Hewlett Packard A Story of Glory and Demise

Paul Richardson 2012

I worked for HP from 1970 to 1983. It was a great learning and growth experience for me. The organization as I experienced it in a Colorado division was remarkable. H and P had established a company-wide consistent culture. You could describe it in many ways, they called it The HP Way; high performance, high expectation, paternal due to the no layoff policy, never incur debt except to hedge currencies, company recreation areas available to everyone for camping, picnics, high integrity expected and delivered, intellectual honesty, up and down communication flow . The list could go on but as I think about it now I think the best description of Bill and Daves management philosophy was loose-tight. By that I mean that the management was not directive as was pioneered by Frederick Taylor and his colleagues for the production line plants in the early twentieth century. It was much more participative than typical organizations. In fact, the directive, turn workers into robots, style is perhaps more popular than ever now in spite of being proven to work poorly over many decades by rigorous research. The tight aspect was provided by the HP Way culture that Bill and Dave had so well crafted from their founding. I marvel now that I have time to contemplate the aspects of the environment I experienced in detail at how very coherent and positive it was. I also marvel negatively at how far HP has fallen since Bill and Dave left the day to day management and then passed away. It is a testament to the strong and unique ethic they had established and also a lesson that even a great company can fall prey to discarding a winning formula because someone not nearly as wise as the founders thinks it is a better move in the present. The termites begin to gnaw immediately when the inspirational leaders leave. In the new uncharacteristic during Steve Jobs tenure, problems

with the newest iPhone 5 we can begin to see that the passion for getting it absolutely right before launch has diminished so that revenue plans can be met. Jobs is irreplaceable just as Hewlett and Packard have proven to be. In honesty, Bill and Dave were very different and very complementary and totally comfortable with their relationship. Both were electrical engineers from Stanford and very bright. Bill was more the engineer with a strong design interest and focus. Dave had an interest in design as well but was more focused on management. I had the opportunity to talk one-on-one to each of them and Dave was interested in my management challenges and what I was doing about them and Bill was interested in the new oscilloscope my manufacturing section was building in its first production run. At the end of my talk with Dave he put his arm around my shoulder as we walked out of the room and thanked me for my work and told me he knew he didnt have to worry about my area of responsibility. Wow! I walked back to my desk about a foot off the ground. When Bill was putting one of the new scopes through its paces during my time with him it failed. He looked at me with a mischievous grin and said, It makes you want to drop the damn thing on the floor, doesnt it? Another example was that during the first year I was working at HP, the orders were slower than had been planned and the production capacity was 10% too high for the backlog. The answer was not to lay off people to bring the production level into line it was to institute a 9 day fortnight plan. Everyone, in the company took a ten percent pay cut from H and P on down for the 4 months or so it took to get things back in balance. This was a great example of the lack of status in the company. It was a very egalitarian structure. No one had assigned parking spaces, there

were no fancy offices but cubicles with no door (it wasnt open door, it was no door), benefits were equivalent for all levels, managers were encouraged especially by Packards example to practice MBWA (Management By Wandering Around) which is a great way to improve communication and assess how things are really happening in the organization. In fact during my time at HP they and some key people from corporate would travel to every division in the company annually to do a division revue which typically took two to three days. When you consider that there were about 50 divisions around the world when I left you can see it was a massive commitment to keeping the culture in place with annual vaccinations. Dave Packard took a leave of absence to serve as Assistant Secretary of Defense in Washington. His stock was put into a blind trust. During that time the full weight of top management fell on Hewlett. By the time Packard came back, the MBA types in finance had convinced Bill that to continue growing HP would need to float corporate debt for the first time and against the policy HP had put in place from the beginning. Dave immediately put the debt offering on hold and dug into the problem realizing that the cash flow was being greatly reduced due to excess inventory and a big backlog in accounts receivable. Dave was not happy. He immediately scheduled worldwide travel to meet with managers in marketing and manufacturing in every region where HP had operations. His message, If you think I am going to allow HP to borrow money to cover your poor management performance you are very wrong. You have nine months to get inventory and accounts receivable in line or your replacements will do better.

I dont know if you have heard the old term assholes and elbows that used to be used back in the day to describe frenetic work activity, but that is how those managers came back to their jobs. They couldnt be mad at Packard, he was right. How long did the nine month project actually take? Three months. That is leadership, knowing how to adapt your style to the situation at hand, instead of the Johnny-One-Note style so common today. When people like Hewlett, Packard and Jobs come along, their passion, smarts and hard work can achieve wonderful things. The sad part is that they are basically impossible to replace when they leave. Some management gurus say that a manager has failed if they cant be replaced, but I say that in cases like H, P, and Jobs that would have been impossible. It would have been foolish to limit their excellence to a level where someone else could replace them. So the thing to do is to celebrate them while they are alive and hope you get to work with someone as special again.

The HP environment I experienced created great synergy because the loose-tight style encouraged everyone to grow and contribute to their full potential. That is, people perform better on the higher floors of Maslows hierarchy than they can if directed by boss or extremely tight policies to Maslows basement.