From Politico: Why Fiorina Was a Terrible CEO

Why I Still Think Fiorina Was a Terrible CEO

She can diss me all she wants on live TV, but personal attacks won’t take her from colossal business failure to leader of the free world.

By Jeffrey Sonnenfeld

September 20, 2015

As a professor, hearing my name once, let alone twice, before 25 million TV viewers in an historic U.S. presidential debate is a surreal experience. “The head of the Yale business school, Jeffrey Sonnenfeld, wrote a paper recently,” Donald Trump proclaimed in his attack on Carly Fiorina’s business record, “one of the worst tenures for a CEO that he has ever seen.” Immediately, the phones started ringing, text messages dinging, emails beeping—notes from thrilled old students, proud colleagues, teasing friends, pleased former teachers, curious clients, and my own immediate family in shared, flushed, utter shock. So used to being identified before large audiences as Jerry Seinfeld, I’ll admit that I was surprised to hear my name pronounced correctly. But it was a bit traumatic to hear my professional title, professor and senior associate dean, blurred a bit too closely with that of my widely admired boss, who is the actual dean of the Yale School of Management. Last week on CBS’s “Face the Nation,” Trump identified me as dean of the Yale Law School. When he makes me dean of the medical school, it will be very sad my mom is no longer around to share the joy. (Importantly, my perspective is my own, independent of any Yale affiliation.)

Trump did get something right, though: my criticism of Carly Fiorina’s disastrous term as CEO of Hewlett-Packard.

As Fiorina admits, I have been critical of her for over a decade—long before she announced her political aspirations. I have studied her business record, challenged her leadership abilities and have come to agree with the assessment that she was one of the worst technology CEOs in history. I stand by that evaluation.

Fiorina can attack me all she wants, as she did when she called me “a well-known Clintonite” (an absurd allegation I’ll get to later) who “had it out for me from the moment that I arrived at Hewlett-Packard.” But no amount of one-liners to Trump, weekend study of Middle Eastern names or ad hominen attacks on a university professor can take someone from gross business leadership failure to leader of the free world. To do that, she’ll have to own up to her missteps and try to learn from them—which she seems disinclined to do.

Here are the facts: In the five years that Fiorina was at Hewlett-Packard, the company lost over half its value. It’s true that many tech companies had trouble during this period of the Internet bubble collapse, some falling in value as much as 27 percent; but HP under Fiorina fell 55 percent. During those years, stocks in companies like Apple and Dell rose. Google went public, and Facebook was launched. The S&P 500 yardstick on major U.S. firms showed only a 7 percent drop. Plenty good was happening in U.S. industry and in technology.

It was Fiorina’s failed leadership that brought her company down. After an unsuccessful attempt to catch up to IBM’s growth in IT services by buying PricewaterhouseCooper’s consulting business (PwC, ironically, ended up going to IBM instead), she abruptly abandoned the strategic goal of expanding IT services and consulting and moved into heavy metal. At a time that devices had become a low margin commodity business, Fiorina bought for $25 billion the dying Compaq computer company, which was composed of other failed businesses. Unsurprisingly, the Compaq deal never generated the profits Fiorina hoped for, and HP’s stock price fell by half. The only stock pop under Fiorina’s reign was the 7 percent jump the moment she was fired following a unanimous board vote. After the firing, HP shuttered or sold virtually all Fiorina had bought.

During the debate, Fiorina countered that she wasn’t a failure because she doubled revenues. That’s an empty measurement. What good is doubling revenue by acquiring a huge company if you’re not making any profit from it? The goals of business are to raise profits, increase employment and add value. During Fiorina’s tenure, thanks to the Compaq deal, profits fell, employees were laid off and value plummeted. Fiorina was paid over $100 million for this accomplishment.

At the time, most industry analysts, HP shareholders, HP employees and even some HP board members resisted the Compaq deal. (Fiorina prevailed in the proxy battle, with 51.4 percent, partly thanks to ethically questionable tactics, but that’s another story.) But rather than listen to the concerns of her opponents, she ridiculed them, equating dissent with disloyalty. As we saw during the debate when she attacked me, rather than listen to or learn from critics, Fiorina disparages them. She did so regularly to platoons of her own top lieutenants and even her board of directors—until they fired her.

These facts have been documented, both with quotes from her own board members and leadership team and with raw numbers in such revered publications as Forbes, Fortune, Business Week, the New York Times, the Wall Street Journal and leading tech industry journals. I also have extensive first-hand knowledge of this situation, having spoken at length with two of Fiorina’s successors, past and present HP board members, fellow CEOs and scores of HP employees—including many of her own top lieutenants who contacted me directly, such as her head of employee relations.

And I have to point out the obvious: If the board was wrong, the employees wrong, and the shareholders wrong—as Fiorina maintains—why in 10 years has she never been offered another public company to run?

Now, Fiorina wants to run the country. I am a firm believer in second chances. Just because Fiorina failed at an early career does not preclude her from becoming a good leader later. But I do know, having written a book on how great leaders rebound after career disasters, that to overcome failure is to admit to it and learn from it. During the debate, instead of addressing the facts and taking on my professional observations, Fiorina decided to shoot the messenger. What she failed to see is that this behavior—sidestepping accountability by resorting to demagoguery and deflection—is exactly why she failed as a leader the last time.

Fiorina is clever and articulate, but during events like last week’s debate, it’s clear that she seems to have learned very little from her reign as a tech chief. On the campaign trail as in business, she still displays four key leadership flaws:

1. She refuses to learn from failure. Properly mastered, failure is a badge of honor for heroic leadership. People like Steve Jobs, Martha Stewart, Vanguard founder Jack Bogle, Anne Mulcahy of Xerox and Ellen Kullman of DuPont have all faced crushing adversity and rebounded from it. Walt Disney, Henry Ford and four U.S. presidents—Abraham Lincoln, Ulysses S. Grant, Thomas Jefferson and William McKinley—all suffered bankruptcies. The difference between these people and Fiorina is that they all acknowledged their failures and learned from them, providing us with inspiring models of resilience. Fiorina thinks she can sweep obvious public facts of failure under the carpet. But what she doesn’t see is that talking about failure makes you stronger; hiding it makes you weaker. Fiorina’s denials inspire no one.

2. She plays fast and loose with highly misleading metrics, changing the goal posts by manipulating peer comparisons. Fiorina brags that she doubled revenues—but she cut value in half. She talks about doubling employment at HP when all she did was combine the employment of two huge firms—and then lay off 30,000 employees. She presents her story as rags to riches saga, from secretary to CEO, when in fact she is the daughter of a Duke University Law School dean and a federal Appeals Court judge. She just worked for a few months as a receptionist after dropping out of UCLA law school.

3. She makes irresponsible decisions. At HP, Fiorina abruptly pivoted from a strategy of chasing IT services to a splashier, but less sound strategy of ramping up in device manufacturing. While her predecessor, revered HP CEO Lew Platt, traveled coach in commercial planes, she demanded the company buy her a Gulfstream IV. More recently, her service on the Taiwan Semiconductor board indicates continued irresponsibility. Financial disclosures at the time Fiorina left the board in 2009 show that she attended just 17 percent of the company’s board meetings.

4. She is intolerant of dissent and resorts to personal attacks. Rather than address the points made by her critics—she elects to attack their character with false information, shifting the spotlight away from her. And, as much as she laid into Trump for his comments about her face, she has been known to be a queen of personal invective—even when it comes to physical appearance. She once ridiculed the music interests and appearance of a dissenting board member Walter Hewitt, son of HP’s co-founder—as well as the allegedly dowdy look of rival Senate candidate Barbara Boxer.

Now, as for Fiorina’s specific charge that I am a close adviser of the Clintons (a charge she repeated about me by name on NBC’s “Meet the Press” recently), that is false. I am a leadership scholar and impartial in my leadership reviews. I vote for the person, not the party. I have had private meetings with four current Republican presidential candidates for private exchanges of ideas—at their request—pro bono, two of them in just the past 10 days.                                                                                                                                     

I have never been part of any Clinton advisory group. I have personally known four U.S. presidents across parties—including Bill Clinton and the Bushes—and been the houseguest of President George H.W. Bush and Barbara on several occasions for small private non-political events. I have given unsolicited opinions to Bill Clinton while taking long runs with him, which we both needed. Once in 1994, I suggested to Clinton that he host regional economic summits, and he did so. I have known the Clintons as fellow participants in large recreational, non-political, intellectual/spiritual retreats where my fellow guests included prominent Republicans such as Reagan speechwriter Peggy Noonan and Forbes publisher Rich Karlgaard.

My own CEO programs, including one just last week, hosted such Republican political titans and patriots as Senate Majority Leader Mitch McConnell, Sen. John McCain, former Secretary of Labor Elaine Chao, former Deputy Secretary of State John Negroponte, political strategist Ralph Reed and taxpayer advocate Grover Norquist.

If the Republican Party seeks great women leaders with proven track records of accomplishment and character for national office, I could recommend many, including New Hampshire’s Sen. Kelly Ayotte, Alaska’s Sen. Lisa Murkowski and, especially, South Carolina Gov. Nikki Haley. But Fiorina is not one of them. Her unacknowledged record of failure and intolerant, no-dissent “my way or the highway” leadership style might better fit high office in China or Russia—or on “The Apprentice” for that matter.

I love a good comeback. I’ve devoted my professional life to showing that comebacks and second acts can be positive and successful. But I also know that they must be earned. In order to overcome her business past, Fiorina must acknowledge her setbacks and show the American people what she has learned. She needs to display contrition—and earn redemption.

Jeffrey Sonnenfeld is senior associate dean of Leadership Studies and Lester Crown Professor of Practice Management at the Yale School of Management, as well as author of The Hero’s Farewell: What Happens When CEOs Retire (Oxford University Press) and co-author of Firing Back: How Great Leaders Rebound After Career Disasters (Harvard Business School Press). The opinions expressed here do not reflect the opinions of Yale University.

See http://www.politico.com/magazine/story/2015/09/carly-fiorina-ceo-jeffrey-sonnenfeld-2016-213163 for the original article.