long before hurd's departure,the 'h-p way' was shown the door - wsj

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AUGUST 9, 2010, 3:09 P.M. ET

Long Before Hurd's Departure,The 'H-P Way' Was Shown The Door

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By Benjamin Pimentel

Five years ago, a smiling Mark Hurd posed for a picture in front of the tiny garage in Palo Alto, Calif., where Hewlett-Packard Co. (HPQ) was born.

The new H-P chief executive was there to rededicate the fabled spot, now designated as the birthplace of Silicon Valley--where William Hewlett and David Pa

started the technology company that became famous for its superior products and its singular corporate culture.

Last week, Hurd stepped down in disgrace, capping a tumultuous decade for the iconic Silicon Valley business that saw Hewlett-Packard morph into a powerf

global behemoth, but one that seems to get caught in one embarrassing scandal after another.

Hurd's predecessor, Carly Fiorina--now the Republican candidate for senator in California--also had posed for a photo in front of the garage, and in 2005 she

fired after the board lost confidence in her leadership. A year later, H-P Chairwoman Patricia Dunn stepped down and even faced felony charges during thecompany's boardroom-espionage fiasco of 2006.

Along with the waves of layoffs over the past decade, these leadership crises underscored the transformation of a business that, until the late 1990s, was kno

nurturing a sincere and collegial culture, referred to simply as the "H-P way."

"The issues with the CEOs clearly seem to be separate from the cultural norms H-P had before," analyst Rob Enderle of the Enderle Group said in an intervie

Working For Bill And Dave

Founded in 1939, Hewlett-Packard became known for allowing employees to work flexible hours; workers shared the corporate profits and were encouraged t

their opinions on company issues or policies. H-P did away with formalities like regular offices, allowing employees and managers to work out of cubicles.

Bill and Dave, as the founders were fondly called, were respected leaders who appeared to be beyond reproach--brilliant engineers and managers who worke

yet never lost their folksy, personable touch. The two would serve steaks and beer at company picnics, and even purchased real estate for these gatherings (in

a lake in Scotland, where employees could go fishing and hope to catch a glimpse of the Loch Ness monster).

In his 1996 book, "The H-P Way: How Bill Hewlett and I Built Our Company," Packard recalled preparing dinner for a group of visiting Chinese managers and

engineers in the 1980s, and realizing that he didn't have any chopsticks. So he popped into his garage and made a dozen sets out of redwood.

Bill and Dave popularized the tradition of "management by walking around," in which executives were encouraged to have informal chats with employees in the

workplace.

Many of these practices eventually became part of the culture of Silicon Valley, with the "H-P way" becoming a guiding principle for the many region's entrepre

and managers.

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merger. This brought a more aggressive culture to the organization, and frankly made them more competitive in many of their core markets. ... Over time, I thin

Mark changed the culture again after joining, to one of execution and cost control."

However, the focus on cost-cutting, highlighted by layoffs during the Fiorina and Hurd years, took a toll on the workforce and the H-P culture, according to Ende

P tradition took much better care of employees, and it's what made employees loyal to the company," he said.

The Hurd scandal will likely have an impact on company morale. "The scandals do impact people's impression on the company," noted Tim Bajarin of Creative

Strategies Inc., "but consumers don't stop buying H-P product because of it."

Bajarin did add the following: "Inside, the demand for leadership that is above reproach will be top of mind with the CEO search committee."

As for H-P's culture, he said: "If you look at the tenets of the H-P way, they came out of a much more gentle business climate."

Nevertheless, in light of the turmoil the company has gone through, it may be time for a sort of cultural revival. "The company is a leviathan," commented analys

Allen of Sierra Tech Research.

"The entrepreneurs have left the house. Hired guns are bound to have oversized egos," he said. "Maybe it's time for a renaissance, a comeback for the H-P w

-Benjamin Pimentel; 415-439-6400; [email protected]

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long before hurd's departure,the 'h-p way' was shown the door - wsj

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