Losing the HP Way

I could no longer ignore the squeaking and grinding from my printer. A few months ago, I decided to buy a Hewlett-Packard multi-function model. During checkout, the helpful associate asked whether I wanted an extended 3-year warranty. I said no, my usual response to extended warranties. What he said next surprised me. “Are you sure? Because HP is only building its printers to last two years. So if this one breaks, the warranty will buy you a new printer.” He proceeded to tell me that HP’s ink sales were suffering due to after-market suppliers. Thus the short lifespan of my HP printer as they looked to make up the lost profits from increased hardware sales.

My sales guy probably receives incentives to sale the extended warranty, but what’s happened at HP that the story told about the company is so out of whack with its founders’ principles? The sales associate told a story that seems contrary to “The HP Way” espoused by founders Bill Hewlett and Dave Packard. According to Hewlett, “What we consider the HP Way doesn’t just happen from the top; it’s built into the organization. I tell HP people, ‘You’re really the propagators of the HP Way. You’re where it resides.'” (link)

Personally, I think Bill Hewlett and Dave Packard would throw a fit if they were alive and knew the company they founded was building hardware with expiration dates:

Until his death in 1996, Packard was a fearsome paragon of corporate integrity. He was famous for flying to distant branches to make a show of firing managers who skirted ethical lines. Neither man would hesitate to kill a business if it wasn’t hitting its profits goals. The result: HP grew nearly 20% a year for 50 years without a loss. (link)

The HP story tells a bold tale. It’s the quintessential Silicon Valley success story that started in a garage almost 70 years ago. Now where are they? The last few years include a very public, and very ugly, ousting of their CEO, board members investigated for leaking information to the press, and illegal spying on said board members by ex-board chairman Patricia Dunn to find the leak. (This quote from Patricia Dunn tells me everything I need to know about her: “If I knew then what I know now, I would have done things very differently.” However, she said, “I do not accept personal responsibility for what happened.”)

Sticking to Your Values

Many of HP’s current issues stem from a betrayal of the bold ideas of its founders. There seems to be two main frames of mind about corporate values. One, a company may espouse certain values, but its actions don’t support its words. Two, a company places high priority on its values, becoming as well-known for its stance as its services or products. HP is hardly the only company that faces these choices.

Google has backed itself into a corner with the motto of “don’t be evil.” Everything they do is compared to this motto, and critics often accuse it of failing to measure up. Flickr’s latest kerfluffle over censorship is yet another example of a company failing to meet expectations. At some point, every organization must choose which path to follow: ignore your values or become identified by your values.

HP faces a tough, competitive market. And in the short term, perhaps this strategy of creating product with expiration dates will generate a profit. But what are they losing in the long term? Any recommendation I make for HP printers will include the sales associate’s warning. For me, the HP story is tainted. To remove that taint my printer will need to work without problems and last more than two years. HP’s current story feels particularly disappointing because its founders and early successes were so amazing. Dave Packard comments on the relationship between making money and a company’s existence seem particularly striking given the recent events:

Why are we here? I think many people assume, wrongly, that a company exists solely to make money. Money is an important part of a company’s existence, if the company is any good. But a result is not a cause. We have to go deeper and find the real reason for our being. (link)

During a congressional hearing into HP’s investigation of board leaks, current HP CEO and President Mark Hurd said, “If Bill Hewlett and Dave Packard were alive today, they’d be appalled. They’d be embarrassed.”(link) I agree. My only question is, how many other people at HP feel the same way, and are they doing anything about it? Maybe I’ll find out the next time I buy a new printer.



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June 2007
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