Do Corporate Executives Belong in the White House?

Carly Fiorina, the millionaire former chief executive of Hewlett-Packard, announced her intention to run for the Republican nomination for president Monday morning via Twitter and an appearance on ABC’s Good Morning America.

So can Fiorina shake up the Republican field?

Her candidacy may be only a few days old, but already she is facing a campaign-debilitating question: what will Fiorina bring to the campaign that other Republicans cannot? Or, in other words, why should the Republican leadership believe she would be able to win the White House for the party? The cookie-cutter slogan unveiled on her campaign website, “New Possibilities, Real Leadership,” suggests Fiorina will do little to shape the primaries. Candidates with little name recognition and little pull among wealthy donors can serve an important role in elections by forcing the major candidates to be accountable or bringing attention to a particular issue. But neither Fiorina or Republican neurosurgeon Ben Carson who also announced this week have anything new policy goals or plans to offer voters. And they are far less qualified than those Republicans — Kentucky Sen. Rand Paul, Florida Sen. Marco Rubio, or even Texas Sen. Ted Cruz.

Self-described on her Twitter profile as “a conservative who believes in unlocking human potential & holding govt accountable,” Fiorina’s public imagine is largely defined by her time at Hewlett-Packard. She spent six years leading the technology company, presiding over its controversial $25-billion acquisition of Compaq. At the time, that merger was seen as disastrous, but has since been applauded. She was the first female to run a Fortune 20 company. She has been highly ranked on lists of powerful women in Corporate America, although some rankings of top tech CEOs place her low because the often-vilified Compaq merger. Despite the controversy, her political persona depends heavily on her business credentials. In 2010, Fiorina launched an unsuccessful challenge to unseat three-term California Sen. Barbara Boxer, a battle she lost by 10 points. Then, as now, Fiorina is molding her career to be her biggest asset. Her campaign website highlights her abilities as a problem solver, as well as her strong track record of making unpopular but necessary decisions and bringing growth — all typical pitches of a business leader turned politician.

If Fiorina’s leadership of Hewlett-Packard is her most obvious strength, then her political inexperience is her greatest weakness. Her first foray into politics, the failed bid for a seat in the Senate, was partially attributed to that weakness. However, in an email to MSNBC, Fiorina argued that inexperience was actually to her advantage. “I do believe that ours was intended to be a citizen government and we have to engage folks where they are, build a robust ground games, and not leave votes on the table,” she wrote. “If we want someone who can reimagine our government, then we cannot elect another career politician who knows how Washington works but doesn’t know what leadership means.” Similarly, in a video statement included on her campaign website, she claimed that the founding fathers never meant for the United States to have a “professional political class” — reiterating what has become a common battle-cry for inexperienced politicians. This is by no means a new political tactic; many aspiring politicians, from Ted Cruz to Rand Paul, claim to be “Washington outsiders” in hopes of convincing voters that they will bring fresh ideas to federal government and have no interest in corruption or their career.

Fiorina did remind potential voters that she “has served in a large number of advisory and policy-making positions for national and state governments” as well as led “a number of charities and nonprofits,” including the American Conservative Union Foundation.

Do to her lack of experience and political exposure, Fiorina has much more work to do than her Republican competitors to show voters what kind of conservative she is. Voters know Ted Cruz for his outspoken and unshakable version of hardcore conservatism. By comparison, Fiorina has to build a brand. She has begun by framing herself as an outsider, and she has drawn in her career at Hewlett Packard as evidence that she is willing to go against the grain. “Carly didn’t always make the most popular decisions at HP–but, time and time again, they would prove to be the right ones,” reads one section of Carly for President. Those “right” decisions brought HP from the 29th to the 11th largest company in the United States and doubled its revenues. However, the company’s shareholders saw the plummeting price of the company’s stock and her shaking handling of the company’s board as a problem. Fiorina addressed this opposition in her campaign materials, arguing that she faced “headwinds from people who did not want to see HP change.” And then she drew a parallel with the United States federal government. “Our nation faces this very same problem today — where career politicians protect the current system that personally benefits them, but no longer works for the American people.”

Criticism of her HP career

Because Fiorina does not have any political accomplishments, she is essentially running on her business record: her terms as a top executive at AT&T and Lucent and her six-year tenure as HP’s CEO. That experience she suggests is similar to being president. And she claimed on Good Morning America: “I think I’m the best person for the job because I understand how the economy actually works.” Fiorina’s team boasted of how her leadership doubled revenues at HP, while the company’s rate of growth more than tripled, its rate of innovation more than tripled to an average of 11 patents awarded per day, its cash-flow quadrupled, and it grew to 11th largest company in the United States. She also made HP into a leading personal computer manufacture. These claims are not untrue, but that narrative needs context. After all, in 2005, Fiorina was fired because, as many said, she was doing a bad job. The nexus of this story is the Compaq merger.

Hewlett-Packard purchased Compaq, the first company to legally reverse engineer the IBM personal computer and the largest supplier of PC systems in the 1990s, in a bet that they could together beat IBM, the largest PC maker at the time. The result of the merger was a company that could produce twice the revenue of HP alone, which is why the company’s sales doubled during her tenure, as she so often highlights. The result was a company hugely invested in the soon-to-be lagging PC industry. And that risky move came at the expense of HP’s profitable printer business. By comparison, IBM saw how margins were declining and sold its PC business to Lenovo in 2004. HP shareholders paid $25 billion in stock, but as Fortune’s Carol Loomis wrote soon after, they “got relatively little value” in exchange. “In fact, so little value was secured that accounting rules could force HP to write off a chunk of the $14.5 billion in goodwill assets,” she added. In corporate accounting, “goodwill” is an intangible asset created when one company acquires another, but pays more than the market value for its net assets, so by taking such a large write-off, HP management essentially acknowledged it had made an overly optimistic assessment of the PC market. And that poor assessment forced so many layoffs that Fiorina was nicknamed “chainsaw Carly.”

A former employee purchased the URL to show how many people Fiorina let go during her tenure, represented by 30,000 “sad face” emoticons lined up across the page. After much scrolling, the website reads: “And what does she [Fiorina] say she would have done differently? ‘I would have done them all faster.’” While Fiorina was cutting her workforce in the United States, HP was outsourcing jobs. During the 2010 election, Fiorina was fairly frank about her choice to ship jobs abroad. In January 2004, Fiorina told Congress, “there is no job that is America’s God-given right anymore.” And in a op-ed published for the Wall Street Journal the next month, she argued that much attention has focused on a handful of companies, like HP, which have sourced some jobs to other countries,” but instead she believes the U.S. “must focus on developing next-generation industries and next-generation talent.” Her support of outsourcing was also a contributing factor in her 2010 loss.



It can be argued that Compaq merger looked good on paper; the two companies had synergy, although, unfortunately that synergy lay in the PC business. It can also be argued that it took a subsequent CEO to made the deal work. “[I]t was a successful merger because your successor managed to execute what you were not able to execute, which is why the board fired you, I believe,” Steve Rattner — Obama’s economic czar who served as lead adviser to on the restructuring of the auto industry — stated in an interview with Fiorina on MSNBC’s Good Morning Joe. Ultimately it was Fiorina’s inability to managed HP’s notoriously difficult board that got her fired, albeit with a $21-million severance package. In the years since her departure, HP leadership has given up on keeping the PC business tied to its technology operations, and the PC arm will be spun off in October 2015.

The question Fiorina will be hard pressed to answer is why voters should trust her with the running of the United States, an arguably far more complex institution than Hewlett-Packard. That chief executive post has left her with a worrisome image. “Republicans have to be concerned they’re going to repeat the mistakes of Mitt Romney with Carly Fiorina with the out-of-touch, wealthy candidate who made her mark laying off workers and shipping jobs overseas,” Boxer’s campaign manager Rosa Kapolczynski told MSNBC this week. She can leverage her rags-to-riches career story, and she has. “Only in the United States of America can a young woman start as a secretary and work to become Chief Executive of one of the largest technology companies in the world,” comments her website. Her story is brimming with toughness. She rose from a secretarial pool to the CEO of Hewlett-Packard; she ran for the U.S. Senate while battling cancer. But that may not be enough. Toughness must be tempered by judgement, and it will be easy for her opponents to criticize her on that point.

Plus, even her conservative beliefs are not much to distinguish her.

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