Computer giant's low-key chief executive is limiting damage from boardroom spying scandal and keeping company in good financial health, writes Karlin Lillington

For a man who shuns personal publicity and prefers to keep the focus on his company's performance, the past two months have been awkward ones for Hewlett-Packard (HP) chief executive and chairman Mark Hurd.

As he noted wryly during a keynote speech recently at Oracle's OpenWorld conference in San Francisco, he has had a little more attention than he would like of late. That's due to a boardroom level spying scandal at an iconic Silicon Valley company that has a long tradition of decency and corporate ethics.

HP's reputation has suffered a blow following revelations that investigators hired by HP obtained the private phone records of nine journalists, seven board members and two HP employees, as well as those of Hurd, attached tracer technology to some e-mails, and placed journalists and board members under surveillance - all to try to winnow out who was leaking boardroom discussions to the media.

A number of board members and executives have since resigned, and Hurd has appointed a new corporate ethics officer. For their roles in the investigation, former chairwoman Patrica Dunn, former senior lawyer Kevin Hunsacker and three others have been indicted on four felony counts by California attorney general Bill Lockyer.

But largely due to the efforts of Hurd, who publicly apologised for the scandal and said that he took full responsibility, business has remained stable - and Hurd has managed to steer clear of direct implication in the mess.

In his first public interview since the scandal broke in September and his consequent testimony before a congressional subcommittee, Hurd told The Irish Times that he had asked HP employees to "stay focused" as the scandal emerged.

Hurd stressed that he believed the scandal did not affect the company's core business or strategy, and shouldn't be compared to financial wrongdoing at some other companies.

Asked what he was saying now to HP's customers, he indicated he did not feel the affair was an issue that overly concerned customers. He says: "I think that it doesn't have anything to do with the strategy and operation of the the company. When you get to the core of what the company is doing, it doesn't affect jobs or what people do." He said HP may continue to shuffle its board and management. "HP deserves to have the best board of directors it could possibly have. We'll rebuild the board in the same way we've gone and rebuilt the company."

He acknowledges that the scandal has deeply shocked many who admire HP's legacy of integrity and responsibility, embodied in a distinct corporate culture dubbed "the HP Way" by founders Bill Hewlett and David Packard. In testimony last month before a congressional subcommittee, Hurd acknowledged that, if Hewlett and Packard were alive today, they would be "appalled" and "embarrassed" by the scandal.

But he says their legacy is important to the company, and to him, with a bit of a Hurd twist: "The values of the company are fairly timeless. I like them. They're ones we embrace. But make no doubt about it - when things weren't right at HP, [ Hewlett and Packard] fixed them. Bill and David got things done. It's not that tough things don't get done, but that they get done in the right way."

He said many people have misinterpreted the HP Way to mean its founders were "soft guys" who would have avoided tough actions. They weren't, but giving them a tough guy image aligns them more comfortably to Hurd's approach. Hurd's first step as new chief executive was to cut 15,000 jobs - a task he says was his most difficult as chief executive but which he says employees knew was coming.

He says he made sure to talk to them: "I tried to connect the dots for them, to tell the whole story." He adds: "I think they always felt talked to. It's not that tough things don't get done, but that they get done the right way," he says, referring to the HP Way.

Since that announcement, Hurd has hired about 1,000 additional salespeople and turned around a company that many felt had begun to sprawl and lose focus, following big acquisitions like Compaq under Carly Fiorina (she has since argued the company is now benefiting from decisions she made).

HP has turned in a strong financial performance too. Revenue for the last fiscal year totalled $90 billion (€70 billion) and HP predicts over $24 billion in revenue for the current quarter. Its share price has continued to rise and HP overtook Dell recently for the number one spot in PC sales. So was Fiorina's Compaq purchase the right decision? He won't comment: "That wasn't done on my watch."

Will the company make other acquisitions? Yes, he says, of a moderate nature and when they fit in with HP's core focus on PCs, services, printers and management software. He points to HP's recent purchase of software maker Mercury, which passed his three "filters" - it made strategic sense, it made financial sense, and HP could operate the company efficiently.

Hurd likes to boil decision making as well as management style down to just a few simple points - and enthusiastically sketches out diagrams to show what he means. He talks about "matrices" in management and draws numerous circles to show that, under Fiorina, HP had centralised management so that too many layers of decision making were added across too many parts of the company. He likes a dispersed management style - deputies who tightly manage their sections and report directly to him.

And rather than lots of divisions within HP, he cut what he didn't want, and restructured HP into a handful of categories where the goal is to keep winning market share, keep improving offerings, keep cutting costs.

And in an attempt to show customers and shareholders that HP takes the medicine it sells, it is spending money on new IT hardware and software to reduce, reduce, reduce.

When he arrived, HP had 87 data centres, and a broad acquisition portfolio, housed on 23,000 servers running 5,000 applications, which typically ran at 20 per cent capacity.

"We had a lot of silos of information and we really took the decision to simplify and modernise it and reduce costs dramatically while lowering risk. In the end, I think the motto that you have to spend money to save money is the right strategy." And that is HP's current marketing strategy in a nutshell.

On his first visit to his Irish operations - which have outperformed most others in Europe and are considered one of the company's star divisions - Hurd says that HP is likely to add additional jobs in Ireland or transform existing jobs.

"Is there the possibility to add R&D jobs or transform the existing jobs in Ireland? Certainly, the capacity is there," he said. "We're trying to grow our company. We're always looking to expand capacity, and innovative research and development is the lifeblood of the company."

He said that Ireland's gross domestic product (GDP) growth remained strong, and "it's very attractive for us to go where GDP growth is strong and market growth is strong.

"As a market, Ireland is attractive for us to do several things. And I can tell you, externally, Ireland is viewed very favourably." Then he offers a big handshake and is out the door - a friendly, amiable, low-key man who rules, to the benefit of HP's bottom line, with an iron grip.