William R. Hewlett, David Packard, George P. Shultz, Edwin V. Zschau
June 8, 1995, Sheraton Palace Hotel, San Francisco
Contents:
- David Theroux, President, The Independent Institute
- William R. Hewlett, Director Emeritus, Hewlett-Packard Company
- David Packard, Chairman, Hewlett-Packard Company. Author, The HP Way: How Bill Hewlett and I Built Our Company
- Honorable George P. Shultz, Distinguished Fellow, Hoover Institution; former Secretary of State, Secretary of the Treasury and Secretary of Labor
- Honorable Edwin Zschau, General Manager, IBM Storage Systems; former Congressman
Good afternoon, ladies and gentlemen. My name is David Theroux, I am the president of the Independent Institute, and I am delighted to welcome you to our Independent Policy Forum program today. As many of you know, the Institute regularly sponsors programs featuring outstanding experts to address major social and economic issues, especially as they may relate to important new books. And, today is certainly no exception.
Our program today is a very special one. With worldwide economic and political changes rapidly accelerating, the Independent Institute is honoring the remarkable achievements of one of the leading figures since World War II in business, government and high technology—his life, the personal and business principles that have guided his enormous success and that of the company that he founded with his lifelong friend and partner, William Hewlett, and much more.
At this special Independent Policy Luncheon Forum, the Independent Institute honors David Packard. The history of America has been marked by great men and women who, free to seek their own dreams and endowed with enormous integrity, intelligence, and initiative, have pioneered incredible advances in our civilization, profoundly enriching our lives economically, socially and otherwise. Our honoree today truly exemplifies the American spirit of entrepreneurship, a man of vision, a man of impeccable character, a man of enormous compassion, and a man of immense humility. David Packard is a giant among men and indeed a living legend!
His newly released book, The HP Way: How Bill Hewlett and I Built Our Company, traces his life from his childhood on the prairie on the outskirts of Pueblo, Colorado, to his friendship with Bill Hewlett beginning in graduate engineering class at Stanford University, to the birth of Hewlett-Packard Company in 1938 with a $538 investment in a one-car garage in Palo Alto, to the development of “Silicon Valley,” to his efforts at streamlining government and corporate bureaucracy, to his work in education, and much more. His new book draws upon archive letters, speeches, and other historical documents and photos, now available for the first time.
Dave was born September 7, 1912, and received a bachelor of arts degree in 1934 and master's degree in electrical engineering in 1939. From 1936 to 1939, he was an engineer with General Electric in Schenectady, New York. From the time of the founding of Hewlett-Packard, he served as partner until it was incorporated in 1947 when he became president, a post he held until 1964 when he was elected chairman of the board and chief executive officer. In 1993, he retired as chairman.
Of the immense contributions of David Packard and Bill Hewlett, perhaps the most notable are the business practices they developed and applied—principles they have considered integral to entrepreneurial and business success—principles that have been the foundation of Hewlett-Packard and that have become models for organizations around the world: decentralized decision-making, the Open Door Policy, management by wandering around, and management by objectives. Contrary to the conventional wisdom of most management practices, the "HP Way" is based on the recognition that a company is responsible to its customers, employees, shareholders and the community in which it exists. Based on the recognition that employees do want to do a good job, the "HP Way" empowers employees to work most efficiently as partners when given the breathing room to carry out their tasks. To Dave Packard, such practices are not just intelligent business, they are extensions of the "Golden Rule."
As the success of the “HP way” first became apparent in the early days of Silicon Valley, these principles spread to other high tech firms as former employees left the company to start companies of their own, as former HP employees like Tandem Computers’ president Jim Treybig and Silicon Graphics’ president Ed McCracken have so stated. Today, with nearly 100,000 employees and annual revenues over $20 billion, Hewlett-Packard is a model of business success based on the combined innovation of the “HP way” and the engineering brilliance of the Hewlett-Packard team.
For decades now, David Packard has exemplified the qualities of entrepreneurship, leadership, vision, and business excellence upon which American economic and social progress has depended. Now chairman emeritus of Hewlett-Packard Company, Dave Packard holds honorary doctorates from Catholic University, Colorado College, Pepperdine University, Southern Colorado State College, University of California at Santa Cruz, and University of Notre Dame, in addition to his B.A. and M.E.E. from Stanford University.
He is chairman of the Monterey Bay Aquarium Foundation, has served as chairman of the President’s Blue Ribbon Commission on Defense Management and the U.S.-Japan Advisory Commission, and he has been a member of the President’s Council of Advisors on Science and Technology, White House Science Council, President’s Commission on Personnel Interchange, U.S.-U.S.S.R. Trade and Economic Council, National Academy of Engineering, Business Roundtable and California Roundtable. Co-founder of the American Electronics Association, he has also been a director of Boeing, Caterpillar, Chevron, Genentech, and the Beckman Laser Institute & Medical Clinic. He has served as vice chairman of the California Nature Conservancy, and has been a director of the Herbert Hoover Foundation, American Enterprise Institute, Hoover Institution, and Wolf Trap Foundation.
His enormous generosity as a philanthropist is evident in his recent gifts to Stanford University, the Monterey Bay Aquarium Research Institute, the Lucille Salter Packard Children’s Hospital at Stanford University, a nationwide program of science and engineering research fellowships, support for black colleges and universities, and much more. A recipient of the Presidential Medal of Freedom, he is a fellow of the Institute of Electrical and Electronics Engineers and the American Academy of Arts and Sciences. He is the recipient of so many awards, I cannot even begin to list them all.
My first contact incidentally with the work of Dave Packard was as a graduate engineering student in 1973 at the University of California. My parents had just given me an HP 45 calculator, and to this day, I can't imagine how I could have completed my degree without it. And after twenty years, it is still my working calculator. Since my days as a student, he has been a recurring figure in my professional life, later chairing various events I have organized including the national dinner to honor the Nobel Laureate economist, F. A. Hayek, as well as supporting our work at the Institute.
The accomplishments of Dave Packard are indeed legion, and to discuss some of these, we are very pleased to have two highly distinguished leaders with us today. Before introducing them however, please note that to assist Dave in later responding to questions, at your table, you will find index cards for use in writing out any possible questions you might have for Dave. We will have these collected later in the program.
Our first speaker is a man whose incredible career spans the pinnacles of business, government, education, and much more. George P. Shultz is distinguished fellow at the Hoover Institution, but is best known for serving from 1982 to 1989 as U.S. Secretary of State. A graduate of Princeton University, he received his Ph.D. in industrial economics from MIT. Among his many other positions, he has served as President of Bechtel Group and earlier, as Dean of the Graduate School of Business at the University of Chicago, where as a graduate student, I first had the pleasure of meeting him. His public service has also included stints as Secretary of Labor, Secretary of the Trea-sury, Director of the Office of Management and Budget, Chairman of the Council of Economic Advisors, Chair-man of the East-West Trade Policy Committee, and Chairman of the President's Economic Policy Advisory Board.
He is also the author of eight books. including Turmoil and Triumph, Economic Policy Beyond the Headlines, and Workers and Wages in the Urban Labor Market. He is the recipient of the Presidential Medal of Freedom and fifteen honorary degrees. I am hence pleased and honored to present George Shultz:
Presentation by George P. Shultz:
Mr. Chairman, I have been observing the “HP way” for a long time although at first I did not quite know it. I first ran into Bill Hewlett over 30 years ago at a board of directors meeting, and here comes this guy from California and increasingly I was amazed at the rein of his curiosity. I learned what the twinkle in his eye meant because here would come these innocent seeming questions but which would zing right to the point. Always pleasant, always curious, always a person of immense care. I had heard of Hewlett-Packard of course, so I said to myself well, so that's Hewlett. I wonder what Packard is like.
Back in 1969, Dave was Deputy Secretary of Defense. I found myself in charge of something called the Office of Federal Contracts. I was in the Department of Labor, and it was our job to see that contracts with the federal government adhered to the equal opportunity clause. Textile companies were contracted with the Defense Department, and the Labor Department was trying to crack down on these guys. But, for that to happen, somebody named Dave Packard had a job to do.
So, I had a little chat with him, and he made a suggestion. But, I could tell by the tone of his voice and the look in his eye that it really wasn't a suggestion at all, but an announcement of what he was going to do. He said that he didn't know those people down there in the textile business, and he thought that he'll just go down there and see if he can work it out. And, that's what he did. Of course, when I talked to my colleagues at the Labor Department, they were outraged. I asked them if they had considered the possibility that Dave Packard might be right. It made everything better if we can get people to do things voluntarily and make things better. It obviously makes a lot of sense for a person who has spent his life in business to go and talk to other businessmen and work out an agreeable arrangement. As it turns out, Dave was right and the problem was solved and the government didn’t have to exercise any excessive muscle. As I reflected back on the Hewlett side and then learned about the Packard side, I could see both a decisiveness and then the ability to see decisions through. I guess that’s part of the “HP way.”
A little bit later, I found myself in another job, reviewing with Dave, the President, and Secretary of the Treasury John Connelly that the Lockheed Corporation was about to go bankrupt. Should we go to Congress and get legislation to prevent that? I didn’t think so, but Secretary Connelly countered with his trump card, “This is a defense contractor and in the kind of environment we’re in, we can’t afford to have a major cutback in the Defense Department. Don’t you think so Dave?” Well, Dave said no. He said there really was no defense problem. The defense part of Lockheed is a perfectly sound business. They’re in trouble because of the L-1011 commercial venture which they tried to get into and didn’t succeed. So whatever might be liable to go bankrupt, the defense business will be a sound, profitable business and we won't have any problem. Well, neither Dave nor I was ever invited back to a meeting in that Oval Office. And, I thought to myself that in Dave Packard, there was a certain clarity of thought that was rare indeed.
When I later was Secretary of State, we had, and we always seem to have, problems with Japan. So, I spoke with the President. We wanted to pursue a different kind of effort than tried in the past. We had the idea of having an advisory panel mainly of business people to work on the subject. And, if we could get Dave to head the U.S. side, then we could probably get some solid person on the Japanese side as well. So I had a meeting with Dave about it, and I could see that he was not very interested in doing something that would just result in a report. He was interested in doing something active. Fortunately for me, I said that that was exactly what the President and I had had in mind.
We wanted to have a committee that has ideas of what can be done and we don't want to wait for a report to act. We wanted to have a process and if there was a good recommendation, then let’s see if we can get on with it. So Dave, the report you did turn in was just the tip of the iceberg of all that was accomplished as a result of the whole project.
I then had the privilege of watching Dave in connection with the development of the Monterey Aquarium. When he would go on a trip for HP or whomever, he would often disappear, and it would emerge that he’d heard about some aquarium nearby and would go over to visit. And when you talk to Dave about this aquarium, it's apparent that this man is a hands-on man. He really knows what he’s interested in.
So for me, all of these personal experiences, not inside Hewlett Packard but observing on the outside, are an interesting way of describing David Packard who is a creative science engineer, a businessman, a philanthropist and for me a good friend. Dave, I salute you.
David J. Theroux:
Thank you ever so much, George.
Our next speaker is Edwin Zschau, General Manager of IBM Storage Systems Division. One of the true visionary leaders of Silicon Valley, Ed was the founder and Chief Executive of Systems Industries, which is where I first met him, and he served as U.S. Congressman representing the Silicon Valley area for two terms ending in 1986. He has also been General Partner of Brentwood Associates and Chairman and Chief Executive of Censtor Corporation prior to joining IBM. Also a graduate of Princeton University, he received his Ph.D. in business administration from Stanford University. Ed has held faculty positions at Stanford Graduate School of Business and Harvard Business School, and he is the founding Chairman of the Tech Museum of Innovation. The recipient of the William A. Steiger Award from the National Venture Capital Association, he also holds an honorary doctor of laws degree from the University of San Francisco. I am very pleased to present Ed Zschau.
As one of the thousands, perhaps tens of thousands of people who’s lives and careers have been touched and shaped in a positive fashion by Dave Packard and Bill Hewlett, I was pleased and honored to be invited to say a few words today about Dave Packard and the impact that he’s had on my life.
Here are some words that come to mind. He’s a combination of adjectives and nouns as you will see: leadership, human, principle, responsibility, frugal, humility, and inspiration. I want to talk about each one of those words because they represent not only the “HP way” but Dave Packard’s personal qualities, qualities he shares with his long time friend and partner, Bill Hewlett.
Leadership—that’s a word that has been used all too frequently in politics and the business community and yet it is in such scarce supply. Leadership requires foresight, some people call it vision, anticipating the future. Bill and Dave have that capability to look ahead and anticipate. But it wasn’t just dreaming about what might happen. It was then taking action in order to make it happen. This morning, I attended the board meeting of the Santa Clara Valley Manufacturers Group. This is an organization designed to address issues in the Santa Clara Valley for manufacturers. It originated with an idea from Dave Packard that bringing companies together to address those issues would be very important. As David Theroux mentioned earlier, Dave Packard was one of the co-founders of The American Electronics Association, and at that time, it was designed to organize and provide value to West Coast electronic companies. But, now it’s become the premiere electronics association in the country, again providing that leadership and touching my life. In 1978, I was privileged to serve on its board.
Dave Packard sent out a clear message through that example that good guys can finish first. As a result, a lot of the entrepreneurs who started companies like I did in 1968 would write down one of our objectives was to become a company like Hewlett-Packard and create the HP kind of environment. Leadership is not only a function of personal activity but also products, and an extremely important factor in the Hewlett-Packard Company success was the concentration on creating not just goods and services but leadership as a product.
Human—this was really what set Hewlett-Packard, and Dave and Bill, apart from traditional approaches. They believed in people, the potential of people, and they viewed the main objective of management to create an environment that would allow that human potential to prosper, treat all the people in the company in a fair and equitable way, and allow them to share in the benefits. That single difference of focusing not only on the products and the technology but recognizing that the strength and growth of enterprise comes from its people, was a fundamental to the “HP way.”
For instance rather then managing by rules and regulations to establish a set of principles, management was based upon the belief that when people understand the objectives, they have some guiding principles to accomplish enormous things. These were principles not only of business management and conduct, but personal principles of operation and character: candor, integrity, directness, decisiveness.
Responsibility—perhaps the greatest contribution that Bill and Dave have made to the business community in Silicon Valley is to set an example for corporate responsibility. Responsibility not just to the shareholders, customers, employees and vendors but also to the community in which we operate. As David Theroux mentioned, I’m the founding chair of the Tech Museum of Innovation, a science center that is trying to create educational opportunities for young people at schools in the Santa Clara area. Both Dave and Bill have been major contributors to the success of that enterprise, and their philanthropy has further touched literally hundreds of thousands of people as they have lived by the guidelines that you have a responsibility to the community in which you operate.
Frugal—this is the characteristic that is lacking so much in young companies where in order to get started they want to look like a big company although they are small. Dave and Bill never spent time and energy and money on doing things for show. They did things in order to get results. They sought to be efficient and effective, and not to waste people’s time and certainly not to waste money.
Humility—Too many entrepreneurs seem preoccupied at creating their own celebrity images, almost like movie stars or athletes. But, Bill and Dave were content to demonstrate their effectiveness through results. Yet, in so doing, they are now celebrated for their accomplishments through the common sense ways they have operated.
Inspiration—I believe that you can understand why I use that word. By their example—not by what they said, but by the way they operated, by what they did, by what they accomplished, they have inspired entrepreneurs and people throughout the world to take up risks, try new ways of doing things and create new enterprises.
When I was in Congress, Dave Packard was a supporter of mine, having made contributions to my campaign. And when I ran for the U.S. Senate, he was one of the early endorsers of my campaign which affected many people and brought some much needed support not only here in California but around the country by the mere fact that he had endorsed me.
Earlier, in 1984 when I was running for Congress, Dave and his wife, Lucille, contributed the maximum amount of $1,000. A number of people associated with the campaign thought that it would be a nice idea to recognize a $1,000 contributor. Subsequently, they created a pin that said, “The Ed Zschau for Congress Killer Bucks Club,” and these pins were sent out to each of the people who had contributed the maximum amount. Now of the principles I have mentioned, one is responsibility — getting involved in political campaigns. But, another principle that includes directness and candor is frugal. Well, after the election, which I won, I got this letter from Dave Packard, one sentence long, pretty frugal in his use of words:
Dear Ed,
If you waste money on junk like this, there won’t be any Killer Bucks from me next time.
Sincerely,
Dave
Well, we never did that again, but if we had, the staff had strict instructions not to send any to Dave.
The HP Way, I hope you all get a copy of it. This book is a reflection of Dave Packard’s personal qualities. It offers ideas for leadership, it’s a lot about people, it’s human. It emphasizes principles, the HP principles and it characterizes some of the responsibilities that we all have. It’s frugal, it’s only 200 pages long. Dave doesn’t waste any words, you’re able to read it in one sitting. It’s filled with humility and it’s an inspiration to anybody who reads it. Dave, thank you for writing this book and thank you for all that you’ve done for me, my family and so many other people.
David J. Theroux:
We have now heard from others regarding many of the reasons why we so admire and cherish this great man. But since his new book, The HP Way, after all is a memoir of his life, I am very pleased now to introduce David Packard to speak, after which he will then answer your questions. Please join with me now in welcoming Dave Packard.
Presentation by David Packard:
It’s a great honor and a great pleasure to have so many of our friends here today. I want to begin by pointing out that Bill and I spent our grade school and high school years in the decade of the “Roaring Twenties.” Our college years and those years up until we started our company in 1939, were spent in the Great Depression of the 1930s. That depression did not seem to end until the United States began its military buildup to help our allies in Europe.
The experience both of us had during that period was responsible for some of the important policies we followed as we built our company. Those policies we followed included our strong policy to finance our company by reinvesting our profits to finance our growth and to avoid any long-term debt. My experience as a youth in our Pueblo, Colorado, neighborhood gave me a strong dedication to the importance of philanthropy, and a strong commitment to the importance of fishing!
Some of the other important policies and practices were the result of the advice we received from Fred Terman at Stanford University.
We did not have any master plan about what we though we might accomplish in the future. In the beginning, we simply wanted to create jobs for ourselves. In those days, one could live on three dollars a day. And, that is what the job I took with General Electric Company paid in 1935.
We did decide at the beginning that we wanted to do something that was new and useful. We did not want to duplicate products that were already in the market—we did not want to be a “me too” company.
In the spring of 1934, I received a job offer from the General Electric Company. Fred Terman encouraged me to take that job. He said I would learn many things that would be helpful when we started our own company. He also thought Bill would benefit from some additional graduate education.
My job at the General Electric Company did not start until the spring of 1935. When I arrived at G.E., I first met with Mr. Boring who had interviewed me at Stanford and knew I was interested in electronics, which was then called radio engineering. He told me there was no future for radio engineering at G.E. and that I should concentrate my work there on motors, generators and power transmission systems. I have often thought of the irony of that advice because the Hewlett-Packard Company is now much larger than the entire General Electric Company was at that time.
Subsequently, our company limited its involvement to electronic instruments during the 1950s, but in the middle of the 1960s, we began our involvement in digital products, including electronic calculators and computers. We had to take considerable time to catch up in this field. We were not in a position to attract the best talent from outside the company, and the leadership in the company came mostly from our own engineers who had concentrated their work on electronic instruments.
In the decade of the 1970s, we built up our strength in computers and we were able to attract some important talent in this field. As our strength has grown, we have now become one of the best computer companies in the world. Today, our company has thousands of products and customers all over the world.
There is no way any chief executive officer of a major company today can know everything involved and be able to make all the decisions. One of the reasons why the problem of bureaucracies can develop results from the fact that a chief executive officer will have a number of people covering all these matters, trying to advise the chief executive all of what is happening in all the areas of operations.
Now we got to a point one time when to approve any major sales decision, we had to receive approval from fourteen committees. Well, we fixed that problem by cutting it down to one. Instead, people involved in operations all around the company received responsibility themselves to decide what they wanted to do. It was their responsibility to make sure that their decisions fit in with what was the company’s online goals in the field. For example, without such responsibility, by the time top management discovered that there existed a problem with a computer in the system and attempted to correct the situation, another situation would have developed, altering the earlier problem altogether.
Not every company has the problems that we have—a very large number of products for a very large number of customers all over the world. Some companies have a much smaller group of customers, but in many ways, the same group of management principles apply.
There are in fact several things a chief executive officer must do. One of them is to make sure that there is a strong internal audit capability because you simply cannot have innovative accounting policies. That has to be reinforced very rigidly, and in some cases, companies come into some areas needing an audit committee which if not followed can cause a company a lot of trouble.
Now, the second thing, of course you have to have a common experience, have common warranty policies, and a number of those things. And then the chief executive officer also has the responsibility to look for new areas in which the company can make a contribution and doing so of course what’s important, having the advice and counsel of all those people throughout the company.
These are the sort of principles that I discuss in our book because they are important to success.
David J. Theroux:
Thank you, Dave. As Ed and a number of us have mentioned, The HP Way book is rather unusual. Those of you familiar with business management books of different types are going to find it quite unusual reading. The first question that we have is, “What worries you most when looking ahead, particularly when thinking of your own family, children and grandchildren?”
David Packard:
I am concerned that the young people of the future have the same opportunities that Bill and I have had. And, we believe that it is our responsibility to do what we can to make that come about.
David J. Theroux:
The next question is, “Thank you for your contributions, please share with us your vision of what high tech will be like in the year 2000?”
David Packard:
Something that is very important that has caught on in the world in the 20th century. Of all the technology that was used up to the end of World War II, technology since has changed everything for the future. Science had developed over a number of years leading to the development of the atomic bomb. But right after World War II, both we and our allies in response to the Soviet Union, undertook a major program in high energy physics, including the work at the Stanford Linear Accelerator. We believed that we might discover something that would give us a decisive advantage over our enemies. But, that did not happen. What did happen was that we learned that the atom was not the smallest particle in the world. The atom contains smaller particles held in place by the weak and strong forces which do not obey the Newtonian Law of Gravity.
Now, the fundamental difference that is very important compared with the earlier technology that could create such substances as an artificial diamond, was that you could make things that did not occur in nature. And this change is the basis for example for today’s field of genetic engineering.
However, if you look at the large-scale integrated circuit, which is the basis for all computers today, they are really just plainer devices. They don’t have three dimensions. But with the new technology, they will have three dimensions. And, that will provide many, many more options to consider for the future. I look at this as some-thing extremely exciting and offering new possibilities which are hard to imagine. We are not just going to have an information super-highway, we will have a whole new world of new kinds of products, new kinds of things to do. And, we will be developing new jobs for a lot more people with these options from this tremendous new science.
David J. Theroux:
“What trends do you see today that are positive and which concern you?”
David Packard:
We have spent the better part of the 20th century dealing with communism. Now that we have gotten rid of it, we don’t really know what to do. Many of the post-communist countries of the world are having serious problems, such as we see in Bosnia. And, it is not at all clear how we can solve these problems. It might be done through the United Nations or other international organizations, but it will take the firm commitment of the United States for that to happen. And, the American people don’t want to get involved in a commitment of that kind—it would be like Vietnam again. Now that means that these areas of the world are going to suffer great losses. We certainly are not in a position to provide any optimal solutions.
One of the problems that concerns me is the situation with education. Dave touched on it, and I would like to repeat it. Without education, we cannot look forward. There is a tendency today to downplay education and to underfund it. If we look at the University of California for example, it is a travesty what is going on there.
David J. Theroux:
The next question is, “At the ten year mark of Hewlett-Packard, there were about 200 employees, did you envision at that time that HP would be 100,000 strong and such a success today?”
David Packard:
We certainly did not envision that the company would ever be as large as it is today. We thought that we would be successful, but never foresaw this size. Bill and I have said many times that because the principles of the “HP way” apply, as the company gets larger, its success depended entirely on the results of the people involved. Fortunately, that is what has happened, and in publishing The HP Way, we have had a tremendous response from the 100,000 employees all over the world.
David Theroux:
“What lessons can you share with us about management succession and what is the role of former leadership?”
William Hewlett:
The future of the company today rests upon the people trained yesterday. And, if they have accepted the HP way principles, then they will be all right. If they deviate, then I think that there will be problems. As for successions, it is an inside thing depending upon the same issues.
David Packard:
I have always felt that any company that is really strong has management and people who will take over as time goes on. Filling positions from inside and doing the job very well, we are in very good shape. We have quite a number of people coming along. However, this poses one problem for us that we know about. Some of our people have become targets for other companies. And, Bill and I have always taken the position that if they want to do something to promote themselves, then more power to them.
There is one other aspect to this. We started a profit-sharing plan early in the game when we had just ten employees. That was piloted after a program begun by General Radio Company, at that time the largest such firm. They had a profit-sharing program for engineers. Now Bill and I were the only engineers in our company at the time, but we decided to offer it to everyone. And, that was a very fortunate decision that meant starting a profit-sharing program on a broad basis and that was a major encouragement for teamwork all the way across the company. No one would benefit by doing something by themselves. So, we backed into that policy, but in the end, it turned out to be a very important policy, and we are continuing it today. I hope that it will be continued in the future.
David Theroux:
“Please comment on the many lawsuits increasingly taking place in the high technology industry, i.e. Microsoft, Intel, etc.?”
David Packard:
I have a lot of lawyer friends, and I have said many times that there are too many lawyers in the field. And, I have a joke about this: What is the difference between a dog run over on the highway and a lawyers run over on the highway? The skidmarks in front of the dog.
David Theroux:
“How well did your management philosophy work for the Department of Defense and what changes in government bureaucracy do you suggest?”
David Packard:
We were interested in putting into effect at the Department of Defense some of our HP policies like “Management by Walking Around.” Many of you know that Bob McNamara hated professional military people, and that was well known even then. But, I believed that we should really have them on our side. So, I made a point of having them come to our offices and similarly visit them in their offices.
Bill and I also had a deer hunt every year at our ranch in San Jose, and the first year, we did not have a caterer. So, we brought all our own food and cooked and washed dishes together. Well, we invited the Joint Chiefs of Staff that first year, and to help pay, they all offered to help out, taking off their good clothes, rolling up their sleeves and washing the dishes. Again, such an experience was an example of the very important elements that were a part of our policies at HP.
Another development involved the problem that a contractor could only bid on a whole job, including both development and manufacturing. But, there is no way that you can calculate the cost of something that hasn’t even been developed. So, we had a counter suggestion that to reduce these requirements would not in any way have a serious effect on the performance of the equipment. But, the lawyers said that if you reduce the performance, you have to reduce the price. So, we had to finally go to Congress to take care of that.
The other thing that is extremely important is that the Pentagon is really run by a committee of the Joint Chiefs of Staff and they could not affect policy unless they all agreed on it. I learned one thing Dwight Eisenhower said: Beware of the Military-Industrial Complex! But that’s not the same thing. The Chairman of the Joint Chiefs of Staff should be the only military officer answering to the President and decisions should not be made by committee. The military services were just too strong politically. This was one change that we able to make with the help of Senator Goldwater and Senator Nickels, and we believe that that was one of the single major factors in the success of the Gulf War, because Colin Powell could use the forces in the most effective way possible.
David J. Theroux:
“How is the Clinton administration doing?”
David Packard:
I would say not so well. They have tried to accomplish various reforms without much support. However, the recent release of the hostages in Bosnia is welcome news and hopefully will lead to peaceful resolution of the situation there.
David J. Theroux:
Our last question is, “How is HP solving the problem caused by the overload of information from the information highway? How do you process all this information in a 24 hour day?”
William Hewlett:
I don’t know.
David Packard:
That’s probably the only honest answer. It is certainly clear that the information highway will generate more information than anyone can handle, and it will take discipline on the management level. On the other hand, having this information available is so important that we are going to be way ahead of the game by doing that. Our foundation is working on a program with the Library of Congress. The Library of Congress has the largest collec-tion of books and documents of anywhere in the world. We have been working to develop a course in American history with the Library of Congress people and several professors who are teaching American history. That pro-gram is going along very well. If you’re studying a particular city, you could just look up what it looked like 100 years ago. It’s an exciting program and it will be great for children and will have a tremendous amount of potential.
David J. Theroux:
Thank you again Dave and to our wonderful speakers for their marvelous assistance, George Shultz, Ed Zschau and Bill Hewlett. And thanks to all of you to have taken the time to join with us in making our program a great success. Autographed copies of Dave's book, The HP Way, are available for purchase in the front. I want to thank each of you for joining with us today, and we look forward to seeing you again soon at another Independent Institute program.
