A book review by Pavan Soni – Research Fellow IIM-Bangalore & Innovation evangelist
While reading and writing about startups is in a vogue, especially in India, often some of the most enduring case studies are overlooked. Notwithstanding the wonderful work offered in scores of good books such as Zero to One, The Lean Startup, and The Elephant Catchers, amongst others, it’s always worth studying firms which have endured the tides of time. One such book is ‘The HP Way‘, written by David Packard, the late co-founder of Silicon Valley’s ‘mother startup’, if you will, Hewlett-Packard. Published in 1995, a year before David passed away, the book chronicles the journey of the startup from its humble start as a measuring instruments maker to becoming one of the world’s most respected technology firms.
Similar to several others, I never thought of this book as one on startups, and what ‘HP Way’ sounded was more of a firm’s ideologies rather than the principles that could help perhaps any firm to sustain growth. But towards the end, I am convinced that it’s a great read for anyone keen on starting off, and more importantly, sustaining.
The five tenets of HP Way are to make a technical contribution, aiming forsuperior performance, offering freedom for employee to chose their paths, contributing to the well-being of its community, and integrity. In fact, across all the tenets the underlying factor is contribution. Through the journey of HP, the pursuit of making a contribution to science, the world of technology, employees, and communities has been a cornerstone. This very missing goalpost on making contribution leads to several firms falling by the wayside. Further, the very contribution helps the firm establish the difference between ‘what we stand for’, and ‘how we do things.’
In what follows, I share the key insights drawn from the book on creating and sustaining growth enterprises. This is not a summary or a review of the book, but an attempt in distilling the most actionable of propositions.
The value of experiments
Hailing from Pueblo, Colorado, David had a keen interest in reading science books, tinkering with gadgets, especially radios, and playing with explosives (literally)! He demonstrated early leadership qualities as was elected as the president of his school in Centennial, before joining Stanford University in 1930 to pursue studies in Electrical Engineering, where Prof. Fred Terman sparked David’s interest in electronics, and where he met his business partner Bill Hewlett. All through his schooling and college days, David kept his interest in roaming in the hinterland, gardening, farming, ranching, playing violin, athletics (football) and electronics (primarily communication equipments). Further, his travelling to distant parts of the world, and ability to make friends helped him get an exposure to platitude of ideas and business ventures. One of his friends from Stanford, Barney Oliver, played a significant role in later years at HP.
After spending some time with General Electric at its vacuum tubes business, David finally decided to give shape to his long held dream of forming a company with his pal Bill. His early experiments on career, education, hobbies, and general studies led to HP being a very adaptive firm. Founded between the Great Depression, and the start of WWII, the occasion couldn’t have been any interest for HP. Started as ‘The Engineering Service Company’ in August 1937,
Sticking to the core yet being open to opportunities
The first product at HP was audio oscilloscope, which the firm sold to Walt Disney for its feature films. While the idea was to excel in measuring instruments, HP was always open to exploring adjacent areas to grow the business, such as signalling devices, microwave equipments, frequency counters, oscilloscope, calculators, printers, and eventually computers. The firm maintained its focus on designing and fabricating high quality ‘electronic equipments meant for measuring and testing’, and later moved to areas where such capabilities acted as differentiators.
The power of partnerships
HP would not have been so successful without the approach of soliciting and maintaining long-lasting partnerships. It started with a life long partnership between David and Bill, and later with Stanford University, where HP started the fellowship program after WWII and later led to the creation of famous Stanford Industrial Park that housed several of the Silicon Valley’s greats.
Another example of an enduring partnership and ability to overcome the Not Invented Here (NIH) syndrome was the HP-Canon alliance for laser printers in 1970s where HP adopted the patented technologies from Canon in producing some of the most advanced range of printers, and eventually dominated the market with release of low cost impact and non-impact printers (ThinkJet and DeskJet).
Importance of autonomy: Management by Objective
Little known is the fact that it was HP that lead to the creation of now famous management dictum, called ‘Management by Objective’, which is an antithesis of management by command and control, the military way. On the core philosophy of this radical concept, David observed in a 1960 speech “people work to make a contribution and they do this best when they have a real objective when they know what they are trying to achieve and are able to use their own capabilities to the greatest extent” (pp. xxii).
In essence, management is about showing the aim, and not directing the approach. A notion that most enterprises fail to appreciate, let alone practice. To this extent, the real role of a supervisor that is to provide opportunities for people to use their capabilities efficiently and effectively. Which also means that one needs to be tolerant to subordinates to be a good supervisor.
One example of how MBO leads to innovation is when Chuck House, an engineer persisted with developing a display monitor for oscilloscope even though David has asked him to abandon the project, and which later became a highly successful product for HP. David present Chuck with the citation of “extraordinary contempt and defiance beyond the normal call of engineering duty”.
Being hands-on: Management by walking around
Another key management practice which took seeds at GE, but perfected by HP was ‘Management by Walking Around.’ The realization of the importance of getting involved into the detail occurred to David while he was working on testing of vacuum tubes at GE. There he got to learn the hard earner principle that personal communication was often necessary to back up written instructions. In later years, this philosophy and practice helped the leadership team remain in good connect with the trenches.
Another important practice that emerged from HP was ‘Quality Circles’ where for the printers business the company had a setup where final testing was located close to the final assembly area which led to frequent and smooth flow of ideas and resulting product improvement.
On people practices, HP was one of the first across the world to introduce a programme of catastrophic medical insurance in 1940s. Also picnics was one of the quintessential ways for the larger family to remain connected informally, a practice that still continues. HP was also a pioneer in introducing flexible hours, temporary work-reduction programs, early-retirement programs, program of voluntary severance, and continued education program in 1950s.
That apart, I can’t but share a few quotable quotes from the text.
A group of people get together and exist as an institution that we call a company so they are able to accomplish something collectively which they could not accomplish separately (pp. xx)
In those early days Bill and I had to be versatile. We had to tackle almost everything ourselves- from inventing and building products to pricing, packaging, and shipping them; from dealing with customers and sales representatives to keeping the books; from writing the ads to sweeping up at the end of the day. Many of the things I learned in this process were invaluable, and not available in business schools. (pp. 48)
Our success depends in large parts on giving the responsibility to the level where it can be exercised effectively (pp. 72)
Self financing requires constant vigilance and self-discipline (pp. 87)
To be useful as invention must not only fill a need, it must be as economical and efficient solution to that need. (pp. 97)
Our dedication to making a contribution, coupled with our commitment to understanding the potential needs of customers, served us well in allowing HP to adapt to both changing technologies and changing customer needs. (pp. 109)
I would certainly recommend entrepreneurs to read the book, as it is as relevant and timely as some of the recent advents in the space of startups.
Buy the book online @ http://www.amazon.in/HP-Way-Hewlett-Business-Essentials/dp/0060845791