Hewlett Packard – From There to Here is only part of the story

I started my professional career at Hewlett Packard. I joined at a time when the founders (Dave Packard and Bill Hewlett) were still alive, very old but still very much an influence on the day-to-day culture of Hewlett Packard.
It may seem quaint nowadays, but when a company, successful in so many ways (such as HP) still has the founders around, there is a lot of pressure to run the business in their image.

I used to work in a major site in Europe, the site contained a development and manufacturing operation, as well as an arm of HP labs, a pure research facility full of PhD’s with foreheads significantly larger than can be comfortably considered normal. Because it was a major site, company board meetings and visits from the highest echelons of the company’s management team were quite frequent. Even though I was a neophyte in the company I was able to attend all-hands meetings and hear the views of these leaders over the years. And it was normal for executives visiting a site to offer to meet one on one with anyone who would care to make an appointment.

The idea of management by wandering around and of being open with all employees was so engrained in the culture that whenever a dignitary was visiting there was a signup process to arrange for a one-on-one meeting. I made a point of always putting my name down on the list. And so it was that I got to meet both Bill and Dave among others.
Bill Hewlett was quite infirm when I got to meet him, actually travelling around the inside of buildings in a golf cart, waving at everyone and saying “you’re all doing very well” in a rather frail voice (I did notice the similarity at the time to young Mr. Grace, from the UK TV show “are you being served”). But his thoughts were still an amazing thing for a young engineer to be exposed to.

Young Mr. Grace – Are you Being Served
Catch phrase “You’re all doing very well, carry on”

When I spoke with Dave Packard I remember him telling me a story about how HP drove innovation. He said that the model was quite simple, every year they would undertake a dozen game changing projects, knowing full well that most of them would not turn into strong businesses directly. But the ones that did succeed would be the future of the company, and would more than pay for the ones that had failed. But just as importantly the people who had worked on the failed projects has the experience to become the company’s success in the next round. It was just as much about gaining the positive experiences of failure as it was about the positive experiences of success.

This was a lesson I’ve taken with me through my career and life. The fact that Hewlett and Packard created a culture of respect for people was much more about creating a good long-term business strategy than it was about creating a good ethical playing field.

When Bill and Dave left their executive positions at Hewlett Packard, they still were very much involved in the running of the company until pretty much the days that they died.

John Young was the CEO when I joined Hewlett Packard, and I believe Bill Hewlett was the Chairman of the board. I remember quite clearly the time when the annual revenue of the company passed the $40 billion mark. As companies grow the levels of management between the CEO and the workers has to grow as well. And I remember that all of the management team of the company was trained on how to deal with the growth the company was going through. There was a paper from Harvard that analytically explained the pains company’s need to go through to be able to keep innovating. Hewlett Packard addressed this by refocusing on the founding principles of the company, and created an internal campaign called “the rules of the garage”. This is well documented and I’m sure you can find a copy on the HP site or around the web. But the rules were a practical set of cultural definitions, the core values of the company.

As time moved on John Young was replaced by Lew Platt. I remember some of the fundamental changes we started to see around the company. Where before decision-making was quite a public affair, we started to see a change. Information about the business was scarcer to the average employee, and the pressure was on to grow the business beyond purely new products. The company started to grow into markets such as printing and PC’s, areas where partnerships with original equipment manufacturers (canon, intel etc) drove amazing market-share growth. But where previously the leadership used to take a holistic view of the business, large fiefdoms started to form. I remember a time when laser printers, inkjet printers and consumables were all different fiefdoms. The heads of laser printing and Ink printing (Doug Carnahan and Rick Belluzo) were very different personalities and didn’t seem to see eye-to-eye on many things. Both I remember were amazing inspirational leaders.

It was very clear to the sales and marketing teams that the money was in toner and ink, and the way to sell more toner and ink was to get as many printers in use as possible, whatever that took. It took another decade for the company to agree on a way to link the consumables and printers together in a way that would maximize printer unit placements, and of course by that time, the competition had grown and had taken a significant share of the market that previously Hewlett Packard had been primed to dominate in-perpetuity. HP’s did create some amazing software to make their printers better than the competition in the form of printer drivers and logic boards, which were considered the best in the industry. But when everyone on the planet seemed to by buying printer it was easier to lose market share than to gain it.

This was the power of the fiefdoms, and it has had a continually detrimental effect on the business (in the view of this author).

Lew did have the respect of his dukes (the business group heads of the fiefdoms). But this loyalty was not automatically passed to him replacement.

I had the pleasure of being at HP when Carly Fiorina became the CEO. I found her to be an incredibly smart woman. But I saw quite quickly how the Dukes listened to her direction and then did whatever they thought was preferable for their individual fiefdoms. Carly drove HP to become larger by acquisition, the most obvious being Compaq (who had at the time only recently absorbed DEC). Many of the leadership were replaced by incoming Compaq executives, much of the culture of the company at this time moved from one of innovation in R&D to innovation in acquisition and just-in-time manufacturing processes. Ms. Fiorina tried to address the new risk-averse nature of the management team by trying to refocus HP on innovation and invention, hence the new company tag line “HP invent”. But I suspect too much time had passed from the passing of the founders and their passion for their culture, and the latest management team was not effective in trying to reinvigorate the culture of “huge corporate entrepreneurialism”.

The amazing thing to me was that all through these decades of change, HP was still able to bring out such amazing products. There technology is still preeminent in so many categories. And I know that HP still has some of the best engineering and field staff in the world. A lot had changed but it’s hard to un-teach greatness from engineers, however hard you try.
During the time of Carly, I left HP for an exciting new opportunity, but still continued to follow the company closely.
After Carly (whose end as CEO was quite shocking), eventually the HP board found a new CEO in the form of Mark Hurd. I have never met Mark personally, but many of my friends at HP at the time described him as “cut throat” and were dismayed at the deep cost cutting exercises he continually delivered. I can only imagine the pressure he was under to right the ship, and a combination of cuts in many areas along with massive acquisitions in others were made. Frankly the strategy (while hard) did seem to hold a lot of business sense. Unfortunately another very public falling out with the board along with some salacious stories that were never fully substantiated (in my opinion) had Mark leave the company well before his strategy could reach a point of ROI.

Again the board took some time to find a new CEO, and this time it was the ex-ceo of SAP, Leo Apotheker. Leo then started a new round of trying to right the ship, and again it seems (to me) that he didn’t really grab hold of the dukes of the fiefdoms in such a way that they truly followed his lead. I have no inside knowledge here, but it seems that his views on the direction of the company were not widely supported by those that worked one or two levels down in the business. His public plans to divest of the PC business, and move the company to be in high value, lower volume enterprise markets such as enterprise software, while entering new markets such as tablets didn’t seem congruent. Again it may just be that his time at the company was too short to be able to show the world the full value of the plan.

Leo was then replaced by the current CEO Meg Whitman, and boy does she have her hands full. This week we heard from HP about their analysis of the purchase of Autonomy. From my experience of enterprise software company’s, I’m not that surprised. Enterprise software in inherently a relationship business, and I suspect every software company holds themselves in incredibly high esteem, combine this with the track record of acquired software companies and it seems par for the course.
It was very impressive that Ms. Whitman was so open about their analysis, and being able to draw a line under the politics of the situation speaks very well for her ability to drive change.

Again below all of the complexities of the last thirty years, HP still creates amazing products, and I suspect their new CEO may be just the right person to fix some of the gaps in their thinking culturally and strategically.

HP’s strength started by valuing people, especially those that had learned the lessons taught through failure. I suspect the people there today have been battle hardened and when the ship is again pointing in a single direction they will dominate the markets they serve.

(1159)

What’s in a strategy?

Don’t you hate it when you (and the team around you) spend hundreds or thousands of man-hours to build a strategy and go through the process of getting it agreed to, funded and committed, only to then have the entire playing field changed.

This seems to be the way in which business works these days. A business unit within a large corporation will be asked to grow their business and they all go off to work out the best possible way to do it.

You assume either no increase in budget or an increase in-line with the requested growth target.

You spend the time to build a detailed market analysis, spending a lot of money on external consultants and analysts, focus groups, surveys and meetings.

You meet with all the areas of your business, from sales, marketing, development, finance, procurement, public relations, etc. And get a consensus as to what is going to be delivered.

The plan is built. Graphs are prepared, Spreadsheets are created, a forecast is calculated, decisions are made on where investment will be made, and where things can be paired back.

And the plan is presented, agreed to, blessed and becomes the plan of record… the strategic plan.

And then every single time, it happens! The rules are changed. Budgets are cut, a new idea is brought into the mix, and everyone has to shuffle around. The strategic plan is put to the side and everyone scrambles to deal with this new reality.

And in case you didn’t realize it; that is exactly why the product you just bought doesn’t work as expected.

Why that new camera has a really annoying menu structure.

Why your computer keeps asking you to click okay to accept things that are not important,

Why you keep hitting your knee on that button in the wrong place in your car,

Why the new maps on your new whizzy phone don’t work well,

Why government forms are so complex,

Why the best laid plans of smart, creative, experienced teams never quite turn out as planned.

And that is why dictatorial leaders, (who are often considered to be terrible people managers) save the day. When you look at the best products, they tend to come from companies that are lead by founders, people who grew with the business and deeply understand the long game.

Who would disagree that Ford was most innovative when Henry was in charge.

Sony under the guidance of Masaru and Akio,

Polaroid when Edwin set the direction,

Disney when run by Walt,

HP with Bill and Dave were at the controls,

Touchscreen in the 1980’s…

Apple with Steve,

the list goes on.

I’m not saying that companies have to fail when the founders leave, just that there is something special that a founder brings to a company. It’s a mix of totalitarian dictatorship along with passion for the business and with the experience of success and failure. They may sometimes be bastards, but they have a vision that includes their customer’s needs and the abilities of their own team.

When the ultimate leader of a business is deeply involved in the development and execution of a strategy, there isn’t that need to keep changing direction. And this allows companies to bring out the best products.

It doesn’t need to be a founder, but it does need to be someone who knows a business inside and out. Understands the culture, the customers the products and the market.

You know when a product comes from a company like this, because it just does what you need and doesn’t annoy you in lots of tiny ways.

(4)

(1041)

The difference between people and resources

I went to university with a scholarship from Hewlett Packard. Actually everyone on the course I was on had to have a scholarship to be part of the course. It was a course setup by a consortium of industry leading computing companies to fill a need they had for people who were specifically trained for roles in their industry. If I remember correctly the sponsors were IBM, HP, DEC, Data General, Wang and a couple of other names. Of these only a couple of those trade names are still in existence, with the others being consumed in mergers and acquisitions.

Bill Hewlett and Dave Packard
The founders of HP

As part of the course we all spent time (time that on every other university course was vacation), going to large corporate training centers and taking courses in such exoteric subjects as x25 configurations, system 360 basics , sales methodology and troubleshooting skills, among others.

Dr An Wang
The founder of Wang Labs

It was a major investment, and one that was a win, win for the corporations and the students. When we graduated, I believe virtually every graduating student got offered a position with either their sponsoring company or one of the other companies on the course.

I look back at that program and think it showed a level of corporate responsibility that is missing from the world today. Instead of training people, companies look to hire pre-trained candidates. And as a previous blog Business Shoot Thyself pointed out, this is a silly situation where the overall quality of candidates goes down over time, as the pool of knowledge is not enhanced.

The key to me was that companies recognized that spending the time to train new employees while costly ensured that a business was able to keep and grow its culture. When you fail to spend that time and effort to help new employees understand why a business has been and continues to be successful, then in fact you are rolling the dice every round of employment. Will the good ideas of the past be remembered?

The issue is exacerbated when after a few years those previous new hires then go out and hire for themselves. They are likely to continue to treat the next round of employees just as they were treated.

The concept can be seen very simply as follows:

When a new business is formed, the founders have a deep passion for their business, and they have the desire to instill this passion in those they hire.

James Watson
The founder of IBM

But when a business gets some distance from the founders, often that passion is diluted and it is not passed onto new hires.

The result is that where founders hire people, those without passion for their business hire resources.

How can you tell when this happens? I’ve read quite a few papers from places like the HBR that try and but a business size or revenue number on this tipping point. I’d suggest the answer is much simpler.

If everyone in the business cannot answer one simple question, then the business has moved from hiring People to hiring resources, and this one question is:

“What business are we truly in”.

If the answer is we are in the business of making money, it’s too late, but if the answer is along the lines of “we’re in the business of solving problem x, or making people feel good” then the business has a healthy dose of passion in its blood.

Companies that know why they exist, and see profit as just one of the results of doing what they are passionate about as opposed to the only goal will be around for many decades or longer and will inspire and improve the world.

While those who focus on resource management as a way of maximizing profit are going to merge and acquire their way into homogeneity.
(181)

(681)

I hate the culture of indecision

I’m a big believer in the power of doing stuff. Doing anything is good, if it turns out in doing something you made a mistake, well then you do something else to fix it and move on, with increased knowledge.

When you do something the worst that can happen is that it turns out to be the wrong thing, and so you have to work a bit harder to fix it, and then do the right thing. But you did it, whatever it was and the world kept on turning and (generally) no one died in the process.

Of course I’ve making a generalization here, but I believe people have the best intentions when they do something, pretty much anything, and when guided by your common sense and knowledge of a situation, the chances are you are doing the right thing.

In most situations where there are two (or more) choices the worst thing you can do in nothing. It’s of course entirely possible that doing nothing was the right choice, but in my experience., doing nothing is only the right choice in a very small percentage of times. But it’s the choice taken far too often.

In business and in most personal and decision making situations people who are scared of their own shadows tend to want to analyze a situation continually, as a way of avoiding decisions.

There is an old saying “look before you leap”, but there is equally another saying “he who hesitates is lost”. The ability to make a decision before absolutely every possible choice has eroded over time is the mark of a leader. Being able to take a calculated risk, is what separates those who life a valuable and full rewarding life from those who do not.

All of the greatest world leaders, business leaders, visionaries and successful people have known and act this way. It’s okay to make a mistake; it’s generally not okay to not do anything.

Without risk, despots would never have been defeated, amazing feats of engineering would never have been achieved, and the most creative businesses and geniuses would never have reached their highest levels of success.

Winston Churchill’s life was full of decisions that he made that proved to be wrong, from which he learnt his greatest lessons in humility, leadership and eventual greatness.

Many mistakes were made politically and scientifically before a man made it to the moon and back, and the lessons that were learnt lead to decades of amazing advancement in all the fields of science.
I had the honor of sitting down with each of the two founders of Hewlett Packard many years ago, and Dave Packard told me that the secret of their success lay in the simple idea of trying several really big things at a time, with the full knowledge that some of them would fail. But he was confident that the ones that would work would pay for all the research they have invest in and all the projects that had failed as well.

And he knew that the people who worked on the things that failed would be the experience that would make the successes for their company in the future. For decades HP was a company that thrived on leading the technology of the world into new areas. It was only after Bill and Dave became too old to run the company that this model slowly changed. And their company became very risk averse. They still made amazing technology, but then it was just iterations and improvements on what everyone else is doing.

They have tried many times since then to reignite the flame of innovative risk, and I truly hope they succeed.

Whenever a business chooses to eliminate all risk entirely they are forced to stop innovating and instead focus purely on efficiency.

In the paraphrased words of Peter Drucker (one of the most amazing management consultants the world has ever seen) “the role of a company is to create and keep customers, only once they can do this well, should they look at creating and keeping customers efficiently and effectively”

The bottom line is you need to truly understand why you do what you do before you worry about doing it well. If you limit what you do to just focusing on something well, you will never be able to do anything new.

If you are driving your car on the highway, and the road splits in two, you need to make a decision and make it before you hit the barrier. That’s taking a calculated risk. If you turn left and it turns out that right was the right answer, well you take the next exit come back and do it again. But if you keep going down the middle line and don’t make a decision you will crash. It happens.

In life and in business if you see people who are unable to make any form of decision, and use every technique possible to avoid looking like they are unable to make a decision, then you are looking at someone with very low self-esteem. I call the inability to make a decision “making an indecision”.

Not everyone is able to make decisions, some people work best as followers, and that’s fine, so long as they are not in positions where making indecisions effects others.

Know indecision makers for what they are!

(153)

(717)