In 1964, HP had $125 million in sales. Instruments (and not computers) made up 100 percent of their sales in 1964. Thirty years later, computers made up 78 percent of their sales. Their 1994 computer sales were $20 billion.
Packard says that the company didn't plan to move into computers. They were pushed by market forces in that general direction.
Packard says that there is never a shortage of good ideas at HP, or at most other high-tech companies. The difficult task is to identify those ideas that fill a real marketplace need.
Two necessary conditions for HP choosing to pursue a new product are
- The idea must be practical.
- The idea must be useful.
The author describes a method which they named the "next bench" method for determining if a new test or measuring instrument should be developed, manufactured, and sold. Basically, if an engineer could convince the engineer working at the next bench that the idea was solid, then that added a lot of credibility to the notion of developing that particular piece of electronic gear.
Unfortunately, this type of peer-review test is still used a lot in the software development industry, and the results aren't always pretty. Ideas that sound great to fellow-developers might not appeal to a general audience of non-technical end users.
Another test that HP used to determine which projects to choose was the ratio of lifetime profits to development cost. If they could reasonably project that they could earn six times the development cost in lifetime profits, then they would build it.