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Articles
about DEC
mgmt memo
Volume
4, Number 6
October 1985
Marketing
At
Digital By Ken Olsen, President
Working
Toward
One Company by Win Hindle, vice president, Corporate
Operations
Ken
Olsen's
School Of Management
Suggestions
For
Reducing Travel Costs by Beebe Meyer, manager, Corporate
Travel
Corporate
Communications
Divided Into Two Groups
Field/Manufacturing
Business
Center Reorganizes
The computer industry is in the doldrums, but
with the products we have, if we organize the marketing correctly,
we should be in a position to have a much larger market share, and
to do very well. I believe we have a year’s head start in
networking capability, so this year we have to fill the world with
VAXs and Ethernet.
We have to do this immediately. Our plans have
to show immediate results. This should not be difficult because we
have the products, and we have the expertise. We have to put all
of this capability together to solve cusÂtomers' problems with
products, and to systematically sell these to the specific
industries.
Marketing's
Transition
Digital must focus on providing customers with
excellent products, which means total business solutions. By
products I mean hardware, software, applications, installation and
training. From a customer perspective, this means we offer what
they need and it is easy for them to do business with us. It also
means that our equipment is easy to install and easy to use.
To compete effectively in the future, we must
o build highly integrated hardware and software
solutions,
o use our marketing and channel resources more
efficiently and effectively, o focus efforts on key industries.
Former
product lines
The original product line structure at Digital
had some wonderful results. By breaking the responsibility into
pieces we gave people the authority to accomplish their own goals.
We ended up with more opportunities than could be exploited, and
much more growth than possibly could be accomplished.
The product line manager job was designed to
exploit Engineering as it was, Manufacturing as it was, Sales as
it was, and the products as they were. Product line managers were
expected to build a business model tying all of these together to
make a profit even though they did not run each of these areas
every day. In time, product line managers complained and said that
they couldn't be held responsible for the overall picture if they
didn't give orders in each of these areas. As they began to do
this, it took so much time that they didn't get around to
understanding the product, or marketing it, and they did not take
responsibility for the group's results. In time, very little true
marketing was done; more time was spent telling Sales, Engineering
and Manufacturing what to do.
Probably the most serious problem was that the
marketers lost their focus on understanding the product and the
customer.
Today's
focus
Today we have, by far, the best set of
products, and we are the only company in the world that can
integrate them all into large systems, and communicate effectively
and easily.
We plan to solve our marketing problems by
breaking the market into two major pieces: products (applications)
and industries. We will further break them into other pieces and
assign the responsibility for each piece so that there will be an
individual or a team that will be expert in both the prodÂuct and
the customer. Each individual or team will take complete
responsiÂbility, even though they do not have absolute and
complete authority for all of the details.
Most Marketing people will continue to do what
they are doing today, but there will be some shift in focus and
some will have different managers. Our goal is to:
o move entire groups of people
o execute plans, goals and activities as
planned until the transition is complete
o have a smooth transition in which everyone
comes out a winner
We will sell what we have, and do it
immediately. Each team will organize the products we have for
their particular application or industry, and systematically
market and sell them.
Expectations
We have formulated a set of plans that commit
to results for the next three quarters, by quarter. We will review
the plans for most products and markets once a quarter at
Executive Committee and Strategy Committee meetings. However, the
most urgent plans will be reviewed once a month by the Executive
Committee.
Each review will look at what orders were won
and lost, how we are doing with plans, and what updates to the
plans are necessary. The key part of each plan is selling what we
have, but it must immediately include those things we need in
order to complete products.
We have before us some exciting opportunities.
We have superior products and our technical capabilities outweigh
those of our competitors. But, there is urgent need for change in
the way we approach the marketplace. We must begin now.
As we strive to reduce Digital's cost and
expense structure, we must conÂsistently remember the importance
of teamwork and our need to be ONE COMÂPANY. With everyone working
toward the goal of Digital's short- and longÂterm financial and
technological success, there will be no holding us back. Without
everyone pulling together, we will experience internal
competitiveÂness, and diffuse our energies and capabilities to
compete successfully in the external environment.
As managers, it is our job to deliver our work
at the lowest possible cost and the highest possible quality. Each
of us must be individually committed to strengthening the company,
improving our customer satisfaction, and reÂversing the profit
margin decline. However, to maximize our efforts, we must work
together. By doing this, we can focus our energies where they will
produce the most good: on winning against the competition.
Expense control is an individual effort. It
requires faith in each other's motivation to cut expenses so that
everyone feels their contribution makes a difference. It requires
managers to make certain their operations are run as efficiently
as possible at all times.
After you pull back all of the layers and use
all of the descriptive names, expense control comes down to
teamwork — pulling together to truly be ONE COMPANY with one
strategy and one message. Teamwork requires discipline. It
requires trust. We have seen teamwork become more and more a part
of Digital's senior management style, and we expect it to be the
management style of the future throughout the company.
The teamwork between the Field and
Manufacturing in improving our responÂsiveness to customer needs
illustrates why we are as strong as we are today. Examples of
cross-functional efforts increase every day; for instance:
o Marketing, Engineering, Manufacturing and
Sales coordinating their efforts for the MicroVAX II introduction;
o Sales and Service working together in the
Selling Services program; and
o Engineering and Manufacturing striving to
improve product quality and reduce manufacturing costs.
These kinds of team efforts are vital to
Digital's short- and long-term success.
The way we have been going about doing our jobs
involves too much overhead; we do too many things that are not
absolutely necessary to the successful running of the business.
We've got to work together and take the risks inherent in trusting
each other in order to sort out those things that are essential
from those that are nice, but not essential. When we do that,
we'll have molded our cost structure into a shape that will allow
us to achieve the kind of profit levels a first-class company
should earn.
We've gone from about a $2 billion to a $6.7
billion company in sales during the last five years, and yet our
profits have not increased. All that addiÂtional potential profit
has been consumed because our cost structure has grown faster than
our sales. Together, as one team working toward one goal, we can
turn this situation around.
This spring, Ken Olsen, president, gathered top
managers at the Westminster, Mass., facility to give them
first-hand experience in ordering and assemblÂing computer systems
from Digital. "Digital is a product company," explains Ken. "Our
whole strategy is based on products and what our customers want
from our products. Above all, these products have to work together
in systems and in networks. So to assure that our senior managers
stay current with our products -- so they can provide necessary
leadership — we arranged a one-day 'Ken Olsen’s School of
Management.'"
Ken divided 24 of the company's top managers
into six groups, assigned each group a problem, and gave them a
month to design the system and network necessary to solve the
problem and order the equipment. On the day of the School, in an
empty bay in Westminster, there were six piles of cardboard boxes
that included all the equipment each of the groups had ordered.
A major part of the educational experience was
designing the systems, and learning to use the catalogs and order
processing system to get the necesÂsary pieces. "The first
conclusion everyone came to was that we have too many components,
too many parts, and too many ways to solve a particular problem,"
says Ken.
The groups could get help in designing and
ordering the products, but on the day of assembling the system, no
engineer or technician was allowed to help them. Two VAX-ll/780s,
in a cluster, were assembled ahead of time for everyone to use on
Ethernet, but other than that, everyone opened their own cardboard
boxes, found and assembled the cables, put the pieces together,
and then made the systems work.
"The groups learned a lot from this
experience," notes Ken. "For instance, Grant Saviers [vice
president, Storage Systems], who is responsible for the design of
our disks, discovered he couldn't tell which way the disk should
go into the drive. Win Hindle [vice president, Corporate
Operations] found he had trouble getting information from our
Atlanta Customer Support Center because he was not on the customer
list. Jeff Kalb [vice president, Low-End Systems & Technology]
discovered that assembling six workstations on a MicroVAX resulted
in an enormous amount of packing material and cardboard. John Sims
[vice president, Personnel] discovered that IBM PC computers,
which were connected in a large number to a MicroVAX computer, did
not compare, in operation or ease of use, to Digital's personal
computers."
By 2 p.m., the groups had finished the main
part of their task. Then John Adams, manager of strategic planning
and marketing for Distributed Systems, drilled the holes in the
Ethernet cable, and installed the transceivers, and every one
worked.
The only remaining difficulty related to a
piece of software from England that had not yet been released. The
half-inch magnetic tape which contained the software program was
defective and wouldn’t play on the VAXcluster. So on the spur of
the moment, the group pulled the end of the Ethernet cable over to
a MicroVAX computer that already had that software in it, drilled
a hole, installed a transceiver, plugged the computer into the
Ethernet, and immediately downloaded into the MicroVAX on the far
end of the Ethernet cable. Then the system worked without a hitch,
and there were no mistakes. In other words, the simplicity of
Ethernet made the solution easy.
At 3 p.m., they had a closing meeting to
identify all of the things they had learned, and everyone relished
their success in solving, so easily, the six worst problems that
Ken Olsen could think of.
According to a new U.S. policy, "Where provided
for, employees must use the travel service under contract to their
site for airlines, hotels/motels, automobile rental and any other
details associated with business travel." Also, a policy relating
to business expenses has been changed to state that employees are
now allowed to accumulate points from frequent flier programs as
long as, in doing so, no additional, unnecessary expenses are
incurred. The intent of both policies is to control costs, ensure
that the appropriate services are received for money spent on
travel and achieve full utilization of the company's travel
programs.
To qualify for the best possible airfares,
employees who travel for business should let their site’s travel
service know how flexible their plans are and book as far in
advance as possible. The savings can be considerable. Some special
fares offer discounts off regular economy of as much as 70%. Other
less restrictive fares have discounts of up to 35%. Airlines limit
the number of seats available at reduced costs; therefore, when
reservations are made as far in advance as possible, the
opportunity for securing a lower fare is greater.
Employees who travel frequently to the same
city can combine trips to take advantage of "back-to-back"
excursions. Convention fares can be negotiated for groups
attending meetings and seminars. Also, an increasing number of
hotels are offering volume discounts to Digital travelers. These
hotels should be used whenever feasible.
The following suggestions can also help reduce
travel costs:
o Avoid unnecessary changes in plans. Some
special fares have refund penalties if reservations are changed or
cancelled after ticketing, and airlines may have
different fares for different days or times. So a change in flight
times can result in a change in prices.
o When renting cars in the U.S, and
internationally, use Avis and National. Because of Digital's
contracts with these companies, rates in most locations are
significantly lower than rates offered by other rental firms. In
addiÂtion, Avis and National provide free Collision Damage Waiver
for rentals within the U.S. If other rental companies are used,
employees or their cost centers are responsible for the deductible
amount ($1500) if they are inÂvolved in an accident.
o Collision Damage Waiver is not provided free
on international rentals. However, it should be declined unless
renting in certain countries in the Caribbean, South and Central
America, Mexico, Africa and the Middle East. If involved in an
accident, the employee's cost center will be responsible for
paying the deductible amount (usually under $1000, depending on
car size, exchange rate and country.)
o Personal Accident Insurance should be
declined on all business rentals un1e s sfamily~members or guests—are
traveling in the vehicle with the employee.
o Whenever possible, return cars to the pickup
point. Most one-way rentals cost more. Cars should be returned
with full tanks because rental companies assess service fees to
refuel, charging premium prices for gasoline. And finally, rental
agreements should be reviewed carefully to ensure that Digital's
contractual rates have been charged.
o Remember, hotels charge for rooms that have
been "guaranteed for late arrival" and then not used. If
guaranteed reservations are not going to be used, cancel them and
note the cancellation number or name of the person taking the
cancellation, to avoid the "no-show" charge.
The Corporate Communications group has been
organized into Corporate Marketing Communications and Corporate
Public Relations. Both groups report to Win Hindle, vice
president, Corporate Operations.
Dick Berube, as manager of Corporate Public
Relations, will develop the detailed plans for his group. Dick has
been with Digital since 1973, when he joined the Corporate Public
Relations staff. He became Public Relations manager in 1975 and
was named Corporate Communications director in 1982.
In parallel, Peter Jancourtz will head the
Corporate Marketing CommunicaÂtions Group. He has held various
positions in his 13 years with Digital, including manager of
Central PDP-11 Marketing, manager of the Product ProÂmotion Group,
manager of New Products Marketing, and most recently, manager of
Marketing Research and Competitive Analysis.
The U.S. Area Manufacturing organizations that
supported the Northeast (NEAS), Middle Atlantic and Southern
States (MASS), and Western and Central States (WACS) are being
consolidated under the leadership of Abbott Weiss. At the same
time, the central functional groups of demand/supply, planning,
finance, customer information services, personnel, MIS and the
manufacturing corporate accounts team, in Chelmsford Mass., are
being consolidated and report to Don Hunt. Effective July 1, these
organizational alignments facilitate continued improvement in the
Field/Manufacturing interface.
"The Areas and Chelmsford are proud of the
progress made in the last two years in planning, scheduling,
on-time delivery, and revenue management," noted Abbott and Don.
"These are vital to company performance and will be maintained in
the future. Over FY86, we need to focus on becoming number one in
customer satisfaction, increasing our profitability, and
increasing employee satisfaction.
"The new U.S. Area team will address
operational goals of zero slips, deÂlivering when the customer
requested, becoming easier to do business with and improving the
invoicing and collection cycle. A better planning process and
elimination of some duplication between systems and organizations
should increase profitability, and employee satisfaction should
increase with the evolution of broader-scope jobs, and by clearly
communicating and managing the changes."
Carol Burke has been named Corporate
Staff manager for Personnel, reporting to John Sims, vice
president, Personnel. She has been Personnel manager,
Marketing/Finance & Administration, since last November and
will retain Personnel management responsibility for Finance &
Administration, reporting to Jim Osterhoff, vice president and
chief financial officer. A Digital employee since 1977, she earned
a B.A. from Furman University and an M.Ed. from the Harvard School
of Education, where she specialized in organization behavior.
Bo Dimert has joined Digital as Country
Manager for Sweden, reporting to Pier Carlo Falotti, president,
Digital Europe. With 19 years of profesÂsional experience, he
comes from IBM, where he most recently managed Large Accounts
Sales Field Support, CAD/CAM and scientific applications and was
responsible for more than 50% of IBM sales in
Sweden. He graduated from the Stockholm School of Business
Administration with an M.B.A. in economics.
Michael Ewing has been appointed
European Personnel director. Prior to joining Digital, he served
as vice president of Human Resources for Singer Corporation's
Europe, Africa and Middle East Division. He brings to Digital over
15 years of personnel/human resource management experience. He
began his new job in September.
Paul Milbury has been appointed
Assistant Treasurer of the company, reportÂing to Ilene Jacobs,
Treasurer. Paul joined Digital in 1979 and has held various
positions in the Treasury Department. He is responsible for Cash
and Investments, Banking Relationships, Foreign Exchange Exposure
ManageÂment, Compensation and Benefits Finance, and Corporate
Financing. Since August 1984, he has been manager of the Treasury
Department, succeeding Ilene Jacobs in that capacity. He has a
B.S. in economics and an M.S. in business administration from the
University of Massachusetts.
Jocelyn Scarborough has been named Human
Resources Development manager for the Field, reporting to Dick
Walsh, Field Group Personnel manager. Since joining Digital in
1973, she has served as a Personnel manager in the Field,
Manufacturing and Engineering organizations. Most recently, she
was PerÂsonal Computer Marketing manager for CAEM. She holds a
B.A. in applied art from Syracuse University, a B.A. in psychology
from Gordon College, and a M.Ed. degree in community mental health
from Salem State College in Mass. She has also completed the
Professional Management Development program at Harvard University.
Martin A. Toomey has joined Digital as
Group Marketing manager for the Terminals Business Unit (TBU),
reporting to Bob Huettner, TBU manager. For the past nine years,
Martin has been with Four-Phase Systems, Inc., as vice president
of International Marketing. He holds a B.S. in math from Fair-
field University and an M.B.A. from Boston College. Joe Meany,
manager of Market Development in Technical OEM since 1983, has
transferred to the Terminals Business Unit (TBU) and will report
to Martin Toomey as Marketing manager of TBU's Marketing
Operations. Joe joined Digital in 1971 as manager of Marketing for
PDP-11 OEM, served as OEM Product Line manager from 1974 to 1979
and ECS Group manager from 1980 to 1982. He holds a B.S. in
electrical engineering from the University of Notre Dame and an
M.B.A. from Northeastern University.