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William Hewlett (1913—2001)

 
Source:
The Encyclopedia of the History of American Management
Author(s):

Packard, David (1912–66) 

David Packard was born in Pueblo, Colorado on 7 September 1912 and died in Stanford, California on 26 March 1996. The son of a lawyer, Sperry Sidney Packard, and his wife Ella, a high-school teacher, the young Packard was an avid reader of books on science and electricity while in elementary school, and built his first vacuum-tube radio receiver at the age of twelve. He became a proficient ham radio operator while in high school, and went on to enrol as an electrical engineering student at Stanford University in California. There he met William Hewlett, a fellow student who shared his passion for electronics.

Packard was awarded his bachelor of arts degree at Stanford in 1934. After some months of graduate study at the University of Colorado he moved to Schenectady, New York, to work in the vacuum-tube engineering department of General Electric. After solving a production failure problem with the vacuum tubes by spending time on the factory floor and working closely with the employees there, Packard learned that what he would later call ‘management by walking around’ could be a simple yet effective way for supervisors to get to know their employees and understand the work they were doing.

In 1938 Packard returned to Stanford on fellowship to study the theory of the vacuum tube. He renewed his friendship with Hewlett, and they formed a business partnership aimed at using their combined training in circuit technology and manufacturing processes to design and manufacture electronic products. They called themselves Hewlett-Packard Company after flipping a coin to decide whose name should appear first on the company masthead. The garage of the house they were renting in Palo Alto, California became their workshop. The garage was later designated by the state of California as an official historical landmark and the birthplace of that high-tech region of California now called Silicon Valley.

Packard and Hewlett began their business with $538 in working capital and soon were taking custom orders for apparatus ranging from air-conditioning control units to foul-line indicators for bowling alleys. In 1939 they switched their focus from custom orders to mass-produced instruments, with particular emphasis on low-cost audio oscillators that could generate controlled signals at predetermined frequencies. These units were used to check the performance of amplifiers and broadcast transmitters. The Walt Disney Studios bought eight of them, at $71.50 a piece, to use as part of the sound equipment for the movie Fantasia. By the end of that year the partnership had grossed $5,369 with a net profit of $1,563. They would show a profit every year thereafter.

During the Second World War, Hewlett-Packard expanded rapidly to meet the electronic needs of the US defence industry, building instruments to measure and test electronic equipment. They moved from the garage to a rented building, and hired staff to do their sheet-metal work, cabinet-making and machinery designs. Packard looked after the business and administrative matters, and was seen as the ‘dynamic manager’ of the firm. Hewlett, responsible for product design and manufacture, was the ‘engineering brains’. He spent part of the war as an officer in the US Army Signal Corps while Packard ran the company alone.

Business declined rapidly after the war. Staff who had been hired for defence-related assembly line work had to be laid off. Key technical staff were retained, however, and gradually the business rebounded. During the 1950s Hewlett-Packard's product line grew to include hundreds of electronic measuring devices for a wide range of frequencies. In 1951 the company had 215 employees and reported sales of $5.5 million. In 1958 the company had 1,778 employees and sales of $30 million. In 1959 the company established an overseas marketing division in Geneva, and a manufacturing plant in Böblingen, West Germany.

By the end of the 1960s Hewlett-Packard was the world's largest producer of electronic measuring devices, with seventeen manufacturing divisions and 160 sales offices in the USA, Europe, South America and Asia. Packard served as chairman of the board and chief executive officer of the company – with Hewlett as president – until 1969, when he left the company to become Deputy Secretary of Defense in the first Nixon administration. Packard served in that capacity for two years, and found that government bureaucracy ran counter to the principles of efficiency that Hewlett-Packard held dear. It was, he said, ‘like pushing on one end of a forty-foot rope, and trying to get the other end to do what you want’ (Packard 1995: 184).

Packard was re-elected chairman of Hewlett-Packard after he resigned his government post in 1971. A year later, Hewlett-Packard introduced a hand-held calculator that became an instant success and made the slide rule obsolete. The year after that, the company began to make inroads into the general consumer market with its minicomputers, scanners and desktop printers.

In 1995 Hewlett-Packard had more than 100,000 employees on its payroll, and produced revenues of $31 billion. The same year, Packard published a book about the company's approach to business (Packard 1995). He wrote that he had tried to retain a small company atmosphere at Hewlett-Packard even as the company expanded around the world, and that his emphasis on high employee morale and fringe benefits had resulted in a low personnel turnover rate. His management philosophy, which he called the ‘HP Way’, involved encouraging employees to work towards a common goal in an atmosphere of shared purpose and individual freedom. He characterized this as ‘management by objective’, and said it was vastly superior to the system – once common in American business – in which organizations operated under ‘military-type corporate directives and tight controls’ (Packard 1995: 152).

Packard was generous with his money. In 1964 he and his wife founded the David and Lucile Packard Foundation in Los Altos, California, to support universities, community groups, youth agencies, family planning centres and hospitals dependent on private funding and volunteer leadership. When he died his entire $6.6 billion fortune went to the David and Lucile Packard Foundation, making it America's third-largest charity.

Bibliography

Packard, D. (1995) The HP Way: How Bill Hewlett and I Built Our Company, New York: HarperCollins.Find this resource:

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