History of Hard Deck Part II: Enforcement and the Compaq Acquisition

As I wrote last week, both our new Channel program PartnerOne and our new GTM predictability strategy named Hard Deck was agreed to by the Hewlett Packard leadership. The team was totally stoked and the communication and training materials were designed and executed. Thank you dinners and coffee talks were abound.

The Channel, which at times can be cynical of change, was on board, too, and quickly building out sales plans and compensation models that would optimize Hard Deck and extend HP in the market.

Our channel team was over the moon with a Channel model that had clarity and predictability.

The Channel press, particularly CRN was highly complimentary and was nice enough to put us on their front page. We were rolling!

Handling Objections from the Direct Sales Team

While the excitement by the team, channel, channel press, and the rank and file was palpable, dark warning signals started to be fed back to the core team.

The feedback was both disturbing and consistent.  The message was that a percentage of the Direct team was not happy with Hard Deck and, while openly supporting it, had plans to ignore it. Their passive aggressive strategy was to take any deal direct that they wanted to and use a “blame the customer” excuse to justify ignoring Hard Deck.

Basically, they would claim that the customer was demanding a Direct engagement and if we didn’t honor their request they would buy from another vendor. The core team was in agreement that this was a serious threat, as HP like most companies would be reluctant to turn down a P.O. at the end of a quarter. We also knew that a few cracks in the Hard Deck would kill the entire program.

What to do?

The core team came up with a strategy. I would go to Carly Fiorina and ask for her support. Specifically, we would give the names of three violators of the Hard Deck each month. She would then send the violator an email that read:

Dear (Name):

It has come to my attention that you do not have an understanding of our new Go to Market Strategy, specifically Hard Deck.

Please call my assistant asap and schedule fifteen minutes with me so I can remind you of your responsibilities to our new GTM and to HP.

I have cc’d your supervisor(s) in the event they would like to join the call.

Regards,
Carly

Carly agreed to this approach. It was right up her alley, as she wanted to send a message to the sales team that the days of democracy in GTM was over.

The only thing left to decide was the terms of a side bet between the two of us on how many months she would have to send these emails out before the message spread and the bad behavior stopped. Carly thought six months, I thought four. It only took two months.

Hard Deck was rolling and could not be stopped. The team toasted glasses of champagne and, to be quite honest, we were feeling quite full of ourselves. We had executed a complicated change agenda in a very large company and the accolades were coming in from all directions.

That was, until the next storm cloud came rolling in. While getting ready one morning to head to the office, it came across CNBC that HP has come to terms to acquire the Texas based manufacturer Compaq. Our Chief of Staff Carrie Maslen summed it up - “Holy Cow!”

An Unexpected Obstacle: Compaq and The Hard Deck

The core team had competed with Compaq for years and knew them well. They had a loyal and large channel, and our respective channels overlapped close to 90%. Maybe this wouldn’t be too hard, I thought. Talk about naive.

You see, Michael Cappelas, CEO of Compaq, had lost share, revenue, and profits to their archrival, Texas based Dell. He was looking to blame someone for his company’s poor results, and his conclusion was somewhat logical - Dell at the time was 100% direct and rocking, Compaq was 75% channel and getting killed.  In a 1990s Businessweek interview, he blamed the channel for Compaq’s misfortune and stated, “It’s time to move to direct. Time to get on with it.”

As you can imagine, the entire HP channel team and the HP Channel read this article. Fear and uncertainty set in and an existential threat to Hard Deck and the HP Channel in general now existed. The team once again huddled.

To reiterate; in order for the HP Channel to be a highly profitable, market share capturing machine, it needed to be predictable to the partners. In order for the partners to invest their own money ahead of revenue, HP needed a program that gave them the cold comfort required to mitigate any risk. Hard Deck gave the channel just that and it was imperative that it remained in place.

As with all major mergers, a Clean Room is created that is staffed with key employees of both companies to build the merger plan in the event that the acquisition was approved.

I was informed that the respective Channel teams of HP and Compaq would have one slot in the Clean Room that would focus on the new combined GTM.

Again our core team met. Who had the brains, passion, diplomatic skills and guts to represent the HP Channel team and it’s Hard Deck Strategy in what clearly would be a challenging environment? That decision was both easy and unanimous; Carrie Maslen was the only one capable of representing us.

Carrie agreed and entered the Clean Room (you can read a bit about her experience in this blog article). An interesting rule of Clean Rooms is that the information, agreements, etc. were 100% confidential and not to be shared with anyone outside the Clean Room.

For those of you who know Carrie, she operates with the highest integrity.  She shared nothing she was not allowed to, so the core team had to resort to “reading Carrie” body language to gauge the direction of the negotiations. While Carrie never verbally articulated it, it was crystal clear to all of us that Compaq leadership did not like our GTM and, specifically, Michael Capellas didn’t like Hard Deck. Now what?

Fortunately or unfortunately I was scheduled to meet with Michael Capellas as part of an interview process to determine who would run the newly combined Channel. Bold, courageous, or more likely stupid, I decided to hard pitch Hard Deck to Michael while at an off-site event at Pebble Beach.

It went horribly.

I was shocked and surprised at Michael’s highly emotional opposition to both the channel and Hard Deck.  Michael blamed the channel for downward pressure on his margins, obscenely high SG&A costs, etc. I countered with a fact-based economic argument that Compaq’s trouble with the channel was self-inflicted.

Michael left HP shortly after the close of the acquisition and, happily, Hard Deck and support for the channel continued. Interestingly to me, years later Dell adopted the channel, put in their own version of Hard Deck, and are now one of the top three suppliers to the Channel.

Previously: The origin of the hard deck.

Up Next: The Final Chapter: Compaq leadership and my team. How did it all play out?