Skip to content
Home ยป EDS


The stunning fall of Mark Hurd

I didn’t believe it when the news broke late Friday that Mark Hurd, CEO of Hewlett-Packard, had suddenly resigned under fire.

Hurd wasn’t flamboyant or a quote machine like many technology CEOs. He just steadily turned HP around, increasing profits, passing Dell in sales of PCs and IBM in sales of servers, and buying companies like EDS and 3Com. He was exactly what investors liked.

In the following days, it turned out there was more to the story.Some people believe the infraction that HP cited for Hurd’s downfall was a cover, that HP wanted him out. The reasons make some sense. The one that resonates with me the most is the logic that Hurd increased profits by squeezing expenses to the bone, slashing the workforce to the minimum, then slashing salaries. Doing more with less, in other words–the mantra of IT during the entire previous decade.

The result? Record numbers of applications from HP employees at competitors. So far, no Steven Slater-style meltdowns, but when demanding more and more while paying less isn’t a good long-term strategy. The Slater story brought attention to this problem and got people talking about it, and it looks like HP may have been a few days ahead of the curve on that.

Other accounts have said employees don’t like working for Hurd and he’s unpleasant toward him. Which lead to some defenders questioning when "being nice" was a job qualification for a CEO.

Well, five years ago I was consulting for a Fortune 500 company. I stepped onto an elevator, and the company CEO stepped on right after me. He extended his hand, introduced himself, and asked me my name, what department I worked in, and what I did there. It was a 30-second exchange.

He stepped off the elevator and literally never saw me again. I don’t know whether he forgot about me the moment I stepped off the elevator, or if he jotted down a note that if he needed a printer fixed he could call Dave Farquhar and filed it away. But unlike a certain very famous CEO, he gave me no reason to fear sharing an elevator ride with him.

And I do think an important qualification of being a CEO is knowing who to call when they need something done quickly and done right. Being friendly is conducive to that. Being ruthless at all times is not. Even Genghis Khan and Attila the Hun knew when to be kind.

Then there’s the question of the consultant. The consultant who had, among other duties, the questionable job duty of "keeping Mr. Hurd company on trips," but with whom Hurd didn’t have an affair (both deny any sexual element to the relationship), and whom Hurd didn’t sexually harass (HP said no harassment took place, and the two settled out of court and kept the terms private). The consultant with whom Hurd concealed $20,000 in expenses in order to hide the relationship.

To a CEO of a multibillion-dollar company, 20 grand isn’t much. Hurd could have paid that back, and he offered. The amount of money isn’t the question nearly so much as the motive. Why did he feel the need to conceal having dinner with one particular subordinate?

The sexual harassment claim gives weight to the claim of it not being a sexual affair. But the job duty of "keeping [any male in a position of power] company" is a common euphemism for something less innocent. I’ve also read speculation that some of this consultant’s past work–namely, acting roles in several R-rated films of the type that gave the cable TV channel Cinemax the nickname "Skinamax"–may have contributed to these expectations.

Some have said that’s blaming the victim. But no means no, and the definition is the same no matter what the person’s job description was for most of the 1990s.

If Mr. Hurd jumped to certain conclusions because his consultant once had a starring role in "Body of Evidence 2," that says more about him than it says about her.

If I remember one thing from my freshman orientation in college, it’s sitting in an auditorium and being told repeatedly that no means no. Regardless of how much she’s had to drink, or what she’s wearing, or what reputation she has for whatever reason.

Since the charge was harassment rather than something else, it sounds like perhaps someone thought a no on Monday might not be followed by a no on Tuesday. That’s better than thinking no means yes based on reputation, but it was still problematic enough to settle out of court rather than try to get it dismissed.

We’ll probably never know HP’s full motivation behind the dismissal. Mark Hurd left over what appears now to be a relatively minor matter of $20,000 worth of incorrect expense reports and a slightly inappropriate relationship with a subordinate, both things that would go completely unnoticed or be easily rectified if it was a different company, or, perhaps, a different person.

The key is to not leave that something relatively minor laying around.

Buy, don\’t build, enterprise servers

Steve sent me some questionable advice he found online–basically, someone advocating that you build your high-end servers rather than buying them, but admitting that it’s difficult for someone to build a $20,000 server and still be able to afford to maintain the thing.

There’s a solution: Buy it.This is the opposite of the best advice for desktops (although I increasingly tell people to just buy their computers because you don’t really save any money by building), but there are lots of very good reasons for it.

First and foremost is maintainability. The last time something went wrong with one of the HP servers at work, an LED on the front case came on before the problem became critical. Pop open the case, and an internal LED next to the failing component is lit up. Does your off-the-shelf motherboard have that feature? It may or it may not.

How does hot-spare memory sound? It’s kind of like RAID. You buy identical DIMMs to put in the system, but you buy one extra one, which goes into a specially designated slot. When a DIMM starts to fail, the system switches over to the hot spare. In the case of the mid-range HP servers, you can even open the case up, remove the failing module, and replace it, without powering down.

Of course you want your server to have RAID, and use hot-pluggable drives, so a failed disk doesn’t mean downtime. All but the very cheapest commercially-built servers have that feature from the factory.

But if you really have a budget of $20,000 per server, you shouldn’t even mess around with local storage. Buy some kind of a Storage Area Network instead. Basically, it’s a large bank of disks that connects to any number of servers. Some use a Fibre Channel connection, while others just use an Ethernet connection. Then you buy disks, slap them in the SAN, and configure the SAN to split the storage up between the servers. Ever run into a situation where you need 40 gigs of storage, and one server has 10 gigs free and one has 30 gigs free, but there isn’t much of anything you can move around to consolidate that free space? The SAN eliminates that. You can add one monster 300-gig disk to an array and split that storage up however you want. And one hot spare protects the entire array–no more need to buy one hot spare for every server on your network. On a big network (40 servers), that alone can pay for the SAN.

Finally, as far as spare parts go, a company ought to keep a couple of spare hard drives around for the times when a disk in a RAID array or SAN fails. But you put the servers on a maintenance agreement with someone like HP, IBM, or EDS, so that when anything else fails, that company comes out and replaces parts with its inventory. Outsource your server organ donor bank. You’ll save money, not just on the parts themselves, but also on physical storage space.

When I can get all of these features (except for the SAN) in an HP Proliant server that costs about $3,000, there’s no point in my employer wasting time building its own servers.