Box 2, Folder 27 – General Speeches

.4/19/55,  Copy of typewritten letter from Mickie Ayres (Packard’s Secretary) to Captain E. S. Jernigan, Air Force, giving him the sources for some statistics Packard quoted in his speech to SRI.

5/3/55, Letter from Capt. Jernigan to Mickie Ayres thanking her for the information.

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Box 2, Folder 28 – General Speeches

January 24, 1955, What Should the Chief Executive do Today to Assure the Company’s Tomorrow, AMA Conference, Los Angeles, CA

1/24/55, Typewritten speech by Packard.

Packard says he is going to discuss the subject in terms of what they are doing at HP to assure HP’s tomorrow. He starts by giving the audience a brief summary of  what is made at HP (Test and measuring instruments), and the manufacturing process that they have to make these units.

Looking at some of  the things that they do in an attempt to assure a tomorrow for HP, Packard says “I think perhaps the keystone in your entire program can be summarized in the statement that we believe tomorrow’s success is based on today’s performance.”  He admits that this may be an obvious statement,  “…but we often see many other firms who are so busy worrying about tomorrow that they never quite seem to have today’s program under control.” He says they try to do otherwise at HP, “and the first order of business is almost always to make sure the current operations are on a sound and profitable basis.” He admits that the desire to avoid over commitments may somewhat limit their rate of progress, “but on the other hand we find that when we have our current situation well in hand all of our key people seem to have a little more time to look constructively toward the future.”

Packard says he thinks the most important consideration for the chief executive “is to look carefully at the requirements his own business. In some cases sales is the most important field. In some cases it is production. But I believe we all have a real interest in research.” –applied research, not pure research, he explains, which few small companies can afford.

Packard says HP’s research program is directed at developing new products and to build inexpensive quality into instruments produced. He says “The demand for a continual stream of new products is not always present; the demand for inexpensive quality will always be with us whether we supply a product or a service.”

Talking about HP’s new product program Packard says that while it is usual to measure this in terms of the amount of dollars spent as a percentage of total sales. However, at HP they believe it is impossible to measure the efficiency of a research and development program in terms of the number of dollars being spent. As a result  “…we work hard toward the control of our new product work. And he explains that  “Perhaps the first and most important element of control is in the selection of men, because new products are developed not by dollars but by men, and it requires well trained engineers with vision and energy to do a good job in this field.”  Since good people are hard to find “…our expansion in the engineering department is determined not by the number of dollars we have to spend, but by the rate at which we are able to locate the kind of people we want.”

Moving from the selection of people Packard goes to the subject of selection of projects. He says they have a large number of suitable projects from which to select. “We coordinate this selection closely with the sales program; we do a certain amount of market research; and we are careful to select projects which fit into our present line and which are as general purpose as possible so they will meet the needs of many customers.”  He adds that “…we attempt never to undertake a new product unless we feel we can make some important contribution to the art.”

Packard refers to his previous statement that they always have more potential products on the list than they have been able to undertake at any given time. He anticipates the question, “Why don’t we simply expand the engineering program and undertake all of the projects which we have available?” One reason, he explains, is as he has already indicated, “We try and limit our engineering department expansion in terms of the rate at which we can get food men rather than the rate at which we can get average men. The second requirement we place on our development program is that it must be supported out of current income. This again places some limit on our rate of growth, but by careful advance filtering of the development projects and by careful selection of people we believe we have been able to maintain a development program which, although limited in magnitude is quite efficient in performance.”

Saying that it is almost obvious that if we have a development program which is continually generating new products, we must have a production and sales program which is geared to this continual stream of new developments. Looking first at production, Packard says they have a three-fold program.  “First, we are continually working on production methods which will achieve cost reduction and quality improvement, methods which will help maintain our goal of inexpensive quality. Second, we must have in our production organization an efficient and effective means for transferring the new product from the laboratory to the production bench.”  To this end, Packard explains, “…we bring the two groups together toward the end of a development program with the first objective to educate the production department in the idiosyncrasies of this new product, and second to acquaint the development engineer with the simple proposition that his new product must be producible if it is going to be worth anything.”

And thirdly, Packard says, “…as we add more and more products to our line our production program becomes more and more complicated. We therefore are continually asking our production people ….to do parts standardization, basketing of production quantities, etc.” As to the sales area, Packard says “Our sales people must be trained to know more and more about a larger number of instruments…”

“There are of course other problems about which the chief executive must always worry. Even for a young company such as ours, time does not wait, and so it is important to continually feed top caliber men in at the lower levels so that strength and depth is generated for all important executive functions.. Again, I find I am mentioning people as the key to the future, and this simply re-emphasizes that the future for all of us is determined more by what our people do than by how many dollars we spend. We try to carry that philosophy throughout our entire company because we feel that personnel problems are among the most important in building toward the future. We have a strong personnel program but no personnel department because we feel that personnel problems are the prime concern of all executive levels and we attempt to keep all of our people looking ahead in this area.”

Packard urges chief executives to look beyond their own companies saying, “I think, therefore, that we have a responsibility to the future to step outside of our office as frequently as we can to study and help guide some of those forces which are carrying us ahead at such a rapid rate.” And he cites a couple of areas: “Some recent surveys among high school youngsters indicated that in certain areas as many as 75% of the young students did not understand the principles of, or the value to be gained from, the free enterprise system and thought rather that it was something which should be corrected or even possibly done away with.”

Calling attention to the financial difficulties of  “…the great universities throughout the country which have generated and maintained the ideals on which our free enterprise system is founded are finding it increasingly hard to live on their endowments, to attract capable men to their teaching platforms, and this situation is becoming worse rather than better. And so to those of you who are here today, who think for the afternoon about the things you can do to insure a tomorrow for your company, I suggest that in addition to the things inside your organization you also look at ways in which you can bring the strength of your company to the assistance of your local community or the nation as a whole by a specific and direct contribution to one or more of these all-important problems, for unless the environment for hour company remains healthy all efforts to maintain a good internal program will alone not insure a tomorrow for your company.”

11/19/54, Letter to David Packard from Frederic E. Pamp Jr. of AMA, welcoming Packard as a participant on their Presidents_ panel at their General Management conference.

12/9/54, Copy of a memorandum from Frederic E. Pamp Jr. to panel members giving background on the upcoming conference.

12/14/54, Letter from Mr. Pamp to David Packard sending a copy of the final program for the conference.

1/24/55, AMA publication, “Assuring the Company’s Future Today”, containing text of talks given during the General Management Series, including David Packard’s.