1. How relevant is HP’s legacy in today’s technology driven environment? Were the changes made by Fiorina justified?

Clary Fiorina was regarded as one of the most high profile executives in global IT industry, when she was selected as the CEO of HP in 1999. She brought with her exceptional energy, a new temperament of working, new, but challenging vision and excellent skill set to make HP a global tech savvy face, from a boring equipment designer. In her six years of service at HP, She was determined to revamp HP’s culture and working style. She communicated clearly with exceptional persuasiveness, was aggressively expressive and always tried to deliver best to her ability and acted decisively to do so. The main events that shown her shortcomings can be listed as below:

She had the habit of materializing everything. She believed that productivity of employees can not rise due to increased worker participation but because of higher salaries and incentives rewarding and performance and enhanced job training.

She never believed in rules and culture that limits her efficiency. She was very convincing because of her self-marketing abilities. She always tried to portray herself as the key personnel for any achievement.

Using her natural marketing skills, public speaking abilities, leadership skills, she tried to transform the image of HP from a slow-paced engineering company into a sophisticated yet competitive global IT player.

She restructured the company’s business units by grouping them into few major heads and then having different allocation of resources, budget and manpower for different units. She headed all the groups solely and never shared the responsibility with other industry veterans even though they demanded for. She always tried to standout in the crowd and took the credits to her name.

She discarded the HP’s long lasting culture of “management by wandering around”. She never believed in diversification. She always demanded people to meet quotas. She immediately dismissed the sales representatives with poor sales record under her agenda, without even giving them a second target. Even if she rewarded the high-performers, she gained a negative popularity among the employees.

She discontinued the practice of sharing a percentage of company’s profit with the employees. Instead, she decided to measure bonus with respect to HP’s performance with respect to that of its competitors.

Her hubristic approach was gradually killing “The HP Way” and its culture of paternalism. In order to drive a new direction and leadership style into HP she published “Rule of the Garage” in 1999, which focuses only on profit, performance and pace and

neglected the intrinsic attributes such as satisfaction, freedom of thought and responsibility towards the team.

Using her excellent marketing skills and good rapport with media she positioned HP as savvy company for future generation after spending millions of dollars for advertising rather than focusing on innovation and R & D. She was never for keeping Chief Operating Officer to improve the operational efficiency of the company and herself controlled everything.

She always valued personal prominence and branding over companies. Even after being criticized by several intellectuals and media houses she continued her style of working by doing charities, world tours, corporate parties rather than concentrating on companies operational performances.

People often opposed her decisions regarding company’s expansion and new investments. She was even proved wrong once or twice. During the Compaq merger she already had made her mind to go with the strategy and hence she stuck to her guns with great determination. Despite of being considerably opposed by Hewlett, she used her power to make Compaq deal. Stock market responded adversely to it. And finally she had to resign after much arguments and debates.

Relevance of HP’s legacies:

From day 1, HP had a paternalistic approach towards its employees. This motivated them throughout their work and catalyzed their performance. There was never a firing policy. This goes well with today’s IT companies where the attrition rate is already very high. To keep the best of talent pool stick to the company, it needs to cater the needs of its employee in order to make them perform better.

HP believed in diversification. This has high relevance in today’s situation as well. Diversification leads to mixture of thoughts and opens the door for new ideas. People with different demographics can sensitize to different needs of their area which will make the company operate in a better way.

HP had an open door policy, which was mentioned in “The HP Way” as “management by wandering around”. This ensured constant innovation and fearless work environment with constant flow of ideas across the organization. Without this, a company cannot survive through the heavy competition and changes. In an industry like IT, where changes are inevitable, this policy plays a key role.

HP always believed in slow and steady growth. It never persuaded aggressive expansion or promotion or investment plans. It slowly invested in R & D practices and tried to fulfill the demand generated then. This may not stand true in today’s scenario. With rapid growth of technology and corporate practices, one has to keep track of industry changes in order to stay ahead of its rivalries. Sometimes, it has to make few

structural changes as well. Sticking to one management policy can ruin the profitability of the company.

HP had never focused on brand building. It had a powerful product line earlier, which helped it to standout in the crowd. Due to its strong R & D, it remained updated in the market as well. But not having a marketing department to promote the brand that is recognized well among the consumers can impose a serious threat from the competitors, who in turn will grab a bite from your market. This will prove fatal for any company in today’s situation, be any industry.

Justifying Fiorina’s Changes:

Although, Clary Fiorina had so many shortcomings to her credit, some of the steps she taken is bearing fruits now. A few of them can be listed below:

Repositioning HP’s image in the industry: It is always believed that marketing and promotion strategies are for long term benefits. The time was not right, when Fiorina adopted aggressive marketing campaigns, as the company was financially ill and operationally defunct. She, using her excellent marketing and public relations skills, and strong media relationships repositioned HP from being a mundane engineering and equipment manufacturer to a future oriented savvy IT service and hardware provider company, which was ready for the next generation. She attached the tagline “HP-invent”, to point out its new and innovative culture, though she herself never tried to implement it in the company. This anyway, helped the company to stand out well after Clary Fiorina resigned from HP during its worse days.

Consolidating different business units of HP: One of the reason for HP’s poor performance was it vast line of business. It had a total of 83 business units which were managed by a single management. Most of these units were making huge losses because of lack of proper management and leadership. Fiorina rearranged them into three main business units (back –end or product facing), under which each one of them was working as subunits. There was a separate unit for R & D, budgeting and employee grievances also. She kept a separate “front end” division (customer - facing) for handling customer demands, complaints, needs and feedbacks. This made the unorganized company a neat and clean place to work with proper division of work and responsibilities. She divided the whole business into different geographical zones with associates assigned their jobs to handle their performance. This structure later would have benefitted HP a lot while the global downturn, in order to making strategic moves and effective business decisions to keep or sell any unit.