Commentary: Three Simple Rules Carly Ignored

Commentary: Three Simple Rules Carly Ignored

Very interesting analysis! I shall come back to comment on this!

Thursday, 9.23 AM: Okay, I am back and will now comment on the article! :)
NOTE: This post is not in anyway directed at Carly. It is only a generic analysis of the situation and an attempt to learn from it. The article and its contents are assumed to be reflecting facts.

Three Simple Rules Carly Ignored
Why things went wrong at HP -- and went right at P&G , UTC, and IBM

Carleton S. Fiorina faced a daunting task when she took over as CEO of Hewlett-Packard Co. (HPG ) in 1999. She was an outsider brought in to revive a troubled tech giant. Iconic though HP was, its deeply rooted engineering culture was badly in need of an overhaul. Her failure to achieve her goals was a fiasco that reflected the quirks of both Fiorina as an executive and HP's corporate milieu. So are there any lessons here about how to handle the job of shaking up a company or its business model? Certainly, it is difficult to generalize -- every CEO has his or her own style, every company has its own culture. But Fiorina broke three key rules that most CEOs would do well to heed.

Nimmy: Does this in anyway indicate something about how good a CEO an outsider can be? Would he be able to understand the culture of the company? Would he be able to put the company before himself given that he's not grown with it and cannot identify with it - at least as much as an insider? Would he able to understand and empathize with the people that have stayed almost their entire lives in the company that he is managing?
Please note that this doesn't mean that I support insiders handling everything. Outsiders have their own advantages like better logic and less of the sentiments, new ideas, faster decisions etc. It's just a thought that sometimes, outsiders might not make good CEOs because of the reasons stated above!

MAKE IT ABOUT THE COMPANY, NOT YOU. By the time CEOs rise to their post, most have a healthy ego, and Fiorina was no exception. She was also a sales whiz known for high-profile marketing events and a fondness for global gatherings packed with A-list politicians, celebs and CEOs. Problem is, many who spent time around her came away with the impression that she was as interested in burnishing her own image as she was in turning the company around. As Jim Collins noted in his 2001 book, Good to Great: Why Some Companies Make the Leap...and Others Don't, the defining hallmark of market-beating long-term leadership is the exact opposite -- CEOs who place their companies' well-being above all else, including themselves.Nowhere has that difference been starker than at Procter & Gamble Co. (PG ), which has seen both kinds of leaders over the last decade. Durk I. Jager sought to shake up P&G's insular culture and jump-start innovation when he took over the helm in 1999, but his abrasive nature and insistence on rapid change alienated the troops. Under Alan G. "A.G." Lafley, who also has a broad agenda but a less contentious and more patient style, P&G has made a comeback. Lafley also has no qualms about letting others take credit for success -- a critical trait for enlisting subordinates to your cause.

Nimmy: I love the last line!

KNOW YOUR COMPANY INSIDE AND OUT. As skilled an executive as she was, Fiorina focused on marketing and didn't fully comprehend the impact on operations of her vision to transform HP's structure and strategy. She also resisted board efforts to name a strong chief operations officer to compensate for that weakness. As difficult as it is, successful CEOs must immerse themselves in the details of their empires -- or have a sidekick who does.United Technologies Corp.'s (UTX ) George David is no back-slapper and lacks Fiorina's marketing flair. But he is obsessed with the minutiae of production techniques that can make or break his company -- and has quietly amassed an extraordinary record: 10 straight years of higher profits.General Electric Co. (GE ) under Jack Welch was likewise a study in total management immersion. Talent, in particular, was a Welch obsession. He participated in hundreds of executive evaluations each year. If one slipped, he was among the first to know it, not the last.

Nimmy: I once attended a training programme wherein the trainer asked us to think about who normally is at the helm of affairs in organizations. - Marketing/HR/Finance/Others. And I said that it was the marketing guys who normally take over the role of the CEO once it's time for the incumbent to step down and hang up his/her boots. The trainer nodded and said it was seldom that a HR person took over. The training programme was about Communication Skills and Inter-personal Relationships. :-).

The trainer went on to say that the trend was so because the marketing guys are the ones with a flair for communicating and building relationships! Now, isn't that ironical? Marketing guys do seem to be doing this, but only with outside entities. Once they become CEOs, isn't it essential for them to look inward - within the organization!? They need to be building all those relationships with their employees and leave it to their marketing guys to take more care of the external relationships! I am not suggesting that CEOs ought to forget the external world! After all, the CEO is the most influential and recognized face of the company! But that's so with the employees as well! So, looking inward would be extremely important! This ought to be a lesson to those who think they can get away without understanding how things work within the company...

HOLD PEOPLE ACCOUNTABLE -- INCLUDING YOURSELF. Fiorina's decision to fire three top executives after the company missed third-quarter earnings targets last year went down poorly. Many inside the company thought it looked more like scapegoating and a way to assuage Wall Street than good management.Contrast that with the dismissals Louis V. Gerstner Jr. made after coming to IBM (IBM ) in 1993. The first item on his agenda was to learn everything he could about the troubled tech giant's business, staff, and customers. So when it came time to hand out pink slips, workers had confidence that the cuts were necessary and that the right people were being fired for the right reasons.Much of this sounds obvious, the sort of thing any executive should know by the time he or she reaches the corner office. What's surprising is how many of them don't.

Nimmy: I will never ever agree with anyone who believes that someone should be fired for the *only reason* that some (stupid) number was not met! Period! The more I get to see and hear of numbers the more I feel myself recalling Dave Snowden's view that setting numerical targets can only spur people on to misusing things to achieve the numbers rather than getting them to think about the objective at hand.