The title of this book is not promising - after all, there must be many contenders for being the world's greatest company. Yet Malone paints a convincing portrait of the rise of a great (if not the greatest) company under the direction of its eponymous founders. His entertaining and pacey book left me with a much deeper understanding of just how radical and innovative a company Hewlett-Packard once was: as Malone relates, this is the company that was the prototypical Silicon Valley start-up, whose first business premises were, famously, a weather-beaten garage on Addison Avenue, Palo Alto, writes Kenny Paterson.
This is the company that introduced to the business world the idea of an employee stock purchase plan, family picnics, and flexi-time, and that introduced the nine-day fortnight rather than make employees redundant during a downturn.
At the same time, as Malone makes clear, Hewlett and Packard were hard-nosed businessmen, with profit always the first corporate objective. Malone recounts a story about an ex-employee who found the going tough competing against HP. Malone explains: "Taking on Hewlett-Packard of the Bill and Dave era was to reap a whirlwind: HP would out-innovate you, outsell you, outflank you with other, related products, outservice you, defeat you with superior quality, bring in a living legend or two to close the deal - and, if all else failed, even out-price you". This characterisation is at odds with the commonly held view of Bill and Dave as being avuncular and soft-hearted philanthropists. They were philanthropists, for sure, each man establishing multi-billion dollar family foundations. But they were also completely unsentimental, able to kill without blinking product lines that were no longer profitable (as was the case with the HP-35 pocket calculator, for example), and only too glad to leave behind the Addison Avenue garage the instant they could afford something better. Even the fabled stock purchase plan, through which employees could invest a proportion of their monthly salary to buy HP shares at below market price, had a pragmatic business strategy behind it. Over the years, it generated billions of dollars for HP which, combined with healthy profits, enabled the company to grow at a dramatic rate without ever incurring long-term debt. This is a typical example of what Malone calls the "HP fork" - a fortuitous combination of circumstances which benefits both the business and the employees. These days, it's more prosaically called a "win-win situation".
The magic of Hewlett and Packard was that, between them, they developed the skills needed to build a successful global company, while preserving the ability to inspire unswerving loyalty from employees by connecting with them on a personal level. The book details how they achieved this, all the while following a developmental path from being fresh college graduates, to risk-taking entrepreneurs, then turning into company executives, eventually, as if reaching some final state of business Nirvana, metamorphosing into living legends. In this last stage, Malone explains, Hewlett and Packard consciously acted out the roles of themselves, engaging in quite deliberate acts of myth-making as a ploy to ensure that their way of doing things, the HP way of doing things, would be passed on to succeeding generations of HP employees - as Malone puts it, so that "future HP employees would always have before them the 'best of Bill and Dave'".
Malone's book is broad in its coverage - starting with Hewlett and Packard's formative years under the mentorship of Fred Terman at Stanford, covering the growth of HP from a minnow to a corporate giant, discussing in detail the evolution of some of HP's best-known products, and bringing the reader right up to date with the ins and outs of the corporate scandals that engulfed HP during the Fiorina years. Malone also accurately captures the ineffable spirit of the HP Way, the unwritten rules that complemented the explicit corporate principles guiding HP employees. And he writes with sufficient pace and colour to hold the reader's attention, even if the early pages do dwell a little too long on Hewlett and Packard's college years. In some ways, this book is also a sad one - it is hard not to draw comparisons between the actions of Hewlett and Packard in building HP, and those of later CEOs who seem to have overseen a systematic dismantling of much of what made HP different. One is left wondering if something essential was not lost with Hewlett and Packard's passing - that perhaps HP is now just another computer company.
This brings us to one of the central themes of Malone's book: that today's business leaders would learn a lot by following the examples set by Hewlett and Packard, the original Silicon Valley entrepreneurs. These examples are neatly summarised at the end of the book for stressed execs too busy to read the extensive text itself. But in so doing, they would be missing out on the details of a fascinating and well-told tale - one that begins in a garage in a side-street in Palo Alto, and ends not only with a business that today has a market capitalisation of more than $100bn, but also gave rise to a particular way of doing business that has had a marked global influence.
Kenny Paterson is Professor of Information Security at Royal Holloway, University of London. He worked at Hewlett-Packard Laboratories from 1996 to 2001 and still holds HP stock. He can be contacted at firstname.lastname@example.org
This was first published in November 2008