Tuesday, January 13, 2009

The worst CEO

O'Dell In 1999, Wally O’Dell became the Chief Executive Officer of Diebold Systems, a $1.2 billion manufacturer of ATM and Security systems. The 2000 election gave the company a significant growth opportunity, as the Florida presidential recount highlighted vote-counting issues caused by paper ballots. Congress passed the Help America Vote Act in 2002, mandating replacement of punch card and lever machines with new voting technology and providing $3.9 billion to help states meet the requirements. O’Dell later observed “The country had a crisis and we could help; it would be an opportunity to serve, and it would be a good business.''

Diebold’s Election Systems (ES) division acquired Global Election Systems for $24 million, giving it a 66% combined market share that O’Dell said could generate $1.5 - $2 billion in revenue by 2007. In reality, 2007 was the year that Diebold tried to divest the business. ES revenues peaked at $230 million before falling over 70% (Diebold annual reports). Their products were criticized as badly designed, insecure, and easily manipulated; media coverage turned sharply negative. Lawsuits multiplied as state commissions decertified Diebold’s machines. The Board finally dismissed O’Dell in 2005 after the stock dropped 30%, earning him my (paper) vote for Worst CEO.

Wally O’Dell believed that his job, as leader, was simply to capture demand, “offering the best touch-screen voting stations and providing software, services, and training to support them”. He failed to recognize the wider need for favorable relationships beyond local election officials, including politicians and advocacy groups sensitized by allegations of vote rigging. Reasonable proposals for paper backups, source code inspection, and independent validation were initially resisted. He later submitted systems to independent testing with the provision that the detailed results be kept secret. The trust of groups publicly committed to ensuring the fairness of the electoral system was lost.

O’Dell’s public advocacy for Diebold’s products was further undercut by technical failures. Voting screens froze, requiring replacement of 4700 system boards in Maryland; a software glitch caused machines to spontaneously reboot statewide on election day. Rather than take responsibility and assume control of the situation, Diebold blamed local officials for inadequate training and improper maintenance. When challenged, O’Dell claimed that no votes had been lost, but audits showed inconsistencies in vote totals that could have tipped close elections.

Most damaging, O’Dell signed an invitation to a 2003 fund-raising event, declaring ''I am committed to helping Ohio deliver its electoral votes to the president next year”. While he had no direct control over the outcome, the public believed that he was proposing to directly manipulate the vote. Later, O’Dell admitted that he’d made a ''huge mistake” as the company’s leader. He promised, belatedly, that the company would recognize its public issues and responsibilities, and would work to address its computer security problems and build voter confidence in its products.

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