A Great Company Stumbles

Is the HP Way obsolete? That's the question the LA Times asks in in today's paper, wondering in print if the HP board scandal signals the obliteration of the vaunted HP culture, which set high ethical and creative standards in a familial environment.

"William R. Hewlett and David Packard, fishing buddies and graduates of Stanford's electrical engineering program, started HP in 1938 in a Palo Alto garage, using $538 in working capital," the Times writes. "In 1942, HP opened its first building, a combination factory, office and lab that used what was then a radical design: a single large room. The idea was to encourage informal interaction and collaboration, a foreign approach to most businesses of the era.

"'We all had our desks out in the open,' said Norm Glaeser, who started building calculators and scientific instruments at HP in 1964. 'It allowed for easy discussions not only with peers but with management.'

"HP established one of the first company health plans and a program of flexible work hours to promote a paternalistic bond with employees. The philosophy, later codified in the HP Way, was based on trust and respect for individuals, teamwork, the creation of useful and important products, openness and honesty.

"The approach engendered a sense of family, former employees said, even as HP grew into a corporate giant."

The article goes on to suggest that Silicon Valley's remarkable trackrecord of success has unleashed a toxic ethical environment. Richard Koppes, a corporate governance expert at law firm Jones Day, is quoted as saying that executives in the Valley came to feel "like the rules don't apply [to us] because 'we're the engines of the economy."

The article goes on to say that many people thought that HP, even today, was above the ethical lapses that characterized some of its competitors -- but not any more. What do you think? Can HP salvage something from this scandal and get itself back on track? Can the HP Way be preserved in a corporate environment, and at a company where the founders are no longer around to enforce their code of conduct? How would you reiterate cultural standards throughout your organization amid a scandal such as this one?

To read the full text of the LA Times article, click here.

Mike Hofman was previously editor of Inc.com and a deputy editor at Inc. magazine, which he joined in 1996. The site was nominated for a National Magazine Award for Digital Media in 2010, and was named the best business website by Folio Magazine. In 2006, Hofman was part of a team of writers nominated for a Webby Award for best business blog. He lives in New York City. @mikehofman