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HP: How not to manage a crisis

Not so Agile Business

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Comment HP grows leakier by the hour: today's Pretexting Scandal episode, brought to you by an unnamed source of the NY Times reveals that the company "conducted feasibility studies on planting spies in news bureaus of [CNET and The Wall Street Journal] as part of an investigation of leaks from its board". Check out those janitors, before they check you out.

Internal mails leaked yesterday to the Times and the WSJ undermine the know-nothing defence of the HP board. And they also blow a hole into the timeline offered by HP for its probe into the identity of the board snitch, which saw private detectives engaging in identity fraud to nab the phone records of nine US journalists, and even sending a trojan in an email to one surveillance target(it failed to load).

Worse, former board director Tom Perkins says he was told by chairman Patricia Dunn that a stepped-up investigation had begun into board leaks on 23 January, 2006 after an article about HP was published in CNET. However, CNET reporter Dawn Kawamoto was told by government investigators that her phone records were accessed on 17 January.

Rarely has deniability looked less plausible.

Barely a day has gone by since September 5, when Perkins debuted the Pretexting Scandal in an interview with Newsweek, without an unwelcome revelation or three for the beleaguered board. Each titbit brings with it the prospect of another lawsuit [although CNET would be exceptionally brave to sue one of its biggest advertisers]. What a mess.

So Dunn has resigned as chairman - but not till January. And she stays on as director. Her replacement? Why, CEO Mark Hurd, who gets to hold the top two jobs. That's how to trigger an argument over corporate governance. And what happens if, God forbid, Hurd, who has been conspicuous in his silence on the matter, is dragged into the debacle? That's two top jockeys the corporate headhunters will have to find.

This is an object lesson in how not to manage a PR crisis. Given the threat of criminal action hanging over individuals, it is understandable that the HP board has displayed the decisiveness of a rabbit caught in headlights. But may we recommend the Japanese Way of handling such things. Admit everything; accept responsibility for everything; issue a craven apology in front of the TV crows, and walk with head bowed out the door marked mass resignation. And don't forget to put that hefty severance check in your back pocket. Then everyone can move on. Except for the class action lawsuits, of course.

Admittedly, some aspects of the Japanese Way do not translate particularly well into corporate America – jumping out of tall buildings and Seppuku, or ritual self-disembowelling, are best left to people more accustomed to the traditions. . ®

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