150 Million in personal earnings (what some of the current HP employees have called "theft") in the past three years. WHEW. What has this Board been doing? What IS this Board doing?

Wednesday, August 11, 2010

Who is writing this blog?

From a blog posting June 1,2009 by Joel Birnbaum, long-time R&D leader for HP, and definer of the HP/PA computing program, commenting about Chuck House and the new book by him and his co-author Ray Price:

"When I came to HP as a rare outsider hired into a high position, many people advised me to look up Chuck as someone who really understood the soul of the company. He was famous within HP for his wit, his creativity, and his willingness to speak out against things that he thought short-sighted or self-serving. I found that he more than deserved his reputation.

"His soon to be published book (The HP Phenomenon: Innovation and Business Transformation, Stanford Press, 2009), for which I was interviewed extensively, is likely to find wide acceptance and is a marvel of careful research and writing.

"Chuck is a witty, daring and very effective speaker, and during our time together at HP, he lent his name to many causes that resulted in dramatic improvements... not always with the prior approval of upper management. HP was eventually proud of these sometimes irreverent accomplishments, and many found their way into the literature and are in wide use in the industry today.

"For all of his career, Chuck's signature style has been his refusal to accept the status quo for purely historical reasons, and to think creatively and deeply about a problem or opportunity and then, often with recruited partners, to seek a novel solution. Chuck's style, while often flamboyant to attract attention to his causes, is inherently a modest one.

what were you saying a year ago?

From this blog on December 13, 2009

"Dave Iverson (of KQED and NPR) moderated the CHM (Computer History Museum) event, very ably, and the questions were good ones. One in particular had to do with the current 'regime' and pay practices. Tough one to answer, and my answer "unconscionable if true" for the reported $113 Million for the four top people caused a murmur. I did say, 'Bill and Dave, for their egalitarian company, would find that an unusual pay practice'." The CHM video of this event is still available; these comments occur at about minute 60.

From this blog on Sept 2, 2009

"Hewlett and Packard have had multiple occasions to turn over in those cold graves -- the selloff of Little Basin and the merger/acquisition mania pale alongside pretexting, forfeiture of long-promised benefits, and rules banning executive participation on civic boards. Ethics and a huge belief in the dignity and value and worth of all employees were cardinal elements, weren't they?"

And from August 17, 2009

Five long-term HP employees (144 years between them), including two current VPs and one ex-EVP, commented: "the image of HP being the leading corporate citizen in the community, long a cherished hallmark of the company, has dried up in the current regime. Carly, they averred, was as strong on that as Lew or even Dave himself; not so under Hurd.... {At a key STEM (Science, Technology, Education, and Math) meeting for America recently, leaders} were outspoken about HP absentee-ism on topics of science and math education in America. They were outspoken... that HP only cares about sales, and ties 'corporate giving' only to 'deals' at best these days."
"Moreover, the considered opinion was that nine of the top ten high-tech firms in America (recall that HP is now the largest) have their CEO or Chairman or both involved enough in STEM education to be carried on the front pages of the Wall Street Journal while HP stands aside. What the hell has gone wrong at this place? Is the new guy in touch with anything besides the bottom line?"

Tuesday, August 10, 2010

Larry Ellison shows his colors

Mark Hurd's "close friend" Larry Ellison weighed in yesterday, to say the HP BOARD just made the biggest mistake in history for HP shareholders, as big as the idiots who removed Steve Jobs at Apple twenty-five years ago.

Surprise! This is the 4th richest guy in the world (Forbes, January 2010) who brazenly took $3 million away from the Portola Valley school district in 2008, while spending nearly a billion on his boat. Might makes right! Begins to give you a sense of why The Robber Barons were called that a century ago.

And Larry says no CEO fills out their own expense reports, so that must be a trumped up charge. Right! His minions tried to cover up the (non-sexual) dalliances? And he ... umm... voluntarily agreed that maybe he should resign?

Check out Bianco's BIG LIE

Anthony Bianco had the perseverance to dig into the mountain of filed data re pretexting. He had the courage to write the book. He fingered Mark Hurd as "the guy", and in addition fingered him as "nailing Patti Dunn" (without violating the HP sexual conduct code) to take the fall for him.

My Amazon review of Bianco's book on June 13, 2010 (before Jodie Fisher sent her complaint to the HP Board June 29), says "where there's smoke, there's likely a fire. Unfortunately, from Tiger Woods and Enron and WorldCom leadership, to Lehman Brothers and other Wall Street "leaders"... we are getting accustomed to leaders being less than they seem. True at HP now?"

Howze that for calling the shot?

Holy mackerel

The e-mails were flying fast between 2:07pm and 2:09pm last Friday afternoon. I arrived home from a visit to the Palo Alto Medical Foundation at 2:21pm, unaware that HP had just announced that Mark Hurd had just resigned. The e-mails were from a varied lot -- KGO/TV who had never ever tried to call me before; reporters for Business Week, CNBC, etc with whom I'd met once or twice in previous years; friends and colleagues from HP today and "the old HP".

Sexual harassment that didn't happen?

A few mis-stated expense reports, that "totalled" somewhere between $1,000 and $20,000? This turned out (missed by nearly all the columnists) to be for EACH ONE. The 2008 10K report says Hurd was re-imbursed $79,814 in tax "True-ups" for the estimated $243,000 in "personal meals" that he ate on behalf of HP. This was in the midst of the three years cited with "his girl friend" -- sounds like a little more money than the initial reports.

All bogus, in my view. This guy was a thug, nicknamed Mark Turd by ex-HPites who worked directly for him -- stories that have circulated in the Valley for three years. He raped HP employees (figuratively, without violating the sexual conduct code at HP) by eliminating the sixty-five year concept of profit sharing, preferring to move to obscene bonuses for himself and his five top minions -- a mere $113 million payout for them in a year he chopped everyone else's pay by 5% plus profit-sharing. These were raises for some of the five people by as much as 400% -- a tidy uptick.

He was profane, a bully, autocratic, threatening, demeaning, vindictive, and rude. Blogs over the weekend by current employees said "Hooray, the tyrant is gone!" I couldn't contain my glee on the 11pm news -- best news for HP in a very long time!

The Voice of the Workplace, HP's thirty-five year historic 'measure' of employee feelings (done every five years) showed in April an astonishing finding -- more than two-thirds of HP's employees would quit tomorrow if they had an equivalent job offer. Not a raise, not a promotion, simply an alternative. That number never used to be in double digits. Other companies in the Valley have reported an amazing rate of HP resumes being submitted; one large company saying, "we didn't know they had that many people working there".

There's lots more to "worry about", and it is easy to imagine that the HP Board was worrying about all of them, but didn't know where to "pin the blame". This "non-sexual" harassment was simply a convenient foil...