UPDATED 12:47 EDT / AUGUST 15 2010

The Real Real Reason HP Dumped Hurd – A Revolt and Bad Judgement – More Hurd Women Might Come Forward

The New York Times writer Joe Nocera wrote an article called “The Real Reason for Ousting H.P.’s Chief. I have been covering HP for many years and recently here on SiliconANGLE.  I have spoken to dozens of former and current HP employees over the past few weeks and the story is clear – 1) it was time for Hurd to go and 2) Hurd executed bad judgement.

The Mark Hurd Era – A Short Term Strategy

Mark Hurd took over HP from Carly and the company was a mess.  Carly was dismantling the HP Way across the board.  It is well documented that Carly was on a tear to remove all remnants of the HP Way and the founders.  The HP Way and employees including the board rejected Carly’s power play.  Enter Mark Hurd the operational guru to save the day.  Mark was the opposite of Carly (at least on paper – the record will show he was just a self serving),

Yes, Mark did straighten things out in terms of operational or short term financial stability.

Mark operated HP, the employees, and the executives with a “gun to the head” management style – focus was on real results.  His style was in deep contrast to the HP Way culture set by the founder Dave Packard and Bill Hewlett know as “management by walking around”.  The HP Way was people management.   A major disconnect from the beginning, but no one cared HP was a sinking ship.  If there was no HP then there is no HP Way.  Hurd was the only answer at that time.

Hurd’s Big Mistake – Serving the Wrong Master

Mark was serving Wall Street not the employees and shareholders.  Mark’s compensation and style reflected that.  Mark was basically operating the business at “red line” and the engine of HP (the employees) burnt out.  HP was tapped out and didn’t have “legs’ in both the people and product side (killing R&D as a percent of revenue in particular).

A revolt at the board level was taking place for over a year.

Hurd Bet Against the HP Way

Much of the HP Way is outside of the walls of HP. Since Lew Platt stepped down as CEO, the ghost of the HP Way has played a hand in all of the companies major dealings.  Think about how much Bill Hewlett and Dave Packard have contributed to society, to families, to Silicon Valley, to education, to charities, and to innovation.

Just read this from a long time HP engineer Chuck House. He talks about the Hurd issue but mainly he’s talking about the HP Way culture:

Charles House, a former longtime H.P. engineer who now runs a research program at Stanford University, openly rejoiced when he heard that Mr. Hurd was leaving. “I think the sexual harassment charge was a total red herring,” Mr. House told me. He didn’t care. “I was delighted,” he said.

Mr. House’s brief against Mr. Hurd went well beyond his outsize compensation and penchant for cost-cutting. As Mr. House saw it — indeed, as many H.P. old-timers saw it — Mr. Hurd was systematically destroying what had always made H.P. great. The way H.P. made its numbers, Mr. House said, was not just cutting any old costs, but by “chopping R.&D.,” which had always been sacred at H.P. The research and development budget used to be 9 percent of revenue, Mr. House told me; now it was closer to 2 percent. “In the personal computer group, it is seven-tenths of 1 percent,” he added. “That’s why H.P. had no response to the iPad.”

Mr. House was also offended by Mr. Hurd’s dictum that H.P. executives had to resign from all civic boards, as well as his decision to cut off many of H.P.’s philanthropic activities. “H.P. has always been a model corporate citizen,” Mr. House said.

Plus, he said, Mr. Hurd was “incredibly rude and demeaning, and relied on the fear factor.” Mr. House summed up the Hurd era this way, “He was wrecking our image, personally demeaning us, and chopping our future.”

Joe Nocera writes a great story, but he loses credibility in telling the NY Times readers that the HP board was cowardly. I believe that Joe is not plugged in to what’s happening and he’s jaded and still stung from the spying scandal that plagued HP many years ago.

Employee moral was not only in the toilet, but a general hatred to eroding culture of the HP Way. Hurd’s personal judgement was out of control.

The board forced him to resign. The cost $40m. A drop in the bucket for HP to only take a minor haircut in market cap as compared to the haircut they would have taken if they came out and “shitcanned” the guy.

 


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