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.


Blogger Anita said...

A really fascinating article.

7:49 AM  
Anonymous Anonymous said...


there is much more to it, although you got this part exactly right.

go back a few years. carly wanted the hp cpq merge so bad she bullied the institutions into going along with voting for it. carly left a vm for michael c about it which went all over the net. hp and carly never denied it. both carly and michael got multi million dollar bonuses for trashing both companies. then the layoffs started. something unheard of previously at hp. of course, unlike hewlett and packard, who walked around and talked to employees, carly would not go to company meetings without bodyguards.

but michael c at this point became a liability. he had to go so hpq bought him out for many more millions. a year or so later he surfaces again as ceo of wcom, then changes the name to mci. as if anyone would forget that wcom actually owned mci and this was just more bs.

now michael c wants to 'merge' mci. talk on the street now is he wants a merge with verizon. the smt talks were just smoke. at the same time his name has been mentioned as a replacement for carly. he screwed up cqpq, so why would hpq want him back? i doubt that will happen.

it sems that some ceos think they are not just the brand, but can do anything they want and make millions - even for screwing up.

note also carly came from lucent. look where lu is now.

hope all is well with you...

1:12 PM  
Blogger Seun Osewa said...

1) We need not feel too bad for her: $21 million severance package eases exit2) "[Fiorina's] good with marketing. She's a good speaker for the company," says a former HP executive. "But this is a company that doesn't need a statesman. It needs a hands-on operations person."
'The Inside Story'They decided on a '21st century' manager, now they want an operation guy. Carly is good at what she does, but it seems to have taken the board 6 years to decide that they don't really need what she does. I think the board should be considered as part of the 'problem' - they hired her, didn't they?

8:51 PM  
Blogger Rob Frankel said...

It's going to get worse before it gets better. Now we all get to listen to everyone who, suddenly, will crawl out of the woodwork, claiming, "I knew she was wrong for the job even back then." I'm already getting letters and e-mails about it. Funny -- if so many Wall Street and media people knew about it back then, why didn't anyone do anything about it? Where was the media backing the anti-merger folks? More lemming mentality, eh?

7:19 AM  
Anonymous Anonymous said...

imo - most of the public was unaware. all they knew was hp printers. techies otoh knew, but we don't count for anything. the tech press for the most part didn't say a whole lot (although they did say a bunch) out of respect for hp as a company. as to wall street - all they care about is the next quarterly report. hp employees - well, the real hp group is special. they are trained to never say anything bad about hp or other employees. even in phone conversations (for all i know they are recorded) employees will say - i can't comment about that. however, judging from reactions i received over the years, no one there liked carly. hp employees just have too much class to imply anything.

carly also bullied the institutional investors into going along with her. so the board was really sitting there with their hands tied. the h/p familes and foundations really hated carly. publicly which is unusual to the extreme. carly got rid of every top level exec from hp that she saw as a threat.

i know one person that is an hp employee for over 20 years. he told me when the board hired carly, a friend of his at lucent, said thank you. the hp person didn't get it then. took a couple of weeks to understand. carly is a salesperson and sold herself and a bill of non-goods well. reminds me of snake oil salesmen.

7:38 AM  
Anonymous Anonymous said...

I liked Karlgaard's piece that he wrote for the Journal yesterday.
First sin; Acting like a "Rock Star".
Rob your more of a rock star than Carly could ever hope to be.

9:19 AM  
Blogger Rob Frankel said...

I could never be a rock star. For one thing, no matter how hard I try, I can't seem to attract any branding groupies.

5:08 PM  

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