G2 On Leadership


HP board vs. the man at the top: The right decision?


In forcing out successful chief executive Mark Hurd, did Hewlett-Packard directors overreact to what, given his overall compensation, appears to be a modest abuse of his expense account? Or did the board underreact by allowing Hurd to resign with his full contracted severance package rather than firing him for cause?


KLMNO Slade Gorton is a former


U.S. senator and Washington state attorney general who also served on the 9/11 Commission. The Hewlett-Packard


directors were faced with a Hobson’s choice. They had one of the most talented and successful chief executives in the country. They also had a chief executive who had misused company funds on a questionable personal relationship and in flagrant violation of an ethics code for which he was responsible. As much as they may have wished to retain him, it is impossible to see how they could have done so without severely undercutting his ability to lead and the corporation’s reputation. Disruptive as his forced resignation may have been, it was the right course of action and was taken promptly. But to have attempted to deny him his contractual severance not only would have been vindictive but would have prolonged the agony and almost certainly resulted in protracted litigation.


Michael Maccoby is an


anthropologist and psychoanalyst globally recognized as an expert on leadership. He is the author of “The Leaders We Need:


And What Makes Us Follow.” Hewlett-Packard was founded by leaders who built strong bonds of trust with their employees. The founders, Bill Hewlett and Dave Packard, articulated and practiced a clear philosophy they called “the HP Way.” Ethics were a given, and disrespect among employees was not tolerated. To strengthen trust and loyalty, HP did not lay off employees during business downturns but instead had everyone take time off and a corresponding cut in salary. Trust and a strong value of excellence supported a collaborative culture that became a model for Silicon Valley. The HP values have been undermined and


ASSOCIATED PRESS


Mark Hurd was forced to step down after Hewlett-Packard’s board found that he had filed inaccurate expense reports to conceal a personal relationship with a contractor.


frayed by some of the leaders who followed Bill and Dave. Mark Hurd promised to revitalize the HP Way. His actions — hiding expenses to engage in a questionable relationship— undermine the trust essential for a company’s sustainable success. Hurd was widely admired, especially by HP shareholders, for cutting costs and increasing revenue through acquisitions. However, HP’s future depends on a leadership team that strengthens collaboration and innovation, that can articulate and practice a version of the HP Way for a global market.


Katherine Tyler Scott is managing partner of Ki ThoughtBridge, a leadership consultancy, and the author, most recently, of “Transforming Leadership:


The Episcopal Church of the 21st Century.” She is a board member of the International Leadership Association. From my vantage point, the board has


performed its governance role admirably. Its action was particularly important because it expressed the character of the company and showed it is living up to the espoused values the leaders are legally and ethically bound to uphold. In this tragedy, the chief executive permitted his self-interest to override the greater interests of HP. The board made its decision based not on his personal failings but on his betrayal of corporate values. The board’s response sent a clear message that dishonesty and deceit will not be accepted at HP. Its decision to allow Hurd to resign and to keep his contracted severance package was humane. It acknowledged his record of excellence in his professional performance while conveying the unacceptability of misuse of funds. When leaders violate an institution’s policies and core values, they destroy trust — the glue that holds everything together. If Hurd had stayed, questions about his truthfulness in other matters would have been raised and doubts about the character of HP’s leader would have put the reputation of the company at risk. The one thing a board must preserve is the good reputation of a company. A responsible board would never squander the good name of the company. In the end, the HP board chose the company’s character over the CEO’s competence.


SUNDAY, AUGUST 15, 2010 Howard Gardner is the


Hobbs Professor of Cognition and Education at the Harvard Graduate School of Education and senior director of theHarvard


educational research group Project Zero. In announcing his resignation as chief


executive of Hewlett-Packard, Mark Hurd said: “There were instances in which I did not live up to the standards and principles of trust, respect, and integrity that I have espoused at HP and which have guided me throughout my career.” I have no way of knowing who wrote and approved that statement, nor whether the last phrase is true. But as an observer of how difficult situations are discussed publicly, I can say that Mark Hurd’s statement is an impressive model. There is no attempt to wriggle out of the


accusations, nor to spread blame ( for example, on the media). And, importantly, Hurd praises a company that, even after the death of its founders and the unhappy tenure of Carly Fiorina, still occupies a privileged niche among major international corporations. In the past, when someone said that he or she worked for HP, it meant something special. The speed and manner of Hurd’s resignation increases the likelihood that working for HP will continue to mean something special. Redeeming that likelihood is the challenge for the next leadership, thousands of supporting employees and, especially, the board.


Excerpts from On Leadership, a Web feature exploring vision and motivation by Steven Pearlstein and Raju Narisetti. To see videos and read the entire panel’s comments, go to www.washingtonpost.com/leadership.


ANDREW HARRER / BLOOMBERG Hewlett-Packard, the world’s biggest PC maker, has been known for its values, or “the HP Way.”


LITTLE-GUY ECONOMY


Byte-sized books give small presses a bigger role


Digital readers help level the publishing playing field


by Jill Priluck


ublishing is a business plagued with many afflictions — except a lack of media atten- tion. Reports that the Wylie Agency — among others — is launching an online imprint and that Amazon’s e-book sales outpaced hard- cover sales and its digital sales will surpass paperback ones within 12 months underscore a new reality: It is the age of the publisher-turned- digital-curator. Simultaneously, as agents be- come publishers and membership in such groups as the Council of Literary Magazines and Presses rises, a small-time publishing renaissance is un- derway. With word-of-mouth being the best way to sell a book, small presses — already experts at cultivating loyal followings — are positioned to thrive in the march toward digital distribution. But don’t count on them making a profit. Most small presses are labors of love, with


P SHANNON STAPLETON/REUTERS


Wireless readers such as the Barnes & Noble Nook are boosting the opportunities for small publishers to reach readers, though they’re not getting rich as a result.


writing class at Smith College. In the little-guy economy, the personal wins. In


money a secondary consideration. Independent publishers, who toe the delicate line between art and commerce, aren’t in the business of selling books to become the next Simon & Schuster. Of- ten, these members of the little-guy economy are writers, poets and designers eager to sustain and expand the communities they inhabit to satisfy the public’s creative needs. But no matter how far these jewels may be from Random House’s Broadway office, they share a stark reality with the big houses: They need to sell books to stay afloat. Small presses are almost like


this way, indie publishing is no different from the start-up world. “There’s a premium on the indi- vidual. Getting an e-mail from somebody who says, ‘Hey, check this out,’ means a lot more to the recipient than spam from the Random House publicity department,” said Richard Nash, for- merly of Soft Skull Press and the founder of Cur- sor, a portfolio of digital publishing communities that launches next year.


Of course, online readers can be fickle, and at-


off-line communities, which allows them to move more seamlessly into the digital realm than bigger houses that don’t engage audiences on an intimate level. Independent publishers literally live and die by their networks. Feather- proof Books, which publishes two books a year and borrowed its 50-50 profit-sharing author model from a small record label, posts requests to buy books on Twitter and Facebook if it is hav- ing trouble making ends meet on a given month —and the audience responds. “They know where we are, and we know where they are,” co- publisher Zach Dodson said of his audience. These little entities, like many small busi- nesses, have exchanges with readers that tran- scend the commercial. Like much of what tran- spires in the digital space, it’s personal. Consider Gavin Grant and Kelly Link of Small Beer Press. Six months before they launched their e-book portal Weightless Books, they moved to Boston so their 6-month-old daughter, Ursula, could be treated for a serious lung condition, and their private lives suddenly fused with their roles as literary curators. They shared Ursula’s progress on their blog, took their laptops to the hospital and held author meetings there. They even sold books to help raise money for their daughter’s hospital stay. “It really was an office in a way,” says Link, an author who teaches a short-story


WITH


tracting them isn’t automatic. Structures in place for selling — wandering into bookstores, perus- ing covers, seeing what people are buying, talk- ing to clerks — don’t exist online, which means that publishers, even small ones, can’t do busi- ness the same way. “A 12-, 24- or 34-year-old stumbles into things different- ly than a 12-, 24- or 34-year-old 20 years ago,” said Electric Lit- erature co-founder Scott Lin- denbaum, who, with co-found- er Andy Hunter, worked every day of the week for six months to ensure that the business would exist one year after they sold 3,600 iPhone apps of their literary magazine in July 2009.


Embodying the little-guy economy maxim that marketing and product are becoming the same thing, they spend 70 percent of their time creat- ing digital content and promotional material to remind trollers of YouTube, blogs and other vir- tual spaces of their existence. Because of their readership’s fealty, these pub- lishers don’t feel the reverberations of the larger economy — as much. But there is an overarching problem that most small presses experience: They often generate only enough revenue to rein- vest in the business. Small presses with skeletal operations and tiny budgets may not have the same financial pressures as the big houses. If a book sells only 25 percent of its print run, a small press won’t take the same hit as a large company that has invested hundreds of thousands of dol- lars in a title. “If they don’t sell a certain number, they’re in trouble. For us, it’s only a few hundred copies,” said Jonathan Messinger of Featherproof Books. Nevertheless, small-time publishing often does not reach beyond the break-even point. There’s a big discrepancy between the value


In the little-guy economy, the personal wins. In this way, indie publishing is no different from the start-up world.


these presses offer and the revenue they gener- ate. “While the capacity to generate some kind of noise within the larger attention marketplace has improved for independent publishers, they still struggle with how to convert that into mon- ey,” Nash said. Some are eager to grow. Last year, Electric Lit-


erature raised in the five figures — or “barely enough to buy a luxury sedan,” jokes Linden- baum — from a round of investors. This summer, the business reached the break-even point and recently closed a second round of funding for several ventures. One involves licensing its iPad app to other indie presses for either $300 or $150, depending on the content’s complexity. Un- like some companies that license apps, Electric Literature doesn’t seek royalties, so participants can make up the cost quickly. The Kenyon Re- view, for example, will recoup the $150 text-only fee after selling just 15 copies. Electric Literature’s approach extends beyond


the stay-afloat model, which is the biggest nut in- dependent publishing needs to crack — if small- press founders are so inclined, and many say they aren’t. But publishing in general will benefit when more of these gems are able to leverage the digital space without compromising their titles and communities.


Jill Priluck is a writer living in New York. She contributes to Slate.


THE COLOR OF MONEY


Don’t like that banking fee? Tell the FDIC.


color from G1


plans to issue new guidance for automated overdraft payment programs administered by the financial institutions it regulates.


With changes in technology, the number of transactions that can trigger overdraft fees have substantially increased to include not only paper checks, but also ATM withdrawals, debit-card use, preauthorized debits, telephone fund transfers and online banking transactions, said Sandra L. Thompson, director of the FDIC’s division of supervision and consumer protection. Under new proposed guidelines, the agency wants banks to closely monitor overdraft programs to look for customers who excessively or chronically overuse overdraft protection. If a customer is charged an overdraft fee six times in 12 months, the institution would have to contact the person to discuss less-costly alternatives to automated overdraft payments, such as linking his or her checking account to a savings account, overdraft lines of credit or a small loan. “We are just making sure consumers have a good understanding of what their options are,” Thompson said. The FDIC wants institutions to impose appropriate daily limits on overdrafts by, for example, limiting the number of transactions that will be subject to a fee or providing a dollar limit on the total fees that will be imposed per day.


Additionally, the FDIC is seeking comment on whether it should have banks provide information to habitual overdraft users about how to access free or low-cost financial education workshops or individualized counseling to learn how to better manage their money. I love this idea because it helps customers become more responsible. The FDIC is also putting on the table a banking practice that really steams people. The agency wants banks to review how checks are processed. A federal judge in California recently ruled


against Wells Fargo in a class-action lawsuit, ordering the institution to pay California customers $203 million for processing checks in order of amount, from high to low — a practice that resulted in increased fees for customers. “What we don’t want is check-clearing procedures that are designed to maximize customer overdraft fees,” Thompson said. To comment on the proposed guidelines, send an e-mail no later than Sept. 27 to overdraftcomments@ fdic.gov or a fax to (703) 465-4303. “This guidance proposes common-sense ways to mitigate risks to both consumers and banks,” said FDIC Chairman Sheila C. Bair. “Ensuring that their customers are educated on the appropriate use of overdraft payment programs is just one more example of how community banks understand their customers and play a role in helping individuals find suitable financial products.” The FDIC issued the proposed guidelines just a few days before a new Federal Reserve rule about overdrafts took effect. Starting today, if you are an account holder and have not opted in for overdraft protection, your debit card and ATM transactions will be declined if you don’t have enough money in your account. Part of the reason


regulators have been implementing tougher banking standards is because customers were fed up. Consumer complaints to the FDIC about overdraft protection programs almost doubled from 2008 to 2009. Although I don’t think we should make Slater a hero for his actions, there are times you need to say enough is enough. singletarym@washpost.com


Readers can write to Michelle Singletary at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071.


Comments and questions are welcome, but because of the volume of mail, personal responses are not always possible. Please note that comments or questions might be used in a future column, with the writer’s name, unless a specific request to do otherwise is indicated.


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