Victor Cook has a couple of interesting posts on his blog about the reign of Carly Fiorina at HP. In them, he details the performance of HP during Fiorina’s tenure, and the interesting paradox that although HP was migrating toward a more effective conversion of marketing expenses to revenue, its stock value and credibility on Wall Street was taking a major hit. Cook’s financial framework for enterprise marketing suggests that when marketing expenses are optimally leveraged to create maximum earnings, market value should climb, and in many years of analysis and refinement of the framework, that usually turns out to be the case. HP under Fiorina was an anomoly. Cook had noted the paradox at the time, when he was teaching a course that featured a competitive analysis of the desktop computer industry, but he didn’t have a good explanation for it.

Fiorina recently published a memoir of her tenure at HP, during which she undertook to "reinvent HP", most famously by merging with Compaq, which sparked numerous high profile conflicts with board members and a famous proxy battle with Walter Hewlett. It ultimately led to Fiorina’s dismissal. The book has received mixed reviews, lauded for its depiction of the struggles of a woman climbing to the top of the corporate ladder, criticized in some quarters for its one-sided view of internal struggles, and questioned for the completeness of its description of the successes and failures of performance, as in this review from BusinessWeek.

At one point in the book, Fiorina says the only "clouds on the horizon" were stock price weakness and sniping in the press. But underlying both was a larger problem: credibility. Not only did Wall Street analysts doubt the CEO had the operational skills to deliver on her goals, but they’d grown distrustful of her projections as well. HP slipped up and missed quarters—and missed big—on too many occasions. Analysts often felt she was trying to sell them a story, rather than giving a conservative view of the company’s capabilities. In the book, she even slips into this mode in one small way. Fiorina cites a 13% one-day jump in HP shares in mid-2000 as proof that Wall Street was buying into her view. She leaves out that the pop was due to the sale of most of HP’s remaining shares of spinoff Agilent Technologies.

But ultimately, the picture that emerges sheds some interesting light on the Enteprise Marketing Framework, and the strengths and weaknesses of the way in which market value for any business is ultimately determined. It seems fair to say that, based on the numbers Wall Street uses to measure performance, Carly took HP through a chaotic transition that undermined the perception of performance. But the measurement of performance by Wall Street’s standards is notoriously short-term. By another standard–by the standard of Enterprise Marketing Efficiency–Carly’s performance was quite good, and set the stage for longer term gains, which appear to be paying off. However, Carly was not able to make that case in a way that Wall Street would accept. Because she didn’t have the right framework? Because she couldn’t articulate her strategy in financial terms? Because she was unpopular? Because she was a woman?

Reality may hold some measure of all those explanations. But it’s clear that not only are competing models of financial performance viable, non-financial inputs like public relations, internal relationships, and intangible perceptions of credibility can all play significant roles in ultimately determining market value. What fascinates me, personally, is that the Enterprise Marketing Framework showed a strength in HP that was not evident in the whirlwind of chaos surrounding the merger with Compaq.