Saturday, August 14, 2010

Hurd's out, perhaps innovation is back in.

“If you hire honest, smart people, they will likely do a good job for you.1” It seems that somebody forgot to tell that to H.P.’s Board of Directors. They have a poor record when it comes to hiring CEO’s. This past week they showed the door to their latest pickpocket. Mark Hurd managed to pick their pocket for more than just an incredibly generous pay package, but also for about $20,000 in fudged expense report reimbursements. Time magazine online had the following observation: “If a midlevel manager had submitted $20,000 worth of bogus

expenses, he or she would probably be ousted in an instant.

In an interview with the New York Times, Larry Ellison, CEO of Oracle reportedly said “The H.P. board just made the worst personnel decision since the idiots on the Apple board fired Steve Jobs many years ago.” According to the Times he went on to say that firing Hurd is against “the best interests of HP’s employees, shareholders, customers, and partners.”

Ellison is probably wrong about that. Again according to the Times, “ recent internal surveys, nearly two-thirds of H.P. employees said they would leave if they got an offer from another company — a staggering number.” Moreover, Hurd’s cost cutting ended up cutting into the heart of H.P.’s culture by chopping away most of the R&D budget. If you’re employees are not engaged they won’t be spending time in the shower thinking up great innovations for the business. And if there is no money available to push ahead with the few crazy ideas they do produce, then the best ideas (which always sound crazy at first2) will have no way to gain any traction. But innovation is critical for the long term survival of any technology firm. By getting rid of Hurd now, the company can get back on track sooner.

1 Quoted from The Peak Interview.

2 See the discussion on pages 115-120 of Advantage, Business Competition in the New Normal.

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