In the 1960s, the firm decided to put in place a proper organizational structure. The philosophy of individual responsibility was followed right from the inception and in the backdrop of growing number of employees, it became increasingly difficult to keep up with this philosophy. Bill and Dave then decided to adopt a decentralized strategy. The implementation first started with the divisionalisation of labs followed by that of the Sales organization. Four-product development groups were formed subsequently with each concentrating on a family of similar products. More divisonalisation steps were undertaken in the following years in the view of geographic expansions and a significant number of acquisitions. By the mid-1960s, the company had a dozen different divisions responsible for their managing their respective product lines end-to-end. In 1968, group structure was adopted. Divisions with similar product lines and the market to which they catered, were brought under a single group and headed by a group manager. Planning and other related duties were laid off from the VPs and handed to groups for the purpose of decentralization.
The process of decentralization, as it continued, brought along with it certain demerits as well. As the number of employees and divisions increased to a substantial number, management became more difficult, and communication became limited. People started losing their identity within the division. In the years to come, various forms of organization were tried – divisions, group structures, task forces, and committees, to achieve the desired coordination and stick to the philosophy of empowering the employees. As a result, too many layers of management cropped up leading to the creation of a web of bureaucracy. Decision-making process slowed down significantly. With the rapidly increasing competition in the computer industry, paralysis in decision-making started affecting the fortunes of the firm. In 1990, the stock price had fallen to $25.
Bill and Dave continued to be part of the board but were not actively involved in day-to-day management. But with the problems increasing day-by-day, they could do nothing but get involved in the management again. The firm had always maintained an open-door policy which seemed to be paying off dividends in this time of crisis. Managers would walk up to Bill and Dave to talk to them about their worries with the existing situation. Both of them then decided to visit HP facilities by themselves to meet employees at different levels in the organization. As a corrective measure, they decided to reduce the layers of management to disband bureaucracy. Computer Operating units were given enough leeway to make their plans and take decisions accordingly, as it used to be a few years back. After these measures were put in place, the fortunes began to rise again. By 1993, the stock price was back up to $.