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Recently I viewed “Origins,” a 25-minute DVD produced in 2005 by the Hewlett-Packard Company and sent to me at my request, free of charge. It portrays the founding of the company by Bill Hewlett and Dave Packard in 1939, in a garage in Menlo Park, California; the garage is a state historic landmark and is widely considered to be the beginning of Silicon Valley.
It also talks a great deal about the business philosophy of Bill and Dave, generally referred to as “The HP Way.” It is a people-oriented approach to business that considers the employees of the company its most valuable asset. In “Origins” Emery Rogers, the First Executive Director of the Hewlett-Packard Company Foundation explains it this way: “The essence of the HP Way, plain and simple; top management sets the overall objective and then gets out of the way and lets the people do it.” It emphasizes that decisions should be made at the lowest possible level.
This is the company that “downsized” me and 6,000 other employees in August 2001 by hiring an outside consulting firm to determine who would be let go, preventing local management from having any involvement in the decision. This wasn’t made public, but the information was readily available within the company. After HP’s Network Server Division, my old organization, hired me back as a consultant I ran into Rich Archuletta, the division manager responsible for it’s two billion dollar a year operation and someone I had known for 13 years. He apologized to me for the layoff, saying, “We really miss you guys.” He also made it very clear that he had no say in who was let go.
This discrepancy between what is espoused in the video and what happened to me highlights the problem that exists in many corporations; their focus is maximizing profits and returning dollars to the shareholders; anything else is unimportant. In “Origins” Michael Malone, author, Silicon Valley reporter and former HP employee calls this “a business model in which the human being is a replaceable part in the manufacturing assembly process.”
Why do most corporations focus on profits rather than people? The answer lies in the nature of bureaucracy. Corporations take on a life of their own; they exist for their own sake, regardless of the effect on any people involved. Unfortunately this perspective has been supported by legal precedent; court reporter J.C. Bancroft Davis included an opinion expressed by Chief Justice Morrison Waite in the headnotes of a 1886 Supreme Court Decision (Santa Clara County v. Southern Pacific Railroad Company,) even though it wasn’t part of the final judgment. This opinion, that corporations have the same legal rights as individuals, has since become a legal precedent. The ramifications of this are far-reaching, affecting everything from copyright and patent law to corporate political contributions.
What is wrong with treating a bureaucracy like an individual? It delegates the people involved to the roll of individual cells of the bureaucratic body. The bureaucracy becomes what is important; people are expendable. And that is not only dehumanizing, it is ultimately self-defeating; either the body can no longer function because too many individual cells “die,” or the cells revolt in a cancerous attack on the bureaucratic body.
Unfortunately either scenario results in the destruction of numerous human lives.
This is not a new idea. At a 1948 meeting of business leaders most were promoting such a philosophy. A young Dave Packard stood up and responded, “Actually, I respectfully disagree with all of my elders… You also have an obligation to your customers and your employees and to the community in which you operate.”
They laughed at him.
Jim Collins, co-author of “Built to Last: Successful Habits of Visionary Companies” said in an “Origins” interview that Dave Packard felt: “A purpose of a company is not to make money. It makes money in order to be able to do what it’s really all about and in our case that’s to make a contribution. We’re here to create things that if we didn’t create them the world would be worse off. And if you don’t understand that, you don’t understand the HP Way.”
This view is shared by a few other corporate leaders; recently James D. Sinegal, CEO of Costco Wholesale said, “We just believe firmly that if you’re taking care of your customers and taking care of your people, you’re not too far off target… The profits will come and you’ll be successful.” Like those business leaders in 1948, current Wall Street analysts criticize Sinegal as being too generous to his employees and not focused enough on the bottom line. Yet Costco is profitable and continues to out-perform their major competitor, Sam's Club, operated by Wal-Mart, a company that is continually in the news because of their low pay and benefits for employees.
The circumstances surrounding my termination is a result of corporate bureaucracy, but the same challenge exists in all bureaucracies; government, labor unions, religions… any large organization. Whenever the needs of the bureaucracy are consider more important than the needs of the people there are problems, and giving bureaucracies the same rights as individuals make such behavior likely.
Changing such bureaucratic behavior is challenging, and the solutions vary depending on the type of bureaucracy involved. But there are several principles which can guide such change:
Don’t make the bureaucracy any larger or powerful than necessary. View bureaucratic action as a last, not a first, resort.
Deal with issues at an individual level whenever possible. Resist the tendency to over-generalize situations and solutions.
Remove any notion that a bureaucracy somehow is a “person” with the same rights as individuals.
Don’t allow individuals to avoid responsibility by hiding behind a bureaucratic shield.
“Origins” was one of the first projects sponsored by Hewlett-Packard’s new CEO, Mark Hurd, when he replaced Carly Fiorina in February, 2005. In an attempt to improve morale and rebuild the company spirit he turned to former HP employees who had worked with Bill and Dave, asking them about the company founders and the HP Way; the result was this 25 minute video. When it was screened for the participants last December Michael Malone wrote, “…when the video was finished, after they had watched the old movies of the two founders and listened to their own commentaries and those of their peers about Bill and Dave, there wasn’t a dry eye in the house.”
Even bureaucracies can change for the better, when the right people run them.
Erwin Bush
April 2006
