I hate to say I told you so, but I told you so. Well, technically speaking I may not have told you so but I did tell someone so. I wasn’t writing for the Mail & Guardian Online back in March 2002 but I said on radio that the proposed merger between Hewlett Packard (HP) and Compaq was (and I quote myself here) ”unlikely to succeed”.
At the time, the battle lines were drawn. On the one side was HP chief executive Carly Fiorina — a tough, no-holds-barred brawler who rightly ranked number one on Fortune‘s list of most powerful women in business, a position she had held since the list’s genesis in 1998.
On the other side was Walter Hewlett, the son of HP’s co-founder. Fiorina wanted to merge with PC-maker Compaq, Hewlett didn’t want the merge to go ahead. They fought in public, they haggled in private, they cajoled and twisted shareholders’ arms, armies of spin doctors fought the good fight and then the vote was held.
Fiorina was declared the winner. (Although, as can be expected in, um, the world’s most advanced democracy these days, not before a good bit of legal wrangling and what one commentator called a ”blizzard of paperwork” descending on the courts before a recount and final decision was taken.) The deal, worth an estimated $19-billion, went ahead.
A month ago, not yet three years after victory was declared, Fiorina stepped down from her job as CEO and chairperson at the request of the board. The merger, or rather its spectacular inability to produce the sort of returns she had promised, is generally cited in the press as the chief reason for her fall from grace.
Let’s ignore for a second the fact that someone leaving their job with a cheque for $21-million can be considered to have suffered a ”fall from grace”. I’d like to focus on a further ignominy suffered by Fiorina about four months before she was shown the door.
In October last year, Fortune released the seventh edition of its list of most powerful women in business (the one dominated by Fiorina for all these years). To no one’s great surprise, the queen of power had been toppled from the top spot by Meg Whitman, CEO of the awesome eBay online auction site.
There’s a clear message here. And it’s not ”don’t try to merge laptops with printers, they do different things” (although that would have been a good lesson for Fiorina to learn a couple of years back).
It’s that, in today’s terms, power isn’t about the size of the purse strings you control, but about the size of the community you control. eBay is firstly a community, secondly an online shop. People don’t visit the site just to buy stuff, in much the same way they didn’t visit the marketplaces of old to close deals. They used to prod the produce, squeeze the fruit, chat to their neighbours and laugh at the fishmonger trying to palm off last week’s tuna to an out-of-town trader. It was a social occasion, a reason to dress up and the one chance you had to catch up on gossip and spot new trends.
Sure, if you came across a deal too good to pass up, you’d buy. But that’s because you liked the environment and the way it made you feel. eBay understands that. Whitman understands that. She gets the fact that the buyer will decide what sells, not the seller. It’s a simple fact that is often overlooked by today’s retailers, who tend to tie themselves in knots telling you what they think you want or need.
Fiorina didn’t understand that, and that’s why her time was up when she decided that consolidation of the industry would be best for the consumer. The consumer thought differently, and that was that.
There’s a strange, intuitive, almost mystical connection that really good, and really powerful, CEOs have with their customers.
Fiorina didn’t have it. She was too busy concluding transactions and burying herself in proxy forms. Whitman does. She knows her community intimately, she presses flesh at large gatherings of eBay communities around the world, she talks to them, she listens to them and she understands them.
She won’t impose her ideas on them, but rather she responds to what they want by shaping and developing the company she runs around their needs. Community is king. Whitman gets it. And I reckon that, because of that, she’s going to stay top of the power heap for a while yet.
I might be wrong but, in a couple of years’ time, I think that I’ll be able to say ”I told you so” once again. I like that.