Hurd The News About HP? What Does The Oracle Tell Us?

So, first Michael Hurd resigns as HP CEO because of minor accounting snafus related to his totally not sexually harassing a B-movie actress (snicker!). Then, Oracle hires him “allowing” one of the co-Presidents, Charles Phillips, to leave.  Phillips apparently had his own public problems with a woman (snicker!) .  Now, HP is suing Hurd because – now get this – they have a non-disclosure. Not a non-compete. An NDA. So HP is suing Hurd after they effectively forced him to resign over something he didn’t do with a woman because of something he has yet to do.

I couldn’t make this stuff up if I tried. The mind reels with questions here. Let’s choose a few major ones.

• Are technology executives of such low moral fiber that they keep getting into trouble with women other than their wives?
• Is Hurd just so good that Oracle is willing to deal with the inevitable lawsuits?
• If so, was HP just that stupid for letting him go?
• Can you really sue someone for something they might do but haven’t yet done?

Let’s tackle these in order. First off, I know a lot of technology executives. While some are ethically and morally challenged, as a class they don’t seem any worse than anyone else. I don’t mean no worse than other business executives. I mean no worse than the guy who delivers my mail or teaches my kids in school. Really, they are about the same as everyone else. Except politicians. Those folks don’t seem to know what ethics are at all. Oh, and Wall Street. Don’t get me started on Wall Street…

Next question - is Hurd just that good that he’s worth the trouble? Well, it’s possible that Oracle didn’t think he would be this much trouble. He didn’t, after all, have a non-compete. That still blows my mind but we’ll come back to that later. More likely, Larry Ellison just didn’t care. You see, Hurd has done some pretty remarkable things at HP. Mr. Ellison clearly thinks so, going so far as to send an email to the New York Times calling the HP board “idiots” for letting him go. That kind of tells me that he thinks Hurd is special.

The next question sort of answers itself. Given the mess HP made of Hurd’s departure it doesn’t look like they were doing the smart things. Really, didn’t they think they could deal with one aging actress who got hit on by an executive (if that even happened)? On the surface, it at least seems like cowardice. I’m willing to accept that there may be more to the story than is generally known. Maybe. Still, guys with Hurd’s track record are not exactly sitting around waiting for “The Call”. It does seem at least a little stupid.

Look at it this way: If they had tossed a tiny fraction of what they are going to spend on 3Par at the B-movie actress, this all could have gone away in an instant.

Finally, can they sue Hurd for not adhering to a non-disclosure when it hasn’t happened yet? A non-compete is different. The minute he took the job at Oracle he would have violated a non-compete. But he didn’t have a non-compete! I’m still trying to wrap my head around that. If you sell a bagel restaurant you sign a non-compete. This guy was CEO of a huge corporation. How did that one get through? But I digress (and rant a bit admittedly).

Hurd can’t violate the non-disclosure until he actually disclosures something and HP finds out about it. What would a court say here? “Mr Hurd is ordered not disclose trade secrets like he has already agreed to and has so far complied with”? Huh? He has to do something to harm them then they can go after him. What it looks like here is that the HP Board wanted but didn’t get a non-compete. I can’t believe they just forgot. Since they didn’t get the non-compete they want to make one out of the non-disclosure. It’s like legal alchemy. Take a base agreement and turn it into a golden one. The contract is what it is. It is not something else just because you want it to be.

Maybe the argument is that he can’t be an Oracle President and not disclose sensitive information. That’s a scary argument mostly because it assumes guilt. This suit assumes the inevitability of wrongdoing. Even if HP feels that Mr. Hurd has such low moral character that it’s likely he will disclosure something (see above) he still has to do the bad thing first. It’s not enough to say “we feel he might.”

This is not a trivial matter. Technology businesses cannot exist without confidentially. Everyone signs confidentiality agreements. Who will now if they can be turned into non-competes and other types of agreements by fiat. If you can be sued because you might do something but haven’t then would you sign an NDA? Will you enter into a confidentially agreement that is a non-compete in disguise? This has far reaching consequences in all aspects of business. Everyone signs non-disclosures when they go to work for a company, enter into partnerships, work with customers and vendors, etc. What if all of those magically turned into non-competes too? If you except the argument that you can’t work for someone else without disclosing trade secrets then you effectively do that and bind everyone to their current company. Like indentured servants only with cubicles.

So, the answer to the last question is “Yes. You can sue someone for something they haven’t yet done.” It doesn't mean you will win though. Hopefully HP won’t prevail. That would be devastating to all business.

And guys, stay away from the booth babes. You shouldn’t have them in the first place. They are insulting to men and women alike but clearly a minefield for the C-level executives. Protect your CEO. Don’t use booth babes.

Risky Social Behaviors

Management (the practice not the people) is, to a large extent, about risk avoidance. Managers spend a lot of their time managing risks. Through a combination of experience and knowledge, managers mitigate market, financial, technology, and legal risks in order to provide a positive outcome for their organization. That’s a big chunk of the job.

Given that, I’m amazed at how many managers and professionals don’t understand the risks of social media. Whenever I talk to managers about these risks I hear the same refrain – It’s new! Sorry, that’s no excuse. It is not an excuse because it is an electronic communication like any other. For risk management purposes, social media is no different than email or a website.

The legal risks of electronic communication are well known. They can roughly be summarized as risks associated with:

• eDiscovery – why would anyone think that social media including Twitter or Facebook is not discoverable? If search results, websites and email are then so are these. The same rules apply including the FRCP in United States. Keep in mind that Electronic Communication is not defined as email but as electronic records of all sorts. This includes private accounts in the same way that private email accounts may be discoverable.
• Privacy – people forget that a lot of social media, especially Blogs and Twitter, are public forums. You don’t have an expectation of privacy in an open forum. If you wouldn’t stand in a crowded room and shout it out, don’t Tweet it. The same goes for Facebook if you don’t set your privacy controls to kill. Leave them wide open and you are publishing to the world.
• Defamation – public speech that is intended to harm is not protected speech in most countries. If you call someone a thief or a liar on Twitter you may as well have put up a billboard. Trash a competitor’s product in your blog? You had better be able to back up what you say.
• Agreements – a recent story about a lawsuit that accused an ex-employee of using LinkedIn to solicit another employee to leave garnered a lot of attention. So what? Solicitation is solicitation. The media is irrelevant. Social media does not give you a pass on sticking to contracts and other agreements including non-competes.
• Misrepresentation, Spam, Phishing etc. – again, the rules don’t change here. If you are NOT who or what you say you are or you are a scummy spammer you are acting legally or ethically by using Twitter or a Blog comment instead of email.

What is different is the ease of which one can fall into legal or ethical traps. We have been trained to think before we send the email. Social media with it’s quick, short, rapid fire bon mots encourages impulsive behavior. For the manager the real risk is that things can happen without people thinking about it. And these comments last for a long time. For the average corporate drone, the danger zone is in not remembering that these are not private communications. If you Tweet that your boss is an idiot, the boss can fire you it. It’s no different from taking out an ad in a newspaper. You are likely violating part of your employment agreement (folks, you really should read those before signing them) and giving cause to terminate you.

Use of social media does represent special marketing risks. Most of these risks are derived from a fundamental misunderstanding of social media – that it’s open. Twitter, for example, is a broadcast media. From a marketing perspective you can think of it like television and radio. Some obvious risks are:

• Forgetting you are talking to the world – I got into this on Twitter some months back. I objected to the use of swearing on Tweets by my alma mater. I was concerned what it would say about my school when they write posts like that. Clearly, they forgot that they were not talking to just a small group of like minded people. Full disclosure: people who know me will tell you I can swear like a sailor, though never in business situations. The risk to my school’s brand was my complaint not the words themselves.
• Not reaching for the shut off valve – legal risks aside, trashing competitors and individuals in public irritates people. Even worse is the back and forth that a lot of techies engage in. Sorry but no one wants to hear that. It’s one thing to point out your competitors shortcomings in person. It’s quite another to scream it all over the Internet. Playful poking is one thing as is thoughtful discussion. Trash-fests turn people off and make them stop listening.

Here’s a few tips and reminders to guide you through the social media forest.

• Remember, it is eCommunication and media like any other. The same rules apply.
• Do not assume privacy exists just because you want it to. If someone can see it, it’s in the open no matter what your intentions were.
• Think before you Tweet or post.
• You are publishing. Act like you are publishing even if it’s so you don’t annoy your friends.
• Remember that you can be punished, socially or legally, for thinks you say. Social media is a form of saying.
• Managers, be clear on what you expect and where the boundaries are. You can’t exert total control over your employees lives outside of work nor should you try. Just make sure they know how to keep private thoughts private.
• become proficient with privacy controls and use them appropriately. Parents, this goes especially for your kids. School administrators do trawl around in Facebook for threats and inappropriate behavior.
• No innuendos or in jokes. You lose the wider audience and annoy people. In the same vein, don’t trash talk.
• Don’t mix personal and business communications. If you usually Tweet about your cat I will not expect to hear about your company’s new product. I might care about one or the other but probably not both in the same context. That means I’m not listening when I should.

Above all else remember that social media allows you to tap into a wide community of people. Don’t be a jerk and don't’ be creepy. People will treat it as if you acted like that in person. That can’t be good.

Is It Right To Enforce a Non-compete

Over the past few days there has been some intriguing commentary on non-compete agreements. This has been spurred on by the recent hire of Dave Donatelli by HP and subsequent lawsuit from his former (long time) employer EMC. Much of the commentary, mine included, though missed the most important point. We failed to consider the question “Is it right?”

I don't know the particulars of Mr. Donatelli's contract but to me the legal technicalities don't matter. Massachusetts law and California law may well differ as to whether the contract is enforceable but that too does not matter. What is not debated nearly as much is whether it is right to try and break a non-compete agreement in the first place. Steve Duplessie of Enterprise Strategy Group went there but looked at it as a business argument. What does the business get and lose from a non-compete.

What interests me is the moral argument. Having signed a number of these agreements in the past, both on behalf of myself and the company, I have confronted the moral ambiguity of the situation enough times to have an opinion. It breaks down to two questions:

1. When you agree to something freely are you bound to it?

2. Can a company effectively keep you from working when there is nothing more for you at the company?

The legal answers are different between jurisdictions. The morality is more defined – that is to the extent that any morality can be absolute.

Question 1: Should you be as good as your word?

It doesn't matter if you don't like the agreement. Don't sign it and deal with the consequences. Unless someone holds a gun to your head and makes you an offer you cannot refuse, your word should be your bond. Maybe that is an old-fashioned concept but it is the fabric of society. The social contract should always outweigh the legal one. If you agree to something, even if it is inconvenient later, you should abide by that agreement. That is what used to be called honor . Even mercenaries have a code of honor. And it matters. If you will break your agreement with my rival, then you are clearly willing to break your agreements with me. How can there be trust in that environment? Especially at the highest levels, there must be trust or business, communities, and society can't function. It doesn't matter what the law says. Law is for wrongdoers. Keep in mind, this type of behavior is one reason why we are in such a mess economically. People did what was legal but had no honor. It worked for awhile but now they are despised.

So, if you agree to a non-compete you are bound to no matter what California or Massachusetts says. Do what is legal and not moral and you lose your honor. Maybe your soul too.

Question 2: Can we indenture people like this?

The counterargument is that non-compete agreements are a form of indentured servitude. As was pointed out by many, you always can't hold people (in some jurisdictions but not all) to a non-compete if you fire them. Morally it's straightforward. The company ditched you so you should be free to go elsewhere to make a living.

What about someone who leaves voluntarily? Here the situation gets messy. For the average Joe worker, even a typical middle manager, the job is too important to survival to turn it down. It is especially hard to do so when every job requires a non-compete. Even narrow non-competes can effectively keep you from working. You are binding the employee to the company by making it impossible for them to use their skills and knowledge, especially domain and industry knowledge, to continue and further their career. In philosophy it is called Morton's Choice. You have to choose between two bad alternatives - Be bound like a slave or go bankrupt. There is no moral argument for supporting this type of agreement under these circumstances.

For an executive though, things are different. Executives are very highly compensated people who hold the most important secrets of the company in their heads. How do you not use those for your new employer to devastating effect? It is not just industry and domain knowledge that the new employer wants, it's specific knowledge of your former company. Besides, for executives in Fortune 500 companies, having a job is not a matter of survival. I doubt if any of them won't eat if they can't work for a year.

Still, no job can become a form of bound servitude. The executive who wants to leave must have a recourse, a way of working in his industry without becoming a weapon of mass destruction. That can happen by limiting what they do for awhile. In the computer industry a year is a lifetime. In the case of Dave Donatelli, storage is only one part of his portfolio at HP. One solution is to limit involvement in that group for a year. Another possibility is to pay an executive to not work for awhile. That happens a lot in buy outs. Top folks are paid lots of money to sit on the sidelines or just be pundits for a period of time. Perhaps write a book about their management philosophy or birds. Whatever. Will a year off for a C-level individual destroy their career? I doubt it. Might actually help their marriage and make their kids like them better.

Answer 1: Yes

Answer 2: No for regular people, Yes for executives with a safety valve

In a sentence – we should be bound to our word. If, however, you have the equivalent of a gun to your head – that is you need the job to survive and the employer knows it – there should be a safety valve to protect you from becoming a slave to the company. For most executives, this doesn't apply. Ambition is not the same as survival. Still, even an executive can't be bound permanently. Hopefully, cool heads will devise a solution here that is both legal and moral.

My guess is that EMC and HP will come to some agreement rather then let it go to court. A protracted legal battle in multiple jurisdictions won't help them sell anything. It's a cost they don't need. There will be an accommodation. Okay, but has trust been ruined forever?