False Diagnosis

One day's obituaries reveal the blind spots of the opinion establishment.

On the day of the California primary, an all-but-meaningless election with record-low turnout, two famous men died, both in their early 80s. One was Edmund Muskie, former senator, briefly secretary of state, and the candidate wistful Democrats like to imagine might have been their 1972 nominee if not for a dirty trick and tears in the snow. (They forget, conveniently, that McGovernites had engineered the delegate-selection rules.) Muskie's obituary took 82 column inches in The Washington Post, 84 in The New York Times.

The other man--eulogized in a mere 28 inches by the Post (eight devoted to his two years as deputy secretary of defense), 40 by the Times--was David Packard. On the day he died, the only American politician who could rival him in real-world importance was Ronald Reagan. But the papers didn't see it that way.

Packard was co-founder of Hewlett-Packard, one of the most influential companies in the history of American business. The Palo Alto garage where he and Bill Hewlett started is a state landmark, designated "the birthplace of Silicon Valley." HP has created billions of dollars in wealth, tens of thousands of jobs, and hundreds and hundreds of innovative products. (Stashed in a closet of my house is one of the first-ever financial calculators, a miraculous HP product my father bought for several hundred dollars in the early '70s.) Yet even all these accomplishments don't begin to account for the company's broader importance, which lies in the management model it created, the famous "HP Way."

In the age of hierarchical Organization Men, HP pioneered a style of management based on granting employees broad discretion--"empowerment" is the current buzzword--and deemphasizing rank and privilege, most famously by giving everyone from the chairman on down a doorless office. HP trusted its employees with unlocked supply cabinets and with decisions. It fostered a sense of community and promoted from within, but, unlike many large employers, it held no grudges against HPers who left to start their own companies or to work elsewhere. Among the spinoffs were Apple, Silicon Graphics, and Tandem.

In 1991 the founders returned to active management, saving the company from death by bureaucracy. The turnaround started with a letter from an HPer to Packard, then chairman, complaining that she was spending all her time in meetings instead of productive work. It was an extraordinary demonstration of HP's open-door policy that the letter was not only written but read and acted upon.

"Profit-sharing, flex-time, management by walking around, sales force automation, global customer service systems, new employee health programs, reduced workweeks instead of layoffs--H-P has always been there first," says technology writer (and former HPer) Michael S. Malone in a San Jose Mercury News article on Packard. "As such, it has always taken the risks for which the rest of us have eventually enjoyed the benefits."

Packard was the model of what the opinion establishment says CEOs should be: philanthropic, unpretentious, concerned about employees, public spirited, politically moderate. His obits were certainly positive. Yet the nation's leading newspapers--and the establishment culture they shape and reflect--judged David Packard less than half as important as a senator notable mostly for his might-have-been presidential bid. It is, they suggested, the Ed Muskies of the world who determine the future, not the Dave Packards.

We're all used to thinking in those terms. Asked to name the five most significant events of 1968, few educated people would think to include the founding of Intel. Such milestones take place out of camera sight. We tend to think of them as unimportant, or nonexistent. We assume that what matters is what makes the evening news.

It is worth pondering such assumptions, and the world view they create, especially in light of recent rhetoric toward business. For the first time since the 1970s, corporate is becoming a pejorative word outside narrow left-wing circles. From Pat Buchanan to the editors of Newsweek to the secretary of labor, important people with loud voices are denouncing the management of the nation's companies--and suggesting that politicians and intellectuals could do a much better job. They are preaching "loyalty" and decrying CEOs as ruthless job killers. Extolling the security of old-time monopolies, they mock anyone who dares point out the thousands of jobs added in recent years by such upstarts as Federal Express (6,000 in 1995 alone) and MCI. They roll their eyes at Silicon Valley.

Above all, they suggest that good change comes from above--from wise men in Washington and Cambridge--and only bad change from below. There is, they imply, One Best Way to be an employer, or an employee. The world is divided into good and evil, "A-Corps" (Sen. Jeff Bingaman's term) and meanies. And companies will never realize how well they could do by doing good unless somebody gives them a subsidy or tax break. Nobody will ever invent an HP Way unless Robert Reich hands them the instruction book.

This argument, if it even deserves the term, ignores history. It is intellectually dishonest, pretending that loyalty is an unalloyed good destroyed by greedy, overpaid executives. In fact, loyalty as a corporate value has been under attack since the mid-1950s--for good reason.

In the 1950s and '60s, social critics attacked the regimentation and blandness of corporate life, with its demands that managers sacrifice their individuality, autonomy, family life, and community ties. The Organization Man, William Whyte wrote in his 1956 book of that name, "must not only accept control, he must accept it as if he liked it. He must smile when he is transferred to a place or a job that isn't the job or place he happens to want....He must be less 'goal-centered,' more 'employee-centered.' It is not enough now that he work hard; he must be a damn good fellow to boot."

Whyte observed that younger managers--managers who would today be in their 60s--were particularly prone to embrace loyalty to a single organization as the center of their professional ethic. By closing their career options outside the company, they became dependent on it.

Whyte wrote: "When I asked a group of [older, senior] executives whether they thought that in the years ahead they should make a point of keeping their eyes open for opportunities elsewhere, two thirds stated, emphatically, that they should. I asked the same question of younger men. Only one third thought the executive should keep his eyes open; the consensus was to the effect that such behavior was characteristic of the What-Makes-Sammy-Run type, and that companies would be better off without such people." Lest anyone be tempted to bolt the organization, companies made fringe benefits, including pensions, non-transferable.

This is the world we are losing, to the consternation of today's social critics. Henry Allen, writing in The Washington Post, laments a study of corporate employees: "Half the people surveyed said success at work was personal satisfaction from doing a good job. Less than a third said it was 'earning the respect or recognition of supervisors and/or peers.'" Once upon a time, we would have considered that a healthy sign that more people were "inner-directed," more concerned with the substance of their work and less with what other people thought of them.

Silicon Valley has been the vanguard of that new culture, which Rutgers labor professor Charles Heckscher calls "the professional ethic," as opposed to "the loyalist ethic" of the old Organization Man. The new ethic--in which managers are motivated by the mission at hand rather than lifetime loyalty to a company--accounts for Silicon Valley's resilience. The local culture fosters adaptability based on personal mobility and constant corporate invention. Annalee Saxenian, whose book Regional Advantage analyzes the differences between Silicon Valley and Massachusetts's Route 128, quotes a high-tech manager who moved West: "The mobility among people strikes me as radically different than the world I came from out East. There is far more mobility and there is far less real risk in people's careers. When someone is fired or leaves on the East Coast, it's a real trauma in their lives. If they are fired or leave here it doesn't mean very much. They just go off and do something else."

This is the culture David Packard, along with many others, created--a culture whose evolution took place far away from news cameras and presidential candidates. It responded to the demands not only of customers and stockholders but of employees who wanted to be treated as adults. Increasingly, it is the culture from which all businesses, and employees, must learn. It is worth understanding, and honoring. And it is far more important than anything Edmund Muskie left behind.

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