This part is about the Hewlett Packard Company. One of the most interesting companies in it's best days. I think today, they employ people like any other multinational company. I am a great admirer of old Tektronix instruments, and I own quite a few. It is probably the company closest to HP, though Tektronix was more classical.
The HP way
One thing, all employees knew about, was the HP-Way. You could not oversee it, because at your first working day, you were informed about it, and handed out a copy. I still have mine. It was a 10 points list, which the owners, Bill Hewlett and Dave Packard introduced when the company was young. It was used with great pride still, when I joined the company 1986. One of the key points was called the 'open door policy'. This meant, it is allowed to contact the next higher management level when you disagree with your own manager. The rule was, you don't need to ask anybody if you wanted to do so, and it should have no negative effects on you. Of course this will not help to solve a conflict, but it prevents them. A manager has the option, not to create such situations, or if he does, speak with his own manager first. And in the end, nobody wants this. The employee doesn't want it, his manager doesn't want it, and the next higher manager really has something better to do. This is typical about how things were done. Just a small rule, just a few lines of words, but it had such a large effect. Brilliant! I loved the company for that, and admired the wisdom of those two founders.
I never had the opportunity to meet Bill Hewlett or Dave Packard, but my main question to them would have been: What is your recipe for keeping such a company on track. From my observations, they had a recipe for managing people, one for building products, and one for the company as a whole. People were managed the same way as in a small company, and it was called 'the HP-Way'. They kept that spirit alive on purpose and with system. Later generations of managers did away with this, as soon as they had a chance. Which is obvious, because the open door policy, somehow controls the management level, bottom up as well, instead of only top down.
A very good book about this subject is called 'the HP Way'. You find it easily on Ebay, as all employees were given a free copy, so very many of those books were printed. A basic element was the famous coffee breaks in the morning, where you could ask really anything to anybody, over a cup of coffee. Where I worked, in the sales building, the coffee tables were too small on purpose, so you could share it with maximum 3 persons only. Many times you were face to face with two other people you knew only from seeing. Of course you could also say with a deep voice 'good morning' as if you just come from a funeral. But when you just say 'Hi, how is your day today' sometimes you are asking a high level person, and they are often interested in a small chat just like anyone. But you had to ask, and that's what I always did. Comparing that with the stiff, and 'layer' oriented structures of most other companies, the HP way is for me the favorite way. But fair enough, this is history now.
Environmental Test Manual.
For the products they had this manual, a fat, red book, of which I was able to pick up a copy on Ebay. A wow... what a masterpiece that is. You can clearly see, the idea was not to tell what you need to do to make products pass. Rather the testing aims to unveil any weakness, and it is a systematic help. I am sure, have you ever received a broken product in the mail, stupidly packed by somebody who did not care? Well at HP, to get a product release, you had to prove it can not be damaged by a shipment company or other fools. The monkey test was exactly specified. The developer had to pack it in the official product carton, same as used shipment. Then, the requirement is, using the product carton for shipment as it is, and no other packaging stuff. We had an internal test labs for that. Not passing that test, means the R&D manager gets no product release. Period. There was no way to bypass the requirement. During testing, they would first drop the box on each of the 8 corners, and than flat on each of the 6 sides, on a defined, steel platter, with a machine to drop it in a repeatable way. So there is no personal factor. I once had the opportunity (and fun) to watch such a test, in the Boeblingen test lab. The drop height, I believe was 130cm. Quite high. The Product R&D manager needed an official, 'no visible damage' report from the lab manager (my Dutch fellow countryman Bart). Another department would verify the functioning, and those two approvals together become part of the product release documentation, which can be audited by an internal and external auditor, at any time, without announcement. That is really tough.
I have an old HP 130C tube oscilloscope here. It is hard to carry. And I know now, what procedures it had to pass, before product release. What an idea, to drop this machine from 130cm eight times, on each corner, and then 6 times flat on each side. I would never do so myself with a tube oscilloscope. But it is good to know, at HP they did so, and the machine is designed to survive that. Actually I bought this HP130C on Ebay, and I was confident the post office could kick it around like a bag of old potatoes, and it will not break in pieces.
For the company itself, the overall idea of Bill and Dave, was organic growth, by technological leadership. That was my impression. Make products, with build-in quality, that only highly motivated employees can build the way they do. I think the two old men never intended anything else, starting that way in the garage, and doing so until their last day. It creates workaholics. Many employees were of the kind that made sketches on Sunday, of how they want to do things on Monday. Myself included. My free time, and working time, it was the same. I think that was not because we were different, but we were managed different. It is hard to describe. People were managed with honesty. You knew it, and you wanted the best for the company too. Well at least it worked for me that way.
When I visited HP Labs in California for the first time, I felt like Alice in Wonderland. I saw miracles where ever I went. In the company in Holland, where I worked before, I shared a 40m² office with my manager, with a glass front and great view on the landscape. A woman was bringing us coffee in the morning, and tea in the afternoon, and the daily mail. That was really a nice place to work, and graduated engineers were a little bit privileged. The financial guys were higher privileged. They had a floor of their own, and were brought each morning a copy of the Financial Times, and news papers like that. However, at HP USA, it was not like that at all. Everyone worked in a cubicle, with dimensions of really only 2x3 Meter. No matter who you are or what you do. You might think this was horrible, but I saw only happy employees. The walls were 170cm high, meaning you could not look outside, unless you stand up, but when people pass by, they could just look inside. The floor had main streets, and side streets, and everywhere were those cubicles, like little apartments. Strangely there were no numbers or names on it. You simply had to know where somebodies cubicle was, or you would never find him or her, in this forest of anonymous boxes. And the people seemed to like it. To find somebody, is almost impossible because there was no official map. So I would just walk over to one of the many meeting places. These were just a cubicle with a round table in it, but you could find those easily, because of large the flip chart board standing upright. In those meeting places was always a phone, I would dial the person's number, and ask him to stand up. That was always fun to do, because this was considered bad manners, but it was accepted from visitors with a smile and a joke. So yes, they were 'captured' in their cubicle, but on the other hand they were given great freedom, time and resources. As long as their results were good, they were not troubled with useless control.
So the cubicle was their second home, and many of the old timers have spend the greater part of their active life in such a thing. It was normal. Who wanted so, could stay with the company until retirement. Not just tolerating "the elderly" but they respected them. Of course this comes from two sides, and I saw the older people work very motivated. What was also new for me, that managers could be young or old, as if that did not matter. You could see there, how people can be given great freedom and little control, and will work hard, as long as the right factors are in place. What these factors are, is difficult to say for me, but they were there for sure.
The father of light.
Amongst the wonderful people I met, were Hans Sorensen, the king of writing application notes and other literature, and Egon Lobner who was a close friend of Hans. Egon Lobner was free to do as he wanted. His hair was a little bit like Albert Einstein. See his picture below here. They called him respectfully 'the father of light'. This was for defining the color definition chart still used today, as he was a leading member of that standardization committee. I remember having to use this diagram during physics classes. So what an honour that was for me, to meet it's main inventor, cosy working in his cubicle. He appreciated the visit from this technical person from Germany, and he explained what he was working on. I asked him if he had German ancestors because of his name. He said, no he was Polish, but immigrated to the USA after the second world war. I asked him to tell me more about it. Now that was a mistake. He didn't say a word, unbuttoned the sleeve of his shirt, and showed me his Nazi concentration camp tattoo. We both looked at the tattoo in silence, and it ended the nice meeting. I had to think about my step grandfather who is a Holocaust survivor himself. He was freed by the Canadians from concentration camp Westerbork in Holland. This is the same as Anne Frank was in, but he was in a special part there, as punishment for hiding Jewish refugees in his house. Which was regarded by the Germans even a more serious offense then being a Jew. Which meant they woke him up each night, for torture, and he suffered the intentional spinal injuries for the rest of his life. It was on the tip of my tongue to tell Egon this. I also had to think of my uncle, who was kept as a slave, in the Mercedes-Benz Factory in Sindelfingen, who died too early from this work. I had to think about the war memories my mother told me as a kid. About the bomb that dropped through the roof of their house, and did not go off, which is the reason why I can write this text now. As a kid, I played on grandfather's attic, and I respectfully looked at that place in the roof, where the bomb fell through, as he fixed the hole only provisionally. All of this flashed through my head, as something to mention perhaps, but I did not do so. Instead of this, I just said to him, I feel deeply sorry for what the Germans did to him.
At that moment, he was working on a brain controlled computer. The idea was only to prove the possibility, to control a PC without keyboard, only by brain activity. Like strongly thinking 'yes' or 'no'. He was able to pick up this signal . Today you would say 'of course' but it was another thing in 1987 where the main application for a PC was just to replace a typewriter. Egon had this vision of those PC's not physically being there any more. And yet control it. Repeating Egon's words from 1987: Jac, this will come, one day in the future. And look now, how right this man was. Today, our data is stored in 'the cloud', and indeed some software is not working any more from your PC, but it needs the 'cloud' as well. Though this is not really new. All mainframe computers had your data stored in the 'cloud' ever since 1952. Programs you ran, were not in your PC either, but in the 'cloud' on the mainframe, and information exchange with others was just a matter of giving them read-only access to a specific data file. I remember doing so, before Windows. But Egon's vision was, in the future PC's have only a screen, and no keyboard any more. What a remarkable prediction, and how right he was. So did apple invent the tablet PC? I think Egon invented it. But he went much further than a touch screen, HP had those already by then anyway. He told me, one day PCs will be controlled directly by your brain. Because it's possible, and he proved this with a working model. I didn't quite feel the need for this, but I suppose my grandchildren will.
In any case, meeting such highly unusual and extremely talented people, and also become friends, such as Hans Sorensen and Egon Lobner, was for me one of the highlights of the overseas visits. Even my colleague application engineer in San Jose, Jim Prettyleaf, was a walking encyclopedia, who could could tell something amazing about just anything. You don't get a chance so easily to speak with such people face to face.
p.s. The picture of the tattoo is not Egon's, but it looked just like that.
About Dr. Roland Haitz
I remember when I was 16 years old, my chemistry teacher had an HP scientific pocket calculator the first one on the market. The whole class was gazing at it, and I remember me looking at this miracle product, and thinking: how on earth can people build such complex function in this tiny device on batteries. That was my first time with an HP product, and it would not be my last. Then, 20 years later, I worked for this company. This little side story, I have to write here. That pocket calculator, I gazed at as a kid in 1971, the LED displays were totally new on the market, and invented by Dr. Roland Haitz of HP. Later in December 1988, working at HP, the sales force which I belonged to, was invited for an incentive skiing weekend high up in the Kitzbuehel mountains in Austria, with Dr. Roland Haitz and his team. We were presented the world's first high power LEDS. We never saw that before. LEDS were only little red dots for me, but Roland Haitz brought 10mm LEDS with him, which were so bright, they were like red flashlights. So were were all speaking about the huge impact this would have on automotive design. Unbelievable now, but HP was again the first to come with something like this.
We were at the top of the mountains, where the ski lift ends, in a mountain hotel. Roland, who studied in Karlsruhe, Germany, was a heavy drinker. Not everybody liked him, because of his grumpy way, and the smell of his clothes. But on the other hand, he had a large influence on things, and was generous with help and information, Anyway, he was very lucky, the second night at 2 a.m., we found him in the mountains, sleeping in the snow, just in his T-shirt. Fully drunk, unable to wake up, in the freezing cold. He was carried to his room, and layed on his bed. The next morning he was just present as if nothing happened! For sure he would have frozen to death, If he would not have been found by coincidence by some other late drinkers, walking in the snow outside the hotel.
I found out much much later, he was the father of those LED displays, I was gazing at as a kid, when my chemistry teacher pulled out his HP pocket calculator. And now I was there on an incentive training, by this man. What a small world we live in.
HP developed not just the pocket calculator, but also the first ink jet printers, the first Personal PC with touch screen, the first 7 segment LEDs.... and many more things. They changed the world more than Apple Computers did. HP was always there when these (and a lot more products) were born.
For electronic engineers the 1980's were a great time, provided you were working in the right company. All modern things, it basically existed. Integrated circuits, LCD panels, Personal computers, Solid State lasers, Satellite TV, phased array radar, anything. Even mobile phones, huge as a suit case, but some medical doctors had it. It seems to me very few new things were invented ever since. There were men on the moon, and instruments on Venus. I see no difference with today, apart from one thing: The worldwide web, but that's just a development, no invention. At HP we were so close. We had already Email at HP. It was internal only, but it worked worldwide, and it was 10 years before the internet took off. I don't know who invented the Telex, as that was the first email, but I do know HP was the first company selling email systems. To use it, you needed a personal computer, called HP150. It had a touch screen. Sorry, no Apple invention. You had to buy a mainframe computer, and run a software on it, called HP-Desk, and an HP150 computer for each user. The thing could works as an RS232 terminal, or as a real PC. It worked just like today's email. Really no difference whatsoever. It cannot be described what a MIGHTY tool that was, and what a feeling. In the company before HP, our highly modern facility to communicate without delay, was a fax machine. Most companies just used telex. That delivers an email at the other end too, but with a typewriter kind of printer. Then at HP we had real electronic email. I loved it, and I used it very much. Better to say I was addicted to it. Today you would be happy if they let you do your work in piece, but by then, email was "the" new thing in 1986, and I had never seen this before anywhere else. If that is not technological leadership, then what is?!
About Changes, errorz and Misstakes.
In the 1950's, Bill Hewlett and Dave Packard planned to start their European operation, and not sell any more through a distributer. So what to do? Just take the map of Europe, and throw a dart at center. It lands in South-West Germany. So that was decided. What was good, they had already a distributer there, called Wandel & Golterman. Instead of just quit the relations, Bill and Dave had an idea for a win-win situation. In 1959 they went to the small village of Eningen to propose a daring plan. Let's join our companies. But Wandel & Golterman refused the offer. So Bill and Dave looked on the map once more, to see what is a place near by. Close to the airport, close to the main roads, and outside city centers. The search ended up at the desk of the major of Sindelfingen. This is the home town of Mercedes Benz, and they asked for a piece of land. Not small, but huge. It was to build the European operations in Sindelfingen. But the major explained them, what we have, we give it to Mercedes Benz. Back in the hotel, they looked on the map again, and at the other side of the road was a farmer's village, called Böblingen. They tried their luck just, and yes they could buy a large parcel, to build 6 plants, including a huge R&D facility, and the European logistics center at another piece of land. Too bad for Wandel & Golterman and for the city of Sindelfingen. In business, sometimes you win, sometimes you loose.
No Risc no fun
This is an old, funny sentence, HP Used to sell their Computers, using 'Reduced Instruction Set Computer' Chips. Abbreviated: RISC. It was at the same times as INTEL put "Intel Inside" stickers on PCs. We were handed out those "No Risc no fun" stickers, to put on your items, but soon this was understood wrong, and we could not get those stickers any more. Indeed there is such a thing as an intelligent risk, in financial mathematics, and in trade as well. It's opponent is "a stupid risk", which is what this text part is about.
Somewhere around 1993, HP began to change from an engineering driven company, into a marketing driven company, and a downwards spiral began. In the beginning there was no visible agenda for it. It sort of just happened. It seemed to me, when Bill Hewlett and Dave Packard have died, with them died the unforgettable spirit, these two men had given the company. Soon after, the first marketing psychopaths smelled their chances. It's just this kind of doing things, just because you can. This behavior is very common amongst human. Just take a good look at what a group of young kids are doing. One kid will kick another, obviously for no reason. But there is a reason! This puts him higher in rank, when he gets away with it. Kids have an instinct feeling for this. Frankly, you can observe the same in the zoo. There is the largest monkey who owns the favorite place on the main rock, with the best view from above. Just he has to leave that position occasionally to do unavoidable things, he can't do up there. Then, you see the second largest monkey jump on the rock instantaneously. He was just waiting for it. The old one doesn't like it, but he can't avoid it for 100% of the time. For a short moment, the second important monkey demonstrates his rank, just by taking this place for a short moment. There is no purpose other than showing he can do this. When the boss comes back, he quickly makes place. But of course all the females saw it, and that is very beneficial for him. You don't need to search very long to see this fully identical behavior within a company too.
Actually it was just like above, what I saw at HP as the old owners died. Of course just indirectly, I never had a chance to look at their empty chairs. Small groups of people teamed up with totally new ideas, that the old founders sure would have rejected, but they were dead anyway. Silently and uncommunicated, the 10 rules of the 'HP WAY' were forgotten. I remember many people objected. This was historical company DNA. From now on, the company was ruled with respect to the direction from where the wind was blowing, and where the power was coming from.
Management had all kind of ideas, and if they could do it, they just did so. They even created slogan for it. Called: Manage change, to break away from the rest. What a sick verb that was. So the change is a target by itself, making you better than the rest, just because. We were given T-shirts with this text on it, and caps to wear. Break away from the rest.... I never liked it. This 'rest' was not an external company, it was other parts of the company itself. Instead of teaming up, they set up divisions against each other. Your team is successfully breaking 'away from the rest', but the 'rest' could be as well be your own department, your business unit, or just yourself. Everybody, every team, had to break away from 'the rest', and show how great they did that. Even worse, they did the same with strategies. Just find a strategy that breaks away from the rest, and you are the king. Nice for you, but not so nice for 'the rest'. I was in state of war with this program ever since. Effectively, this disposed of the original direction of the company, and it was the beginning of a long chain of changes, which to my opinion has the potential to end the company, one day. Well, but let's not hope so, my wife still works there.
A new benchmark was introduced: CPOD, Cost Per Order Dollar. My prognosis was, and still is, this will damage the company DNA. Any division with a higher than average CPOD was told they should feel bad, and they must improve themselves. Even though they were already profitable since 40 years, they were now doing things wrong. CPOD ranged from 33% for the extreme technical products, to an amazing 4% for the Printer Division, who were extremely proud of this, though it was neither their own achievement, nor a top down goal. It just happened, and this 4% stunned us all. It didn't take long and they began to tell others how this works. The new idea was, to dispose of all 'higher cost than average' divisions, products, sites, buildings, people and other things. Anything or anybody which comes in the radar of those CPOD psychopaths could be shot down. But what to do with 'the rest'? What to do with those 'elements', those departments, products, and employees that belong to it? They found the ideal solution. They were outsourced. So that 33% CPOD Product Line (Automated Test Equipment) was the first one to be sold, directly after this benchmark was invented in 1994. I remember talking about this, with the Boeblingen Sales manager under four eyes, during the morning coffee rounds. He could cry about a profitable, healthy division being destroyed. I mean when it was a separate company of it's own, you would also not dismantle it as long as it makes profit.
But... the game was kicked off, and the company started to benchmark profitability of products lines against each other, departments against each other, geographical locations, and sadly even people within the same department were benchmarked against each other. Forgotten was the HP way.
Later on, I mentored a student during his practical year at HP. To my opinion he had qualities in taking strategic decisions. So we gave him a benchmarking project to see what he was capable of. Afterwards, he told me he will use this for his career planning. He benchmarked HP against his other future employers, with a matrix of the benefits against the risk. After his studies, we were still in touch by email, but he said to me the risc to get kicked out in bad times, is not worth the extra benefit in good times.
I bench marked HP from another view. My benchmark was, a good company puts 10% of his revenue back into R&D. This is like a farmer putting 10% of his profit into fertilizing the land. That is impossible with costs of 4% per Order Dollar, as there is 6% missing. The results of this is clear: New technology can no longer be a key product, for such a company. But what will HP sell, if in the future it will not be technology anymore? Is that the main idea behind the lowest possible CPOD? Chasing lowest CPOD, was like letting the ghost out of the bottle, without knowing how to get it back in, when the ghost doesn't do as you please. It kills the technical diversity within the company, and I could already see HP end up with a narrow product line, of high order dollars at low cost. Just as they want it. Great for the moment, but then life gets dangerous. That is because technological leadership comes not at lowest cost. To be competitive with the Chinese, you must have a low cost structure, they said. Competition from new regions will come our way, and the only way to keep our position, is grow faster as the market, at lower costs. Well, and it came that way. However, you cannot grow faster than the market for ever. This is the problem that sits on your back one day. So, the day will come, when the market saturates, and 4% COPD for printers is too high then. I mean, what will you do, when your costs are as low as can be, and you get under life threatening cost pressure? Probably it catches you at the wrong moment, as these things always do. Well, when time comes, we will know. Earliest at that moment, you want the ghost back into the bottle. Only now, the ghost will say 'no' to his master. I have seen good times at HP and never any really bad times. I did see times that were just below average, and instinctively the company reacted with the full program of job cuts, salary freeze, travel constraints, asking you to pay back holidays, and early retirement programs.
The only way to save costs is reduce production and fire people, or give up production completely. After you completed the process, you will end up selling 'services' at lowest internal cost, moving to parts of the globe where salary is lowest. Today to India, tomorrow to Africa? Who cares. The process has started already. Main thing is, low cost. But..what is left of the HP way? I wonder what would the Bill and Dave have said, when their young company was expanding so rapidly in the 1970's, and someone would say a lowest cost approach with as little product diversity as possible, is the 'future'. I really wonder what the old men would have said.
After the founders died, the company quickly changed.
I made this prediction first time in 1993, Hewlett Packard may get in deep trouble on the long term, when they have disposed of everything which costs money now, and brings nothing on the short term. Still it is so tempting to do this with a high cost structure company like HP. Simply cut costs wherever you can, and raise your profitability in the same ratio. That may put the company in danger when a bad period occurs on the PC and printer market. Problems have a tendency to come unforeseen and are unchangeable. That can bring the company in danger, and when it goes wrong, everybody will say the disaster came from external. I do not hope this for the people who still work there, but when HP has to shut down, due to 'externally caused disaster', I will add it here.
The Acquisition of the Palm Company.
HP tries to forget this episode, so let's have a closer look why this is so. Now of course, we all know better afterwards, but this acquisition was not a very intelligent one. I was given a Palm PC myself, when I worked for HP (later Agilent) in 1999. A Palm PC looks like a smart phone, but there is no phone and no camera inside. For the rest it would do pretty much the same things. You could read your email off line on the airport, edit Excel files and contact people via an Infra Red LAN if a colleague was there with his Palm too. For it's time it was the most amazing device one could have. It worked similar like Windows, and it had all Microsoft Outlook and Excel features. So in a meeting, you would simply use your Palm, read to the others things they did not know yet, set the next meeting with the people that also had a Palm. Wow... they envied you for having this device. Then you would go to your desk, put the Palm in your docking station and the new appointment would appear online for the everyone on his PC. Moreover the battery lasted several weeks. So WEEKS, not days. Something Smart Phone today can only dream about, and it seems to me each newer version has a shorter lasting battery. The Palms would directly communicate with each other via Infra Red, or office LAN. And it never had a virus. I never saw this myself, but it was a hype in San Francisco area, to exchange messages in the subway with random people. Well you must see, this was totally new at that moment. Much before mobile phones. I mean today your effort is how to avoid unwanted messages, but not in 1999. That was the PALM PC. Short after, Blackberry came, and they had a real mobile connection, but PALM did not have that. So with the same speed as PALM entered the market, they lost it again. The smart phone as such, came in slow steps, but PALM lost it's connection to this market, and the company was in a starvation mode.
During that time, it was at decided that HP would NOT develop a smart phone. Then, suddenly this decision was regarded a mistake, and in a hopeless attempt to jump on the boat, they bought the PALM operating system for the stunning price of.... 1.2 Billion dollars. Yes you read it correct. Not 1.2 Million for a useless, outdated operating system, but 1.2 BILLION. This is not a joke, look it up in the internet. It's a historical mistake. So this ABSURD sum of shareholders money for a company, of which they only wanted to have the software. Which was totally outdated software. But to make it worse, they did not just buy the software, they bought the whole company, which was one big pool of trouble, because those people were totally demotivated. HP had to dispose of the PALM employees and other legal obligations, and have more costs from this as only 1.2 Billion dollars. I never understood this wisdom, because I know the PALM OS would run the Microsoft applications, which was the only useful feature to my opinion, BUT we all know that Microsoft products are eating memory and waist PC speed, and before you know it, the hardware is not good enough for this software. And it was just this what killed the Palm. So what is the big thing, entering the mobile phone market with a Zombie product, Microsoft infected. And then pay 1200 Million US$ for it? I frankly say it here, this was highly suspicious to me, and I always wondered who was the winner behind this.
This is Apple Park, it has cost 5.1 Billion to build. Compare this, HP payed 1.2 Billion for an old Palm design, when this was already a Zombie product. Yet, HP did it. The result was a smart phone indeed, but it was completely unsuccessful. When the product was introduced, it was already too slow and too expensive. In the end they sold the phones internally for 50 Euro to their own employees , who effectively wasted their money on it. HP silently gave up on this, and released the code as open source, in a final attempt to do at least some damage to the competition. All I know for sure, they wasted 1.2 Billion on buying the PALM software alone, and in addition wasted many more millions developing this into the first and last HP smart phone, and also had to pay all those PALM Employees afterwards, to leave the company. So how many billions it has cost to develop this into a smart phone, I do not know, but given the money throwing, it can be anything. Perhaps it is better not to know :) Sure is, it would have been better to give 1.2 Billion to the shareholders in form of dividend. This sure would have done more good to the stock price, as what Carly Fiorina did. These kind of things would have make Bill Hewlett and Dave Packard turn around in their grave, but the wise guys from marketing had already taken over.
The result we can all see... Read the rest ;)
Split of HP in HP inc and HP enterprises.
There is little to say about this. If you search for a revolutionary idea behind this, you won't find any. It is more in line with a 20 years history of separating high profit business and low profit business, with the usual disrespect to employees and share holders. The way she put money legally owned by share holders, into pockets where this money doesn't belong into, was the kick off of this new attitude, which is now just business as usual.
Under Carly Fiorina, things changed.
I am not proud of this, but Carly Fiorina, a USA 2016 presidential candidate, was our highest boss at Hewlett Packard. After she came, suddenly there was stress end pressure everywhere. I don't know exactly what caused it, but in some way it had always to do with her, and her person. All women behaved more important, probably hoping for better chances now. Some openly said so, more women would be appointed in the management. I think this is a wrong attitude. You are supposed to get positions because of what you can do, and not because of your sex, religion, or the way you look. But it seemed I was wrong with that.
Suddenly the management had a 'cost problem' and had to focus on lowering costs, instead of being one of the major innovators of Silicon valley. Ironically she changed the logo to HP Invent while in reality she just cut the innovative part out of the company. Suddenly profitable departments were told to cut cost, so they would become as profitable as the printer division too. That was hard to do for some, and actually impossible for others, though these were all profitable divisions for decades, and the hearth and soul of this company that was the birth place of Silicon Valley. A shock wave went through the company, although I was sure we were in a financially healthy situation actually. I knew we were, because from my previous job, I still had unlimited access to the complete data base of all worldwide sales numbers. and I looked at it, of course. There was no problem, but we were told we were in trouble, and Carly was going to save us, It would be hard, but it might work if everybody helps her doing so. One of the things was voluntary giving up on some of the holidays, which I refused. You could just smell the hidden agenda with every move she made. I remember she came to the Boeblingen site in Germany, where I worked, with a rental Helicopter, which cost the company 10.000$. Here only message was to tell about the hard times that were coming, and an immediate travel stop was announced. What a way to tell the employees about a cost saving program. That whole thing was only set up to boost the stock price, for which she had good reasons, because of here private stock options.
She had a great talent in getting the women on her side, but it was always in this 'conflict' kind of way. She fed the women with this feeling they had lower chances, just because they are female. She always found these kind of problems, and she was always the one to help solving it. I can tell you, if there was one company where everybody was equal, it was HP! But she did it, and it became even something for open discussions, how to 'solve' that problem. Her solution was, that during the selection process of new managers, the male persons had to be discriminated. So when a man and a woman had equal qualifications, she issued official guidelines to give the job to the woman. Carly made her calculations cold as an ice block. I saw the women in the company adore her, and she knew it. Given also a fair percentage of the male personal liked her cute face, she had the majority at her side. The situation was dangerous, because many felt they could trust her, but she had no proven trust record, and all I saw her doing was playing with emotions. Such a woman who intrigues, and seeds emotional friction everywhere, to my opinion is not suited to lead a company based on the work of the best designs engineers. I have a below link here, to a discussion with Donald Trump, where she tells how terrible the business situation at HP was, before she came, and how she doubled and tripled the results. This is simply not true. HP had very many cycles of doubling and tripling results before. Over and over again, and it was all without her. Just her method was to let everybody believe, we were in deep trouble, and then she did the impossible, and turn the troubles into great result. Every other useless politician knows how that is done. I mean it's a proven political method, to get better from troubles that you create first, and then profile yourself as the savior. She was changing people's attitude. Some that felt always 'one company', now, became internal competitors, not helping each other anymore. It worked for her as a person. After a while we all felt we had problems coming up, and we all began to develop this feeling something needed to be done. More and more people were prepared to bring sacrifices to her. Like no salary raise, travel constraints, use old equipment, or give away some part of your holidays. We had hard times coming up, but we had a savior, and our saviour has a plan for us. Her name was Carly Fiorina. People felt lucky to believe in such person in charge of the future.
As she left Lucent, she had a small problem, that needed to be solved before she could come to HP. It was a huge amount of (quite worthless) Lucent stock options, that she could only exercise when she would not leave Lucent.
So to make her change to HP possible, this had to be solved. HP gave here a similar amount of similar worthless HP stock options. Those options would only have a value when HP stock would rise to a value, which was believed to be totally unrealistic anyway. So they gave her the illusion. Only... the Hewlett family made that calculation without this ice cold woman. She was going split off Agilent from d HP. She was in charge of that, and in possession of a huge amount of HP stock options. Can you add up 1+1? So what happened then, was a pre programmed mistake for the share holders. She started cost cutting programs everywhere, and she did so in the middle of a financially healthy situation. So that made the HP stock rise sky high as it never happened before. Look at the historical stock charts, this was really crazy. There was another reason why she wanted that, because the Agilent-HP split would be a larger advantage for HP if the HP stock would have a higher value, at the moment of the split. I saw this coming, and I sold my HP stock, 3 days before the official split, and I said: This is an historical, manipulated and artificial high, and we'll never see that again ever. Even today, 1/4 of a century later, that value of the stock is not reached. That, and some more things, was Carly Fiorina.
Selling off Agilent for 5 times of what it was really worth, sure gave here a lot of respect, and made her the real Captain of the Ship. But you see, HP is not a boat. This company is owned by the share holders, and Carly made her calculation without the largest stockholder: The Hewlett family. Later on, when she had to prove her captain's capabilities, there was disagreement with the Hewlett family, who rejected her ideas to kick out the computer business. Though she insisted on it, and kept on acting as if the was the highest in charge. In Reality, she was only an employee, working for the share holders. So an insignificant little bit she worked also for me, but mainly she worked for the Hewlett Family. They said, fine so you're the boss, but WE are the share holders. What she did not understand, the share holders can (indeed!) fire the CEO, but the CEO can not can't fire the share holders. Later, when she refused to go, the Hewlett Family took a lawyer against her. What a crazy situation, an employee in legal trouble with the share holders. As I tried to express before, the share holders can block any decision which has to pass the share holders meeting. And what decisions that are, can be changed at every upcoming meeting. These are the meetings that you are regularly invited to, by postal mail, even when you own just one HP share.
Now Carly made an arrogant miscalculation. So yes, the Hewlett family has less than 50% of the stocks, so they have no majority. But.... the other 50% does not vote what Carly wants, and that's just what happened. Initially she made the Hewlett family in their role as share holders loose in court, because they had no 50%. After that, she got blocked by every share holders meeting. She could decide virtually nothing. She lost her power, because she could only decide things, that need no share holders approval, and in the end she was fired. HP finally got rid of her.
Carly Fiorina, the USA president?The closest I ever came to her, was 500 meters, in November 1999, when she landed with a helicopter on the HP campus, in front of the building where I worked, to give a speech about... cost savings and a travel stop. So the basic behavior of politicians, she already had that long before already.
After leaving HP, I thought for me she was history, but I was wrong. I had to see her face AGAIN during the presidential campaign of 2017, stolen from her, by Donald Trump. ( I use Trump's expression "stolen" for winning an election legally)
What is so typical of her, during this campaign, she tells that she is such a talented business woman, developing a world company like Hewlett Packard to an even higher level. I almost fell off my chair when I saw her telling that on TV. This is exactly how she is. The truth about her 'leadership' was: She lost in court against the Hewlett family, and she was indeed FIRED. What is interesting about Donald Trump attacking her, he bypassed her presentation about her success. Attacking her "business" which is difficult, so just attacked the other part of her presentation: her Person. Trumps said only: Look at that. Look at her face. Can you imagine that face as a USA president? She reacted like a poisonous spider, and then Trump interrupted, saying she looks very attractive. The screen shot above here, is from that moment. You can say about Trump what you want, but he is a master mind with this.
Here is the video about this. It is not my youtube account though. The moderator gives her an open door, and look how she walks through that door, making Donald Trump her life time enemy
I suppose, in her information bubble it was just the next logical step, to become the USA president, after becoming Lucent president, and then HP president. After how she filled her pockets on the cost of the HP shareholders, she must have thought, why not try that with the USA taxpayers? Let me tell you why not. To my opinion she was the biggest management mistake, HP ever made in it's entire history. After she came, things changed in such a devastating way, it took the Agilent stock price 20 years to recover from this. I am glad I sold all of them, two days before the split.
Carly Fiorina's major mistake
She tried to become the world largest vendor if Personal Computers, by buying Compaq for 25 Billion US$. Do you think, Bill and Dave would have approved this? Was there a learning effect from the Palm acquisition? No, not with Carly. But what is inside a PC? Well, HP had their own manufacturing of workstation main boards in France and in Boeblingen, Germany, but that had no future. The Chinese can supply that cheaper. But a PC is much more price sensitive as a work station. The inside of a PC is just made from standard parts. The main "product" a PC represents, is the main board. Which hard core functionality is 95% the Processor. So HP has to buy core technology, and sell that more expensive. Which higher price can only be justified by longer life cycle of the PC.
So in PC business, as long as times are good, so is your profit. Too bad, of something unpredictable happens. Carly was captured by the randomness of the dot.com crises. Her PC thing, which the Packard family did not want to have in the first place, ended with a loss as large as HP had never seen it before. Definitely, Compaq would have gone bankrupt if HP had not invested in it. This means they could have had it for free, or even collect government money for such a mega rescue act.
A retrospective article in the New York times, described this as one of the most questionable deals ever made. After the game was over, she had burned 1.2 BILLION of share holders money. She had still wagon loads of HP stock options, and Fortune magazine said, Carly Fiorina collected over 100 million US$ during her short stay at HP.
After the split
When Agilent was split off Hewlett Packard, I found myself working for the Agilent Medical Division, and later at the Optical Components Division. Two things I never intended. This splitting game, this selling of company divisions, selling the people along with it, in a chase for profitability, it didn't stop. My modest prediction was by then, this is going to be the end of this company on the very long term.
This was not the company anymore I wanted to share my active life with. I had to face it. I started already in 1993 with my own company, and still working for Hewlett Packard at the same time. Then in 2003 I quit my job, and started all for myself. So now, when I do something wrong, there is no manager coming to me, telling I need to change my character. And when I do something right, I can put the full result in my own pocket. Looking back, this was my best decision, and I should have done so, the final month before the split of HP and Agilent, because you live your life only once, and time goes by, too fast.