Back to the garage
San Francisco Business Times - by Daniel S. Levine
When William Hewlett died last month at 87, he was remembered not only for helping create one of Silicon Valley's legendary companies, but shaping the modern workplace with his humanistic management approach dubbed the "H-P Way."
Hewlett, along with co-founder David Packard, created the "H-P Way," an approach that centered on the value of the individual employee.
The H-P Way sought to create a work environment that gave people the freedom to do their best, helped them share in the rewards of their work and aimed to provide them with both long-term job and financial security.
Hewlett's legacy continues today both within H-P and throughout Silicon Valley as many initiatives he and Packard crafted have become staples of the workplace, particularly among high-technology companies.
But in recent years, H-P executives say that rather than propelling growth, the H-P Way has been abused and misused as bureaucracy and politics began to weigh on inventiveness and agility.
Now as the company reorganizes its business under the leadership of CEO Carly Fiorina, it is trying to reinvent itself in the hopes of finding its way once again.
Ray Miles, professor emeritus at the Haas School of Business, said the company's strategy was to be first to market with a product and enjoy big margins thanks to its innovations. Once a market matured and turned on price, he said the company moved on.
But as H-P found itself making big money in areas like printers -- where pricing plays a great role -- management styles had to change.
"They are attempting to get back to some of that early vision. The dilemma is they found themselves in marketplaces where they are competing on the basis of efficiency rather than innovation," Miles said. "That partly changed their development-focused management style."
Executives of the firm say the current changes sweeping through H-P's culture began in late 1997, when then-CEO Lew Platt began to worry about H-P's ability to sustain its traditional growth rates.
He directed staff to examine what happens to companies when they reach $50 billion in revenues and they reported that growth slows to single-digit rates, something that Platt considered unacceptable to the company and its shareholders.
That led to the decision to split H-P in two. In 1999, H-P separated out its measurement business and formed Agilent Technologies. The computing and printing side of the business remained under the H-P name. The belief is that as two separate companies with their own boards, they could better focus on growth.
With those changes, Platt thought it was time to step down and find a new CEO to lead the company from the industrial age into the information age. Fiorina took charge in July 1999 and at the end of the year the company introduced the new H-P with a major advertising campaign as well as an internal initiative to revitalize the company. Both centered around the what they called "Rules of the Garage."
"We started to see a lot of behavior that had become much more of a slower, consensus-driven kind of culture where there wasn't a strong accountability for things.
"We were slow in making decisions. There was a lot of conformity. We were losing the idea of diversity and different ways of thinking, which clearly is related to creativity and inventing," said Peter Gaarn, H-P's program manager for Rules of the Garage. "It was another way to bring H-P and the H-P Way into the future and bring us back to our roots."
Part Madison Avenue branding and part daily affirmation, the Rules of the Garage are meant to restore an entrepreneurial spirit, inventiveness and initiative more akin to a startup than a bloated bureaucracy. It's an 11-point list of precepts such as "Believe you can change the world"; "Share -- tools, ideas. Trust your colleagues"; and "The customer defines a job well done."
"When you really look at those rules, it touches on a lot of the basic core values of where we've been. It takes the best of those and takes us into the future by talking about how we need to behave with each other, to be customer-focused, trust each other," said Gaarn.
Backing into the garage
To back up the Rules of the Garage, the company also instituted significant changes to give employees new incentives.
In the past, Gaarn said the company was very internally focused. Divisions measured their results against other divisions rather than outside competitors.
To reinforce the behavior spelled out in the Rules of the Garage, the company created new metrics and reward systems to get employees to focus on customers and competitors.
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