dispatches from the new world of work

Carol Rules!

Carol Loomis belongs on everybody's short list of best business writers; her work at Fortune is peerless. And her knife is sharp. To say that she beats the hell out of Carly & HP this week is gross understatement. Ms Loomis' analytics and depth are mind-boggling. The bottom line: "This was a big bet that didn't pay off. ... At bottom, they made a huge error in asserting that the merger of two losing computer operations, HP's and Compaq's, would produce a financially fit computer business."

HP is flummoxed by Dell on the low end, IBM on the high end—and, as Loomis says, their ain't no easy way out.

(HP walks away from PricewaterhouseCoopers; IBM buys them. HP buys Compaq; IBM sells its PC group to the Chinese. Hmmmm.)

(While HP execs are hardly going to agree with Loomis, their level of Denial was pretty breathtaking.)

(Note: I question 9 of 10 big mergers. Have for 20 years. I supported the HP merger. I should have stuck to First Principles.)

Tom Peters posted this on 02/01/05.

Comments

Yes Carol's conclusions are probably correct. To me Carly Fiorina is one the mysteries of US corporate life: she seems to have great reputation, sits on many boards, even seems to be saying a few things that are quite interesting, yet execution is extremely disappointing... Which, of course, is a bit of a problem for someone who is supposed to lead the dance and generate momentum in execution (what's the "E" word in CEO again?).

I was personally very negative on Carly from day one back in 2000 and I said so to a couple of HP employees who were deep into the HP way. Today, they passionately share my views to the point that I have to cool them down a bit in their Carly-bashing.

A sad, sad story if you ask me, because HP was a great company and it is about to go down the drain because its top dog replicates the IBM 1995 strategy in attempting to develop e-services and plays defense, waging a loosing battle by trying to build scale through a merger with a company that had its problems too... All that to beat Dell and in the hope of being able to face Indians and Chinese competitors at the moment when Intel is supporting very actively Chinese PC makers (I believe they started doing that in the late 1990's so it's not like nobody had noticed before the Compaq move). Except that you cannot win the game with outdated practices (traditional way of selling and supporting PCs versus the might of Dell's infostructure) and you cannot beat the Chinese nor the Indians on cost.

"Adaptability is not imitation. It means power of resistance and assimilation.." - Mahatma Gandhi

"Organizations with lousy infostructures will look like 65-year-olds competing in the Olympic marathon wearing high heels and evening gowns" - Funky Business

Posted by Alex at February 1, 2005 3:04 PM

At the time when Carly was appointed, as well as when the mega-merger with Compaq was announced, the founders of HP had protested that this would do the company no good, but they were sneered at and ridiculed by the bean counters who only see the Quarter figures and nothing else...they know neither technology nor business..Now look what has happened!

Posted by Mandar at February 2, 2005 4:39 AM

When we last talked about the HP-Compaq merger on your blog Tom, you said that Digital-Compaq-Tandem-HP had similar cultures...but I experienced a huge dichotomy in the HP-Compaq cultures...HP was focussed on consensus and agreement, processes and meetings, while Compaq was much more nimble, focussed on results...

The concoction isn't really that great !

Posted by Gautam at February 3, 2005 2:50 AM