Why Did HP CEO Get Ousted?

Among other things, HP’s R&D was cut from 9% to 2% in the last 4 years.

I used to work for HP in Palo Alto and I’ve followed the changes at HP over the years. I remember working at HP was a very different experience from that at GE in terms of corporate culture and management practices.

I’m hopeful that HP Chief’s departure will trigger constructive turnaround for HP.

On another minor note, I recently started to swim for the first time in a long time for my health (to ease my shoulder pain). One of the best parts living in Silicon Valley was to swim laps at an outdoor swimming pool in Mountain View (I’ve gained 8 pounds since then). It’s almost impossible to swim laps outdoor here in Seoul since weather gets too humid to swim during the summer. I miss those days.

From the New York Times:

Here’s a guy who walked into a very troubled situation, replacing Carleton S. “It’s All About Me” Fiorina, and oversaw what appears to be a magnificent turnaround. In his five years at H.P., every metric Wall Street uses to judge companies had gone in only one direction: up.

Its 2009 revenue was $115 billion, up from $80 billion when he took over. Four years ago, H.P. even leapt past mighty I.B.M. in revenue, making it the country’s biggest technology company. Its average annual 18 percent profit increases were remarkable given the company’s mammoth size. And the stock price more than doubled on Mr. Hurd’s watch.

Stories about Mr. Hurd lavished praise on his no-nonsense style. H.P. under Mr. Hurd has “become the benchmark for efficiency in an industry known more for its whiz-bang appeal than its operational excellence,” wrote Adam Lashinsky of Fortune in 2009. Four months ago, Forbes put Mr. Hurd on its cover, attributing H.P.’s success to “dramatic cost-cutting” and “a brutalizing culture of accountability.”

In the press release, H.P. noted that while a claim of sexual harassment had been made, an investigation had cleared him of the charges. Instead, the company alluded vaguely to “violations of H.P.’s standards of business conduct.”

The consensus in Silicon Valley is that Mr. Hurd was despised at H.P., not just by the rank and file, but even by H.P.’s top executives. (Perhaps this explains why Ms. Lesjak was so quick to denigrate him once she took over.) “He was a cost-cutter who indulged himself,” was one description I heard. His combined compensation for just his last two years was more than $72 million — a number that absolutely outraged employees since their jobs were the ones being cut.

Rob Enderle, a well-known technology consultant, noted that in 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. “He didn’t have the support of his people,” Mr. Enderle said.

After Mr. Hurd’s resignation, an anonymous H.P. employee wrote on the Internet: “Mr. Hurd cares about one thing, how much money is in it for him. As an H.P. employee I see it every day. We don’t have the tools to do our job, but he isn’t doing without anything, and doesn’t care.”

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.

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.

http://www.nytimes.com/2010/08/14/business/14nocera.html?_r=1