July 19, 1999 2:00 PM PDT
New HP CEO Fiorina to bring 'urgency and speed'
"Urgency and speed are...things that everyone agrees" Hewlett-Packard needs, Fiorina said in an interview today.
Fiorina, 44, was president of Lucent Technologies' Global Service Provider Business, Lucent's largest and fastest-growing division, with more than $20 billion in annual revenue. The move makes her the only female CEO in the 30-strong companies that make up the Dow Jones Industrial Average, said an HP spokeswoman.
HP prides itself on its glorious history, beginning decades ago in a Palo Alto garage. But with 123,000 employees and $47 billion revenue in 1998, size has brought inertia. The company largely missed the first wave of the Internet boom but believes its "e-services" initiative will be just the thing to take advantage of the second wave.
The e-services plan, however, is just emerging. The ultimate goal is to more tightly lock HP into the Internet ambitions and operations of customers, either by creating technology standards that the world adopts, selling ongoing services, or investing in companies that have succeeded in developing such services.
Although some effort has been made in its computing division, a huge portion of HP's revenues come from printers, scanners, and PCs, and HP has only begun to fold those products into its e-services plan.
"The e-services strategy is clearly the right approach to the market. I'll concentrate on effective execution and determining how to leverage that strategy across the rest of the business," Fiorina said.
One intriguing aspect of her tenure that could emerge is an emphasis on advanced research, the lofty sort of projects that many companies have been deflating. Regarding HP Labs, the company's R&D wing, Fiorina said: "There is an opportunity to more effectively leverage HP Labs. This is an asset that we need to more effectively utilize."
Fiorina's old firm Lucent was formed from the kernel of Bell Labs.
At the same time, she will concentrate on what may seem like a contradictory goal: To not shake too much the collegial corporate culture that HP has created.
"She's not going to be forcing the company to jump-start from square one. I think the wheels are already in motion," said Technology Business Research analyst Kelly Spang. "The key was finding a CEO that would not only pick up where they left off but also add [his or her] own flair."
"Even before the announcement of the splitting of the company and the new CEO, we had spent a lot of time looking at ourselves. We needed to make some cultural shifts," said outgoing chief executive Lew Platt in an interview. "We needed to hold fast to the core values but change some of the practices. [We needed to] speed up decision-making."
But is it possible to bring that start-up mentality to HP?
Some of the new energy could come from new staff outside the computing business--a move that would parallel Fiorina's own arrival at HP from network-oriented Lucent. Although she praised HP's management and employees, "I think we have an opportunity to attract people from different industries and different backgrounds," she said.
After a months-long search that Platt said included about 100 candidates, HP's board approved Fiorina unanimously. Platt will stay on through the end of the year to oversee the split-off of the test and measurement organization while Fiorina takes over the larger part of HP, its computing and imaging business.
The new name for the test and measurement organization will be announced at the end of the month, Platt said.
Hackborn to become chairman
Although Fiorina declined to give many specifics about her upcoming plans, one of her first moves was to persuade HP board member and former executive Richard Hackborn to become chairman, Fiorina told analysts today. Hackborn, also a member of Microsoft's board of directors, will become chairman when Platt steps down at the end of the year.
"It was my idea right from the beginning, and the board enthusiastically supported the idea," Fiorina said. "I think Dick was a bit surprised when I first asked him to take on the role, but it didn't take that much persuading."
Fiorina indicates she doesn't expect top management to change at HP. "It is my deep hope and my anticipation that each of our very talented managers will stay on at HP," she said. "We have already begun to come together and talk about the issues we face."
But Kim Brown, a Dataquest analyst, was surprised at the selection of an outsider over Ann Livermore, who has led HP's e-services work. "Ann Livermore is a fabulous executive, and they might lose her as a result," Brown said. "I think she ought to be running the company."
Fiorina praised Livermore, adding that "Ann and I are really excited about the opportunity to work together."
Livermore made it to the final selection round, Platt said, but the selection team eventually chose Fiorina, because "she was the best total package." Though HP approached her at the end of March, the final discussions came much later. "We started seriously talking to Carly about the job last week," Platt said.
Wall Street cheerful
Wall Street reacted favorably to the move, sending HP stock to a new all-time high of 116.31 in midday trading.
"I think it's good, as the stock is showing," said Merrill Lynch financial analyst Steve Milunovich. "She has adequate respect for HP's past but also clearly the aggressiveness to invigorate the company and bring some new ideas."
He further added that HP Labs "created a lot of breakthroughs for HP, but could probably do more than they have in terms of commercializing technology."