This is in reference to the infamous 3-way 2010 US Senate battle among Tom Campbell, an economist/lawyer who earned both a PhD under libertarian icon Milton Friedman and a Harvard Law graduate, Carly Fiorina, the terminated former HP CEO, and Chuck DeVore, probably the most conservative Tea Partier of the group. Campell, a multi-term Congressman who used to represent my former Congressional district in Silicon Valley, was leading the pack until about a month before the primary, where Fiorina won over half the vote (Campbell and DeVore split the remaining votes), but Boxer defeated Fiorina by 10.
The FCINO (fiscal conservative in name only) charge was absurd. Let me quote Conservapedia over his Congressional record: "Campbell's record was fiscally conservative while socially moderate... the conservative National Taxpayers Union Foundation named Campbell the most fiscally responsible member of Congress. His political leanings have gained him a libertarian following." Sarah Palin, who decided to back the "best" candidate, i.e., the only one with ovaries, termed Campbell a "liberal" Republican. Cato Institute responded:
Hawkins, a DeVore backer, does a good job of pointing out that Fiorina is not a principled conservative here. Now Fiorina was really targeting Campbell's record as an economic adisor to the Governator having to deal with a heavily Democrat state legislature. But it would be more honest to review his record as an elected official, particularly in Congress--part of the GOP-controlled House which had yielded the first budget surpluses in decades. It's not just Carly had no votes on the record, but she had a mediocre personal voting record.
Campbell Boxer Americans for Democratic Action 20 85 Republican Liberty Caucus 79.5 16 American Conservative Union 64 4 National Taxpayers Union 73 (21st in House) 14 (73rd in Senate)
One might think that the fact that I hold 2 graduate business degrees and taught for 4 of my 5 years as a professor in a business school might mean that I would be supportive of Fiorina. I do think that she is articulate and persuasive like many effective managers, but I was not impressed with her record as CEO of HP: in particular, I was not a fan of her decision to merge HP with Compaq. The PC industry was maturing into a highly competitive, low-margin commoditization business; whereas we might see some economies of scale in dealing with suppliers and reduced costs in industry consolidation, I would expected more of an effort to expand in higher margin software (75%) and/or services (40%). (The IBM turnaround in the 1990's was largely based on similar considerations. HP notably tried to acquire PwC in 2000 and backed away under slumping operations, only to see IBM pick it up at a much lower price, strengthening its already strong hand in global services.) And let's point out that while HP stock lost half its value and profits dropped about 40% during Fiorina's tenure (and about 80% of the profits came from the legacy printer business cash cow), this was not typical across the market; in fact, PC/server vendor Dell's stock price grew. When Fiorina spin of her performance focusing on doubling revenues, growth in patents, cash flow, et al, many of these things are artifacts of the controversial merger, not organic internal growth; she is diverting attention from the diminishing aggregate profitability and comparable revenue figures from the new business unit. Jeffrey Sonnenfeld, who Trump cited during the debate, notes that much of what Fiorina had purchased, against the wishes of multiple critics including stiff opposition of HP board members, was shuttered after she left and notes Fiorina's abrupt shift (as discussed above) from the higher-margin strategy to the highly competitive hardware market; if Fiorina's record was as stellar as she purports, why haven't other major corporations hired her? Hawkins and others have cited a handful of lists including Fiorina among the worst CEO's of all time.
Probably a bigger issue from a political standpoint are her leadership skills and fit with the organization's culture, in particular, the infamous HP Way. Now certainly Fiorina paid lip service to the company myth origins of the company's parternship roots as referenced in the above spoof by Sun Microsystems, now an Oracle business unit. Fiorina's self-professed background as a climb from secretary to the corner office is misleading; she worked briefly as an administrative assistant after dropping out of law school in 1976; she earned an MBA at Maryland in 1980 and landed in a marketing management track at AT&T she got sponsored for a prestigous mid-career fellowship at MIT's Sloan School, which gave her exposure to senior managers, earned her second Masters and landed on the senior manager track at AT&T, eventually ending up in a prominent position at AT&T spinoff, Lucent, when HP recruited her in the late 1990's. (Lucent underwent a huge stumble over the years after Carly's departure, not due to Fiorina's non-CEO role, but which involved sales boosted by dodgy loans to finance dubious customer purchases. Let's just say that if the HP CEO spot had opened a few years later, Fiorina would not have been on the short list of candidates.) The basic point here is that Fiorina, although she was a manager in the high tech industry, was not an engineer/techie, but more of a marketer showing certain management skills in streamlining/consolidating operations, etc. However, she seemed to lack the experience and administrative skills that a successor CEO, Mark Hurd, had in eventually making the Compaq merger work and restoring HP to a stable, more prosperous path.
The following excerpt explains some of the resistance to the hotly disputed Compaq merger, which barely survived a stockholder vote, opposed by the co-founders' descendants:
In voting against the merger [the largest to that point in the tech industry], Walter Hewlett cited sluggish growth in the PC and low-end server markets, the potential dilution of HP's profitable printer and imaging business, and customer uncertainty that could be created after the merger.
Packard, in a report in the San Jose Mercury News, said he agrees with Walter B. Hewlett's criticisms of the deal. He also focused on the massive layoffs expected if the deal is completed. "For over 50 years, one of HP's fundamental corporate objectives has been to provide long-term employment for its people," Packard said in the statement.
Eunice said both HP and Compaq have been involved in "massive, failed" mergers, including HP's merger with Verifone Inc. and Compaq's with Digital Equipment Corp. and Tandem Computers Inc.
"Fiorina and Capellas [Compaq] haven't had any track record of doing this," he said. "HP's always been a friendly company, and friendly, soft and cuddly companies have a lot more trouble in mergers, unlike hard-as-steel companies like Computer Associates."Just a side note: as a DBA I have had experience with various versions of Unix and Linux, including Sun, HP-UX, IBM AIX, and Digital Unix. When I was a corporate DBA in Silicon Valley, my employer had deployed Oracle Apps/EBS on the Digital Unix platform. Digital Unix eventually became Compaq Tru64, and the handwriting was on the wall with the HP merger that Tru64 would go away in favor of HP-UX. As you might expect this introduced uncertainty in terms of platform support, and migrations between platforms can be nontrivial.
Mergers can be very expensive, and I just described above how HP almost overpaid by multiple times the proposed, eventually abandoned PwC merger. It's not just that headcount had to be slashed to make the merger work, but Fiorina would be inheriting the problem stepchildren of Compaq, and she had not dealt with the complexities of large mergers during her management stint at Lucent. All this made the merger a very risky proposition for stakeholders.
It went beyond that. The co-founders of the company had managed by "walking around"; they had a more inclusive, informal management style. Fiorina had a more aloof style inconsistent with HP's culture, she was more comfortable operating in the sanctuary of her office. She had an issue with delegating authority to her subordinates, against the wishes of the board, which was a deciding factor in her termination.
It's sad that the GOP has gone from Romney's stellar CEO skills to the more dubious ones of Trump and Fiorina this cycle. I've save my comments on Trump for another post, except to note that, besides his four company bankruptcies, some have pointed out that Trump's executive results relative to his wealth are lower than if he had simply invested his wealth in the 1980's in a stock market index fund. Romney, unlike Trump and Fiorina, had public sector administrative experience, but even he lacked some background, e.g., in international policy. Also, the role of the President is different than that of the CEO; a President can only work in conjunction with Congress' approval. He doesn't have line-item approval; his policy is constrained by the law and available resources. Trump and Fiorina would have to be willing to negotiate and compromise under the Balance of Powers.
What do I think of her as a Presidential candidate? I think that she has benefited from the early campaign stretch showing nearly 1 in 2 GOP supporting one of the 3 candidates with no political office experience. She has made the most of her debate performances to date, with professional, detailed, articulate responses (e.g., modernizing the military) and deftly turning back Trump's unforced errors, such as the disparaging joke about her looks.
However, I think she has come across as highly defensive and has been somewhat misleading about her past (from secretary to CEO); the political posturing she took, insisting that she wouldn't speak to Putin, comes across as demagogic and potentially dangerous. From an electability standpoint, she lost big to Barbara Boxer in the 2010 GOP wave election; she can't even win her home state.
On a pro-liberty front, Fiorina is one of those who made sure that the NSA got all the IT hardware they needed to spy of the American people. So I'm immediately wary of where she stands on liberty issues. I don't really see any vision of reducing or devolving the federal government footprint, any detailed innovative policy positions like Rand Paul's flat tax plan or spending plan, I want to see more attention paid to the unsustainable, growing 70% of the federal budget which is mandatory spending. I would like to see more scaled-back foreign policy, no more constant warfare and nation building.
It's difficult to see me supporting Fiorina unless she is the only alternative to Trump--or whoever left-fascist Democrats nominate.
