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1-Page Summary of The HP Way
The Business Plan
Two friends, David Packard and Bill Hewlett, decided to start a company in 1937. They were both engineers who wanted to make electronics for people. However, they didn’t know what product to make at first because it was difficult for them to decide on one. They eventually came up with some principles that would guide their new business:
- Hewlett-Packard is a technical company. It will not deal in nontechnology commerce, and it will hire only the best people to work for it. These employees will be trusted with leeway to attain their goals, as well as share in profits. HP’s products are profitable, its employees are great at what they do, and the company contributes to communities around them. Hewlett-Packard handles its affairs with integrity by making sure that everything runs smoothly within the organization and that everyone remains honest with one another.
David Packard and Bill Hewlett
David Packard was born in 1912. He went to Stanford University and played basketball there, as well as in high school. He worked for General Electric briefly before going back to Stanford, where he graduated with a degree in engineering.
Bill Hewlett was born in 1913. He excelled at math and science, but struggled with reading and writing because of dyslexia.
Stanford University
David Packard and Bill Hewlett became friends while studying at Stanford. They were both electrical engineers. Fred Terman, a professor of electrical engineering, encouraged them to start their own business after graduation. The company they founded was called the Hewlett-Packard Company (now known as HP).
After graduating, Packard was offered a job by General Electric. He moved to Schenectady, New York and later worked on mercury-vapor rectifier tubes. While working there, he came up with his management philosophy of “management by walking around” (MBWA). Later in life, he married Lucile Salter and they had two children together.
California
To help David Packard and Bill Hewlett get back together, Lewis Terman helped Packard get a $500 Stanford fellowship. Once they were working together again, the two started their business plans again. They lived in separate buildings on Addison Avenue in Palo Alto.
The men set up their workshop in the garage of a house. In 1989, California recognized that garage as “the birthplace of Silicon Valley.” The men worked at Stanford during the day and spent time on their projects after work.
Hewlett and Packard were both good at different things. Hewlett was an expert in circuit technology, while Packard understood the processes of manufacturing. They decided to start a partnership company together and flipped a coin to see which partner’s name would go first.
Model 200A
HP’s first product was an audio oscillator for communications, geophysics, medicine and defense. Later on they also started producing equipment for Disney Studios as it developed the classic animated movie Fantasia.
HP started in 1939 and had $5,369 in sales and $1,563 in profits. HP moved out of the garage to a small building two miles away. They handled all business tasks including planning products, shipping, advertising, customer relations and accounting. HP hired three engineers to assist with design and fabrication. To meet expenses they borrowed money from an ITT friend Harold Buttner; from Palo Alto National bank; later Wells Fargo loaned them money too.
Norman Neely was a successful Southern California manufacturer’s representative for radio, recording, and other electrical equipment. He sold Hewlett-Packard’s audio oscillators and audio frequency measuring instruments in the 1950s.
