I enjoyed reading the new book about innovation at Hewlett-Packard that Chuck House and Raymond Price just published. It’s quirky and curiously researched, but, most of all, I was happy to read their account of Carly Fiorina’s tenure as CEO at HP. History was in need of some fact-based revision. If ever worlds collided, it was at HP when Carleton S. Fiorina took over the reins after a stunning rise through the executive ranks at ATT/Lucent. Chuck points out that, although Carly was not well-liked by her employees (even her direct reports, many of whom ultimately undermined her), she sowed the seeds for Mark Hurd’s success.
The executive suite at HP Headquarters on Page Mill Road in Palo Alto was in those days a row of large cubicles, and, in keeping with the HP culture, there were no doors and no outer offices. Everyone’s office — including Carly’s — was really just a cubicle. Carly insisted that I have two offices: one in HP Labs adjacent to the museum-like offices of Bill Hewlett and Dave Packard — these were not cubicles but were real offices, impeccably maintained in their original 1960’s orange-and-brown Madmen decor — and the other next to hers overlooking a Japanese garden. Carly’s executive council met nearly every week in a nearby conference room whose glass wall looked out over the same garden.
Several council members had offices elsewhere, but those of us who had direct access were within a thirty-foot radius of her office. These were the Gold Badge days at HP when a favored few retirees were granted the privilege of unrestricted, lifetime access to any building and any office suite in the company. The daily comings and goings telegraphed events that would not be visible outside the CEO’s office for days or weeks, even among business heads who had broad authority over multi-billion dollar enterprises. This turned out to be an important vantage point from which to view sand being thrown in the gears during HP’s acquisition of Compaq, but I will save these stories for later posts.
Chuck House had been gone from HP for some time when Carly arrived, so his account is based on interviews with a relatively narrow slice of insiders who were his colleagues — an impressive number of people, to be sure, but in a company with 80,000 employees not enough for a definitive portrait. But House has never been shy about charging ahead when the terrain looks interesting, a personality trait that once earned him a medal from Dave Packard for “Extraordinary Contempt and Defiance Beyond the Call of Duty.” It was awarded to commemorate a mutinous tour of customer sites to demonstrate a new display monitor after HP management in Colorado Springs had decided to shut it down. Nevertheless, House’s account gets many things right. One of the things he misses was what Fiorina brought to HP: a WWC focus on the customer that was foreign to HP’s engineering culture before her arrival.
House and Price defer to old-guard HP employees in characterizing Carly as a marketer, a fiction that was rooted more in style than in substance. Fiorina was unnervingly accurate in her assessment of general market trends, like the importance of the internet to HP’s mainline businesses, but, in fact, she was a consummate saleswoman. What she brought to the table was not the “let’s-see -what -they-think-about-this” arrogance of corporate marketing organizations, it was the ability to listen to customers, sift through encyclopedic knowledge of internal plans and projects, and envision a solution. Sometimes a solution was forthcoming. Sometimes it took a little while longer than customers were willing to wait. But sometimes solutions were sabotaged. To have an HP outsider from the East Coast — a telephone equipment salesman, not an engineer — propose a solution to customer problems was an unpardonable sin to some. It was a WWC culture class that she was slow to recognize.
She was widely criticized for her lack of operational experience, but the truth is that Carly delegated operational authority too widely and to managers with suspect motives (including past and future pretenders to the throne). As a newcomer, I tended to apologize for injecting long-range thoughts into the very operational discussions of the Executive Council, until one day Carly stopped me and said: “You don’t have to apologize for that. It’s true that we’ll never get to the long-term without taking care of the short-term, but it’s the long-term that makes the short-term worth doing at all.”
Council chemistry changed in the months before the Compaq merger. Vyomesh Joshi took over as head of the imaging and printing business unit. V.J. is not only a brilliant executive, he is a skilled engineer, whose technical insights were mainly responsible for transforming ink jet printing.
The other major additions were Pradeep Jotwani and Iain Morris. Pradeep had control of worldwide consumer sales. He was fond of long discourses — sometimes literary, sometimes merely speculative — but their effect was always to slow down a speeding train and turn the discussion in a direction that was more productive. Iain is a big, brash, Harley-riding Scott who Carly recruited from Motorola to carve out emerging businesses like handheld computers and entertainment. Carly quickly transferred the personal computer businesses to Iain from Duane Zitzner’s computer business unit where they had languished as unprofitable also-rans. Morris knew hardware, software and manufacturing from his days at Motorola, and he was also a great salesman.
At one of his first Council meetings, Iain walked in with an HP laptop and stopped everyone cold when he opened it up and bellowed: “What’s wrong here?” When you looked at an open HP laptop from the back, the “hp” logo was upside down. It read “dy”, and of course, that was the way most people saw the laptop: open and from the back, inverted logo. If anyone before had noticed this, it never made it to the upper reaches of management. The order went out immediately to invert the logo and all of the millions of HP laptops produced since that time now display the logo right side up, so that it reads “hp”. It upset some of the industrial designers who argued that laptops were closed a lot of the time and that the orientation of the logo doesn’t matter when a laptop is closed. It took a salesman’s eye to recognize that it was stupid to have millions customers staring at a “dy” laptop.
This episode followed on the heels of two other quick-shifts. One involved HP’s always painful Federal sales performance. I will talk about this more fully in a later post. The other involved architectural consistency, a concept that bridged customer issues and product design.
Shortly after VJ took over the imaging and printing business, he held an advanced projects review for me in San Diego. I was struck but the ubiquity of infrared (IR) connectivity ports on HP printers and cameras, and mentioned it to VJ. He had many compelling reasons for insisting on IR, but complained that Zitzner’s PC division had recently removed IR ports from HP laptops.
To Duane’s immense displeasure, I called a meeting with some of his design engineers, ostensibly to review the component cost envelope for laptops. At the end of the meeting, when everyone was worn out, I asked about IR, and they had a string of good reasons to throw it out. When I pointed out that HP printers, cameras, and PC’s no longer worked together, they just sat there blinking at me. Carly overruled engineering objections and IR ports made a miraculous (albeit short-lived) reappearance in HP laptops.
It would not be apparent outside the CEO suite for months, but architectural consistency was a technology theme that would drive many R&D investment decisions, both near-term and long-term. In an effort to jump-start a consumer-facing initiative, Carly had approached Sony about sharing some key technologies. One of Sony’s success stories was the introduction of memory stick technology into a broad range of Sony products from hundred-dollar consumer entertainment devices to studio-quality video cameras that cost a half million dollars or more. My counterpart at Sony was a CTO named Mario Tokoro, a computer scientist and engineer who had spent time at the famous computer science department at Carnegie-Mellon University. Mario had been instrumental in arranging for memory stick technology across a staggering array of Sony’s consumer and business products. The idea of arranging product strategies around this kind of architectural unity would have sped up HP’s brief surge in Internet and Web technologies. It was an idea that was undone by colliding worlds on a much different scale.
 Charles H. House and Raymond L. Price, The HP Phenomenon: Innovation and Business Transformation, Stanford Business Books, 2009