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Saturday, February 12, 2005

Carly Fiorina's Seven Deadly Sins

Rich Karlgaard comes with an excellent insight about sins of Carly Fiorina leading to her downfall. Excerpts with edits and comments:
1. Acting like a rock star: In the U.S., only entrepreneurs get to act as rock stars. Hired executives do not. Carly Fiorina failed to grasp this distinction. Here, we celebrate Gates, Buffett, Dell, Ellison, Jobs, Schultz, Fred Smith. Etc.
2. Failing to see the cheap revolution: Carly allowed HP to drift onto the wrong side of the defining divide in the global economy. The cheap revolution has two elements: plummeting hardware costs combined with the Web-mediated ability to run world-class operations from anywhere. Dell is on the right side of the cheap revolution divide. It sells powerful servers for under $5,000 and keeps overhead low. HP sells servers for tens of thousands and keeps high overhead
3. Failing to see the consumer revolution: A huge shift has occurred in the last five years. we recently covered rick's view on three trends - digital rules The coolest tech products now go straight into the consumer market. Until a few years ago, most got a footing in the business market first: Copiers, PCs and cellphones were expensive products that only became cheap riding the Moore's Law curve over time. Today, the most transformative products and services go straight for the consumer: Blackberry, Apple iPod, eBay, Orbitz, Google, WiFi and so on. Carly has ineffectively maneuvered HP into this consumer field.
4. Obsession with size over flexibility: Carly is blamed for ignoring a tech truism that large mergers never work. Maybe we need to go deeper and challenge the very premise of these mergers: that large scale is a requirement of success in the global economy. The opposite is true - that speed and flexibility now trump scale. The cheap revolution has armed startups and small companies with powerful, cheap technology and access to global labor pools. You don't need a large organizational unit to manage your outsourcing initiative.
5. Letting talent go: Walter Wriston wrote,In an era of freely flowing information, "capital will always go where it is welcome and stay where it is well-treated." By capital, he meant money and human capital. Carly chased away talent, from Michael Capellas on down. For high-IQ tech companies, talent loss may be the greater sin. The most dynamic - Microsoft and Oracle during the '80s and '90s, and Google now - have always been obsessed with recruiting and keeping talent. Carly didn't stop talent movin out.
6. Not tolerating strength in others: Peter Drucker said about the study of what makes an effective executive. And that the good ones tolerate strength in others; the bad ones don't. Gates has Steve Ballmer. Michael Dell has Kevin Rollins. Larry Ellison has Jeff Henley. Carly had no one like that.
7. Lack of focus: Drucker's other great insight - Effective CEOs pick two tasks and devote their energies there. When those tasks are done, they don't go to #3. They make a new list. One overlooked trick to maintaining focus, Drucker told is to cut travel. " Carly, globe-hopping in her Gulfstream, worked 100-hour weeks. But she was focused on too many tasks. Which is no focus at all. My Take: No doubt, Carly failed to take HP to leadership in any of the areas where HP operated, under Carly HP was never the innovator, HP was never the technology leader, market leader or mindshare leader - HP all along had an identity crisis - no body is clear what this company stands for today- it may be better to spin off profitable ink and printers divisions and other divisions into separate companies and unlock value, provide these divisions woth necessary compulsions and incentives to innovate and grow.

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Sadagopan's Weblog on Emerging Technologies, Trends,Thoughts, Ideas & Cyberworld
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