Palm Trees and Carrots

The HP Garage

The HP Garage

News out of the UK: The Register reports that the R&D teams at Hewlett-Packard are being asked to comply with the corporate dress code, so customers visiting the soon-to-be separated enterprise consulting part of the company don’t get the idea that they have a bunch of scruffy engineers on staff. Never mind that Bill Hewlett and Dave Packard were a couple of scruffy engineers who started the company in a garage behind the house at 367 Addison Avenue, in Palo Alto: these days, HP is more like one of the palm trees found further south, with shallow roots and more decorative value than function.

As companies mature, the founders tend to hire executives with experience leading the kind of business their investors hope to profit from. Sometimes, that works well, as has been the case at LinkedIn. Sometimes, not so well, as Steve Jobs found out when John Scully, whom he recruited from Pepsi-Cola, fired him. Of course, Apple under Scully foundered, and eventually they brought back Jobs. You know the rest. And as former CEO Carly Fiorina fails to convince Republican primary voters that she’s capable of leading the free world, current boss Meg Whitman struggles to overcome the title of “Most Underachieving CEO” awarded by Bloomberg in 2013.

Technology companies are not like soft drink companies, or retailers, or fast food companies. They are started by engineers and designers, who create products that are briefly valuable. I say “briefly,” because the life cycle of a technology product is measured in months, as opposed to the perpetual appeal of fried chicken or sugared, carbonated water. These talented, visionary folks are the roots of the company. When the finance people and the sales people and the other suits make the company about themselves, the engineers leave, or get forced out. HP, for example, sold off most of the engineering bits as Agilent Technologies in 1999. And the suits get left with a bundle of rapidly obsolescing products that they can’t sell, and a bunch of off-shore engineers taking orders rather than visionaries obsessing over the details. So the suits diversify, buying up firms with an installed base that they think they can capture. HP bought Apollo and Convex; Compaq bought Tandem and DEC, to get into the corporate marketplace, and then HP bought Compaq. A few years later, the suits temporarily in charge at HP bought consulting giant EDS. Now, the suits under Whitman are going to split the company into two publicly traded entities: business services (the former EDS), and computers and printers (what remains of the rest of their purchases).

I’ve been working on a consulting contract for the last six months, where the customer provided me with a three year old HP laptop. When I dropped it off at Fedex yesterday, I felt like washing my hands. It’s not a bad computer, mind you: more like a Bic lighter – cheap, disposable, and mass produced. The sort of product designed by a group of engineers under a contract, and manufactured under another contract in some facility in China. Those deep, value-creating roots are gone. And all that remains is a palm tree, giving minimal shelter to a bunch of suits negotiating contracts and trying to differentiate me-too products that they didn’t innovate, like fried chicken vendors selling a heritage they purchased from long-dead founders.

A company that abandons its roots doesn’t have a way to grow. Like carrots, the valuable part is in the roots. All that fluffy green stuff at the top, not so much.

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