Box 3, Folder 35 – General Speeches
November 5, 1979 – GTE Management Meeting, Engineering Session, Hilton Head SC
11/5/79, Speech, handwritten by Hewlett
Hewlett apparently was invited to attend this three day seminar of GTE managers, and this is a speech he gave to engineering people on day three.
He tells the group that he is not going to try and tell them how to run their R& D program, saying “I have seen no sign that you need any help.” But he does say that he can share his experiences in managing the engineering program at HP.
Hewlett provides some background on HP and current financial figures. He says it is roughly ½ the size of GTE.
He describes the organizational structure of HP, divisions and groups, and says the product divisions:
a) Must make a profit
b) Must finance their own growth
c) Must be making a product contribution
Speaking of control of the divisions, Hewlett describes the Primary methods:
1) Groups, and their “small staff”
2) Corporate visit once a year – 2 years for some
3) Strong internal accounting system, designed to emphasize elements of corporate policy
4) Responsible for preparation of a rolling 3 year intermediate range plan
5) Responsible for the preparation and execution of a detailed annual plan
6) Key element is allocation of R&D funds
In discussing the R&D function in the instrument field Hewlett lists some relevant factors, such as:
1) Leans much more toward a “free field style” than a more rigid fixed style
2) On funding package solutions for a customer – can spend a great deal to solve a specific problem if there is a broad enough user need.
3) Control R&D cost and of overhead. He says he once estimated that for each dollar spent on R&D, 5 dollars of pretax income was returned to the company.
4) Wide open field with great opportunity for innovation – primarily a question of matching need and technical solution
5) Importance of “freedom of design”
6) Importance of “next bench syndrome”
7) Excellent training ground for young engineers – can give the engineer a real feeling of accomplishment and job satisfaction.
Hewlett adds that “To support these R&D activities we budget 9 to 10% of sales – about 1% to central labs, 8 or 9% to division support.”
On the role of the central labs Hewlett list some points:
1) Divisions too busy doing their own thing
2) Place to spawn new ideas and new processes
3) High risk, low cost philosophy
On the computer field Hewlett says:
a) Need to have a total strategy
b) Projects can be very long and detailed. HP is a small company but spent 60 engineers for 3 1/2 years on an operating system. Well over 200 man years to wind out.
c) Had great difficulty in learning how to operate in the field – low morale – black arm bands
d) Have our act together now, have the basic strategic plan, have learned how to take the best out of HP background and apply to new highly competitive field
e) Work can be made interesting and rewarding if one works at it.
“I have not told you anything that you did not already know, but I hope that I have reinforced that knowledge with examples and numbers.
“If there were only one way to run an R&D program it would have been discovered long ago and would be in universal use throughout industry – until someone found a better way.
“One point is evident that some level of planning and control is essential – the need varies from product line to product line, but we must have it.
“But this very planning and control tends to curb innovation in the professional staff, particularly if laid on with a heavy hand – it should be used in moderation.
“Engineers and scientists as I know them derive great satisfaction from finding practical solutions to real problems and in seeing the fruits of their labor put to a good use. They must be given every opportunity to find their work exciting and fulfilling.”
Hewlett says he enjoyed sitting in on the sessions over the last two days, particularly the one on Human Resource activities. He says he was disturbed by some of the answers to a little survey taken in the session. To the question ‘Are you thinking of what your professional staff really wants?’, 26 people answered ‘yes’, but 20 said ‘maybe’ and 13 said ‘no’.
“People should not be babies or treated in a preferential way, but you are dealing with a creative and by and large dedicated group of people. To the degree to which you can match their aspirations to the needs of the corporation you will achieve a maximum of return to the company and create the strongest type of dedication and loyalty to the company. The care and feeding of a professional staff is a full time job.”