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Wednesday, February 09, 2005

Carly Fiorina Killed By Branding

She was a leading female executive. A top icon for women in business. And yet, just like so many men before her, Carly Fiorina was done in by branding.

Or to be more precise, her inability to understand branding.

Hewlett-Packard's Chief Executive Officer is now their ex-CEO, and not because she's stupid. Or inarticulate. Or inexperienced. Anyone who knows her, or knows of her, also knows that you can't be a dolt and run a company like HP. I mean, you can if you work in Hollywood, but not at a place like HP. There are simply too many smart and talented people who work there. And there's too strong a culture there. For many years, in fact, it was Hewlett-Packard's brand culture, more than anything else, that drew people to them and kept them happy there, often for decades.

No, Carly's problem was much more basic than that. Her big problem was the same that has befallen her male counterparts, like Michael Eisner of Disney: she just doesn't get the branding thing. Like Eisner, she was too busy building a monument to herself to see that most of her actions served to undermine the HP brand, rather than strengthen it.

Some people could see it coming, notably the family shareholders who bitterly opposed Fiorina's sweeping changes at the company. For a few years, you could hardly pick up a business section of the newspaper without seeing a mention of the vicious proxy battle waging between Fiorina and her adversaries, jockeying for position in an effort to affect the questionable merger between HP and Compaq.

It was the most public battle of Fiorina's tenure, but not the fatal one.

The real damage was done when Fiorina attempted to make over the company in her own image. That brand culture which I mentioned earlier was a lot stronger than she anticipated. A lot of people who worked with the company founders were there long after those founders retired. They took pride in carrying the HP torch and a brand ethic that stressed both excellence and teamwork.

If you go to the HP campus, the original lab is still there for you to see, where the company's first technological innovations were created. Hewlett-Packard's brand is as much that history as it is those innovations.

But Carly forgot about that, as so many CEO's do.

When the opportunity arose for her to grow the company, Fiorina chose to abandon the HP brand ethic. Foregoing the "we're all in it together" spirit so valued by its founders, she completely derailed HP from its brand vision. And she blew it two ways:

First, she violated the company's brand ethic with her own people. The company was driven less by team play than executive fiat. Many employees who had invested lives and careers into HP saw the writing on the wall: the place was changing -- and not for the better. They could see that what Fiorina termed "bringing HP into the 21st century" was simply more of the same Wall Street double-speak. Her lack of understanding regarding branding is at the root of this one. But it plays even worse in the next: The merger with Compaq.

In a bitterly contested shareholder fight, she battled to merge HP -- a printing/technology company -- with Compaq computers, a large but awkward player in the low-margin, highly-competitive PC market. There was no business reason to do the deal. In fact, there were a lot of business reasons not to do the deal: After all, the PC business was already cut-throat. If HP were going to expand into a new market, PC's were the last place to look. Even so, there was no brand compatibility between the two companies. Their products, procedures, cultures and practices were totally different. Totally incompatible.

But Fiorina, like so many of her CEO playmates, thought she was stronger than that. Nobody can know what she was thinking, but here was a woman who had beaten the odds this far. She had made a career out of proving her doubters wrong; she was intent on doing it all over again.

Notice a pattern here? Ebbers at WorldCom, Eisner at Disney, Fiorina at HP, Lay at Enron....the list just keeps on growing. And it isn't going to stop until Wall Street wakes up and notices that the CEO's who know branding are the keepers. That's why you never see FEDEX playing musical chairs in the executive suite. When FEDEX merges or acquire, they buy companies that build their brand, which is why their acquisition of Kinko's made so much sense.

Don't feel to bad for Carly Fiorina, though. As P.T. Barnum said, "There's a sucker born every minute." Most of them live on Wall Street.