CEO succession planning: Carly Fiorina's internal versus external appointment at Hewlett Packard

Succession Planning at HP: Analysis of the role of Carly Fiorina

In July, 1999 Hewlett-Packard appointed Carly Fiorina their CEO after and extensive search that included 100 potential applicants, carefully screened by the board of directors (Anders, 2003). What the HP board was after was a new CEO who would keep the passion for innovation alive in the company and unify its core businesses of printers, scientific instrumentation and computing equipment (Burrows, 2005). Carly Fiorina was an outsider who impressed the screening committee with her brash, direct communications style and her track record at AT&T for taking on difficult projects and turning them around (Burrows, 2005). The following is an analysis of how the succession was handled, what Carly Fiorina chose to concentrate on during her years with the company, and the lessons learned by HP from the experience.

Analysis of the Carly Fiorina Succession at HP

Carly Fiorina came into HP when the company was in disarray, having lost its vision as a unified company. Ms. Fiorina, an outsider, had to be frequently debriefed on just how badly the PC division was completely disconnected from the urgency of the market conditions (Anders, 2003). The sales force was in disarray and there was frequent channel conflict throughout all organizations, which led to the comp[any losing significant time on critical deals (Burrows, 2005). HP was also being completely overtaken by smaller, younger and more focused competitors in its key markets, which was troubling long-time members of the company who felt the culture of fast, brilliant innovation was slipping away (Anders, 2003). Ms. Fiorina chose to rely on Mr. Hackborn as her key advisor instead of getting out and walking around the company to see what was going on, learning first-hand where the disconnects were in the company.

Instead of concentrating on creating her own power base from a political standpoint, Carly Fiorina allowed herself to become isolated from the employees and other managers of the company (Burrows, 2005). Instead of building a strong base of support she chose to find the most pressing projects that had somehow been stifled or nearly canceled due to organizational efficiencies (Anders, 2003). This turned out to be one of the biggest initial mistakes in her succession strategy. Instead of immediately tackling business process re-engineering (BPR) tasks the best CEO successions concentrate on gaining a strategic overview of the company and looking to understand how systematically it is not working (Stanwick, Stanwick, 2011). Carly Fiorina did not have enough experience or insight into HP to begin making the decisions she made on initial BPR and massive structural changes, and this ultimately led to her failing as a CEO. Her initial decision to get the company back to its roots, complete with an advertising program aimed at featuring the famous founder's garage in Palo Alto, failed to energize and unify the company as she hoped or bring back customers either (Anders, 2003). In many respects this advertising program was more about the journey of Carly Fiorina into the HP culture than it was about redefining or re-energizing the company's vision. As these efforts continued, competitors accelerated in key markets and the balkanized nature of the company continued on. Succession planning needs to concentrate on candidates who have a very clear of what the culture of the company is if it is going to be a successful transition (Richtermeyer, 2011). Ms. Fiorina ultimately mistook her personal journey to understanding the culture of the company as its strategic vision.

The inflexion happened when Carly Fiorina announced a massive reorganization that would in effect destroy the level of coordination and synergy that was fragile at this point in the company's history (Anders, 2003). Without having taken the time to thoroughly understand the culture, she was oblivious to just how far-reaching and disruptive the reorganization would be. Her subordinates, many with HP for decades, advised against it. Undaunted, Carly Fiorina continued down the path that led to the massive re-organization that included the acquisition of Compaq, a decision one of the co-founders' family was deadest against (Anders, 2003). Carly Fiorina had a relatively short tenure at HP, voted out by the board of directors in January, 2005. Mark Hurd took over and resigned on August 6, 2010, amidst allegations of unethical conduct including sexual harassment of an event planner. Today Leo Apotheker serves as CEO, having arrived from SAP less than a year ago.

Conclusion