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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

 

Appointments

Marketing At Digital By Ken Olsen, President

 

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 cus­tomers' 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 prod­uct and the customer. Each individual or team will take complete responsi­bility, 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.

 

Working Toward One Company by Win Hindle, vice president, Corporate Operations

 

As we strive to reduce Digital's cost and expense structure, we must con­sistently remember the importance of teamwork and our need to be ONE COM­PANY. With everyone working toward the goal of Digital's short- and long­term financial and technological success, there will be no holding us back. Without everyone pulling together, we will experience internal competitive­ness, 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 re­versing 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 respon­siveness 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 addi­tional 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.

 

Ken Olsen's School Of Management

 

This spring, Ken Olsen, president, gathered top managers at the Westminster, Mass., facility to give them first-hand experience in ordering and assembl­ing 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 neces­sary 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.

 

Suggestions For Reducing Travel Costs by Beebe Meyer, manager, Corporate Travel

 

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 addi­tion, 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 in­volved 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 guestsare 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.

 

Corporate Communications Divided Into Two Groups

 

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 Communica­tions Group. He has held various positions in his 13 years with Digital, including manager of Central PDP-11 Marketing, manager of the Product Pro­motion Group, manager of New Products Marketing, and most recently, manager of Marketing Research and Competitive Analysis.

 

Field/Manufacturing Business Center Reorganizes

 

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, de­livering 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."

 

Appointments

 

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 profes­sional 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, report­ing 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 Manage­ment, 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 Per­sonal 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.

 


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