Product rationalization

The merger was justified by saying that the size of new HP would enable it to take advantage of volume sales. Compaq was a leading player in areas like data storage and direct selling, where HP was not. According to Carly Fiorina the post-merger; HP would become more efficient by doing away with the middlemen. Moreover, Compaq was known for its speed, agility and customer focus, which HP clearly lacked. This deal will jump-start both companies in their race for efficiency. Once the merger was implemented, Fiorina planned to lay off more employees as a part of a major cost saving drive. But analysts in fact felt that the merger would yield huge cost mainly because of the layoffs.

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Fiorina was a straightforward, articulate and market-focused manager. She was appreciated for her willingness and ability to take on challenges. She was quite successful in spinning off Lucent Technologies. Her major assets as a corporate leader were her capacity for hard work, guts and her ability to build and motivate a team. Some saw her as being smart, brilliant and a visionary; others described her as arrogant, complex and self-serving. Of her stint at HP, Fiorina had succeeded in instilling a spirit of hard work, customer-focus and good performance into HP employees.

The leadership attitude in Fiorina always made her believe in providing the best customer experience. Reflecting her own ‘demanding’ management style, she always asked HP’s customers to demand more from the company and promised that HP would put in the extra efforts to meet all their demands. Earlier the research teams at HP focused on developing innovative products. Under Fiorina’s leadership, research teams were asked to develop products that focused on customer needs. Fiorina is all about the customer, the customer and the customer.

She believed that in today’s market they could no longer do pure research. They have to get out and learn what the customer needs so they know what to make next. IBM, in the early days was in trouble because they were more technology oriented rather than customer focused. More similarly Carly Fiorina followed the way in which Louis Gerstner handled the crisis in IBM and she was more aggressive than Gerstner. Carly Fiorina’s leadership style was more autocratic. Task orientation (concerned with the organisation and procedures) was high and the people orientation (concerned with feelings and views of people) was low. It would have also been a reason for HP’s success. It doesn’t mean that she was not at all concerned with the views of people, but she gave more preference to task orientation.

Fiorina introduced a policy of laying-off the bottom five percent of under performers, in order to push performance standards up at HP. This policy was in sharp contrast to the earlier HP culture, where poor performers were given a chance to improve over a one-year period. The new approach was so similar to the ‘ABC system’ (categorizes high performing and under performing employees) followed by GE that critics said ‘Fiorina looked like she would be the next Jack Welch.’

Fiorina encouraged employees to take more risks for faster decision-making. Before, people were reluctant to make decisions until they had all the facts. Fiorina has changed that. She has made it okay for people to take risks and go with just 80 percent of the data. Some of Fiorina’s leadership characteristics, however, met with a less positive response from the employees. Lay-offs, they said, had become so frequent and widespread in HP that a culture of fear prevailed among HP employees.

Employees no longer felt secure in their jobs. Some employees of HP found Fiorina’s attitude arrogant and self-serving. There was a belief that the previous CEOs talked about the company as we. But Fiorina may have used the word I too much. Fiorina demonstrates that there are a lot of styles out there. That’s great for women. It makes a nice contrast to some of the stereotypical notions of women in leadership roles.


The real challenge for Fiorina still lay ahead. HP needs to increase its revenue that had been stagnant for several years. Fiorina had succeeded in bringing HP’s PC business back into profit. The trend of HP’s printing and imaging division accounting for most of the company’s profits is continuing. The credit for this goes to the way in which Carly Fiorina leads HP. A successful strategy is one where it is designed to work with the current and future environment. Strategic Change is not a crisis solution. Fiorina cannot rely on a successful strategy for long. She should revitalize HP’s competitive advantage continuously as new market players enter and current competitors imitate the offerings. However change is not always successful and the reasons may be abundant.