Full Transcript: Carly Fiorina Q&A

Editor's Note: This is the complete transcript of the interview with Carly Fiorina, former Hewlett-Packard CEO.InformationWeek's Sharon Gaudin spoke with Fiorina on October 11, the day after Fiorina's new book, Tough Choices, came out.

Q: What do you think HP needs to do now? When you have tough issues, whatever they are, you have to put them right up on the table and talk about them. You can't pretend they're not there and forget about it. It's uncomfortable for some people but that's what needs to happen. People lost perspective. It was a failure of judgment, as well as ethics. Talk about that, so employees and customers understand it. In the boardroom, definitely talk about it. It's symptomatic of what's happening in the boardroom. Dysfunction happens when people won't deal with it directly. Set aside personal agendas and talk about the real issue.

Q: Do you have any advice for Mark Hurd? I don’t want to go there. I'm not there anymore. All I know is what I read now.

Q: How did you react when you found out that you had been pretexted? It's funny you ask that. Just two days ago, a reporter handed me a copy of that report and I have to tell you it was very chilling to read that report and see my name and my phone numbers and how many cell phones I had. It really is a very strange feeling. At first, I was [angry] and then like the rest of it, it just made me sad. I understand why people feel their privacy had been violated. I felt that way.

Q: In both her Congressional testimony and in her 60 Minutes interview, Patricia Dunn said board members shouldn't expect too much privacy. Do you agree with that? No. People do expect privacy for their personal lives and their personal affairs. It's one thing to say if you are using company property and resources for company purposes that the company has an obligation to understand what you're using it for. If there is fraud going on in the company, the company needs to know that. We had a situation at HP where an employee said there was a child pornography ring running in the factory. We had to investigate. It turned out to be true and we had to fire employees. A company has an obligation to understand how resources are being used. In this case, well, first of all, leaking confidential information is wrong. It destroys trust in the boardroom and also harms the company. But violating privacy is also wrong.

Q: HP CEO Mark Hurd said in a press conference on Sept. 22 that the company had reached out and apologized to everyone who had been pretexted. Did you receive an apology? No, but I'm not asking for one.

Q: Your work at HP was troubled by boardroom leaks. There was a leak before you announced the planned merger with Compaq. There was a leak during negotiations with Price Waterhouse Coopers. When do you think today's boardroom troubles started brewing? I don’t really know, but I do know that we were plagued by some very damaging leaks. The only one I’m sure came out of the boardroom was a couple weeks before my departure. In that particular case . . . we had a direct conversation among the board members about what happened and why it happened. To deal with both the dysfunction and the leak . . . we produced a report that was given to the full board, and what we were really trying to do was assess our dynamics.

Q: In your book, you talk about having your own struggles with board members Thomas Perkins and George Keyworth, who have both since left the board. Do you think the board, and the company, could be better off because they're gone? I think any crisis can create a stronger outcome if it's dealt with properly. So, yes, there is an opportunity here to create a stronger and better board for what is a great company.

Q: Looking back, do you still think it was a good idea to merge with Compaq? Absolutely. But more than that, everyone else does too. That merger provided the foundation for leadership. During the battle for the merger, lots of people said it was a bad idea and now lots of them are saying, 'Well, that worked.' Of course, leaders sometimes have to see things before other people do. That's why it's called leadership.

Q: Do you think you might still be heading up HP if you hadn't gone through with the merger? Then HP would still be lagging behind, which is how I found it. We had to create the foundation for leadership. If I hadn't done it, who knows? I wasn't fired because of the merger. I was fired because of dysfunction in the boardroom.

Q: By your own account in the book, you were surprised and confused by your dismissal. But HP had shown some bad quarters, the stock price was way down, and Wall Street wasn't so confident. Those weren't red flags for you? Remember where we were. Of course, it's not good to miss a quarter. Of course it's better when the stock price is up. But remember the context. We'd just come through a massive merger, a tech recession, a bear market, and an economic downturn. Despite that, we had gone from losing $900 million in 2002 on a GAAP basis, to a profit of $3.5 billion in 2004 on a GAAP basis. Every one of our businesses was profitable. I go through these facts because, in the context of the environment we were in, that was real progress. People were still skeptical because we had missed some quarters. There was just so much controversy about the merger. So people were going to be skeptical. By the way, lots of other tech companies in that same period missed quarters and their stock was down. Their CEOs weren't fired. My dismissal was not about performance. After the board unanimously approved the 2005 operational plan, which was executed, the stock market saw the results and the stock price went up. That's what happens.

Q: But the stock price actually went up right after your dismissal, as well. Actually, I thought it would. I wasn't surprised at all. I had my detractors on Wall Street, without a doubt . . . Two weeks before my departure, there was a front page story in The Wall Street Journal that the board members wanted to reorganize the company. People interpreted that as a prelude to a split-up of the company, which a lot of detractors were calling for. That discussion was so rampant that the board had to reiterate that they were sticking to the same plan . . . The stock price went up because there was talk of a split. In 2004, there was talk of a split of the company because [some people] still [thought] that maybe the merger hadn't worked. When I was let go, many people assumed they would split up the company. At that time, it was viewed as a good thing. It took quarter after quarter of results to convince people that may be it shouldn't be split up after all.

Q: When we asked readers to send us questions for you, some just loved you and some were really angry. What is it that makes you so polarizing? I don’t know. I'm not sure I'm a polarizing figure. I think any person who leads change and who is visible gets all kinds of commentary. It's just human nature. You can't lead the transformation of a company by polarizing it. You have to do it by bringing people together. We accomplished what we did because people pulled together and focused on the same goal. People who drive change create resistance. Of course, you're going to create resistance. Not everybody likes to change. When people lose their jobs, it makes them angry. On the other hand, the publicity around my firing I had nothing to do with because I went silent for 18 months. I said two sentences the day I walked out of HP and then I didn't say anything for 18 months.

Q: Why? I didn't think I needed to say anything. I certainly wasn't fanning the flame.

Q: A lot of readers wrote in and said they believe you single-handedly destroyed the HP Way philosophy. Do you feel like you did? Just the opposite. I said you have to have a conversation on top of the table. The HP Way is a label and the problem with labels is that people stop thinking about what they mean. One of the most important things I did was say: Let's quit talking about the label and talk about the values that make up the' HP Way.' Integrity. It means we have direct conversation about the tough issues. Contribution means we have to move from being an insular bureaucracy and become a company that focuses on contribution. Innovation means we actually have to innovate. We have to invest in innovation.

You say you had to invest in innovation, but several readers wrote in and complained that you cut the budget for R&D. When we combined the R&D budgets of HP and Compaq, we didn't have to have two R&D teams working on industry standard servers, for instance. We could have one. That's why the merger was such a great idea. We could decrease the cost structure by billions and billions of dollars. In the course of my time there, we laid off over 30,000 people. That's why I understand where the anger came from.

Q: OK, were you saying that the HP Way was actually hurting HP? The real values of the HP Way? No. They're fundamental. But the phrase had become a shield against change. In a meeting when a new idea came up, people would say, 'No, we don’t do it that way.' The original HP Way had nothing to do with dismissing new ideas. We had to get off the label and get on to the underlying values.

Q: A lot of women, and some men, wanted to ask you what advice you have for women coming up through the business and technology ranks. I started out as a secretary and having become a CEO, I know it's possible for women to make a great contribution to business. I put lots of women in positions of authority at HP and earlier in my career. I know there are people willing to give women opportunities. Seek them out. There are barriers and prejudices and there still aren't enough women in technology and in positions of authority. Really know what you're capable of. Have confidence in that. Seek out people who will take a chance on you. Learn from everybody you can. Don't let other people's prejudice become your burden.

Q: You've said that 2005 was the year that saw your turnaround come to fruition. What was it that you implemented that is behind the turnaround? The merger. The merger provided the foundation for leadership. We had invested hundreds of millions of dollars in building a direct distribution system for our PCs. It paid off. We had decided to stay in the consumer retail business to compete against Dell. It paid off. We totally revamped our storage line. It paid off. We also had changed the metrics in every part of the business so people knew a meritocracy was what we were trying to create.

Q: What do you think was the best thing you did at HP? Look, you can't transform or manage a company with just one thing. You have to think bigger. It's not just one thing. The merger. A bureaucracy to a meritocracy. Focusing on customers. And refocusing on innovation. All four of those things mattered and made a difference and paid off. Q: What was the biggest mistake you made while you were there? I made mistakes about people. And those are big mistakes. What people go in which jobs is a major point for managers. And I probably underestimated how difficult change was going to be for HP. We got it done, but it was really tough and painful. And I shouldn't have let Tom Perkins back on the board.

Q: Do you think you'd still be there if you hadn't let him back on? I think that's a distinct possibility, but it's all water under the bridge now.

Q: You said in your book that you should learn everything you can from everyone you can. What did you learn from your tenure at HP? The best thing about the job at HP was the people of HP. Without a doubt, the best thing I learned at HP was that anything is possible. Not everything is easy. Not everything happens right away. Really difficult things take really hard work. Most people predicted that the merger would fail. Most people were wrong. That means that when you get a group of people focused on a worthy goal and inspired by a common purpose, then everything is possible. The people of HP made it work against huge odds and great criticism. A company can be transformed. But it's hard work.

Q: What did you still want to accomplish there? I really had hoped to be able to stay for the payoff of five and half years of hard work. I knew 2005 would be a payoff year. So did the board. I wish I had seen that through to fruition. But I'm very glad that HP is going so well. It makes me proud of the people of HP and also of the choices I made.

Q: But that didn't answer the question. What would you like to still accomplish if you were there? [This is a paraphrase, not a direct quote:] I don't know. I'm not there anymore so I don't think about it.

Q: Is the release of your book the first step in a comeback or a reinvention of yourself? I don't know. I don’t think about it that way. I first thought about writing the book five years ago when we were getting sued over the proxy battle. I thought of it when I was on the witness stand [during the proxy lawsuit] being asked a bunch of questions about how a business operates. I thought, 'Someday, I'll write a book about how a business operates.' And it's about people. I wanted to write an authentic book about business through my experience [in] business.

Q: But are you hoping the book will help you become a player in the business world again? I don't feel like I haven't been a player. I hope that people will understand better what got done and how I think about things and who I am. Perhaps, I won't be quite as much of a caricature.

Q: What kind of company would you like to head up now? I don't want to speculate and I don't want to try and make something up on the fly. For the right opportunity, I'd be delighted to be a chief executive again. I'm not prepared to make that decision right now. I decided a year ago that I wouldn’t be ready to decide until I'm finished what I'm doing right now.

Q: What is it that you've been doing? Well, I finished writing the book and [there's] talking about the book and serving on a lot of boards. Working on education service issues, leadership development in underprivileged communities, global poverty alleviation and the role businesses can play. Those are the kinds of things I'm engaged in.

Q: Do you want to be the governor of California? [Fiorina just laughs.]

Q: Oh, come on. You don't want to be the next Governator? Only Arnold can be the Governator. [Still laughing.]

Q: Really. Don't you have any interest in it? Public service is a potential interest and that means a lot of things including, but not limited to, elective office.

Q: What would be your dream job? Let me tell you how a dream job feels to me. To me, a dream job is where I feel like it matters what happens. It's one I can get my heart into and it challenges me intellectually. It's one where a group of people can get something difficult, but really important, done. That constitutes a dream job. I've had a lot of them in my career. I feel very fortunate.

Q: What new technology is really interesting to you right now? I think, to me, it's always been the application of technology that interests me most. What I like to think about is not which gadget or application is more interesting but how can that application or technology transform companies or industries. That's why we totally revamped the IT systems of HP and the way employees communicated and worked. To me, the most important thing about technology is how you can use it. One of the things we're doing at Revolution Health [where she serves on the board of directors] is using a lot of technologies and services already out there and building a new online platform and service to make sure consumers have all of the information they need in the right format in the right time and in the right place about their own personal health care.

Q: Is that really cutting edge, though? Are you saying companies aren't thinking enough about how they present information to people? I think the great benefit of technologists is that they think about technology all the time and how to make it better. I think the blind spot sometimes of technologists is that they think about technology all the time. Sometimes we need to think about people and how they're going to use it. That's the piece of technology that interests me: people and how they're going to use it. Sometimes simple changes can make a big difference.

Q: What do you think about the troubles Dell is having? I'm certainly not an expert on Dell. I'll repeat what I said three years ago. Customer satisfaction is a leading indicator. When it deteriorates, it's always a sign of trouble to come even if it doesn't show up right away in financials. Dell was a great innovator in the distribution model, but, over time, that model could be replicated and improved upon. Dell needed to find additional areas of innovation. All companies have to innovate. Dell has tried to apply the same distribution model for PCs to other areas, like printers, but it doesn't work in the same way for printers. The big question for Dell is where and how will they innovate? Eventually, people will replicate what you've done so you have to keep innovating to stay ahead.

Q: Is HP in a strong position to take advantage of Dell's troubles? I think, from what I can tell, HP is taking advantage of it by building a direct distribution system and investing money from 2001 on to build one that rivaled, and in some cases, was better than Dell's. We took advantage of it by working on customer satisfaction and ours was going up as theirs was coming down.

Q: Where does HP stand today with its competitors? Talk to the people of HP about that. But from what I can tell, HP today seems to be competing very effectively, and that pleases me.

Q: What's your overview of the industry? The industry is a big, diverse landscape. It's hard to make . . . hard to make big generalizations. It's important that America continue to lead in the technology industry. That's why it's important that we continue to do the heavy lifting required to build great American technology companies and transform them, when necessary, so they stay great. Having leadership in technology means we need to look everywhere for good ideas and bright people. As important as it is to look in Silicon Valley, it's important to look elsewhere around the country and elsewhere around the world.

Q: Are you saying we need to raise the H-1B visa cap? I think the danger of any leader, whether it's a company, an industry or a country, is complacency. Change is hard, so people want to be self-satisfied. I do worry that we're not investing enough in education to keep up with what's going on in other parts of the world. I worry if our point of view is too short-term . . . and that [has an] impact on innovation. We have to make the investments necessary.

Q: But what do you think about the state of the H-1B visa cap? I think we should be doing everything we can to educate the minds already in this country and to attract the best and brightest minds from all over the world to come here, stay here and pursue their ideas here. We need to reach deeply in our country to educate people wherever they are, and then we need to encourage people to come here and [we need to] put them to work.