1. 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 highperformers, 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

2. 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

3. 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.