It must be Sunday because here I am again at Starbucks. I forgot that I have to be back in this routine and so stayed up late last night and then woke well after my reason for leaving was already present in my house, no real warning. So, note to self, my exile actually starts on Saturday evening, I have to get to sleep early enough to then get up early enough on Sunday to miss the arrival.
So I am a little dazed right now, hard to focus. But for some odd reason a thread topic just popped into my head. I saw some TV program about local superhero Warren Buffett wanting his son “Howie” to take over at Berkshire. Apparently the point is to preserve the values Warren believes Berkshire has and should continue to have after his retirement. Given the difficulty Warren has had finding a replacement clearly he is concerned that his unique way of running the business will be lost. He’s not using the word “culture” but clearly that’s what he means, try to keep Berkshire relatively honest and the scam artists out – a difficult task.
This idea triggered my own experience at a once great company, Hewlett-Packard. I was lucky and got my first real job there, still in the era when Bill and Dave still ran the place. Since I was located in the corporate headquarters building I had plenty of direct influence by these two heroes. One of the managers in my department had started her career as Bill’s secretary. Betty actually had a physics degree but it was tough for women in those days so she couldn’t find a job and Bill hired her in the only position he could define for her. Since Betty was a great bridge player and Bill was a bridge fanatic they became fast friends for life. HP didn’t mind a little nepotism so Betty’s daughter also worked at HP. Both Betty and her daughter were avid duck hunters. Meanwhile Bill and Dave, with their own money, owned a hunting lodge in some wetlands. Given this didn’t actually belong to the company the only way you could go to the lodge was to be invited by someone who had already been there. Apparently it was a rowdy place, all men, of course, smoking cigars, drinking, poker playing, good ole boy fun. Well, Betty wanted to go too, to actually shoot some ducks. So she badgered various people who could invite her and they all turned her down, no women allowed. So she badgered Bill until he gave in. A couple of partitions were installed and a door placed on the bathroom and Betty and her daughter broke down that glass ceiling.
It’s hard to fully explain what an influence Bill was. By the time I joined HP had about 16,000 employees yet everyone of them knew Bill. I don’t know if Bill and Warren ever met but they seem to be cut from the same cloth, not one of the imperial CEOs we see so much today. So Bill had an “open door” policy (and in fact sat in a cubicle like the rest of us) and also the “HP way” which every new employee rapidly learned. When the term was briefly popular this was referred to as “corporate culture”. Another element of that culture, eventually upgraded to an actual training program was “management by wandering around”. Bill just did it, wandering around, seeing what was going on, meeting the employees, looking for things that needed to be changed, and leading by example. His actions were not always popular. My department grew and had to move to another location, right above the noisy stamping presses (HP actually made things in those days and used American labor to do it). Being computer types stamping press noise interfered with our work. So naturally we complained and this issue made it to Bill, who vetoed our complaint on the grounds he wanted every employee to know “we make things here”.
What Bill really understood was how he could lead by example and everyone would learn about it. Our grave shift supervisor (in an old-fashioned computer room) had complained about the crappy raised floor, tiles coming loose and his people tripping on them. So one night after one of his people tripped, he took one of the dirty tiles and attached a note, “This floor is dangerous, fix it” and dropped in on Bill’s desk, just upstairs. Shortly after I arrived the next day (late in the day, HP invented flextime) I saw a parade of people heading for a conference room with Bill in the lead and the grave shift supervisor next to him. Later I (and everyone else in the company, via the incredible grapevine that didn’t require Twitter or texting for the word to get around) heard what happened.
The grave shift supervisor was noticeably nervous, thinking maybe “open door” didn’t really include what he had done and so he was thinking he’d be fired. But instead Bill calmly went through a routine that was really a training lesson. Everyone in the chain of command between Bill and the shift supervisor was in the meeting. Bill start simply with asking the shift supervisor what he had done to get the floor fixed, specifically had he brought this up with his manager and had he gotten an answer. Then Bill asked the exact same questions to the manager and so forth. What Bill was doing was not trying to solve this trivial problem. He was trying to see if management was working right. Bill explained that: a) an employee can’t just whine about something without trying to get it fixed, and, b) a No answer, with reasons, is fine – but no answer (i.e. stalling) was not fine. Eventually it was concluded the issue had been properly handled but budget limitations were not an excuse for safety violations, so “you guys fix this”.
No CEO can (or should) get involved in micromanaging, but every CEO should make sure management is managing. If an employee had an issue, resolve it and make sure everyone knows it is resolved even if they don’t like the answer. The answer to the issue is less important than actually resolving the issue. No action simply was not acceptable. And hours later every manager in the company was going through their todo list making sure they hadn’t left some issue unresolved so they didn’t have to answer Bill’s questions.
That was the open door, but it was the wandering around that kept managers on their toes. Bill liked to prowl around at night and he actually was a very curious (and very good) engineer. HP permitted engineers to use some company resources to work on their personal projects after work hours. So every lab always had a couple of late owls building something. So Bill would wander around just genuinely curious what they were doing. Bill didn’t much look like his picture so most young engineers didn’t know him by sight. So he’d wrap his arms on his chest, covering his simple name badge (the same as everyone wore) and engage some engineer in geek-talk. After satisfying his curiosity about whatever the gadget was Bill would drift into a key part of his job, leading this great company. He basically had three questions for an engineer in terms of his day job: 1) what are you doing, 2) why are you doing it, and, 3) who are you doing it for.
You see HP’s MBO (Management By Objectives) was real. Engineers working on some part of a product were supposed to know the answers to these three questions. What are you doing? – building a XXX circuit was not the answer, building a product to do YYY was the right answer. Why are you doing it? – because my boss told me was a very bad answer, because it meets our division’s objective ZZZ was the right answer. Who are you doing it for? – this was the critical question as the engineer was expected to know exactly what type of customers would want this product and why.
Now I was working late one night and I spotted Bill roaming around our lab. Sure enough he found an engineer nearby (fortunately not one of mine) and I kinda dropped in to eavesdrop. Even though I’d met Bill multiple times back when I was in corporate headquarters he didn’t recognize me and so didn’t mind me being part of the conversation. The engineer didn’t do a very good job of answering Bill’s questions, but Bill was not critical of the engineer and eventually wandered off.
Next day we had a notice for all the managers in the lab to meet with the division manager, ASAP. When we gathered I noticed Bill was there and pointed him out to several others who didn’t know him. We knew the proverbial brown stuff was about to hit the fan. Bill started the meeting by saying, “Xxx Yyy (the engineer’s name) doesn’t know what he’s doing or why and who it’s for. Someone explain this to me” And again all the managers got their teaching moment, MBO isn’t working if any employee doesn’t know these things. Never again in that division would any employee, in any job function, not know what they were doing or why or for whom, and that was precisely the point of Bill’s teaching. Furthermore all the other divisions in our building complex promptly were making sure every employee knew the answer to these questions. And the word probably spread everywhere and they probably had the same meeting in Grenoble and Pinewood.
Commonsense. Good business. Great management.
And Bill was missed, not just when he later passed, but when he retired. And slowly HP fell apart. The decline really accelerated when a disaster known as Carly put the last nails in the coffin, actually deciding the “HP way” had to go. I’d left HP but the grapevine still worked and in unexpected ways. HP had a couple of private jets, actually owned as a tax shelter by H and P themselves. Anyone could fly on these jets. Yes, you had to justify the first class airfare you’d be charged, but that was it. So everyone at HP knew the jets were business, not a perq for the bigshots. Carly didn’t know that. So once the jet was overbooked and she bumped a senior exec so her “body man” (not sure what the term is when it’s a woman, but someone like Obama’s Reggie Love, Carly’s personal attendant). So that story spread like wildfire, not just inside HP but even to all the alumni. And everyone knew what kind of CEO Carly was, she wasn’t buying the no perqs bit, she was the imperial CEO we all know. And we also know how successful she was at HP, although she was quite successful in helping wreck it.
So HP lives on but everyone thinks it is a troubled company. After a couple of failed CEOs we’ll see Meg can fix it. At least she knows what it is to create a company and I’m betting Bill would approve of her. And I suspect she’ll try to get the HP Way back (of course, lifetime employment is a thing of past anywhere as Meg has demonstrated with massive layoffs). And I suspect she’ll do a little wandering around.
So I think Warren knows Berkshire can easily go the way of HP. The purpose of including his son in management is not actually to run the company but just keep the “Buffett way” (no such term, I just coined it) going. And if Howie does that Berkshire may not follow HP into decline.
Leadership matters. And being involved in the company, known (positively) to the employees matters. Success doesn’t come from the top, it comes from everyone doing their job well. If the CEO can accomplish that everything else will take care of itself.