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Aug 30 2011

What price for failure?

Great article in the WSJ about Hewlett-Packard. And boy, does it deliver on the title and lead: Let’s say you were given a year to kill HP. Here’s how you do it:

Announce plans to maybe sell the PC business. Or maybe spin off PCs as a stand-alone company. Uncertainty will damage the price. Never mind the years of effort H-P spent — including a controversial merger with Compaq — becoming the world’s largest PC maker. .. From former CEO Carly Fiorina’s spectacular flame-out, and former chairwoman Patricia Dunn’s illegal spying scandal, to Mr. Hurd’s alleged sex scandal that apparently didn’t involve any sex at all, this sort of dysfunction has become “the H-P Way.”

It’s a fun read! Well, for me anyway, I was once a portfolio manager for a large Wall Street firm. It brought up fond memories of other companies, Novell for example, who somehow managed to languish even as their field was exploding. But what strikes me these days is stories like the one unfolding at HP aren’t unique. They seem to be more common than ever. People build a company into a giant success; new people come in and shoot themselves and everything nearby in the head endlessly. And yet they never seem to get fired.

Meanwhile, mid-level managers and entry-level employees are penalized if they’re five minutes late. Miss more than a couple of days in one month and superiors become cool and aloof, you could be fired in a ‘right-to-work’ state for that kind of absenteeism! It’s a weird system, one that guarantees sub par performance and failure. But I guess it pays a tiny sliver of influential people really, really, well.

5 comments

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  1. 1
    Pierce R. Butler

    FTFY: People build a nation into a giant success; new people come in and shoot themselves and everything nearby in the head endlessly. And yet they never seem to get fired.

  2. 2
    Neil Rickert

    People build a company into a giant success; new people come in and shoot themselves and everything nearby in the head endlessly.

    The people who built the company were people who knew the product. They were replaced by people who were empty vessels, people who understood only the bottom line, people who didn’t give a damn about the product and only cared about the profits.

    Close the business schools. Stop the MBA programs. They are destroying business.

  3. 3
    Francisco Bacopa

    HP and Compaq should never have merged. The merger was a huge story here in Houston as many of Compaq’s biggest shareholders were employees living here. Pro and anti merger forces took out ads in the paper.

    The former Compaq complex was downsized post merger and some of the buildings were turned into a community college, and now it looks like the rest of the complex will go if they sell off the PC division. Brilliant way to destroy a company, but I guess the top people on both sides got their money.

  4. 4
    scenario

    What people don’t seem to realize about MBA schools is that they are teaching MBA’s what’s best for MBA’s not what best for the companies they work for. Do short term things that drive up the stock prices then bail out before it collapses. The MBA’s make out. The big stockholders see it coming and bail. So you helped management, and most of the large stockholders, just like you were taught.

  5. 5
    ahcuah

    @Bacopa: “Brilliant way to destroy a company, but I guess the top people on both sides got their money.”

    But we certainly can’t tax them more, because they are the “job creators“. Hrrrmph.

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