A New and Different Way Ahead for Electronics Enterprise


As we proceed into the 21st century, major changes in the social parameters of the world motivate some new H-P-style what-if thinking about how to do electronics. The trend begun by H-P and Tek can be extended by including the form of company organization. The dominant 20th-century organization of electronics enterprise was that of the hierarchical model. This form of organization concentrates decision-making and innovation at the top of the hierarchy. They are delegated to varying extents to lower levels, and in the purely hierarchical scheme of command and control, all decision-making emanates from the top level. At successively lower levels, less innovation and decision-making is required, as job functions become well-defined. At low levels, assembly workers function as essentially human machines, performing highly-defined and repetitive tasks: Put these parts in these holes of the circuit-board, solder, then repeat.

The H-P and Tek Way

The founders of H-P or Tek - Bill Hewlett and David Packard of H-P or Howard Vollum and Jack Murdock of Tektronix - had the foresight to see that the earlier business model was imperfect; it was too much a product of the machine-mindedness of the 19th century. It reduced workers to a status of a deterministic machine, and as such were interchangeable, replaceable, and had no creative value. Their potential to innovate and make decisions was consequently lost to the company. The H-P and Tek founders valued people and what they could contribute, thereby replacing the view of workers as machines with one that was more like what they themselves were: innovators. It need not be recounted in detail here how well this has worked out in practice over the years that the founders ran these respective companies.

The H-P and Tektronix company traditions were essentially indistinguishable; all the major features of the H-P Way were also found in Tek culture, including policies such as profit-sharing and stock options for employees. Employees were thereby given reasons to view themselves as having a stake in the enterprise along with the founders. In addition, employees were treated as though they were family members by the founders, and this high regard for the worth of others as persons resulted in high morale.

In effect, a trend was begun in their relationship to workers by these company founders, in distributing some of their decision-making to the entire workforce of the company. I remember a story from Tektronix of how a janitor in Building 50, the technical center of Tek, proposed to an engineer working after-hours an improvement in the front-panel organization of a Tek curve tracer that was setting in the hallway. There were no arbitrary limitations on who was allowed to do the innovating. As a consequence, both H-P and Tek were hotbeds of creativity. Command and control became more distributed than in a pure hierarchy, and the performance of company functions did not rest so heavily on a few innovators at the top.

Toward A New Way

In a hierarchy, all essential company functions - design, manufacture, sales, and support - are part of the company. Those at the top must be involved in all these functions to some extent. It worked out in the case of H-P that Hewlett tended toward engineering leadership while Packard had a better head for business. For Tek, Vollum was somewhat more like Hewlett and Murdock like Packard. What additional technical advancements might these founders have achieved had they not had to concern themselves with nontechnical, organizational issues?

At Tek, some functions that might have been farmed out to contract manufacturers were brought into the company because nobody else could do them well enough. Tek had operations in ceramics (hybrid circuits), CRTs, a big sheet-metal building, and later, integrated circuits. In time, these operations (not CRT manufacture, the component at the “hub” of the analog oscilloscope) were able to be outsourced. Even the high-speed IC operation was sold off in a joint venture with Maxim. At H-P, the split forming Agilent was similar in effect; the large corporation had become unwieldy in a hierarchical organization, and a reduction into differentiated functions was required to manage the complexity and regain focus (clear goals). The lesson to be learned is that there is not really any need for large organizations, only large capitalization of the few processes requiring it. The hierarchy still persists because no viable alternative has displaced it.

Contract manufacturing is sustained by the low labor rates of emerging countries. If low-labor-rate contract manufacturers can manufacture to the requirements of designers, then what is a company like Tek or H-P really contributing? Is Tek’s real contribution to the world that of oscilloscope products? The obvious answer has been “yes”. The correct answer is “no”. This is shown by an event in Tek history whereby the U.S. government contrived to have lower-pricing companies copy Tek scopes, and they did. Tek was not bringing manufacture of scopes to the world as its essential contribution - its distinctive competency. What was it instead? Innovation; what was unique at H-P and Tek was in the design function and its enhancement through employees at all levels. Proprietary component manufacture has also diminished greatly or become distinct functions. Contract manufacturing for all but specialized, high-performance electronics has become a commodity, especially as the technical competency of emerging countries quickly increases.

For a time, both H-P and Tektronix sold products through Neely, a contract sales company. Sales were not a distinguishing function of either company. Nowadays, with the Internet and “word of mouse” advertising, sales is also changing. So is customer support, which often is relegated by machine-mindedness to impersonal, irrelevant, and frustrating Internet boilerplate responses to customer inquiries. Product maintenance is now provided by companies specializing in calibration of instruments. The characteristic deficiency of the support function indicates an implied hostility toward customers, an attitude that has set in which also presages a change in the way designers relate to users.

A New Way

These changes in core company functions lead to new possibilities for electronics enterprise. The current trend is one of predatory design, causing hostility between users and designers. Engineers decide what is to be built and users suffer the consequences. They have no choice; there is often not an alternative “business paradigm”. Predatory designs are optimized to maximize repeat sales, with short product lifetimes caused by design shortcuts that increase profit margins at the expense of product quality, and by frequent product iterations with superficial feature changes to motivate users to buy a new one. Minimum product information is available; even user manuals are released having poor grammar and lacking essential technical information. Interactive human user support and repair is minimum to non-existent. The user is expected to discard the broken unit and buy another one. Valuable trash accumulates in landfills.

The stage is set for this hostility between designers and users to resolve itself in an alternative way of doing electronics. Although hostility originates with corporate management who directs engineers to design in this way,  the engineers are the ones who freely choose to go along with them and are equally if not more culpable, for without the compliant participation of engineers in predatory design, the hostility would not arise.

Now suppose some innovative engineers were to design, to H-P-Tek quality and commercial production refinement, a set of generally appealing products. Suppose the designs are for a line of measurement instruments. These instruments have medium-range performance so that the appeal for them is mainstream and broad. The engineers then do something bold. They take all the risk at this point in making these designs openly accessible and free to be used by anyone wanting to manufacture, sell, and support them. They just “give away the store”, or so it would seem. But let’s explore this further in the next part of this article.

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