| BUSINESSWEEK ONLINE : AUGUST 2, 1999 ISSUE | ||||||||
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| COVER STORY
Why Fiorina Convinced 'an Icon' to Become Chairman If the naming of Carly Fiorina as Hewlett-Packard's first-ever outside chief executive made headlines on July 19, it may well have gotten second billing within HP itself. What could be hotter news? That board member and former executive Richard A. Hackborn would replace Lewis E. Platt as HP's chairman come Jan. 1. Hackborn is widely considered the spiritual keeper of the "HP Way," the revered set of egalitarian values codified by founders Bill Hewlett and Dave Packard in 1957. Plainspoken, informal, and attention-shy, it was Hackborn who envisioned the role that printers could have in a computerized world -- and proceeded to lead the company's charge in the mid-1980s from its traditional high-margin, geeky lab-equipment markets into the high-volume world of printers and then PCs. Says Larry Sennet, communications director for HP Computer Products: "At the end of the day, he is as much an icon around here as Bill and Dave." Hackborn is the ultimate proof that "HP Way" and "consensus management" are not synonymous. Upon seeing the opportunity in printing, he and a crew of managers who came to be known as "Dick's Cowboys" set up shop in Boise, Idaho, far from corporate headquarters and broke away from a slew of long-held practices. "Dick was successful by leaving the system. He never permission for anything. He's rather ask forgiveness after the fact," says Network Appliances Inc. CEO Dan Warmenhoven, who worked with Hackborn for five years in the 1980s. Says Hackborn: "I used to ask Bill and Dave regularly if I was violating the HP Way. But every time, they assured me I was doing things very much in the HP Way -- if you look at the principles rather than the practices." TINY MARGINS. Indeed, Hackborn proved that HP's core values of integrity, teamwork, and innovation could be expressed in totally new ways. While HP had always succeeded by making high-margin products with hordes of high-tech features for a small community of engineers, Hackborn focused on manufacturing efficiencies, simplicity of design, and locking up enough resellers to ensure high-volume sales. Although his printers, and later PCs, carried tiny margins compared to HP's other products, they sold in such volumes that they brought a huge return on assets. And Hackborn was first to see the impact that sales of ink, toner, and paper could have. Today, these consumables are a $5 billion goldmine of hugely profitable sales for HP. "There were some managers at HP who said [printers] weren't a real business, because R&D was just a couple of points [of revenue], vs. 8% to 10% for most HP businesses," Hackborn told Business Week late last year. "In the late 1980s, it was a very progressive model." Now, look for Hackborn to work with Fiorina to lead a reinvigoration of the HP Way. "There's some aspects that have evolved that weren't a part of the orginal HP Way, and I'd just so soon have them go away. But there are other parts that we need to reinforce." With Fiorina injecting new ideas to go with his knowledge of what worked in the past, it should be a winning combination, say analysts and former employees. What's more, his presence will help Fiorina get established at the company. "How do you stop the HP antibodies from rejecting an outsider? By making Dick Hackborn chairman," says Robert J. Frankenberg, another long-time Hackborn associate who now is CEO of Encanto Networks Inc. CORPORATE RENEWAL.Interestingly, friends say he had almost lost faith that this would ever happen. In recent years, he has been concerned by the slowing pace of change, say friends. Indeed, by late 1998, he had decided to end his 39-year association with the company by retiring from the board and devoting himself full-time to a range of charities. But when Platt asked him and a group of other board members to begin looking at radical changes, he agreed to stay on another year. As such, Hackborn worked closely with HP executives and consultants from McKinsey in a year-long corporate renewal process that culminated with the spin off of its $8 billion measurement business in March and the hiring of Fiorina. Even then, he still planned to retire to his beloved Boise -- until Fiorina called to get his sense of what HP needed. During a three-hour meal at a posh New York eatery, the pair clicked. "There was just a surprising chemistry -- especially since we come from totally different places," says Fiorina. The two agreed to meet again, this time at a restaurant at Chicago's O'Hare Airport, where she put on the hard sell. "Once I said to him that there was no one else who could do the job, he agreed. You know, he's a logical guy," she says with a smile. Laughs Hackborn: "It was her first turnaround at HP!" Speaking of turnarounds, Hackborn says he's heartened by HP's improved performance of late. He believes the company is as strong as ever in printers, and he likes the new e-services Net strategy, which pulls together a variety of technologies from HP and outside partners to help corporations quickly develop new offerings on the Web. But he says there's far more to do. "Strategy is the easy part. Execution is the part that counts -- and it's a very different environment than it was even two years ago," Hackborn says. "So we need to make sure we make a major contribution. Because that's the core of the HP Way -- to make a contribution." He should know. By Peter Burrows in San Mateo _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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 RELATED ITEMS HP's Carly Fiorina: The Boss COVER IMAGE: The Boss RESUME: Cara Carleton S. Fiorina PHOTO: Carly Fiorina, as a Child CHART: Profits May Rebound...And Sales Should Rise...So HP Shares Are Surging TABLE: Making a New HP Way TABLE: HP's Executive Branch TABLE: Leadership over the Years Online Original: Lew Platt on HP's Ups and Downs--and the HP Way Online Original: Why Fiorina Convinced 'an Icon' to Become Chairman Online Original: HP's Stock Rocket Will Need Some Refueling INTERACT E-Mail to Business Week Online | |||
