The HP Way | Notes & Reflections

Posted on August 20, 2016


David Packard. The HP Way: How Bill Hewlett and I Built Our Company. HarperCollins, 1995. (222 pages)


“viruous cycle” vs. the “cycle of profit/stock.” (xv)

Therein we find the hidden DNA of the HP Way: the genius of the And. (xvi)

Any great social enterprise exemplifies a duality of continuity and change. On the one hand, it is guided by a set of core values and fundamental purpose that change little over time, while on the other hand, it stimulates progress–change, improvement, innovation, renewal–in all that is not part of the core guiding philosophy. (xvi)

Speech by DAVE PACKARD to HP Managers

The individual works, partly to make money, of course, but we should also realize that the individual who is doing a worthwhile job is working because he feels he is accomplishing something worthwhile. (xvii)

We must realize that supervision is not a job of giving orders; it is a job of providing the opportunity for people to use their capabilities efficiently and effectively. (xxiii)


Chapter 1 – Pueblo to Stanford

Given equally good players and good teamwork, the team with the strongest will to win will prevail. (12)

Chapter 2 – Friendship with Hewlett

Bill gave early evidence of what became a prominent trait: an insatiable curiosity (19)

Chapter 3 – Garage Becomes Workshop

Chapter 4 – Gaining More Space

…more businesses die from indigestion than starvation. (52)

…competition was a good thing and it was better to have two companies introducing a new product, especially if it incorporated new technology, because that made it all the more credible to the customer. (52)

To this day, Hewlett-Packard has a profit-sharing program that encourages teamwork and maintains that important link between employee effort and corporate success. (57)

Chapter 5 – From Partnership to Corporation

…applying steady gentle pressure from the rear worked best. Eventually, one would decide to pass through the gate; the rest would soon follow. Press them too hard, and they’d panic, scattering in all directions. Slack off entirely, and they’d just head back to their old grazing spots. This insight was useful throughout my management career. (70)

…our success depends in large part on giving the responsibility to the level where it can be exercised effectively, usually on the lowest possible level of the organization, the level nearest the customer. (72)

We thought that if we could get everybody to agree on what our objectives were and to understand what we were trying to do, then we could turn them loose and they would move in a common direction. (80)

We published a second version of the objectives in 1966 and they were as follows:

  1. Profit. To recognize that profit is the best single measure of our contribution to society and the ultimate source of our corporate strength. We should attempt to achieve the maximum possible profit consistent with our other objectives.
  2. Customers. To strive for continual improvement in the quality, usefulness, and value of the products and services we offer our customers.
  3. Field of Interest. To concentrate our efforts, continually seeking new opportunities for growth but limiting our involvement to fields in which we have capability and can make a contribution.
  4. Growth. To emphasize growth as a measure of strength and a requirement for survival.
  5. Employees. To provide employment opportunities for HP people that include the opportunity to share in the company’s success, which they help make possible. To provide for them job security based on performance, and to provide the opportunity for personal satisfaction that comes from a sense of accomplishment in their work.
  6. Organization. To maintain an organizational environment that fosters individual motivation, initiative and creativity, and a wide latitude of freedom in working toward established objectives and goals.
  7. Citizenship. To meet the obligations of good citizenship by making contributions to the community and to the institutions in our society which generate the environment in which we operate. (80-81)

Any organization, any group of people who have worked together for some time, develops a philosophy, a set of values, a series of traditions and customers. (82)

Our corporate objectives are built upon these values. The objectives serve as a day-to-day guide for decision making. To help us meet our objectives, we employ various plans and practices. It is the combination of these elements–our values, corporate objectives, plans and practices–that forms the HP Way and that is the subject of the chapters that follow. (82)

Chapter 6 – Growth from Profit

There is a long-standing truth about wage and salary levels–no matter what the pay, the employee thinks he or she needs about 10 percent more. (85)

One of our most important management tasks is maintaining the proper balance between short-term profit performance and investment for future strength and growth. (90)

Chapter 7 – Commitment to Innovation

The key to HP’s prospective involvement in any field of interest is contribution. (96)

We always asked, “How can we make a contribution based on our strengths and our knowledge?” Then we’d ask, “Who needs it?” (97)

| No company has unlimited resources, so it is essential that the resources available be applied to the projects most likely to be successful. (97)

Many HP managers over the years have expressed admiration for the way Bill Hewlett handled these situations. One manager has called it Bill’s “hat-wearing process.” Upon first being approached by a creative inventor with unbridled enthusiasm for a new idea, Bill immediately put on a hat called “enthusiasm.” He would listen, express excitement where appropriate and appreciation in general, while asking a few rather gentle and not too pointed questions. A few days later, he would get back to the inventor wearing a hat called “inquisition.” This was the time for very pointed questions, a thorough probing of the idea, lots of give-and-take. Without a final decision, the session was adjourned. Shortly thereafter, Bill would put on his “decision” hat and meet once again with the inventor. With appropriate logic and sensitivity, judgment was rendered and a decision made about the idea. This process provided the inventor with a sense of satisfaction, even when the decision went against the project–a vitally important outcome for engendering continued enthusiasm and creativity. (100-101)

It would be nice to claim that we foresaw the profound effect of computers on our business and that we prepared ourselves to take early advantage of the computer age. Unfortunately, the record does not justify such pride. It would be more accurate to say that we were pushed into computers by the revolution that was changing electronics. (101)

With each product, HP strives, as I have said, to make a contribution to the art–to add something new and different. (106-107)

We have had to learn that in today’s computer world, the contribution we can make is in ease of use, speed, reliability, and above all, affordability. (107)

So how does a company distinguish between insubordination and entrepreneurship? To this young engineer’s mind the difference lay int he intent. (108)

Chapter 8 – Listening to Customers

The Fundamental Basis for success in the operation of Hewlett-Packard is the job we do in satisfying the needs of our customers. We encourage every person in our organization to think continually about how his or her activities relate to the central purpose of serving our customers. (110)

…we’re not selling hardware; we’re selling solutions to customer problems. (111)

…gains in quality come from meticulous attention to detail and every step in the manufacturing process must be done as carefully as possible, not as quickly as possible. This sounds simple, but it is achieved only if everyone in the organization is dedicated to quality. (125)

Chapter 9 – Trust in People

Techniques that are relevant today will be outdated in the future, and every person in the organization must be continually looking for new and better ways to do his or her work. (126)

| Another requirement is that a high degree of enthusiasm should be encouraged at all levels; in particular, the people in high management positions must not only be enthusiastic themselves, they must be able to engender enthusiasm among their associates. There can be no place for halfhearted interest or halfhearted effort. (126)

| From the beginning, Bill Hewlett and I have had a strong belief in people. We believe that people want to do a good job and that it is important for them to enjoy their work at Hewlett-Packard. We try to make it possible for our people to feel a real sense of accomplishment in their work. (126-127)

| Closely coupled with this is our strong belief that individuals be treated with consideration and respect and that their achievements be recognized. It has always been important to Bill and me to create an environment in which people have a chance to be their best, to realize their potential, and to be recognized for their achievements. (127)

| Each person in our company is important, and every job is important. In the highly technical fields in which we operate, little details often make the difference between a quality product and one that isn’t as good. So what we’ve tried to engender among all our people is the attitude that it is each individual’s business to do the best job he or she can. (127)

The way an organization is structured affects individual motivation and performance. (127)

We feel our objectives can best be achieved by people who understand and support them and who are allowed flexibility in working toward common goals in ways that they help determine are best for their operation and their organization. (128)

| The close relationships among HP people encouraged a form of participatory management that supported individual freedom and initiative while emphasizing commonness of purpose and teamwork. In the early years we were all working on the same problems. We solicited and used ideas from wherever we could get them. The net result was that each employee felt that he or she was a member of the team. (128)

We did not want to be a “hire and fire”–a company that would seek large, short-term contracts, employ a great many people for the duration of the contract, and at its completion let those people go. This type of operation is often the quickest and most efficient way to get a big job accomplished. But Bill and I didn’t want to operate that way. We wanted to be in business for the long haul, to have a company built around a stable and dedicated workforce. (129)

Once we promoted a man, a good worker, to be the manager of our machine shop. A few days later he came to see me. He said he was having a tough time managing and wanting me to come out to the shop and tell his people that he was their boss. “If I have to do that,” I said, “you don’t deserve to be their boss.” (129)

The underlying principle of HP’s personnel policies became the concept of sharing–sharing the responsibilities for defining and meeting goals, sharing in company ownership through stock purchase plans, sharing in profits, sharing the opportunities for personal and professional development, and even sharing the burdens created by occasional downturns in business. (132)

“less tangible–just as important.”

To my mind, flextime is the essence of respect for and trust in people. It says that we both appreciate that our people have busy personal lives and that we trust them to devise, with their supervisor and work group, a schedule that is personally convenient yet fair to others. (137)

Chapter 10 – Growing the Organization

…to remain static is to lose ground. (141)

…more companies die from indigestion than starvation. (142)

While acquisitions are often useful in expanding a company’s technologies and gaining a quick entry into new markets, they are not without their problems. Chief among these is the difficulty in blending two cultures, operating philosophies, and management styles. (143)

…even though an organization is highly decentralized, its people should be regularly reminded that cooperation between individuals and coordinated efforts among operating units are essential to growth and success. (150-151)

Chapter 11 – Managing the Organization

MBO [management by objective] is the antithesis of management by control. (152)

Management by objective, on the other hand, refers to a system in which overall objectives are clearly stated and agreed upon, and which gives people the flexibility to work toward those goals in ways they determine best for their own areas of responsibility. It is the philosophy of decentralization in management and the very essence of free enterprise. (152-153)

…the concept of people working together under common objectives and in an atmosphere of individual freedom is nothing new. It was demonstrated by Athens against Sparta more than twenty centuries ago. There is much evidence, both from history and from current business experience, to show that an organization offering opportunity for individual initiative performs better than organizations operating with corporate directives and tight controls. (153)

MBWA–“management by walking around.” (155)

I learned that quality requires minute attention to every detail, that everyone in an organization wants to do a good job, that written instructions are seldom adequate, and that personal involvement is essential. (156)

…since its [MBWA] principle aim is to seek out people’s thoughts and opinions, it requires good listening. (157)

…this policy is aimed at building mutual trust and understanding, and creating an environment in which people feel free to express their ideas, opinions, problems, and concerns. (157)

To get the job done, an individual is expected to seek information from the most likely source. (159)

Chapter 12 – Responsibility to Society

It is also important that the prospective community want the company rather than simply putting up with its presence. (173)

Good corporate citizenship includes a commitment to providing some measure of financial support to needy and deserving organizations in our society. (187)

— via reflections —

I suppose the most astounding thing about reading the account of such an iconic company is how human business seemed to have been for Hewlett and Packard. “Value” is in human terms, not financial ones, and “contribution,” is not a leveraging strategy, but a truly philanthropic one. These subtle differences are manifestly world’s apart, and discerning between the two makes all the difference for how one operates and runs “business.”