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Fiorina Calls for Greater Leadership, Fiscal Reforms and Entrepreneurship at AALU Meeting

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To renew its economic leadership in the world, America must get its fiscal house in order, revamp the federal tax code and educational system and encourage greater leadership and risk-taking in business.

So said former Hewlett-Packard Chief Executive Carly Fiorina, who kicked off the opening general session of the 2012 annual meeting of the Association for Advanced Life Underwriting (AALU), being held in Washington April 29-May 2. The four-day gathering, the AALU’s 55th since the organization’s founding, comprises a mix general sessions and workshops focused on professional development and political advocacy of issues of interest to the life insurance community.

Absent a more small business friendly environment in which to conduct business–including reduced corporate tax rates, simplification of the tax code to encourage greater risk-taking and entrepreneurship, and less regulation of small businesses–the U.S. economy will continue to lag behind international competitors in terms of growth, job creation and technology innovation, she said.

“Small businesses generate most of the new jobs in small communities,” Fiorina said. “They generate 11 times the number of patents of large companies and are the engine of growth and innovation in country. Small businesses are also the first rung on the latter of the American dream.”

Fiorina added that the U.S. educational system must be revamped to boost the pool of skilled labor needed to meet the demands of the growth sectors of the coming decades. Among them: health care, bio technology, information technology and energy.

Also critical to the nation’s economic health, are reforms, particularly of federal entitlement programs, needed to government spending under control. Corporations, said Fiorina, need to take a long-term view of their business interests when developing go-to-market strategies and not focus so much on short-term financial gains simply to satisfy investors.

Creating long-term sustainable value means investment for growth over the long haul,” she said. “Too many public companies have become fixated on making their quarterly earnings numbers. Growth is essential for companies, but you can’t do this by just cutting costs to boost profit margins.” 

Fiorina drew a distinction between management and leadership. Management, she said, is about achieving acceptable results within known conditions and constraints. Leadership, by contrast, calls for changing the constraints and conditions. 

“I used to think that leadership was about title and position,” she said. “But leadership is actually about making a positive difference–in your community, your business and your family. Everyone has the potential to lead, but not all choose to lead.”

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Fiorina added that she learned early in her business career that changing one’s habits and outlook to meet the needs of the moment is difficult for people because they are afraid of looking foolish, taking risks and failing. Change is also hard because people get invested in the status quo.

By way of example, Fiorina cited corporate resistance to the organizational hierarchy of technology giant Hewlett-Packard, where Fiorina served as CEO. A thinning of the corporate ranks was necessary, she said, to make H-P nimble once more in the information technology space. When she became CEO, the company was suffering from low product margins and was not innovating in most product categories, yet top-tier executives resisted an organizational revamp because they had a vested interest in their current positions.

“I decided that we had to reduce the number of company business units from 87 to 16,” she said. “The vice presidents that headed those 87 business units wanted to keep their titles because they had earned their success adhering to the status quo. They became resistant to change.”

Fiorina added that America’s congressmen and senators also become wedded to a political status quo–repeatedly running and winning campaigns–and the result is that many among them remain in office for too long. The nation’s founders she said, intended ours to be a citizen government, where people routinely move between public service and private life.

 ”We need more of a citizen’s government now, with politicians, the coin of the realm is ideas and words,” she added. “Often, however, there is too much distance between ideas and actions to actually get something done. We need different people and different results in Washington.”

Fiorina said that Washington needs to pay greater attention to the needs and interests of small business owners, who are inadequately represented on Capitol Hill relative to big business. As a result, she noted, federal legislation and regulations intended to benefit large companies often end up harming smaller firms.

To illustrate, Fiorina pointed to the federal bailout in 2009 of the big three auto makers. The government relief saved union jobs and kept parts suppliers in business. But many more people were downsized because auto dealerships were left out of the deal.