HP: Death by Leaks

Rob Enderle

The drama with HP last week, which took its stock down about 20 points and put both its board and CEO at risk, wasn't due to bad management but due to leaks. This is a recurring problem with HP and it has become very costly. In most cases, there appears to be political intent behind the leaks, but they are doing massive damage to the credibility of management and may, if they continue, force yet another leadership change.


Apple, which has had leak issues in the past, and is probably the hardest company to secure, has largely contained all but accidental or third-party leaks. I almost lost my own job due to a leak that was apparently designed to get me fired, so I'm not a fan of the leak concept.


Let's explore the problem with leaks.


The Promise and Problem with Leaks


We see leaks in politics a lot. The promise of a leak is that it can be a low-cost way to create massive interest. People like to share "secrets" and having one gives credibility to an advocate that he/she otherwise wouldn't have if they just shared the news. Because the source isn't identified, the nature of the secret tends to be the focus rather than any discussion that might invalidate the content due to the likely manipulative goals underneath the news.


The problems are numerous, however. The first is there is no easy way to control the outcome and the leak may gain a life all of its own. Recall the Valerie Plame leak. The purpose was to discredit her husband, which it did, but it then got a life of its own and cost the leaker his job and discredited the administration. Collateral self-damage was high. So, too, were the leaks out of the HP board after Carly Fiorina was let go. (Interestingly, she is supporting HP's broad moves and one of her strengths was her vision). Those, and the investigations into finding the leakers, cost the chairman her job along with most of the board, and several HP senior employees were let go as well. We did learn a new word, "pretexting," and it is interesting that something similar recently almost took out (and may still) Rupert Murdoch.


The bigger problem is that if employees see their leaders leaking information, they will most likely view this as a legitimate activity themselves and then control becomes impossible, which is what may be happening now with HP. In short order, the Best Buy return of TouchPads was leaked, the spin out or sale of HP's PC division was leaked, and the recent acquisition of Autonomy (an electronic discovery company, interestingly enough) was leaked. Also interesting, today, the fact that HP's EVP head of its PC division is looking for a new job was leaked as well. This last bit of info comes on top of leaks during HP's search for a new CEO, which had Bradley as the named successor for Mark Hurd, but didn't come to pass, and soured the well for Leo Apotheker. A few weeks ago, it had been leaked that Bradley was looking for a job from Intel and before that with Motorola, suggesting a pattern and where HP should start looking for a source.

My Own Story: Why I'm Not a Leak Fan


In my case, the leak almost cost me my job and I was fortunate that it failed. As part of competitive analysis for IBM, I had created a definitive document, heavily researched, on why the ROLM unit was failing along with a detailed recommendation on what fixes needed to be made. A large portion of the identified problem, which I captured by actually interviewing buyers who had switched to other vendors, was on how the sales team was blowing the sale (causes were bad training and horrid staffing). But parts were also on products that weren't competitive. This report, which, of course, was highly confidential, was leaked to our largest competitor and then given to one of our largest clients who shared it with his sales rep. The SVP of sales immediately demanded my resignation.


Fortunately, I'd anticipated the potential for a leak and had built tracking within the document. Sometimes my own unique training pays off (I was really lucky) and we were able to determine the source of the leaked document. He later left and took over a job that was in charge of displacing us by that same competitor, a job that I still believe he had while he was working for us. I've referred to this before as a fifth column in some companies.


So, I'm not a leak fan and think that as a practice it should not be encouraged because, despite how powerful it is, it is simply too hard to control and represents a far greater danger than benefit. This is exactly what HP has just demonstrated.


Wrapping Up: Leaks Are a Bad Habit


For HP or anyone else who uses leaks, the habit, though attractive, should be discouraged. Apple showcases a best practice in clearly identifying only those that are allowed to talk to the press. While Apple's practices may be overkill for most firms, it also does the best job in securing its brand and image - something a lot of firms could do far better with HP on the short list this week. If you want to locate a leak, there are a series of practices that can be used and most firms like EMC, which have security practices for enterprises, know them.


One thing HP could, and should, do immediately to reduce the exposure is to centralize communications to eliminate that as a source for unplanned leaks. That's Apple 101 and it remains a best practice in the face of a problem like this.

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