MGMT MEMO: Management Lessons from DEC E-Book
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- Herausgeber: Seltzer Books
- Kategorie: Fachliteratur
- Sprache: Englisch
- Veröffentlichungsjahr: 2018
DEC was the creation of its co-founder and president Ken Olsen, who for four decades shaped the cadre of managers and the corporate culture that motivated and enabled one generation after another of creativity and innovation as his company grew from a small team to a global corporation with over 140,000 employees. Fortune Magazine called him "the ultimate entrepreneur". When MGMT MEMO was originally published, most DEC employees couldn't read it. Labelled "For Internal Communication Only", it was only sent to managers, with the understanding that they would communicate the messages to their employees. Now, twenty years after the demise of the company, when there is no longer a need for confidentiality, these documents can help us to remember and relive the challenges, the triumphs, and the cameraderie of that time. Over the course of eleven years, this publication evolved from a collection of short news items to lengthy discussions of the many reorganizations and the reasons behind them, as well as Ken's thoughts on management and corporate culture, his hopes and his advice. It served as a tool for him to deliver messges that he considered important and timely. The articles reflect the dynamics of rapid growth in a fast changing high tech environment: the stress of the ever-urgent need to develop one new product after another and related services, for an ever-expanding range of uses; the need to come up with new ways to connect product to product and people to people, with new kinds of organization and new theories of how to motivate and manage large numbers of people. They repeatedly attempt to redefine the company, as the employee population doubled in size. They recount the struggle to invent not just new products but also new kinds of new products and to find ways to effectively use those same products to develop the next generation of products and to market them and to help an expanding range of customers who needed our products and services to build their businesses and to create new businesses and invent new kinds of business. How was it possible to manage such an entity in hyper-growth mode, to accurately prophesize changing customer needs and tastes and come up with new products and services that they would need and to be prepared to manufacture products in the volumes required, and to recruit and train the people necessary for all that, and to do all of this in sync, so the money and the resources were available when and where they were needed? How could such an entity -- such a storm of creative activity -- hold together and continue to grow? How was it possible to "manage" it, to deal with one unprecedented challenge after another? How was it possible to foster a core of values, a sense of corporate culture and identity?
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mgmt memo
Management Lessons from DEC
Edited by Richard Seltzer
Published by Seltzer Books. seltzerbooks.com
established in 1974, as B&R Samizdat Express
offering over 14,000 books
feedback welcome: [email protected]
Introduction: Refreshing Memories Of DEC, 20 Years After Its Demise
Volume 1, Number 1__ November/ 1982
Volume 1, Number 2 __ December, 1982
Volume 2, Number 1 January, 1983
Volume 2, Number 2 February, 1983
Volume 2, Number 3 March 1983
Volume 2, Number 4 April 1983
Volume 2 Number 5 May 1983
Volume 2 Number 6 June 1983
Volume 2 Number 7 July 1983
Volume 2, Number 8 August 1983
Volume 2, Number 9 September 1983
Volume 2, Number 10 October 1983
Volume 2, Number 11 November 1983
Volume 2, Number 12 December 1983-January 1984
Volume 3, Number 1 February 1984
Volume 3, Number 2 June 1984
Volume 3, Number 3 July 1983
Volume 3, Number 4 August/September 1984
Volume 3, Number 5 October 1984
Volume 3, Number 7 December 1984
Volume 4, Number 1 February, 1985
Volume 4 Number 2 March 1985
Volume 4, Number 3 April/May 1985
Volume 4 , Number 4 July 1985
Volume 4, Number 5 August 1985
Volume 4, Number 6 October 1985
Volume 4, Number 7 November 1985
Volume 4 Number 8 December 1985
Volume 5 , Number 1 January, 1986
Volume 5 Number 2 March 1986
Volume 5 Number 3 May 1986
Volume 5 Number 4 June 1986
Volume 5, Number 5 July 1986
Volume 5, Number 7 September/October 1986
Volume 5, Number 8 November/December 1986
Volume 6, Number 1 January 1987
Volume 6, Number 2 February/March 1987
Volume 6, Number 3 April, 1987
Volume 6, Number 4 June, 1987
Volume 6, Number 5 July, 1987
Volume 6, Number 6 August, 1987
Volume 6, Number 7 October, 1987
Volume 6, Number 8 December, 1987
Volume 7, Number 1 February, 1988
Volume 7, Number 2 March, 1988
Volume 7, Number 3 May, 1988
Volume 7, Number 4 June, 1988
Volume 7, Number 5 July, 1988
Volume 7, Number 6 August, 1988
Volume 7, Number 7 October, 1988
Volume 7, Number 8 December, 1988
Volume 8, Number 1 January, 1989
Volume 8, Number 2 February/March, 1989
Volume 8, Number 3 April-May, 1989
Volume 8, Number 4 June, 1989
Volume 8, Number 5 July, 1989
Volume 8, Number 6 August, 1989
Volume 8, Number 7 October, 1989
Volume 8, Number 8 November, 1989
Volume 9, Number 1 January, 1990
Volume 9, Number 2 February, 1990
Volume 9, Number 3 March, 1990
Volume 9, Number 4 April/May, 1990
Volume 9, Number 5 June, 1990
Volume 9, Number 6 Part 1 - July, 1990
Volume 9, Number 7 Part 2 - July, 1990
Volume 9, Number 8 August/September, 1990
Volume 9, Number 9 October/November, 1990
Volume 10, Number 1 January, 1991
Volume 10, Number 2 February, 1991
Volume 10, Number 3 March/April 1991
Volume 10, Number 4 May, 1991
Volume 10, Number 5 June 1991
Volumr 10, Number 6 July 1991
Volume 10, Number 7 Aug./Sept. 1991
Volume 10 Number 8 Oct./Nov1991
Volume 11, Number 1 Jan./Feb. 1992
Volume 11, Number 2 March 1992
Volume 11, Number 3 April/May 1992
Volume 11, Number 4 June 1992
Volume 11, Number 5 August 1992
Introduction: Refreshing Memories Of DEC, 20 Years After Its Demise
I worked for DEC for 19 years (1979-1998), first in Corporate Employee Communications and then in the Internet Business Unit. For Communications, I was the editor/writer of DECWORLD the company newspaper, and then I was the editor/writer of MGMT MEMO for its full run of eleven years (1982-1992). For the Internet Business Group, I wrote the book "The AltaVista Search Revolution," and, as "Internet Evangelist," delivered speeches around the world to awaken audiences to the business opportunities that were opening on the Internet.
Now, 20 years after the demise of DEC, I'm making all of MGMT MEMO available to the public, because they may be of historical and nostalgic interest, and also for what they reveal about the evolution of DEC's unique culture and management style.
DEC was the creation of its co-founder and president Ken Olsen, who for four decades shaped the cadre of managers and the corporate culture that motivated and enabled one generation after another of creativity and innovation as his company grew from a small team to a global corporation with over 140,000 employees. Fortune Magazine called him "the ultimate entrepreneur". While the company is long gone, the lessons learned remain valuable for managers building other high tech enterprises.
As Moore's Law drove technological advancement from one generation of products to the next, and the company grew and evolved in response to growing demand and changing needs of customers, Ken continuously sought new ways to encourage entrepreneurial spirit and flexibility and teamwork. When reorganizing, he didn't expect to achieve perfection. He found self-criticism and change healthy and necessary. He felt the company needed periodic house cleaning, eliminating unnecessary bureaucracy and management practices that if left alone would clog the company's arteries. Under Ken's prompting, but never really under his control, the company periodically redefined itself. He relished times of economic downturn, because then we had time and motivation to focus on internal change and to get ready for the next growth spurt. That was his rationale for avoiding layoffs and, later, minimizing them, despite the advice of industry pundits. Instead of considering employees as an expense, he treated them as assets that needed to be protected and developed. The underlying principle to be applied in any case of conflict was "do the right thing". Profit was a means rather than an end in itself. The aim was to benefit not just investors, but customers, employees, and society as a whole.
New roles needed to be defined, and new employees needed to be recruited and trained to fill them, and existing employees needed to be redeployed and retrained, and be ever ready to redefine their roles. Change was the rule, not the exception. Ideally, everyone in the company was an entrepreneur within the context of the enterprise as a whole, responsible for finding creative new ways of doing what needed to be done, regardless of the official job description. Innovation -- not just in products, but in how work got done and how people worked together -- started at the bottom and bubbled up. Ken and his management team made hard choices among competing solutions that rose from the bottom to the top. The company's strengths and weaknesses were intertwined and probably inextricable. The pace of growth and the pace of technological change and competition was frenetic.
DEC was a natural phenomenon, a living creature, consisting of the combined creativity and initiative of over a hundred thousand people all over the world, with disparate backgrounds and cultures.Looking back at the complexity, the confusion, the enthusiasm, the dreams and the accomplishments that arose from the joint efforts of so many, we realize how fortunate we were to have participated in the vast experiment that was DEC.
When MGMT MEMO was originally published, most DEC employees couldn't read it. Labelled "For Internal Communication Only", it was only sent to managers, with the understanding that they would communicate the messages to their employees. Now, twenty years after the demise of the company, when there is no longer a need for confidentiality, these documents can help us to remember and relive the challenges, the triumphs, and the cameraderie of that time.
Over the course of eleven years, this publication evolved from a collection of short news items to lengthy discussions of the many reorganizations and the reasons behind them, as well as Ken's thoughts on management and corporate culture, his hopes and his advice. It served as a tool for him to deliver messges that he considered important and timely.
The articles reflect the dynamics of rapid growth in a fast changing high tech environment: the stress of the ever-urgent need to develop one new product after another and related services, for an ever-expanding range of uses; the need to come up with new ways to connect product to product and people to people, with new kinds of organization and new theories of how to motivate and manage large numbers of people. They repeatedly attempt to redefine the company, as the employee population doubled in size. They recount the struggle to invent not just new products but also new kinds of new products and to find ways to effectively use those same products to develop the next generation of products and to market them and to help an expanding range of customers who needed our products and services to build their businesses and to create new businesses and invent new kinds of business.
How was it possible to manage such an entity in hyper-growth mode, to accurately prophesize changing customer needs and tastes and come up with new products and services that they would need and to be prepared to manufacture products in the volumes required, and to recruit and train the people necessary for all that, and to do all of this in sync, so the money and the resources were available when and where they were needed? How could such an entity -- such a storm of creative activity -- hold together and continue to grow? How was it possible to "manage" it, to deal with one unprecedented challenge after another? How was it possible to foster a core of values, a sense of corporate culture and identity?
For decades, through enormous changes, Ken Olsen found ways to exert his influence, and perpetuate his unique style. The image of himself that he projected, as a benevolent and visionary leader, helped hold it all together. He inspired faith and loyalty. He helped tens of thousands of people believe in their own potential and in the far greater potential they had working together, doing what they knew needed to be done, in the ways that they knew were right, rather than waiting for top-down orders; all animated by a belief that conflicts could be resolved by "doing the right thing", and that a rapidly growing capitalist enterprise could operate for the good of all - investors, customers, employees, and society as a whole.
Some might wonder why DEC failed. Far more amazing is that it succeeded so well for so long. Perhaps clues to that can be gleaned from the messages generated by Ken and his ever changing core of managers over the course of a decade of hyper-growth, the words they used to provide the enterprise with a degree of self-awareness and direction and a sense of pride and mission, to give tens of thousands of people a common faith that this miracle made sense and could endure and continue to thrive for the good of all.
Volume 1, Number 1__ November/ 1982
Ken Olsen Emphasizes Bold Products And Financial Conservatism At Annual Meeting
Office Systems To Play A Major Role In Digital's Future
What Is The Operations Committee Doing To Contain Expenses?
Introducing A Special Memo For Managers And Supervisors
A Dollar A Day Can Equal $4.3 Million
Ken Honored With Founders Award
The Importance Of Cost And Expense Controls To Digital's Long-Term Future By Bill Thompson, Vice President - Controller
Ken Olsen Emphasizes Bold Products And Financial Conservatism At Annual Meeting
Over 400 people gathered for Digital's Annual Meeting of Stockholders in Boston on November 4. Explaining the company's strategy and its recent performance, Ken Olsen said, "We have been bold in growing, bold in products, bold in technology, and therefore, we feel we have to be very conservative financially. We plan for the long term. We are willing to sacrifice some profit today in order to grow, develop, make a profit and be stable in the future."
He pointed out that the service part of Digital's business is growing faster than equipment sales. "This trend is due to the fact that the people in that group do a good job, and also because we service the sum of all the equipment we've sold. So mathematically, as long as we continue to do a good job, that part of our business should keep growing faster than our equipment sales. Just ten years ago it was 14 percent of our gross revenue, and this last year it was 28 percent."
Ken also emphasized the importance of office automation and personal computer to the company, and noted Digital's accomplishments in disk and LSI (large scale integrated) technology.
Office Systems To Play A Major Role In Digital's Future
"We own the office automation market," claimed Ken at the Annual Meeting. He explained that we are not late in that market, having actually done word processing in 1962 with the PDP-1. At that time we called it an expensive typewriter. He emphasized that we have the best word processing and electronic mail capabilities in the industry.
"We have a major share of the market for office automation in work places like laboratories, universities and factories. We even automated an entire industry—the newspaper industry, which now has word processing, electronic mail and computerized typesetting, mostly using our computers. At the top 750 newspapers, we have 2,000 computers doing these functions. So you can say we own the office automation business—all except one area: the white collar office.
"We now have between a million and a million-and-a-half terminals on our computers doing word processing and electronic mail," he said. This is more than any other company selling office automation equipment.
"For the white collar office, we have all the functions. We’ve been doing them inside Digital for many years. Altogether we have 20,000 terminals in the company. We couldn’t survive without the capabilities these systems provide. Now we want to sell those capabilities to the outside world.
"Already we have many thousand terminals installed in white collar offices, and many thousand of our computers doing data processing in offices. But as a company we are not well known for these products; many potential customers have no idea of the extent of our capabilities in this area.
"Now we have a program to change that. We reorganized and assigned a number of senior managers to the task. It's importance is indicated by the fact that now that group has two members who sit on the Operations Committee. So, hopefully, over the next year we will take the lead in the white collar office market as well," concluded Ken.
What Is The Operations Committee Doing To Contain Expenses?
The role of the Operations Committee is to establish the direction and focus of the company. In the area of expense controls, the Operations Committee sets the parameters for expense controls. Digital’s managers and supervisors must implement these decisions since they are the people who sign the requisitions and establish the priorities in their departments.
"It takes quite a long time to institute an effective expense control effort because we are trying to change human spending patterns and thought processes. Digital started its expense control effort in Q4 of Fy '82. We could foresee that '83 was not going to be a great year and we started headcount curtailment and expense curtailment," explains A1 Bertocchi, vice president, Finance and Administration.
"Now, we understand the human element a little better and we know that it requires peer pressure to make expense controls really work. It's been a slow process but expense controls have begun to help the company. We just have to make certain they continue and are consistent around the company.
"There have been some questions about why we still sponsored employee outings, such as Canobie Lake, and if we will still distribute turkeys at Christmas in the U.S. In order to understand why outings took place and why turkeys will still be distributed, it's important to know that financial commitments were made many, many months ago. We buy turkeys almost a year in advance of the actual distribution. Digital will honor its existing commitments to vendors, but will look closely at our future commitments.
Introducing A Special Memo For Managers And Supervisors
Last spring Digital conducted a survey to identify strengths and weaknesses in the ways the company communicates with employees. From it we learned that managers and supervisors do not have enough information about the business to satisfy the needs of employees. Many employees depend on the grapevine although they overwhelmingly prefer to get news from their immediate supervisors. And managers and supervisors overwhelmingly think it is their responsibility to communicate Digital's plans, policies and decisions to their employees, if they only had the information.
As one small part of the solution to these problems, this "MGMT MEMO" is intended to help you answer questions your employees have about the company and its business.
This memo, prepared by Corporate Employee Communication on behalf of the Office of the President, will be distributed monthly to managers and supervisors around the world. It will frequently include messages from Ken Olsen and other company officers.
If you have particular questions you want addressed, you should forward them to your vice president who will either answer them directly or pass them along for inclusion in one of these memos.
A Dollar A Day Can Equal $4.3 Million
If every employee saved just $1 a day, the company would save over $4 million in just one quarter. We're not just talking about cutting back on discretionary spending such as offsite meetings, unnecessary travel and postponing optional programs. Your organizations should have already taken these actions.
What we're talking about are the "little things" that add up. Turn off the lights when you leave a room, recycle blank word processing paper as note paper, write a letter instead of making a long distance telephone call, cut down on the time you take for lunches or breaks, etc.
Ken Honored With Founders Award
Ken Olsen was honored by the National Academy of Engineers with the Founders Award on November 3. Established in 1965, the award recognizes outstanding engineering accomplishments by one individual over a long period of time. The Academy of Engineering, an organization of distinguished engineers parallel to the National Academy of Sciences, examines questions of science and technology at the request of the federal government.
The Importance Of Cost And Expense Controls To Digital's Long-Term Future By Bill Thompson, Vice President - Controller
Simply put, Digital's cost and expense controls are our way of managing a very tough business challenge. It is a natural management response to a near-term business problem and a longer-term expectation of more intensive competition in our industry. Digital is financially strong with $760 million in cash and temporary cash investments available for our immediate use in the business.
This money came, in part, from investors who expect a return on their investment. Their money and our retained earnings is available to let us invest in new products, new plants and better equipment. This enables us to continue to make and sell leadership products and to help us protect our position as the second largest computer company in the world. In Digital's case, that is what making a profit is all about—having enough money to invest in the company's future.
Digital makes its expense control decisions based on our understanding of the future outlook of our business. As the future outlook has become less certain, we have had to take further steps to curb spending. For the last eighteen months, our expectations of business have been going down, so we have been enforcing more and more stringent cost and expense controls. This has enabled us to continue critical engineering, product and marketing investments and to keep the company in a good position to take advantage of the up-swing in the business cycle when it comes.
There are many chapters in the book of a company's expense control practices. We have done everything rational and reasonable, which we have thought necessary, given the specific business conditions at specific decision points. We initiated the salary delay measure when we realized our business was not going to turn around as quickly as we had hoped. The decision about whether or not to continue the salary action deferral will be made and communicated the first week of December.
Whether or not customer demand for certain of our products remains weak, we expect to see positive results from the revenue from Digital's personal computers starting in Q3. In other words, we expect results in Q3 and Q4 to be positively helped by shipments of personal computers. But in the meantime, every employee must be particularly flexible and creative in finding new ways to reduce expenses.
We owe it to ourselves, our investors and our employees to avoid unnecessary spending which does not clearly generate revenue today or is not critical to Digital's future interests. If we apply this rule in examining each and every spending decision then we, and I believe our investors, can accept the short-term financial results, because we have done our best. The future of DEC is very bright... indeed!
Volume 1, Number 2 __ December, 1982
Hard Work Is Important To Digital's Future
Strength For The Future In Networking
Update On Personal Computers
New Digital Reaffirms Old Values By Win Hindle, Vice President, Corporate Operations
Broadcasting The World's Best-Kept Secret
Digital Cited For Management Excellence
Hard Work Is Important To Digital's Future
"I'm very pleased at the improvements we've made over the last few years. We've had weaknesses. Now those weaknesses are solved or well on the way to being solved, and the state of the company is good," said Ken Olsen, president, to 325 senior managers at the recent State of the Company Meeting.
"It's been hard work getting here, and I'm sure you're exhausted, too. But, it's the hard things we remember, that make us grow, that give us satisfaction. So, for the next 25 years, I won't pray just for good times, but rather that we have the strength to keep going and continue to grow, to have quality products and to be good at what we do.
"We've got a lot of new products coming that look very good, and technology in the laboratory that looks great. We're boldly investing in the future. Our order rate has improved, but it's still not good enough. So, we're going to have to struggle and be economical for some time to come.
"We've got the most fun industry of all," said Ken. "Let's help people dream about it and prepare now for the marvelous capabilities we can and will provide."
Strength For The Future In Networking
"Our ability to connect all of Digital's products in networks is an important competitive strength." That was the theme repeated at the State of the Company Meeting by Bernie LaCroute, manager, Distributed Systems Group; Bruce Ryan, manager, VAX Base Product Marketing; Peter Conklin, manager, PDP-11 Program Office; and Rose Ann Giordano, manager, Large Computer Group.
As Rose Ann put it, "Networking is key to LCG customers. Most of them have adopted distributed computing as a way to make computing resources available throughout their organizations. They are looking for faster, better local area networks and long-distance communications for homogeneous and heterogeneous computer systems."
"Digital is the leader in horizontal networking," explained Bernie. "We have learned a great deal about networking over the past seven years. While other companies are just getting into that business, we already have 8000 DECnet systems installed in the world. That represents over 100,000 terminals which are connected to our networks and over a million accounts and users on network systems. We have also delivered and installed about 4000 IBM emulators."
According to Bernie, IBM uses an hierarchical networking approach, linking its computers vertically to central mainframes. In other words, a user at a terminal on an IBM 8100 who wants to talk to a user at a terminal on a System 38 must first ask the mainframe "boss” computer for permission. Digital, on the other hand, interconnects computers horizontally, on a peer-to- peer basis. For instance, a user at a VT100 terminal on a PDP-11 computer can communicate directly with a personal computer user. "That capability is extremely important because it reflects the way organizations and companies work," noted Bernie. "You have to be able to ask your neighbor a question without having to ask the boss every time you want to do so.
"Furthermore," he added, "we have the advantage that our networking implementations are compatible throughout our wide range of computer systems — from personal computers to mainframes, giving users transparent access to files and records. And we can integrate multiple protocols — for Digital- -to-Digital communication, for X.25 packet-switching networks, and for access to IBM networks — within a single architecture. So, once again, users have convenient access to the files they need.
"Today we can tie all of our computer systems together using DECnet Phase III. We are developing and will announce in coming months, the software and hardware needed to tie them together in local area networks, and to tie those local networks to DECnet and other networks. We support the only industry-standard local area network. And our local area network support is fully integrated into our overall network architecture, something that, so far, nobody else in the industry has been able to do. We are also developing technologies that are useful for building other kinds of local area networks, including broad-band (for carrying voice, data and video) and PBX (extensions of telephone systems that can carry data as well as voice).
"Our overall approach to networking is independent of the carrier technology," Bernie continued. "We can run our networks over a telephone-switch network or over co-axial cable, whether it be broad-band or base-band. For customers, this represents a guarantee against obsolesence."
Update On Personal Computers
"We're entering the personal computer market in volume this month. We're ready to sell and support the products in the field. We've had a very positive reaction to our products. We think there's an excellent outlook for achieving our volume and business goals this year," reported Bill Avery, manager, Terminals and Workstations Engineering, at the December 1 State of the Company Meeting.
"We wanted our personal computers to be user-installable and -maintainable without special training. We've done that. The engineering issues are behind us. For service, we've implemented complete telephone support for key applications as well as for basic products. You can call one number and get help on your personal computer.
"A year ago, our goals were to have the Professional software available in November, the DECmate software in December, and to have Rainbow software in October. All of this software is available now. We will be shipping products for revenue in December," said Bill.
"Meanwhile, we're providing leadership tools and services to companies that develop applications software. They're the lifeblood of that market because people buy personal computers to solve problems and run applications," he emphasized. "We're not only bringing basic products to market, we're bringing applications to the market with those products," he continued.
Digital will sell personal computers directly to people who want to buy more than 50 units a year. For smaller quantities. Digital will sell through retail stores or indirect channels. (Digital's own retail stores are now known as Digital Small Business Centers).
"The retailers we're putting in place must commit to a significant amount of training with us and a rigorous set of terms and conditions that will ensure the quality and effectiveness of the channels. ComputerLand is going to be trained in December. In a major selling month, they have committed two days from each of their stores to this training. That's the kind of strong commitment we're getting out of the channels," Bill noted.
Ninety percent of the personal computers being sold today end up with a printer on them by the end of the first year. To encourage this, Digital will have its printers in the stores along with the personal computers. "In sales, we have already signed about 200 quantity discount agreements," said Bill. "One of the interesting ones is with the Rochester Institute of Technology. They plan to purchase about 6000 Professionals over the next four years."
To push these products. Digital is planning bold advertising in The Wall Street Journal and key business and industry periodicals. In addition, there will be network and local market television ads on news and sports shows, and, starting in January, on "Meet the Press".
"In the past, quality has been lacking in the personal computer market. We're producing very high quality products. People expect quality from us as a company. We've got a reputation for it. We're going to maintain that reputation. We're going to be a leader in this market," concluded Bill.
New Digital Reaffirms Old Values By Win Hindle, Vice President, Corporate Operations
As we move ahead with changes in our business goals and procedures, streamlining the organization to eliminate redundancy, we must keep in mind that the fundamental values that underlie Digital are not changing. In fact, the changes result, in large part, from a reexamination and reaffirmation of those values. The New Digital, in effect, reinforces the company's basic philosophies.
For instance, we must clearly define responsibilities. People should be able to propose plans, get them accepted (or, if not accepted, changed), then have the charter to carry out the plans and be measured on the results. We don't want people running with plans they don't believe in and don't accept. People do not perform well under those circumstances.
Another important value is our commitment to everything we promise to our customers. This strong commitment-keeping distinguishes Digital from many other companies. We must do everything in our power to follow through on our obligations.
One of the most exciting things about Digital has been the growth opportunities for the business and for the individuals involved. But we always have to remember that growth is the result of doing things well. The real satisfaction comes not from the growth itself, but rather from the high quality of products, services and people.
Another value, competence, is related to responsibility. We want the very best people — our customers expect it; we expect it; and we enjoy working with competent people.
Cooperation is another important element in Digital's value system. Unfortunately, we have allowed "functionalism" (commitment to a relatively narrow part of the company's business) to grow. Sometimes the barriers between groups interfere with our working together. If we are going to continue to improve our productivity, no single function in this company can work in isolation.
So, even though some roles in the New Digital are going to change, the underlying philosophical bedrock of the company is just as strong as before. The challenge is to improve productivity while maintaining these basic values and working for customer satisfaction.
In the years ahead, we are going to face far more intense competition than before the recession. We expect people will be challenged by this new environment. We expect that it will provide the kind of excitement, growth and fun that Digital and its employees have enjoyed in the past.
Broadcasting The World's Best-Kept Secret
"The role of advertising in the New Digital is to help divulge the world's best-kept secret: Digital Equipment Corporation. Not the bits and bytes, but the simple presence of a great company with great capabilities," said Dick Berube, director, Corporate Communications, at the State of the Company Meeting.
"To be successful in the office and personal computing markets, we must reach huge numbers of people. The most efficient way to reach them is by television. But television, by definiton, requires simple messages. We have to fight the temptation to tell folks how to build a watch when all they really want to know is what time it is. Our goal is to let the world know who we are, without confusing them with tedious detail.
"Less than 10 percent of the people who should know Digital actually do," explained Dick. "Our goal is to raise that awareness level in 18 months to 96 percent. That means that virtually every member of our target audience should receive an average of 15 advertising messages about the company between now and the end of FY84.
"One of the worst things we could do is to look and sound like everybody else. Advertising is being created for Digital that will position us as experienced, authoritative, dignified and professional. We’re going to show professional people — managers, owners, doctors, lawyers, brokers, physicists and office workers — working in real-life situations.
"We are proceeding with thoughtful urgency," Dick added. "We want to be on television on January 1 with the Rose Bowl and on January 23 with the Super Bowl. Also, Digital has purchased a six-month half-sponsorship of 'Meet the Press,' which is seen on Sunday morning. This program will give us a total of about 27 minutes exposure to a very select piece of our target audience.
"We want to reach the people who influence computer purchases. We believe that they watch programs like '60 Minutes,' evening news, NCAA Basketball Playoffs, major golf events, 'Nightline' and specials (such as space shuttle coverage). Present plans call for buying 25 different kinds of program properties in the course of a year for a minimum of 200, perhaps 300 or more minutes of advertising. Additionally, we are planning magazine and newspaper advertising to spread Digital's messages in greater detail.
"The message to our sales people is — help is on the way; stay tuned."
Digital Cited For Management Excellence
Digital is one of 42 companies cited in the new management book, "In Search of Excellence, Lessons from America's Best-Run Companies". Co-authored by Thomas J. Peters and Robert H. Waterman Jr., the book focuses on the characteristics which have made the companies successful.
The best-managed companies practice the KISS principle: Keep It Simple, Stupid. They "learn from their customers. The best managers value action above all else, a spirit of 'do it, fix it, try it.' They insist on top quality in their products. They solicit their employees' ideas and 'treat them like adults,' allowing talented people 'long tethers' for experimenting." (Time Magazine, Nov. 15, 1982)
Volume 2, Number 1 January, 1983
U.S. Field Regroups To Take On New Responsibilities
Ed Kramer To Head Technical Group
New Market Group Created
Ken Olsen Explains The Goals Of The New Digital
Win Hindle Talks About Transition To The New Digital
Ken Briefs U.S. Senate On Office Automation
Coping With Unprecedented Change, Intense Competition
Digital In The Press
U.S. Field Regroups To Take On New Responsibilities
Effective immediately, Sales in the U.S. will be managed through three Area Management Centers, each of which incorporates existing Regions. Reporting to Jack Shields, vice president, group manager, these Area Centers will be responsible for geographic Sales, the revenue plans, backlog management, and the consolidation of all operational goals and tasks; this includes the primary interface to Manufacturing for Order Administration and product forecasting. They will help the sales organization to target opportunities and propose plans. They will also interpret strategic marketing plans for tactical implementation by the sales function and provide geography-specific support Programs. In addition, they will be responsible for industry marketing including the government and telephone companies accounts. They will be located in the Greater Maynard area.
The first, managed by Chick Shue, includes the Northeast and New York/New Jersey Regions and is responsible for the telephone companies accounts. Dick Pascal will replace Chick as New York/New Jersey regional manager.
The second, managed by Harvey Weiss, includes Mid-Atlantic and Southern Regions and is responsible for government accounts. The third, managed by Dave Grainger, includes the Western; Southwestern and Central Regions and has responsibility for the U.S. Area Distribution Group.
U.S. business operations which have been part of the product groups will be shifted to these new Area Centers by July 1. For the interim, each Center will work in association with specific product groups to ensure that FY83 revenue plans are met. The transition has already begun and is being managed by Owen Brown, who is on temporary assignment from the Technical Volume Group.
In addition, the role of Corporate Sales, to be managed by Jerry Paxton, is being strengthened. It will now include worldwide responsibility for new product introduction, sales training, technical support, international account management, and the existing sales program function.
Ed Kramer To Head Technical Group
New Market Group Created
A product marketing group has been created to meet the equipment needs of Digital's entire installed customer base., Called the Installed Base Product Group, it will consist of the Accessory and Supplies Group (A&SG) and the Traditional Product Line (TPL).
The group will also focus on the sale of add-on products, thus centralizing this function under Wayne Furman. John Alexanderson has been named manager of the new product group. He will report to Jack Shields, vice president, group manager.
Ken Olsen Explains The Goals Of The New Digital
"The goals of 'The New Digital' are quite simple. We want to simplify the company and increase our efficiency and productivity," said Ken Olsen, president, at December's State of the Company Meeting. "As much as possible, we want to give each group the opportunity to first propose their own goals and then to have complete responsibility for accomplishing their plans.
"Our campaign has been to have everyone have goals which are theirs and to give them the freedom to accomplish them," he emphasized.
"I think we've gotten some good results from many of the things we've done as part of 'The New Digital'. Some people say we shouldn't call it 'The New Digital', that we're just trying to return to some of our old values and we're not a new company. But, we still call it 'The New Digital'. Some of the good things that have happened we like to credit to 'The New Digital'," he explained. As examples, he noted the transfer of business and planning responsibility to the country managers in Europe, reorganizations in Engineering, and the recent creation of the Business and Office Systems (BOS) Marketing and Engineering groups.
Alluding to the pending transfer of customer operation responsibilities to the U.S. field operations from the product groups, he said, "One of our goals in these changes is to free our marketers from most non-marketing tasks so they can create effective marketing programs."
"The results of change are usually good because every time you make a change, every time you move or change the furniture, you end up cleaning house. Periodically companies have to change the way they're organized because when they stay constant for a very long time, people start to work on the measurements and lose sight of the obvious goals; the reasons for their work. We have been due for changes and the economic slowdown has given us the chance to begin some of them," he emphasized.
Win Hindle Talks About Transition To The New Digital
"This is a transition year for Digital. It is important that we all understand the important issues that we are trying to address and what we can do to help bring the company through this a transition period to a new era of productivity and efficiency," said Win Hindle, vice president, Corporate Operations, at a recent meeting of senior managers.
"The most important task facing the company is meeting our FY '83 budget. We want the whole corportion to make its goal for the fiscal year. When we put together the budget we knew it was a tough goal, but we still intend to meet it.
"Roles in some organizations have already changed as we evolve into what we are calling 'The New Digital'. But to succeed this year, we need to continue with the same kind of sales and marketing alliances that have made Digital strong. In other words, the marketing and sales organizations must work very closely together in order to make this transition process succeed," he explained.
Win also emphasized the need to market and sell what has been already ordered from Manufacturing. "We have a lot of exciting new products which are in a start-up phase and we want to book as many orders as possible for these products. However, we have other products which are not so new but which we have already ordered. We have to be creative and do competitive marketing for the products that are now flowing through the Manufacturing system," he emphasized.
"Marketing must continue to take a leadership role in the company in the future," he added. "They must lead Digital to a greater market share in the segments they're responsible for by organizing the resources of the company so we can win. They must provide expertise to users and potential users in the competitive environment.
"Marketing is the thread that binds together the various company to make plans clear. It ties together products, the promotional messages, the merchandizing, the sales and service plans,and everything around the product that is needed to make it successful," he said.
He clarified the meaning of the terms "markting markets" and "sales sells":
Marketing Markets: Marketers must understand the opportunites in their designated market segment: the product capabilities and waht the customers say they will need in the future. They must understand what products and services are being offered competitively. They must provide the plans and promotional material needed to support product sales and those plans have to be written and communicated to related resources in the company so they are understood by everyone: sales, advertising, sales training and customer service. The bottom line is that the marketing plan should make it simple for sales to sell.
Sales Sells: Sales must understand the opportunities in the local areas...the markets as well as the customers. They must know their accounts very well and be able to anticipate needs...not just needs related to one part of an account, but the account as a whole. They also need to figure out what marketing plans apply to specific segments of an account. They must deploy the right resources into specific geographies to maximize Digital's ability to sell products. Their bottomline is to get results on the plans they have promised the corporation on an account-by-account basis. They will draw from marketing strategies from all over the corporation to help achieve their goals.
"In The New Digital, some organizational changes have been evolving for a number of months. They are being put in place to make Digital more efficient, to make it easier for customers to do business with us and to make it easier for employees to identify goals and work to meet them," Win explained .
Ken Briefs U.S. Senate On Office Automation
Considering office automation for its own operations, the U.S. Senate invited chief executives of major suppliers to discuss the current state of the technology as it relates to the Senate's needs. Ken Olsen was the first to testify before the Senate Committee on Rules and Administration on December 8. Excerpts from his remarks follow:
"For a long time we refused to use the words 'office automation' because to some it implied doing mechanical jobs that human beings performed. It also made the technology sound intimidating. But this technology, in fact, helps people do the things they do best, and takes care of dull chores that are not creative and not satisfying. It frees people to be creative and productive. It makes their work more enjoyable.
"We use word processing and electronic mail at Digital, and have for several years. First thing in the morning when I come in with half a dozen notes addressed to 14 people, ray secretary keys them in and edits them on her screen. If the messages look clean to her, she pushes a button and they immediately go to all 14 recipients anywhere in the world. We now have 8000 terminals at our facilities around the world, and it is not uncommon to have my memos delivered by 8:30 in the morning.
"It's hard to measure efficiency and cost-saving in an operation such as ours, but being able to communicate quickly, easily, and positively is very satisfying. In fact, it is hard to conceive of business life without this capability. My secretaries like it so much, I am afraid they'd leave if we ever eliminated it."
He noted that Digital's office automation systems are being used today to solve informational needs of the Federal government. For example, a Federal agency uses our systems to track correspondence and reduce the time it takes to respond to Congressional inquiries. The White House staff uses our electronic calendar and scheduling system. The Federal courts use our electronic mail system to speed up issuing judicial decisions. Also, a Department of Defense organization has automated its procurement and purchasing functions through the use of our word processing.
He added that effective office automation networks must complement and coexist with the networks that the Senate already has in place, and emphasized that Digital is committed to help solve the problems associated with multi-vendor networks. We support industry and government standards for networking and will continue to try, wherever feasible, to develop products which conform to existing or planned standards.
Coping With Unprecedented Change, Intense Competition
"This is a period of unprecendented change in our industry — a time when new markets and unique opportunities are opening and also a time when we are exposed to more intense competition than ever before," noted Larry Portner, vice president, Corporate Planning, at the State of the Company Meeting.
"Competition among computer suppliers has been sharply intensified across the board. Everybody wants in. The stakes are big, and it!s easier to enter this business than ever before. The technological barriers to entry are lower and the potential rewards are greater than ever before. This is one of the most dramatic growth industries of all time, and the marketplace is still relatively immature. The survival mentality, stimulated by the recession economy, further intensifies competition.
"Meanwhile, the Japanese have stated an intention to dominate the computer industry in the 1990s. As a result of and in reaction to their efforts, the pace of technological development will accelerate. Not that we'll end up where they've predicted, but now the technological target is clearer.
"To win in this new environment, we must bring our unique strengths to bear. Where we have an edge -- for instance, in service, in storage systems, in distrituion -- we must use it to distinguish ourselves from newcomers to the field. We must develop new markets and stay strong in mature markets. We ahve to stay alert for opportunities that don't fit nicely into the organizatinal structure that we currently have. We're going to have to sponsor a new mode of collaborative behavior so we'll be able to find important market opportunites and particiipate in them early," he concluded.
Digital In The Press
Digital ranked as the seventh most admired of the 200 largest U.S. corporations In a recent Fortune Magazine survey. It was second in the office equipment and computer industry. The survey was answered by 51 percent of the 6,000 executives, outside directors and financial analysts polled about the reputations of the ten largest companies in each of America's 20 largest industries.
Companies were rated on eight key attributes of reputation: quality of management; quality of products or services; innovativeness; value as a longterm investment; financial soundness; ability to attract, develop and keep talented people; community and environmental responsibility; and use of corporate assets. The overall score for each company was the average of its ratings in all eight attributes.
Reporting the survey results in the January 13, 1983 issue of Fortune, Claire Makin wrote, "Digital Equipment, Number 7, ranks second only to IBM in the office equipment group. 'Digital is perceived,' says Michael Geran, vice president and computer-industry analyst at E.F. Hutton, 'as the company that founded and continues to dominate the minicomputer market.' For innovativeness, Digital gets a 7.86 (10 is perfection), eighth among the 200 companies surveyed. It was rated 8.18 for management and 8.13 for products, both outstanding scores."
Makin noted that, "Almost all the high-rated companies stress motivating and retaining their most promising managers by allowing them freedom to make decisions within a few broad policy guidelines." Digital was one of six companies surveyed that prides itself on being decentralized.
Digital ranks third in the office information systems marketplace after a deadlock between IBM and Wang for the first and second spots according to the September 1982 issue of Open Systems newsletter. Last year Digital was not ranked in the Top Ten listing of Open Systems. "DEC has made a dramatic one-year jump from way back in the pack," the article said.
"Last October DEC began playing its own cards—many of which, according to industry observers, could turn out to be aces." So begins an article entitled "DEC, a winning hand?", which was in the September 29 special edition of Computerworld OA. The article traces Digital's entrance into the new market and notes that "minicomputer giant Digital Equipment Corporation has decided to get tough in the office."
Volume 2, Number 2 February, 1983
Jack Shields Addresses Sales Symposium
Ken Talks About The Small Business Market
Digital In The Press
Planning Process Emphasizes Strategic Investments
Personal Computer Notes
Management Center Update
Jack Shields Addresses Sales Symposium
At a symposium for some 500 representatives from Digital’s worldwide Sales and Service organizations, Jack Shields, vice president, Group manager, talked about recent changes in and upcoming expectations of the organizations .
"About a year ago, we began the process of realigning responsibilities to enable the European subsidiaries to make changes so they could react more responsively to the market. We have just begun this process in the U.S. and expect to have all operational responsibilities transferred to the newly-created Area Management Centers by July 1.
"Basically, we've positioned ourselves to take advantage of the new competitive environment of the '80s. We've reduced our cost structure. We've altered the responsibilities of the product groups, and we're initiating new ways of approaching our marketing plans and our sales organization.
"We're creating a balance between our strategic plans and the deployment of resources. I expect the Field to look at the marketing plans, programs and strategies, and put together their plans, programs and budgets in a way that will respond to the opportunities available for new accounts.
"I want to make sure we have a strategy for the development of new accounts. We do well with our existing accounts and we tend to assign resources to accounts that we know have potential. But we also have to take the time to look carefully at new opportunities for sales.
"We have a fantastic opportunity with some of our new products, which provide new opportunities in new markets. We have the ability to call on people who we previously would not have called to begin a dialogue about the opportunities and solutions we have for these customers," said Jack.
In talking about the future, Jack mentioned that the Operations Committee recently approved growth for the Business and Office Systems group and Digital Business Centers. He also noted that Digital is continuing its efforts to simplify its contracts to ensure that as the company changes, it responds to the needs of its customers. When completed, contract simplification will make Digital appear to the outside world more as one company than as several diverse businesses.
"We've created a new focus at the corporate sales level with Jerry Paxton as our Corporate Sales manager. We want a different approach to the management of our international accounts. We want to be able to make commitments that transcend the geographic boundaries of our organization. We've got to be able to do that while at the same time deploying local resources to solve local problems. This is an important balance which must be maintained.
"We've just created a new market group to focus on sales to the installed base. I believe that we are talking about a huge market here. We have excellent products to help us. For example, the new disks and tape units position us perfectly to take advantage of this customer base. In addition, new Field Service programs will allow us to be more flexible as we upgrade our customers' equipment to better meet their needs.
"We want to focus on management skills, particularly the definition of jobs so that we make people proficient in the basics. For example, at the sales unit manager level, we have people who are exceptionally good in dealing with customers and sales people. These are the skills we will develop in them. And then, at the district and group levels, we begin to add responsibilities such as budgets and, perhaps, profit and loss or contribution margin. We also might add the general management skills which will enable us to develop the managers we need in the future and avoid putting people in positions for which they are not prepared.
"We're also going to continue to look at our sales productivity programs. We're doing well with the larger accounts, but there are a number of sales people who aren't involved with these accounts. They need to know the products well and must be able to ensure that we have a good business relationships with our customers. We have to begin to think about the special kinds of skills and industry knowledge that these people need," he concluded.
Ken Talks About The Small Business Market
At a meeting of Digital's small business channels managers this month, Ken Olsen talked about Digital's need to become more aware of what the small business person needs. He also emphasized the importance of the stores to Digital's selling strategies.
"As the products get less and less expensive...and they have a long way to go...it becomes less and less logical to send people out to make a $3,000 or even an $8,000 sale. When people buy things in this category, its very much like when they buy cars. They will go long distances just to look over the products. Our strategy is to make certain that when they make that long drive, they stay to look at the computers, they aren't intimidated, and they learn about our products.
"When most small business people go to a store, they don't necessarily know what they want. They are ill at ease. They don't all want to talk to the sales people, because they might not know enough to discuss the computers.
They really like looking over the equipment, taking some literature and going off to learn about the computers on their own. Later, they will be ready to talk business.
"One of my ambitions is that we, as a company, learn how a small business person feels. There's something about running a small business and running a store that ‘you have to be sensitive to. They are terribly proud. They are also very economical. They never want to spend a dollar more than they have to, but they want the best. They want the best equipment, accessible and good service and reliable performance.
"We have to learn how to listen to what people want. We've got to find out what people are thinking, what they need."
Digital In The Press
"Engineering a. Compi1er by Patricia Anklam et al. [David Cutler, Roger Heinen, Jr., and M. Donald MacLaren] could have been subtitled Soul of £ New Compiler... the book provides a close, highly technical look at the development of the PL/1 compiler written for Digital Equipment's 32-bit VAX machines. A step-by-step chronical of the programming team's progress is provided, and even a few photos of notes the team kept. Technical jargon is kept to a minimum in this book which displays no lack of a sense of humor: one section is entitled 'Domesticating the Beast.' Published by DEC itself in Bedford, Mass., at $24, the volume should appeal to anyone — computer scientist, software engineer, or student -- attempting a similar project on other equipment." (John W. Verity in "Literary Roundup," Datamation, Jan. 1983.)
From an article in The Boston Globe by Ron Rosenberg, January 25, 1983:
"Several investment firms viewed Digital's second quarter . .. as a bellwether for the Maynard computer maker which has been one of the last computer builders to feel the pinch of the economic recession.
"'The results are spectacular when you consider how everyone on the street figured hardware equipment sales would drop to the floor,' said Donald Brown, a vice president of research at Shearson/American Express Co. 'The good news is that orders seemed to have firmed up. Earnings are under pressure as Digital is in the middle of a new product cycle.'
"A key to Digital's new products -- and future -- is the personal computer. Brown expects personal computer sales in the next two quarters to boost revenues and add to earnings."
Planning Process Emphasizes Strategic Investments
During the next three months, long-range plans and budget requests will be carefully analyzed by senior management in an effort to ensure that resource allocations for FY 184 help Digital meet its ongoing goals of competitiveness and leadership. The current long-range planning cycle has just been extended by one month (to April) to make certain that ample discussion takes place around planning unit proposals.
"With the continued uncertainty in the economy, there will be lots of pressure to contain costs, but this must not stop us from investing in programs that help Digital remain a major force in the computer industry. Our planning process separates spending for tactical and investment purposes. It thereby helps us identify and assess our new investment opportunities," explains Sheldon Aronoff, manager of Corporate Financial Planning and Analysis.
"In FY'83, our strategic investments included the expansion of the Digital Business Centers, the establishment of the Business and Office Systems Group and a continued investment in personal computers. As part of the FY '84 planning process, management will assess strategic investment recommendations and make sure the vital ones are supported.
"Overall productivity investments must also be made to make sure that expanding work needs are met without major staffing increases. Items that fall into this investment category include automation in Manufacturing and Engineering, for example, Computer Aided Design and Computer Aided Manufacturing and artificial intelligence," says Sheldon.
