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9/29/2006
05:05 PM
Rob Preston
Rob Preston
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Down To Business: What They Didn't Say At The HP Hearings

More important than the details of 'pretexting" and other transgressions are what the three-week saga tells us about the composition and priorities of the board, as well as the stuff of its new chairman

Current and former Hewlett-Packard executives, directors, contractors, and advisers paraded before Congress last week, mostly rehashing old revelations about board misconduct or refusing to answer questions as their interrogators performed for the voters in this election year.

While the hearings didn't shed much new light--there was a little more detail on the use of "pretexting," computer "tracers," and physical surveillance to identify the source of HP board leaks--they did cap a three-week saga in which the public learned much more about the world's largest IT company than the fact that a handful of its decision-makers exercised stunningly poor judgment.

We've learned that HP needs to shake up its board--not because it's ethically challenged (Patricia Dunn, who oversaw the unseemly investigation, resigned two weeks ago)--but to bring in new blood. HP's board now consists mostly of insiders and present and past execs from blue chip companies like Verizon, Nokia, McKesson, and Medtronic. The exception was venture capitalist Tom Perkins, who resigned from the board in July to protest the investigation.

Mark Hurd, now chairman as well as CEO, is doing a fine job of overhauling HP's operations, organizational structure, and processes. What the board needs now are visionaries. In a Wall Street Journal op-ed piece last week, Perkins attorney Viet Dinh disclosed the contents of an e-mail his client had sent to Hurd expressing concern that a Dunn-led board would continue to be packed with "ciphers from high cap companies, with no fast-cycle technology background, and certainly no Valley entrepreneurial genes." This is the ideal time for Hurd to change that composition.

We've learned that HP needs to keep its eye on what really counts: execution, growth, and innovation. "What began as a proper and serious inquiry of leaks to the press of sensitive company information became a rogue investigation that violated our own principles and values," Hurd told the House subcommittee last week. Sensitive? A chatty director (George Keyworth, who resigned on Sept. 12) fed a few reporters some dirt on boardroom wrangling, not material insider info.

Perhaps ferreting out the source of the leak was a matter of principle for the principled HP principals, in order to preserve the sanctity of the boardroom. But even before the company went into damage-control mode, executives and directors wasted way too much time (and money) on a relatively insignificant matter.

We also learned that Hurd is a man of decisive action. OK, he says he failed to read the report in which the hacks hired by HP spelled out their tactics for uncovering the supposed leaks (the other two people to receive that report, Dunn and general counsel Ann Baskins, have resigned). "I pick my spots where I dive for details, and this was not a priority for me," Hurd told the subcommittee. But to his credit, Hurd has apologized for the underhanded tactics, forced out the players who approved them, retained a lawyer to conduct an internal investigation, brought in a former U.S. attorney to reassess the company's practices, and last week spent almost two hours on Capitol Hill answering the subcommittee's questions while most of the others called to testify took the Fifth.

At least the hearings were entertaining at times. Dunn, who had authorized the acquisition of director, employee, and journalist phone records, said she thought such records were available to the public. "You really believe that?" retorted Rep. Greg Walden, R-Ore. "You believed that I could call your carrier and say, 'I want Mrs. Dunn's phone records?'"

Rep. Diana DeGette, a Colorado Democrat on the House subcommittee, told Reuters last week before the hearings that she wanted to find out "how pervasive this type of really sleazy investigative technique is throughout corporate America." The hearings didn't reveal much in that regard, as all the private investigators refused to testify and the HP contingent could hardly speak to the practices of "corporate America." Which is to say, the hearings didn't reveal much at all.

Rob Preston,
VP/Editor In Chief
rpreston@cmp.com


To find out more about Rob Preston, please visit his page.

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