Her record at HP is a legitimate campaign issue. She will almost certainly present a narrative of a leader who made tough decisions aimed at strengthening a company that faced difficult circumstances. Her opponents will almost certainly suggest that her leadership impaired the company’s competitiveness and long-term performance. Whose narrative will prevail remains to be seen.
At the time she took the helm, the PC market, which was a key driver of HP’s own opportunities, had reached maturity, even as the Tablet and Smartphone era had not yet been conceived. The once rapid expansion of PC sales had slowed dramatically. A dominant product design had taken hold, closing the door to much room for differentiation. PC’s were increasingly becoming a commodity and an industry shakeout was beginning to unfold. At the same time, the Internet bubble would burst, destroying many young ventures in its wake (with a number of survivors e.g., Amazon.com, positioned to move ahead as the debris of the bubble cleared).
In that context, a business model that relied on rapid employment growth was not sustainable. The company needed to find efficiencies and reorient its product offerings for the evolving market conditions. She took steps that she believed would make the company more competitive e.g., leveraging globalization. Those measures were highly controversial, as they led to layoffs. The relevant question that she will need to answer is whether they made the company stronger.
Perhaps the most contentious issue was HP’s acquisition of Compaq. Compaq was suffering from declining performance, in part on account of the maturation of its industry and, in part, on account of its own past strategic choices. Ms. Fiorina believed that the acquisition would create synergies that would revitalize both companies. The end result was a dramatic reduction in HP’s market capitalization. Ms. Fiorina is not the first CEO to believe that such diversification would revitalize her firm. Indeed, the empirical literature shows that 70% of acquisitions ultimately destroy shareholder value. The relevant question is whether, given the information that was available at the time, she made what appeared to be a sound decision. That one of HP’s cofounders vigorously opposed the acquisition makes that challenge greater.
My guess is that if she focuses on the overall restructuring she undertook, she will have a stronger argument. How she handles the acquisition-related angle provides perhaps the greatest risk to the narrative she will seek to build. A line of argument that the restructuring essentially salvaged the company’s long-term future and that the company needed to take risks (not all of which worked out very well e.g., the acquisition) to chart a better future might be effective.
In the end, how she deals with leadership challenges associated with HP might present one of the more interesting aspects of her campaign. Such challenges resonate in the contemporary world where competition is often intense, various industries are growing rapidly even as other sectors are declining, and trade/financial/labor flows have led to economic and social issues.