I’ve been reading the stories about the continuing saga at Hewlett-Packard with a great deal of sadness. That this once-proud Company has been reduced to a joke is nothing to cheer about, even if you’re a competitor, because the moral is that if it can happen to H-P, it can happen to anyone.
Back in the 50s, I worked for General Radio, once the world leader in electronic test and measurement and then engaged in a vigorous competition with a fast-moving upstart in Palo Alto. In a broader sense, the competition was between Route 128 and Silicon Valley, between MIT and Stanford, between private offices and cubicles. General Radio had a vast catalog of instruments, much larger than its size could justify, and HP would pick off one product line after another, first frequency meters, then impedance bridges, then microwave instruments. And they were usually very successful.
“Hewlett-Packard has just passed us in sales," I remember saying to one of our officers in the 50s.
“They’ll pass us again on the way down,” he answered.
But of course they never did, and eventually they became a test and measurement juggernaut. But Dave Packard, in reflecting on his career, gave full credit to General Radio, founded in 1915, for having blazed the trail. I am sure that Dave Packard and Bill Hewlett had a twinge of regret when GR foundered, just as I do today as I read about the debacle at Hewlett-Packard.
What is the lesson to be learned from H-P’s collapse? It is this: Being bigger is not the same as being better. The technology graveyard is filled with companies whose undoing was wrong-headed acquisitions. Owning the test and measurement market was not enough for H-P, so the Company jettisoned its heritage and became, via acquisition, a computer company, a leader in a business it has now decided to exit.
It is hard to resist the siren song of acquisitions. If you are the CEO of a large company, you are constantly serenaded by the M&A specialists from Wall Street, singing the anthem of synergism. By eliminating redundancy you will increase profits. Your company will move up in the Fortune 500 list. We are all taught that size equals power, and the larger your company is, the more powerful it is.
The old Hewlett-Packard and the old General Radio were all for growth, but it had to be organic, not the result of buying other companies. Both companies eventually succumbed to the siren song, only to find out it was a dirge.
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For an account of the early days of the test-equipment industry, read The General Radio Story, available from lulu.com.
