HP and The Era of the See-Through Corporation

When “Marlboro Man” ad model Wayne McLaren died of lung cancer in July 1992, it marked the beginning of the end of the protective force field surrounding Big Tobacco.  Similarly, the very public demise of Hewlett-Packard Chairwoman Patricia Dunn may signal the fall of the wall of voodoo surrounding Corporate Fortress America.  Welcome to the era of the See-Through Corporation.

You cannot totally blame Dunn for HP’s PR debacle.  She was, after all, just doing her job.  Sure, employing Homeland Security-like spy tactics to flush out a few corporate leaksters was extreme, and seems so, well, un-HP.  But, rather than simply blame Dunn, blame the environment.  Managing material corporate disclosures today has become a fixation, because failure to do so is subject to criminal penalties.  Imagine if Dunn and company sat idly by as insiders unevenly shared corporate information to the market. Would the Board not be in violation of its fiduciary duties?  Would their inaction not be seen as complicity or incompetence?  Does anyone know for sure?  Dunn erred on the side of caution in trying to source the leaks.  Set aside the questionable acts by the outside firm she hired, Security Outsourcing Solutions (tactics reflective of just hard it is to conceal anything these days), and Dunn might have been applauded for her diligence.

My requisite tour of duty at HP (as with military service for Israelis, all Silicon Valley executives have to work at HP at least once during a career) coincided with the “pretexting” scandal.  I was among the dozen or so executives in the room who welcomed Mark Hurd to HP the day he got his badge and met the media beast.  My colleagues there were (and are) good people, talented people, dedicated people.  But in the days and weeks following Carly Fiorina’s ousting, a siege mentality had set in.  The paranoia was palpable.  In a large company (150,000 employees) with HP’s peculiar culture (everyone is permitted a vocal opinion on everything) leaks are inevitable.  Closing down the leaks was more than the work of control freaks, it was seen as a corporate duty under the restrictions on “selective disclosure” set by Congress. Leaks equal a sloppy company.  Leaks hurt shareholders.  Therefore, leaks must be plugged. At HP as elsewhere under Regulation FD, closing the holes became a moral pursuit.  And a Fool’s Errand.

In the Age of Information Ubiquity, expecting total information control is addled thinking.  With blogs, vlogs, message boards, and a plethora of email choices, all companies are sieves.  This new see-through reality has to be built into company strategy.

Besides, managing unwanted disclosures is not the same as ensuring transparency.  In fact it can be the opposite.  Just as airlines unions have leveraged the Federal crackdown on terror to reduce their employees’ workloads (read: put the airbrakes on customer service), so too have some in Corporate America manipulated Sarbanes-Oxley and SEC rules to close ranks on the free flow of untoward market information.  Instead of more transparent, some corporations have become more opaque and secretive as they invoke reporting rules in clamping down on negative news. 

My advice to my fellow executives, is to make transparency a brand and cultural asset.  Embrace the light, embrace openness.  What is the alternative?  In today’s competitive environment, if you move slower than the speed of information, you’re roadkill anyway.