David Packard Retires as Head of Hewlett-Packard : Electronics: At 81, co-founder of Silicon Valley powerhouse says, ‘It’s time for me to step aside.’
Ending one of the most extraordinary careers in California business history, David Packard on Friday announced his resignation as chairman of Hewlett-Packard Co., the electronics powerhouse he co-founded 54 years ago.
Together with partner Bill Hewlett, Packard built a company whose technical competence, innovative management practices and consistent commercial success made it the prototype of the high-tech start-up and one of the most widely admired corporations in the world.
In an emotional farewell at H-P’s Palo Alto headquarters, the 81-year-old Packard, who suffers from hearing and speech problems but remains quick-witted, said he was finally comfortable leaving the company in the hands of chief executive Lew Platt, who assumes the chairman’s post.
“At my age, it’s time for me to step aside,” he said, sitting beside Hewlett in a packed company auditorium. “The company is in a strong competitive position and we have an excellent management team in place. . . . This is a good time to make the change.”
Although Packard gave up day-to-day management of the company well over a decade ago, he had remained involved in the business, stepping in three years ago to lead a remarkably successful corporate overhaul.
And his legacy extends far beyond the business world. He has used his multibillion-dollar personal fortune to become one of the nation’s leading philanthropists, and has long been a force in Republican Party politics.
“The way he and Bill (Hewlett) conducted themselves--the business they built, the values they stressed, the strong belief in putting back into the community the profits they made--that has become a paradigm that has inspired many people,” said Ed Zschau, an entrepreneur and former congressman who runs a major IBM division in San Jose.
The son of a Midwestern lawyer, Packard earned an engineering degree at Stanford University, and in 1939 joined with his classmate Hewlett to start an electronics company with $538 in seed capital. They didn’t know exactly what they were going to make: Hewlett once said that “professors of management are devastated . . . when I say we were successful because we had no plans.”
The company’s first commercial sale came when Walt Disney ordered some audio equipment for the soundtrack of the movie “Fantasia,” and H-P soon grew rapidly as a supplier of electronic instruments and test equipment. In the late 1960s, H-P came out with the hugely popular electronic calculator, and in the 1970s and 1980s gradually established itself as a leading computer vendor.
Packard and Hewlett formed a remarkable team: The strapping Packard was the more public figure, focusing on business issues, while the more retiring and soft-spoken Hewlett concentrated on technology. But they thought remarkably alike and shared management of the company equally.
Packard was chairman and chief executive until he left to serve as deputy secretary of defense in the Nixon Administration in 1969. Hewlett, who had been president, became CEO and kept that post even after Packard returned as chairman in 1972.
In 1978, John Young took over as CEO, but Packard remained as chairman and Hewlett as vice chairman. Young stepped aside in favor of Platt last year, shortly after the founders had reasserted themselves in a successful effort shake up a bureaucracy that had grown complacent.
Today, H-P boasts annual revenues of more than $16 billion, and is virtually the only major computer company to have avoided big losses and layoffs during the tumultuous industry price wars of the last few years.
Underlying that success was a management philosophy known as the “H-P Way,” which emphasized respect for the individual, teamwork, integrity and egalitarianism--mom-and-apple pie values that really meant something at H-P. Both Hewlett and Packard retained a strong sense of personal modesty, forgoing lush corporate offices or other perks of power, and both are known for absolute straight talk. “With David Packard everything was upfront and honest, there was absolutely no phoniness about anything,” said Melvin Laird, who tapped Packard as his deputy when he served as secretary of defense and remains a close friend. “He has common sense and judgment that could not be equaled.”
H-P also pioneered several specific management techniques that have become widely followed in the corporate world and are found in nearly every business school textbook. One is known as “management by walking around,” a method by which senior executives can stay in touch with what is happening on the shop floor. They also instituted what became known as “management by objective,” the seemingly simple idea that people basically want to do a good job, so managers should establish what they want and leave people to do it.
All the while, Hewlett and Packard maintained a commitment to public service, giving huge sums to Stanford and other charities and forging partnerships with government to help address social problems. Hardly any civic project goes anywhere in Silicon Valley without Packard on board.
Packard’s wife, Lucile, who died several years ago, played an active role in the family’s charitable foundation, which has assets of $1.2 billion.
He has three daughters and a son, and his daughter, Susan Orr, was named Friday to the to the H-P board. Packard lives in Los Altos Hills and owns ranches in San Jose and Montana, as well as a fishing camp in British Colombia.
In addition to his philanthropic activities, he has been a consistent supporter of Republican politicians, and spoke out against then-candidate Bill Clinton last year when the Democrat was enjoying a groundswell of support in Silicon Valley.
“I can’t think of anyone who has had a greater impact on Silicon Valley than David Packard, from the 1950s to the 1960s and 1970s and 1980s,” said Ed McCracken, a onetime H-P manager who is chief executive of computer maker Silicon Graphics Inc.--and was one of the most prominent local Clinton supporters. “The culture of H-P permeates Silicon Valley.”
When asked what his proudest moment was, Packard responded with a homily typical of his direct manner: “Do something useful, then forget about it and go on to the next thing. Don’t gloat about it.”
The next thing for him, he said, would be more time at his fishing camp. And he remains in charge of the David and Lucile Packard Foundation, which is responsible for the Monterey Bay Aquarium, the Stanford University children’s hospital and many scientific, educational and environmental projects around the country.
Times researcher Norma Kaufmann in Palo Alto contributed to this story.
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Hewlett-Packard Highlights
Springing from its meager beginnings in David Packard’s garage 55 years ago, the company has grown into a computer industry giant, second only to IBM. Here is a chronology of the company:
* 1938: David Packard and Bill Hewlett begin part-time work in a garage in Palo Alto, Calif. First product: an audio oscillator used to test sound equipment. The Walt Disney Co. is one of their first customers, ordering eight units for use on the movie “Fantasia.”
* 1939: Formal partnership formed--the Hewlett-Packard name is decided by a coin toss.
* 1940: H-P moves from garage to a rented building. Net revenue: $34,000, with three employees and eight products.
* 1951: H-P introduces a high-speed frequency counter, reducing from 10 minutes to two seconds the time required to accurately measure frequencies. Net revenue: $5.5 million, with 215 employees.
* 1958: H-P begins acquisitions of other companies. Net revenue: $30 million, with 1,778 employees and 373 products.
* 1964: Packard elected chairman, Hewlett elected president. H-P introduces a cesium-beam instrument that is flown around the world, thereby setting international time standards.
* 1965: H-P enters the analytical-instrumentation business with the acquisition of F&M; Scientific Corp. Net revenue: $165 million, with 9,000 employees.
* 1966: H-P announces its first computer.
* 1970: Net revenue: $365 million, with 16,000 employees.
* 1972: H-P makes the engineer’s slide rule obsolete, releasing a hand-held scientific calculator.
* 1977: John Young named H-P president; he is appointed CEO a year later.
* 1980: Company introduces its first personal computer. Net revenue: $43 billion, with 57,000 employees.
* 1985: H-P Laserjet printer introduced. Net revenue: $6.5 billion, with 85,000 employees.
* 1987: Hewlett retires as vice chairman of the board of directors.
* 1988: H-P surpasses $10 billion in orders for the first time, becoming one of the top 50 U.S. companies listed in Fortune magazine.
* 1990: H-P Laserjet III printer announced. Net revenue: $13.2 billion, with 91,500 employees.
* 1992: Lew Platt named president and CEO. Starts shipping the “Kittyhawk,” a 1.3-inch ultrasmall hard disk unit aimed at the laptop computer market. Net revenue: $16.4 billion.
* 1993: Packard steps down as chairman on Sept. 17. Platt is named as his replacement, carrying the titles of CEO, president and chairman of Hewlett-Packard Co. Net revenue: $14.6 billion through the third quarter, with 94,900 employees and over 18,000 products.
Sources: Company reports; Bloomberg Business News
Researched by ADAM S. BAUMAN / Los Angeles Times
