August 11, 2010

A Perspective on the HP Tragedy: An Authentic Leader Loses His True North

The Mark Hurd situation can only be considered a tragedy for everyone involved.

Hurd is one of the most outstanding leaders in the U.S. In 2005 he took over an ailing technology giant and restored it to greatness in just five years. He refocused HP on its original mission and values and built the company around its strengths – technology, customer service, and managerial discipline. He built a much stronger organization with excellent leadership at all levels, and unified a dysfunctional board of directors.

During a short span, he turned HP into the world’s largest technology company and expanded its revenues to $125 billion and nearly $9 billion in profits.  The markets rewarded his leadership, and HP’s market capitalization has doubled during a period in which the S&P declined in absolute terms. He leaves behind a company that is demonstrably stronger than it was when he took over.

So what happened here? Did the HP board act “in a cowardly manner,” as Oracle CEO Larry Ellison charged in his letter to the New York Times?

No, the HP board acted in a unified manner to address an extremely difficult situation. Most likely, the board was blindsided when it received the letter from Jodie Fisher charging Hurd with sexual harassment. The board did the responsible thing in conducting a thorough investigation that concluded there was no basis for the sexual harassment charges, but that Hurd had violated basic HP employee policies regarding expense reporting and other issues.

Should the board treat Hurd differently from other HP employees that had committed similar indiscretions? Its answer was “no,” that the values and principles of the company had to take precedence over any individual, no matter how well he had performed or how valuable he was to the company. So the board’s unanimous decision was that Hurd had to resign. Reports out of the company indicate that HP’s global employee base was overwhelmingly in support of the board’s decision.

As much as the HP board doesn’t want to go through yet another CEO search, at least this time around it has excellent candidates both within and outside the company. Hurd has built a strong executive team with several excellent successor candidates. If the board chooses to go outside, it will have outstanding applicants lining up to be considered for the top job in Silicon Valley.

The question remains, how did an exceptional leader like Hurd let himself get into this position? We’ll never know how Hurd let himself get into this position, nor is it ours to judge. But his greater error was to dig the hole deeper. This is a classic case of Murphy’s Law of Compound Loss; i.e., when something goes wrong, individuals often compound their problems by trying to cover up the initial problem. For example, President Richard Nixon’s cover-up of the Watergate break-in is what compounded his problems and led to his resignation.

Hurd could have acknowledged his liaison in the first place and wound up with only a reprimand. Instead, he compounded his problem by submitting inappropriate expense accounts. Then, when the HP board initiated its investigation – which it was compelled to do by Fisher’s letter – Hurd made an agreement with her that kept her from cooperating with the board’s investigation. In business, we call this “hush money.” In criminal law the proper term is obstruction of justice. After his resignation was announced, Hurd allowed his close friend, Larry Ellison, to defend him by attacking the HP board.

In spite of his recent actions, I continue to believe Mark Hurd is an authentic leader who lost sight of his True North. No matter how authentic they are, all leaders make mistakes. When this happens, the key is to recognize that you alone are responsible. By having the self-awareness to see how you strayed off course, or by accepting honest feedback from people who know you well and care about you, you can acknowledge your problems and return to the course of your True North.

Hurd is as human as we all are.  He’s facing the music for a personal failure, but this is far from his last chapter.  Mark Hurd is only 53 years old.  He has nearly half his life ahead of him. If he acknowledges where he went wrong, he can come back to lead other organizations and continue to make a positive difference in the world through his leadership.