The Business Blog at Intuitive.com

Dave Taylor has been involved with the Internet since 1980 and is widely recognized as an expert on both technical and business issues. He has been published over a thousand times, launched four Internet-related startup companies, has written twenty business and technical books and holds both an MBA and MS Ed. Dave maintains three weblogs, The Business Blog at Intuitive.com, focused on business and industry analysis, the eponymous Ask Dave Taylor devoted to tech and business Q&A and The Attachment Parenting Blog, discussing topics of interest to parents. Dave is an award-winning speaker, sought after conference and workshop participant and frequent guest on radio and podcast programs.

Dunn still on board, HP looks terrible to everyone but investors?

I'm continuing to watch the dirt being unearthed as both the media and judicial system dig into the clearly illegal information mining methods used by the investigators hired by Patricia Dunn, CEO of Hewlett-Packard (NYSE: HPQ), to figure out who was leaking secrets from the Boardroom over the last few years.

It's even become a subject of casual cocktail party chatter: I'm in Las Vegas for the World Internet Summit Internet marketing conference and even these eager entrepreneurs are cracking jokes and otherwise commenting on the tactic of illegally and unethically mining telephone records to unearth possible conflicts of interest and related. Ah, HP, what's happened to ya?

The story just gets worse, too, as there are now both Californian and Federal prosecutors involved with this case, investigating exactly what transpired, who likely had knowledge of the illegal "pretexting" techniques used to identify telephone records, and whether there were any specific laws broken.

The New York Times has a very specific update on this today, Zeroing In on Sources HP Used, which identifies Action Research Group as the source of the phone records that were scoured by the HP executive.

[Frankly, even typing in that paragraph gives me the creeps. What has corporate ethics come to that this sort of situation comes to light and the perceived value of the company, as reflected in its stock value, isn't even affected?

Consider: way back in April, HP stock was at $33.81, in July it was $32.25, in August it had moved up to $35.52 and today it's at $36.48.]

It's really an astonishing turn of events. Go to the Action Research Group Web site and you'll see that they ask "When a debtor leaves you with a cell number, PO Box, disconnected number or has changed his number to a non-published number leaving you with nothing current what do you do?"

Most likely, the intermediate was Security Outsourcing Solutions, a Boston-based security management firm that advertises -- with some great irony -- that it "provide small to medium size corporations and institutions with the same level of security currently available only to fortune 1000 companies."

It's a truly sad day when the CEO of a previously well-respected Fortune 500 company calls in these dubious sounding "information providers" and "small business security firms" without any counsel saying "uh, Patty, maybe this isn't a great idea". Instead, the U.S. House Subcommittee on Oversight and Investigations has already called a hearing on the situation and requested that Patricia Dunn, Larry Sonsini (HP's outside lawyer), Ann Baskins (HP legal counsel who apparently doesn't know that you can't get other people's phone records without doing something illegal) and Ronald DeLia, (Principal at Security Outsourcing Solutions).

What's far, far worse, however, is that Dunn is still on the Board at this point, though she's stepped down as Chairman of the Board. Gadzooks! What message are we sending people about ethical lapses - with probable legal consequences - and whether they are really a problem or not?

I will say what I've said before: Ms. Dunn, it's time for you to resign from the Board

Either you take responsibility for the actions of those under your supervision or you don't. You're not going to come out of this one clean, so it's time to cut the ties and stop making the situation worse for Hewlett-Packard.

Posted by Dave Taylor at September 17, 2006 10:33 AM

Comments

Corporate culture at HP had been perverted by business school principles when Fiorina aquired Compaq. It was woefully obvious when Carly gave reasons for that acquisition in a special stock holders meeting. She presented myth after myth including "we will be #1 or #2 in this and that market" - a myth as if that makes any company more productive or innovative. She even claimed a new computer based accounting system would provide information faster - a myth that accounting reports innovation and market trends. Anyone truly informed in business knows accounting is only a summary of work performed 4 and 10 years ago.

Bill and Dave understood this which is why they could buy small, innovative companies long before any spread sheet reported useful numbers.

Fiorina was the classic business school graduate who becomes a bad executive. Educated in medieval history. Only a salesman in Lucent. No dirt under her fingernails. Did not come from where the work gets done. Had not a clue what innovation really is. Classic of executives whose experience causes downsizing and corporate excuses. Fiorina actually believed she could buy innovation and measure it on spread sheets - as promoted in business schools and completely opposite of how 'Bill and Dave' accomplished success.

Anyone on that board who was supporting Fiorina is simply part of a temporary destruction in HP's culture. Innovation can only happen when top management understands innovation long before any spread sheet can measure it. Continuing is cancer created by Fiorina; destruction made necessary because of her war against the HP's culture.

We should have learned this lesson from John Young who did same during a purchase of Apollo Computer. What remains today is more destruction directly traceable to top executives and board members who forgot a 'Bill and Dave' culture that made HP so productive. The ghost of Fiorina - 'disciple of business schools and therefore enemy of innovation' - is still haunting HP.

Posted by: Tom W. on September 22, 2006 8:58 PM

Dave, Do you think that Pattie Dunn used and Ann Baskins approved such manipulative tactics because they were trying to defend their friend Carly? If the info was not leaked to the press, Carly might have had a more graceful exit. I doubt that they would exhibited such determination to find the leak if say Capellas was Chief and he got fired.

With that said, I think they should give the President title to Ann Livermore. She has dodged all the controversy for almost 30 years and still shows up for work everyday.

Posted by: Tom Hall on October 1, 2006 8:27 PM

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