Case Study:
Community Building and the Role of the Leader
The plaque outside the two-family house at 367 Addison Street in Palo Alto, California, identifies
the dusty one-car garage out back as the “birthplace of Silicon Valley.” But the site where Dave
Packard and Bill Hewlett first set up shop in 1938 is more than that. It’s the birthplace of a new
approach to management, a West Coast alternative
to the traditional, hierarchical corporation. More
than 11 decades later, the methods of Hewlett and Packard remain the dominant DNA for tech
companies-and a major reason for U.S. preeminence in the information age.
The partnership began when the pair met as students at Stanford University. Packard, an
opinionated star athlete from the hardscrabble town of Pueblo, Colorado, had a commanding
presence to match his 6-foot-5-inch frame. Hewlett, whose technical genius was obscured from
teachers by undiagnosed dyslexia, favored dorm-room pranks and bad puns. While different in
temperament, the two soon discovered a shared passion for camping and fishing-and for turning
engineering theory into breakthrough products.
The result was one of the most influential companies of the 20th century. Hewlett- Packard
Co. (they flipped a coin to decide whose name would go first) cranked out a blizzard of electronic
tools that were crucial to the development of radar, computers, and other digital wonders. Still, the
pair’s greatest innovation was managerial, not technical. From the first days in the garage, they set
out to create a company that would attract like-minded people. They shunned the rigid hierarchy of
companies back East in favor of an egalitarian, decentralized system that came to be known as “the
HP Way.” The essence of the idea, radical at the time, was that employees‘ brainpower was the
company‘s most important resource.
To make the idea a reality, the young entrepreneurs instituted a slew of pioneering practices.
Starting in 1941, they granted big bonuses to all employees when the company improved its
productivity. That evolved into one of the first all-company profit-sharing plans. When
HP
went
public in 1957, the founders gave shares to all employees. Later, they were among the first to offer
tuition assistance, flextime, and job sharing.
Even HP‘s offices were unusual. To encourage the free flow of ideas, employees worked in
open cubicles. Even supply closets were to be kept open. Once, Hewlett sawed a lock off a closet
and left a note: “HP trusts its employees.” In Packard’s own words, “The close relationship among
people encouraged a form of participative management that supported individual freedom and
initiative while emphasizing commonness of purpose and teamwork. We were all working on the
same problems and we used ideas from wherever we could get them.”
If HP’s policies were progressive, there was nothing coddling about either man. 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 profit goals. The result: HP grew nearly 20 percent a year for 50 years without a
loss.
Community Building and the Role of the Leader
Today, the behavior of the two founders remains a benchmark for business leadership.
Hewlett,
who died in 2001, and Packard, who died in 1996, expected employees to donate their time to civic
causes. And they gave more than 95 percent of their fortunes to charity. “My father and Mr. Packard felt
they’d made this money almost as a fluke,” says Hewlett’s son Walter. “If anything, the employees
deserved it more than they did.” It’s an insight that changed corporate America-and the lives of workers
everywhere.
Objective:
Demonstrate the value of creating a community-based work environment.
Summary:
Encourage students to share personal experiences and historical knowledge of organizations who defied
the traditional “hierarchical” structure of organizations. One such innovator was HP who created a
community-based work culture in 1938 – 1939. The discussion should focus on examples identified by
the class, including the benefits of new thinking such as: designing organizations with an open physical
and structural environment that enhances employee empowerment, shared decision-making, and an
outreach program for integrating the organization into the community where the organization is
physically located.
Community style management/leadership as used in the AOL 6 text refers to 1) a group of people being
together to accomplish specific goals; and 2) a way of being – where leaders remove barriers so
employees can accomplish their work goals as outlined in the organizational vision.
Discussion Questions:
1.
Do you know a leader like Dave Packard and Bill Hewlett? Describe his/her/their policies and
practices.
2.
Do you know an organization like HP? Describe its culture.
Community Building and the Role of the Leader
Teaching Points:
✓ Encourage students to reflect on what they “believe” the organization should do to either
“maintain” or “change” the current culture and why, pp. 393 – 408.
✓ Does the “vision” of your organization or one you know reflect its stated “organizational values?”
If not, why are the employees in general not behaving in a manner consistent with these values?
pp. 104 – 141.
✓ Is the “community style leadership” of HP still a viable approach to influencing the actions of
organizational leaders and employee behavior; or is there a newer approach that would be more
effective for organizations in general?
✓ Is the HP “open concept” of office physical environments still an effective approach to enhanced
productivity?
✓ The “HP Way” identifies employee brain power as the company’s greatest resource. Is this still
an integral part of team building in organizations, or is it passé?
Related AOL 6 Text Information to Support Your Class Discussion:
o Discuss the power of vision and the visioning process, p. 59.
o What is the value of a SWOT analysis for assessing a new process or procedure? (Strengths,
Weaknesses, Opportunities, and Threats), pp. 62 – 63.
o Review the 16 points to creating a positive work climate, p. 73.
o Discuss the four points of Likert’s Pattern IV Management Plan, p. 77.
o Review Figure 4.1 on p. 58 and discuss the value of a vision since those organizations who do not
have a vision tend to create confusion rather than a “success plan” for their employees.
o Caution your students that managers who do not “live the organizational vision” can become an
obstacle to a productive workplace community and their constituents, p. 83.
o Explore examples of leaders who adhered to a “community” concept with a planned “strategy”
and a strong “code of values” for their organizations to succeed: e.g., Steve Jobs (Apple – work
quality and work environment), p. 15; Henry Ford (process strategy), p. 56; James Burke
(Johnson & Johnson – Tylenol poisonings – effective communication of J & J values), pp. 57, 131
– 132; the CIA (values code for defending the U.S.), p. 57; and Howard Schultz (Starbucks –
values and ethics), pp. 105 – 106.
NOTE: We routinely research the subject of our specific case assignment to determine changes in
vision, mission, leadership team, new product development, financials, current national/global news
events, etc., prior to the class discussion. An example of this is found in the Introduction section
preceding our suggestions for using Case Analyses in your class. We have used Hewlett-Packard as a
sample for all the cases since this form of organizational information is fluid and possibly time
sensitive.