08 September 2010

Is Reputation Meaningless Today?

Mark Hurd's smug face looks out across reams of newsprint and computer screens today. The recently deposed chief executive of HP has just been appointed Co-President of HP's erstwhile partner and soon-to-be competitor, Oracle.

In an inevitable reaction, HP has moved quickly to file a lawsuit against Oracle and Hurd, citing the need to protect itself against the inevitable disclosure of proprietary information about his former company in his new role. Essentially, in the course of doing his job as Co-President at Oracle, Hurd would inevitably draw on information gathered while at the helm of HP. You can enforce limitations on what a man does; but you can't enforce restrictions on what a man thinks.

This is disturbing on several fronts, not the least of which is the topic of reputation.

Well-regarded companies generate reputational capital that gives them a competitive advantage:
Their products and services entice more customers.
Their stock attracts more investors.
Their employees are more productive and loyal.
Their job vacancies attract more applicants.
Their clout with their suppliers is greater.
They survive crises with less financial loss.

An individual's reputation can be equally potent. But -- as Mr Hurd is demonstrating -- just as transient and fragile. As Warren Buffet, chairman & CEO of Berkshire Hathaway, has said: "It takes 20 years to build a reputation, but five minutes to ruin it".

Jeff Bezos, founder & CEO of Amazon.com, puts it just as vividly: "Reputation is what people say about you when you have left the room." Going by some of the comments posted here and here, Mark Hurd doesn't have too rosy a rep, Wall Street notwithstanding. Glassdoor.com gives him the lowest employee approval rating (just 34%) of any major tech CEO.
I have to wonder why Mark would make such a move, so soon after his stint at HP. It's not as if he needs the money.  He could have chilled out for six months, or until the proprietary secrets he carries around in his head lose their competitive edge with time. Either Larry Ellison was a persuasive man -- or he must awfully, badly want to stick it to his former company.

HP's Standards of Business Conduct (SOBC) recommend that employees pose themselves a simple question to decide whether an action is appropriate: "Before you make a decision, consider how it would look in a news story."  I served eight years at HP, and once turned down an all-expense paid trip to the Maldives offered by a media owner -- because it was drummed into us to avoid even the slightest hint of obligation in our transactions with suppliers.  After five years with the company, and barely a month after leaving it, Mark Hurd seems to have ditched those very same standards he swore to uphold not so long ago.

He may yet wring a bunch of cost efficiencies out of Oracle; but in my book, he starts in his new role morally bankrupt.

No comments: