The Carly Chronicles

In her most audacious move, Fiorina began invoking the early careers of Hewlett and Packard as justification for the HP-Compaq merger. With the late founders' heirs strongly opposed to the merger, it seemed mind-boggling that she could lay claim to the patriarchs' intentions. She latched onto a legendary Packard quote -- "To remain static is to lose ground" -- and made it the centerpiece of two-page newspaper ads. And not only did she appropriate the founders' language for her cause, but she also scripted dialogue for them, using her new ideas for the company as their text. Fiorina created plausible -- but unsubstantiated -- conversations from long ago, in which the founders spoke her language. Her tactics infuriated Packard's son, David Woodley Packard, but she didn't back down. She had framed her message.

Carly Asks Three Questions
By late 2001, the HP-Compaq merger seemed doomed. The foundations aligned with the Hewlett and Packard families both opposed the deal. During her first two years on the job, though, Fiorina had cemented superb relations with all nonexecutive directors on her board except Walter Hewlett. These board members regarded her as their instrument, charging into work to make HP a more modern business. No matter how bleak it looked outside the boardroom, Fiorina believed that she could draw strength from her directors and ultimately prevail.

A key moment came on Sunday, December 9. Fiorina sat in a small, first-floor study in her home and began a conference call with a half-dozen directors, led by Hackborn. Fiorina didn't plead for their support. Instead, she did something both innocent and ingenious. She asked each board member to give her a yes or no answer to three questions: Should we stop? Should we go on as is? Or should we go on in a modified way?

Decisive answers came back, almost in unison. "We're going on!" the directors told Fiorina. No one was more adamant than Dick Hackborn. "Let's get back to the question, 'Why are we proposing this in the first place?' " he remarked. His answer: "It's the best solution for fixing the whole computer business." By the end of the call, the directors were so confident in what they were all doing that they could afford to worry about Fiorina's well-being. They asked if she felt comfortable proceeding in what would surely be a long struggle. When she said yes, the board's support was sealed.

Carly Carries On
Last spring, the HP-Compaq transaction finally won shareholder approval by a razor-thin margin and withstood a court challenge, giving Fiorina her long-awaited chance to reshape HP. She now runs one of the world's largest enterprises, with at least $70 billion a year in revenue and the number-one position in a half-dozen key markets. HP can bulldoze its way past smaller rivals, simply because it has more salespeople, more advertising dollars, and more reinforcement from consultants and friendly third-party vendors. The company can win just by showing up. Fiorina had played that game effectively at Lucent; now she could do the same at HP.

What's more, the Compaq acquisition brought 65,000 fresh faces into the company. Most of those employees didn't mind redefining HP Carly's way. They had job-hopped already; they were comfortable settling into new assignments and getting the job done, without agonizing over each cultural adjustment. As Fiorina acknowledged soon after the deal became effective, "part of what we've done in the merger is inject new DNA."

Yet winning the battle to acquire Compaq had exacted a toll on Fiorina. In the new organization, she found herself straining to update her own leadership style to the demands of the job. She wasn't the fast-paced outsider anymore, or the daring rebel. She had become the face of established authority. In her first three years at HP, Fiorina had been a strategic whirlwind, creating most of the opportunities and the problems that she now faced. In her fourth year, it was time to repair her own mistakes and exhibit the day-by-day precision of a skilled operating executive.

"I always thought it would be nice if Carly gathered some scar tissue," says Richard Munro, the retired chairman of Time Inc. He had seen her swagger earlier in her career, when they were outside directors of Kellogg, the Michigan-based cereal company. Now, Munro welcomed Fiorina's newfound caution. "She had overwhelming self-confidence then, and she was probably right most of the time," he recalls. "But she had a sharp edge. When she got to Kellogg, I said to myself, 'Someday, Carly, you're going to get yours. You'll encounter the same frustrations that all the rest of us face. And if you're lucky, it will make you a better person.' "