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Book Review: Bill and Dave


agarage.jpg Bill Hewlett and David Packard started in a garage and created the modern world. And the world's greatest company along the way. Glenn Reynolds reviews Michael S. Malone's new book, %%AMAZON=1591841526 Bill and Dave: How Hewlett and Packard Built the World's Greatest Company.%%

by
Glenn Harlan Reynolds

Bio

April 17, 2007 - 12:43 am

Michael S. Malone’s* new book, Bill and Dave: How Hewlett and Packard Built the World’s Greatest Company reminds me of a Neal Stephenson novel. People think that Stephenson’s novels are about technology — nanotech in The Diamond Age, codebreaking in Cryptonomicon, financial instruments in The Baroque Cycle — but they’re really about character and culture. So, too, is Bill & Dave.

Technology plays an important role, because Hewlett-Packard is a technology company. We trace the company’s fortunes from its first product, the Model 200A Audio Oscillator invented in the famous garage on Addison Avenue, through the revolutionary HP-35 calculator, and on to PCs and printers. By the time the book appeared, HP had become the biggest information technology company in the world, worth more (at $100 billion) than IBM.

But lots of companies have had great technology, and as Malone notes, some of them had better technology than HP, but nonetheless vanished or faded because of bad business decisions. (The story of Ampex is particularly sad). Others fragmented or hemorrhaged staff.

HP didn’t, and the reason was the “HP Way” formulated by Hewlett and Packard very early in the company’s history. The key, says Malone, was trust: Hewlett and Packard trusted each other, the pair trusted employees, and the employees in turn trusted them. This trust was repaid by hard work, low turnover (people liked being part of the HP family) and strong recruiting. HP made it through tough times without the kind of layoffs indulged in by other high-tech firms, and employees made HP bigger and more successful with each passing year. Thanks to an employee stock plan, something that HP pioneered, the employees grew rich too.

Then Bill and Dave retired, and the villain of Malone’s story appeared: New CEO Carly Fiorina, who embodied the superstar-CEO ethos of the 1990s. Fiorina saw the HP Way as outdated, and did her best to put it behind her, and the company, as she merged HP with Compaq and pursued her own vision for the company. Layoffs were no longer anathema, and the old family ethos seemed on the verge of breaking down. Fiorina lost the confidence of employees — who controlled almost, but not quite enough, stock to vote her out — and then the Board. She eventually was sent packing.

HP seems to be doing better under current CEO Mark Hurd, who seems to think that there’s something special about the “HP Way” after all. And Malone draws a lesson about the importance of trust that could come straight from The Diamond Age:

Now there was a growing realization that, in a new world of virtual corporations, of sudden market births and deaths, of employees scattered around the world and working everywhere from traditional offices to the local Starbucks, the most powerful organizations would be those that had a strong and moral corporate culture that employees could identify with wherever they were.

That seems right to me. The more dispersed and fast-moving an organization is — that is, the more suited for a complex, ever-changing world — the more important it is that people can trust those they work with. (In The Diamond Age, one group requires its members from time to time to place their lives in the hands of other members chosen at random, which would certainly foster trust after a while. HP didn’t go quite that far, but I think Bill and Dave would have understood the thinking).

The old values turn out to be pretty useful in dealing with new technology. I think there’s a lesson in that that goes well beyond the business sphere.


Glenn Reynolds is the author of An Army of Davids and the pundit behind Instapundit.Glenn Reynolds and Helen Smith talked about the book with Michael Malone on “The Glenn & Helen Show.” You can listen here.

*Michael S. Malone, a Silicon Valley native, is one of America’s most distinguished technology journalists. The former editor of Forbes ASAP and currently a popular Web columnist for ABC, he has written for The Wall Street Journal, The New York Times, Wired, and Fast Company magazines. Among his books are The Big Score, The Virtual Corporation, Infinite Loop, and Intellectual Capital.

Glenn Reynolds is the Beauchamp Brogan Distinguished Professor of Law at the University of Tennessee, and blogs at Instapundit.
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