Vol. 10 No. 9__________________________________________________________________
December 1991
"MGMT
MEMO" was written by Richard Seltzer in Corporate Employee
Communication for the Office of the President. It was written
for Digital’s managers and supervisors to help them understand
and communicate business information to their employees. You can
reach Richard at seltzer@seltzerbooks.com
This issue of
MGMT MEMO deals mainly with the New Management System and
future directions of Digital’s business.
CONTENTS
Reaffirming the New Management System (Ken
Olsen)
To avoid the
temptation to view the New Management System as a
justification to do things the way we used to, we must
continuously repeat what it is and what it isn’t.
The
Enterprise
Information Utility — a Concept for Digital’s Future (Jack Smith)
We are leaving
the era of traditional data processing and computation and
moving to a new era of information creation, analysis and work
sharing that is in support of new, more competitive,
distributed business processes. Profitable markets for the
future will come from what we now call "The Enterprise
Information Utility."
The significance
of October 30 lay not so much in the individual products
announced as in the framework for the future of which they are
a part. We established a new playing field on which we and the
rest of the industry will be competing for years to come.
The Role of the ’Coach’ in the New Management
System (John Sims)
The word "coach"
is our way of emphasizing a style of management that many in
this company have used before and that is very important to
our future success. This style is applicable not just for
senior managers, but throughout the company.
The Market Shift from Functional to
Enterprise Excellence (Paul Kampas)
Key events
beginning in 1987 heralded the end of one era and the
beginning of another for the Information Technology industry.
This change has pervasive implications for vendors and
customers alike.
An increasing
number of companies, including some of Digital’s largest
customers, have initiated broad drug testing programs for all
or many of their employees. What are these customers driving
for?
ISV
Group
Adds VMS Develops to Charter
New Manufacturing IBUs Announced
Ten New Vice Presidents Appointed in U.S. Area
There
is always the temptation to view the New Management System as
a justification to do things the way we used to do them, and a
tool for controlling people. It is very important to
continuously repeat what the New Management System is and what
it isn’t.
The New Management System is not:
o a measurement system,
o a means for allocating rewards, or
o a means for top down, hierarchical
control of operating units.
Some people
perceive the New Management System as a vehicle for a manager,
who usually has no responsibility, to pass orders, directions
and strategies to the people who have to carry them out. The
New Management System is just the opposite.
The New
Management System is based on trust in the managers and teams
who have to do the job and know more about the job, the
problems, the needs and the solutions than anyone because they
are closer to it and are involved in it daily. It is also
based on entrepreneurial creativity. The unusual spirit of
responsibility that motivates an entrepreneur comes only when
the leader and the team feel they are responsible and that
they have set the goals and the plans.
The New
Management System is a system for laying out plans, strategies
and goals for each individual group in the corporation, and an
accounting system designed to give them the information they
need to run their operation in the optimum way. It is not a
vehicle for imposing plans done by the boss, for measuring the
team doing the work, or for punishing or rewarding the team
for results.
Sometimes a plan
could be for long-term investment with a promise of great
returns in the future. Sometimes a plan could be for phasing
out a business because that is the wisest thing to do.
Sometimes it could be for steady profitable growth equal to
the company goals.
The New
Management System is a means to help wise management of a
group. The measurement system on which rewards are based is
separate, and is not part of the New Management System. The
reward system is based on the sum of growth and profit. Those
who invest now to pay off in the future receive their reward
in the future. Those who make great profit and growth today
receive the rewards today.
Job of a coach/manager
If this is true,
why then do we need coach/managers? It is clear that a
coach/manager does not set the goals for the group and is not
measured by the sum of resources spent and of profits gained.
Their measurement system is not based on the sum of the
results of those under them. They do not adjust the budgets of
the people under them to make the sum of all of their groups
meet certain goals.
Their job is to
make sure everyone in the group learns, is trained and
developed to be a great manager. They are measured by the
quality of the managers they develop.
This is very
hard for traditional managers who commonly believe that the
manager’s job is to tell others what to do, and to punish and
reward them depending on how well they did. Of course, that
theory doesn’t work because the manager, in effect, does not
take responsibility and neither do the people who are told
exactly what to do, and the plans that result are not wise.
Having a boss
order better results clearly does not solve the problem.
Wisdom and motivation come from the people who understand the
problem and who are going to take responsibility for laying
out plans to deal with it, and from having a supervisor who
trains, coaches and helps, and adds wisdom.
In August and
again in October, a group of 50 managers, including Executive
Committee members and business unit managers, met in the woods
at Heald Pond in Maine. While we were there, we spent hours
discussing the meaning of the coach/teacher/trainer as boss.
We have to reiterate these principles because of tendencies in
modem management that destroy the entrepreneurial spirit.
The New
Management System assumes that every project and job will be
budgeted and the controllers will maintain those budgets. Any
changes to the budgets have to be made formally, and control
in the New Management System means people propose a budget, it
is approved, and they are held to that budget both in its
expenditures and return.
The New
Management System also assumes that top management and the
Board of Directors will show wisdom in which plans and
proposals they approve. Clearly, every group cannot spend now
for future gains or the company will immediately disappear.
Most plans must pay off immediately. It is also clear we
cannot insist on everyone spending all their effort on
immediate gains with no investments for the future.
Under the New
Management System all groups are encouraged to propose
projects in which they believe. The management of the company
chooses between those projects based on how they fit into the
corporate strategy and the corporate assets, and the
likelihood of return. They also have to balance the short term
return and the long term return.
It is clear the
business units will be measured by the results they produce,
and their managers will be measured by the quality of the
development, education and the values developed within the
business units under their charge.
Outline of New Management System
GOAL
-
The goal is to separate the product
generation, the marketing and the selling parts of the company
so each group can look at themselves as if they were a
separate company that adds value and makes profit on the value
they add. They will have the necessary accounting to see the
cost of the value added and understand if their model and
their operation generate profit. They must make short-term
adjustments to assure constant profit.
THE
ACCOUNTING SYSTEM -
The accounting
system is not a measurement system or a reward system, but it
is clearly set up to give the business unit manager the
information necessary to manage the business unit wisely, and
readily see the income, cost and profit.
MEASUREMENT
SYSTEMS
-
Business units
are measured by profit and growth, and the sum of profit and
growth. Plans and budgets are proposed with optimum business
judgment and wisdom which sometimes means investments for big
gains in the future. The Executive Committee must balance
short-term and long-term needs in choosing between business
plans. If investments are made for a big payoff In the future,
the measurement system of profit and growth will indicate big
rewards in the future.
QUARTERLY
UPDATES
-
All budgets will
be updated each quarter and a quarter added to the budget so
there is always twelve months of budget in the plan. Someday,
we will add two more quarters so there will always be six
quarters in the budget.
As part of this
quarterly review, every coach/manager will review the products
and activities of the business units. How do they compare
with the competition? What products, services, or activities
are missing that others do? How do our costs compare? How is
our marketing? What opportunities do we exploit to get our
messages across? What are our weaknesses that will be improved
in the next quarter? How is our time to market?
Besides the
budget update, the business plan will be updated and
presented. The business plans should have all the data
pertinent for a good business plan for the business which that
group is pursuing.
COACH/MANAGER
-
The job of the
coach/manager is to coach, help, train, discipline, encourage,
lead and, in general, make sure plans are wise and good
business. The coach/manager is also responsk ble to make sure
conflicts between parts of the company are resolved
efficiently.
Each quarter,
every coach/manager of business units and every coach/manager
of coach/- managers will write a summary of all the units for
which they are responsible.
A chart will be
presented showing the morale, enthusiasm, efficiency, cost,
time to market, competitiveness, ease of doing business, and,
in general, the quality and wisdom of the business. Also, they
will carefully outline the competitive position as it is, and
a prediction for the future.
The
coach/manager does not make individual decisions of staffing,
budgeting, products, marketing, but they are responsible for
ensuring that morale is good, that people are competent and
have a plan that works not only for the present quarter but
also for the future.
Our future is
guided by the principles of the New Management System: clear
delegation and accountability at all levels of the value-added
chain. Without compromise, we must challenge all Business
Units to lead us to world-class corporate performance and into
the fastest growing and most profitable market segments of the
1990s.
But we cannot
institutionalize these principles without also articulating a
clear industry concept of growing profitable markets for the
future. This concept is essential to our future success.
Distributed computing, our concept of the
early 1970s, led us to create leadership business practices,
as well as technology: o leadership networking,
o a single
compatible family of computer systems,
o a scalable
operating systems environment,
o a single
application development environment,
o the creation
of the OEM Distribution Channels and a change in focus of our
direct sales effort, and
o a service
approach based on remote diagnosis.
Implementing that concept provided us with
a distinct marketplace dvantage for the last decade and a half
and remains the source of our strength as we look ahead.
Today we are working to capitalize on this
creative legacy in defining a new concept — one that will,
once again, provide us with clear leadership in products,
distribution, and service, resulting in a distinct marketplace
advantage for the next 15 to 20 years.
We need such a
concept to guide our investment decisions, identify and
clarify our critical core strengths and skills on which we
must expand. We also need such a concept to paint a picture of
our position in the marketplace for our customers, our sales
force, and all our employees.
It must take
into account the realities of today and the dream of what can
be better tomorrow. The global competitive forces at work —
which have been disrupting all industries through the 1980s —
will only increase in the 1990s. This means that all
industrial organizations, governments and non-profit
organizations must become dramatically more competitive in
order to survive.
We are leaving the era of traditional data
processing and computation and moving to a new era of
information creation, analysis and work sharing that is in
support of new, more competitive, distributed business
processes.
Over the last
several years, thanks to the creative contributions of many,
we have been moving toward a concept we now call the
"Enterprise Information Utility." It is driven by emerging
technology, much of which has been described by Butler Lampson
and Bill Strecker in papers on "The New Era of Distributed
Computing." The basic market structure of this concept was
outlined in the "meta-frame" work done by David Stone while in
Europe and further refined by work done by Hans Gyllstrom and
a small team aimed at defining our competitive advantage for
the future.
The word
"utility" is difficult to translate in some parts of the
world, and we may want to find a better way to express this
metaphor in those market contexts. We are thinking in terms of
vast and pervasive resources such as electric power and
telecommunications, which we now take for granted, as common
necessities of daily life. We foresee the coming of an
"Enterprise Information Utility," fueled by the continuing
evolution and adoption of standards across the Information
Technology industry.
We already have
a leadership position in the standards environment and a
strong legacy in distributed computing, networking and
database management. Now we must mobilize the company to
understand the direction and structure of this concept and
bring forward the commitment to make it happen.
In simple terms,
Digital should focus on building "The Information Utility" for
and across enterprises, which will provide users with
information in their preferred form (text, image, voice,
multi-media) from any source at any time, in a quick and
secure manner. This would give users the ability to achieve
maximum competitive advantage for their enterprises.
By analogy,
let’s look at how the electric power utility evolved over the
years. In the past, enterprises were responsible for their own
local power generation — much as it is today with information
generation. For instance, the Mill, here in Maynard,
Massachusetts, had a water wheel - producing a local version
of AC power - completely incompatible with what was being
generated elsewhere. That was fine for local needs but
relatively expensive, not very reliable, and certainly unable
to share the economies of scale and reduced costs of a larger
network. Over time, the desire for reduced cost created the
emergence of standards and economies of scale of transmission
and production. This enabled the electric power industry, over
this century, to become a true utility - a necessity of daily
business and human activity.
Today, many of
the information resources within individual enterprises are
adequate for the local needs - but utterly incompatible with
other information sources. We expect that, as in the case of
electric power, standards and economies of scale will make
vast information resources widely available and a common
feature of everyday life.
We should not
expect that within the foreseeable future there will be the
equivalent of a government-regulated utility supplying all the
information needs of all individual companies, metered on a
daily or hourly basis. On the other hand, there are hundreds
of independent companies that already supply all the utility
elements — whether it’s transmission, appliances, support,
maintenance, generation or storage. When these elements are
brought together effectively through standards, they can
provide individual enterprises with an Enternrise Information
Utilitv far more powerful than what is currently available.
We understand
the technology required and are, in fact, working on many of
the elements necessary to deliver this utility.
Already in most
large enterprises today, there are many different plugs on the
walls for the information appliances in the office or factory.
Beyond the wall, there are many elements, both equipment and
services, which are essential to keep that information
flowing smoothly. But those elements have a different level
of complexity and have not yet evolved to the level of
standardization that exists today in an electric power grid.
For instance,
much important information resides within very diverse "old"
information systems which can’t yet be easily accessed from
new systems. But despite these limitations, the trend for
information systems is clearly moving in the direction of
standardization of all the critical interfaces.
Starting in the
1970s, spanning the 1980s and on into the 1990s, much of the
focus in our industry has been on the "appliances" portion of
the system. Only recently has there been much discussion,
exciting progress and growth in the networking of
"appliances." But this level of information appliance
integration only represents a rudimentary information utility
without the scale and robustness of what will eventually be
possible.
Imagine the
future when you plug your information appliance of choice into
the outlet in your office or factory - and have immediate
access to all important information, no matter where it’s
located, on a system within your enterprise, another
enterprise, or in a public database.
Today’s reality
is that each enterprise has its own management philosophies,
business practices and definition of competitive advantage.
Therefore, to move toward this concept of the future, we will
have to add a level of custom value for each customer to
realize the potential of the utility and yet meet their unique
needs. While it will be the end of the decade before we see
the full impact of this Enterprise Information Utility, we
must start now by identifying the investments that are
strategic, critical and vital to the framework of this
concept.
We expect that
competitive pressure to reduce our levels of product
investment will increase during this decade. We will have to
spend relatively fewer engineering dollars while, at the same
time, doing a much higher quality job on every project we
undertake. This can happen only if we focus intensely on a few
technologies.
Overall, we must
have a simpler product set, with fewer offerings of superior
products. This will require making some hard choices and
sticking with them. Some examples of these choices follow:
Subsystems
— chips, disks, and tapes — are expected to grow about 5
percent per year over the next 10 years and are being pursued
by many very large companies able to make the enormous capital
investments to stay up with the pack. Our component-level
products must stand on their own as profitable world-class
businesses (which requires significant unit volume). We cannot
afford to be a small, uncompetitive player.
Base
computer systems — PCs, workstations, multi-user systems are
expected to grow in the range of 3 - 5 percent per year for
the next decade. Product prices will be driven down and will
increase the need for delivery of products, service and
support through indirect channels.
We
must strongly support and smoothly transition our VAX line to
ALPHA. We must become a much more effective supplier of Intel-
and MIPS-based "appliances," which are essential to hold our
place in the hearts and minds of decision makers. Our
investments must be extremely focused and, in many cases,
shared by partners - there is little room for error.
Standards-based,
enterprise-wide
communications networks based on local area networks will
become a significant driving force behind the growth of the
Enterprise Information Utility of the 1990s. The total local
area network (LAN) market is estimated at about $4.7 billion,
growing at 21 percent per year, with client/server LANs
leading the pack. We must focus on becoming number one in this
market. We must focus our hardware and software development on
products designed to optimize the performance of these
networks and on providing a wide array of new functions and
services that the networks can deliver to end users.
Enabling
software
(data bases, frameworks, windowing systems, etc.) is expected
to grow at 20 percent per year for the next decade. Investment
in software for distributed, multivendor systems (Network
Application Support or NAS) must be greatly expanded. This
includes networking, application interoperability, data bases
(traditional, object-oriented, multi-media), systems
management, security and administration for Digital and, very
importantly, non-Digital platforms.
Applications
software
is expected to grow 20 percent per year for the 1990s. Our
investment in "solutions" must be significantly increased.
Examples include "DECtrade" trading system and the
"customized" ALL-IN-1 system for a department. We must learn
how to guarantee solution systems that always will work.
We
must expand our focus on information sources and on
developing, and promoting the standards and products necessary
to assure easy access to them.
Perhaps
the most significant investment required to achieve the
Enterprise Information Utility is the strategic services area,
which is expected to grow in excess of 30 percent per year.
These services are very sophisticated products that enable the
information systems users to dramatically change their
business practices/operations and become much more
competitive. They include information systems strategies and
architectures, formulation of business strategy, human
systems strategy - all the components that exist in what we
today call a systems integration project. We must become the
most cost-effective systems integrator in the industry, with
particular focus on predictable, profitable implementation of
very complex projects and off-the-shelf solutions of simpler,
repetitive projects.
Substantial
investment
must be made in:
o
tools for planning, project management, multivendor
integration, fault tolerant/diag- nosis, capacity
planning/management, etc.;
o
human resources expansion, training, development;
o
development of consulting, change management
methodologies/technologies;
o conducting
pilots with customers on creating "utility-like" systems, and
learning how to implement them profitably;
o creating
targeted programs to leverage our own internal knowledge and
skills in Manufacturing, Engineering, and Distribution on
customer projects; and
o expanding all
the new service offerings, making existing ones more
productive and establishing new ones.
Our
distribution (Sales, Marketing, Services) strategies,
investments, structures, and resources also must be changed,
significantly. Distribution channels must be much more
tailored to better match the specific products or service
being sold and delivered. Non-traditional channels with much
lower costs must be developed, many in partnership with other
companies. Use of our distribution systems to deliver
complementary products and services from other vendors must be
greatly expanded.
Much
of the investment redirection described above will be
difficult to accomplish. It will require a significant break
with the past, extraordinary persistence and leadership. Only
by creating, communicating and embracing an enhanced concept
for the future will we be able to meet the challenge.
by
Bill Demmer, vice president, VAX VMS Systems and Servers, and
Howard Woolf, manager, NAS and Electronic Publishing Systems
On
October 30 we told the world we were making one of the most
significant announcements in our history and setting the
agenda for the industry.
That
day we:
o
announced a set of Network Application Support (NAS) products
for VMS and ULTRIX environments;
o
stated our intent to provide the same NAS products for other
computer system environments such as those from IBM and
Hewlett-Packard;
o
announced new VAX VMS systems that bring that product family
back to a leadership position in the industry in both
performance and price/performance; and
o
introduced an innovative user-based approach to software
licensing and a set of comprehensive services.
We
are proud of the engineering breakthrough in CMOS technology
in Hudson that allowed us to triple the raw performance of our
VAX processors across the whole line. We are implementing
that technology now in our VAX 4000 and 6000 systems, and we
announced our intent to make it available next summer in our
VAX 9000 family. Over time, it will also become available in
VAX workstations. We expect further dramatic improvements in
performance when we move to the ALPHA hardware that is now
being developed and tested.
But
the significance of October 30 lay not so much in the
individual pieces as in the framework for the future of which
they are a part. Yes, we told people about products they can
buy today and that can generate added revenue that the company
needs right now. But we also established a new playing field
on which we and the rest of the industry will be competing for
years to come. That is the arena in which future products,
such as ALPHA, ACE hardware and ever-improving NAS
capabilities, will be introduced and the context in which
they will be understood.
Customers
have heard repeatedly that they have to go to "open" systems
and implement standards. But that’s been a very difficult path
for them. There’s a bewildering number of standards. In just
the last two years, over 1800 industry "standards" were
introduced. It’s a Herculean task just to figure out which
standards matter and how to implement them. These standards
come in many forms — in a book, a specification, a product
that implements the standard, or an application product that
has the standard buried in it. At Digital, we spend about $50
million a year just to keep pace with the changes, to
understand which standards are the right ones to support, and
decide how to support them.
Typically,
customers
already have a wide mix of equipment and software from many
different vendors, and not every vendor supports the same
standards, so they can’t make all the products work together.
This is analogous to owning two videocassette recorders (VCRs)
that use two different formats (VHS and Beta). You can’t run
the movies from one on the other, but you might need to do
that to do your job. That’s the frustration customers feel.
And the problem gets even worse because different vendors
implement the standards differently. That’s like recording a
movie on your VHS machine and finding out it won't play on
your friend’s VHS machine because the vendors implemented VHS
differently.
This
announcement helps customers out of the maze of standards and
lets them easily implement truly open systems. We provide the
right software products based on open standards, in a
consistent way so that an application can run the same on one
system as it does on one from another vendor.
We told
customers that this would be our path — that NAS would allow
various platforms to interoperate with one another, and allow
software applications written against one platform to be
easily ported to another platform. These new NAS products
fulfill that promise. They give a consistent, open systems
platform to our customers that they can’t get from any other
vendor, and was never available in the industry before.
We are making it
easy for people to buy, install, maintain and operate systems
software based on open standards. These NAS products pick the
right standards and apply them consistently.
Today, NAS
software works on nine popular computer systems that act as
"clients" — the desktop devices, such as PCs and workstations,
that users deal with directly. Now the server software — the
NAS software that enables various clients to work smoothly
together over a network - runs on both VMS and ULTRIX
operating systems. In the near future, it will run on
platforms from Microsoft, the Open Software Foundation, SUN,
IBM and others.
This means a
customer could run NAS software totally independent of other
Digital products. They could run it on other vendors’
computer systems, without a Digital computer being involved at
all.
On the one hand,
that’s a major change. On the other hand, we’re just
delivering on what we said earlier when we stated that Digital
is a software company and will build software for all popular
computer platforms.
We’re making an
integrated product set that has all the software the customer
needs to address key computing environments and markets. We’re
selling this, first, on the VMS and ULTRIX operating systems.
And over the next eighteen months we’ll roll it out on other
vendors’ platforms as well.
With this
integrated capability, a single application could bridge
multiple platforms through the use of standardized interfaces.
In other words, pieces of the same networked and distributed
application might run on VAX hardware while other pieces run
simultaneously on totally different hardware and operating
systems from SUN or IBM. And the user needn’t know or care
what hardware or operating system is involved, because all
these pieces could interact and interoperate automatically and
smoothly.
We can do that
in a limited way today across VMS and ULTRIX platforms. And we
will be adding those new platforms to this capability for
truly integrated distributed applications.
For over ten
years, vendors and customers have been caught up in debates
over operating systems - VMS or UNIX? proprietary or open? Now
the whole level of discourse changes.
Yes, different
operating systems have different functionality. We believe
that VMS is the worldwide leader in functionality. And we have
worked hard to bring openness to the VMS environment, by
layering open standards on top of leadership VAX/VMS
performance. We talk about "no compromise computing," a phrase
that emphasizes that we provide the customer with openness,
the best functionality in the industry and also (with our
newly introduced hardware) the best price/performance. The
customer doesn’t have to make tradeoffs. With our VMS family,
we provide the best in all three dimensions.
The VMS system
is not just one of the platforms that runs NAS; it is also the
most robust platform, with capabilities that no one else has
yet implemented on other platforms. So in terms of the old
points of discussion with customers, we are in a much better
position than ever before.
But the nature
of the dialogue is changing. NAS capabilities and the
integrated applications they make possible are moving the
entire industry to a different playing field, where users are
less interested in the underlying hardware and operating
system and more interested in the distributed applications
they need to run their business; where "openness" in its
broadest sense (embracing UNIX, VMS and other operating
systems) is taken for granted and points are scored with new,
higher-level software capabilities.
By analogy,
previously, different companies were selling different kinds
of trains or planes or buses or cars, and customers had to
worry about horsepower and grades of fuel and spare parts. Now
customers can focus their attention on their destination. One
ticket will get them where they want to go, no matter how they
choose to get there; and they can change their mind and go
another way next time - whatever’s best for them.
If a customer
decides later to adopt new hardware or software technology, we
let them do that without throwing away what they’ve done
before. In fact, we support more systems from other vendors
today than any other vendor in the industry; and we’re heading
further in that direction.
This is a whole
new way to look at computer systems. It will revolutionize the
way people build computer systems and the way they implement
them.
At
the same time, this is the next natural step forward from
where we were before. We started by building point products
that could be custom-integrated into a multivendor set of
systems. Now we’ve come up with the right sets of those
products that make sense to work together and have put them
into one integrated product setting. We pick the right
standards for the customer and help the customer implement
them consistently on the variety of systems with which they
want to work. We make it practical for customers to use open
systems to solve real business problems. No one else has done
that with open systems before.
Over
time, we made a number of relatively small but important
additions. Those quantitative changes have become a
qualitative change, making possible truly integrated,
multivendor solutions. Now we’re packaging these capabilities
to make it easier to buy, install and use them.
And
we’re going to do more of the same. Over time, we’ll be
introducing additional NAS functionality for our platforms and
other computer platforms. NAS will be the primary vehicle we
use to sell our newest software technology.
The
target audience for these product messages includes MIS
managers, application developers and end users, who are
getting much more involved in purchase decisions. Typically,
there has been conflict between individual users who want
particular applications and hardware that can run them, and
the IS manager who wants to have all the pieces of the
company’s computing environment talk to one another and work
well together. With NAS, that argument goes away. NAS gives
MIS departments a good tool to manage their entire computing
environment. It also gives them a consistent way to have their
computing environment support the applications that their
users require. NAS is the framework for the global integration
technology of the future.
Today,
with the vast improvements we just announced in VAX/VMS
price/performance, we are equal to or better than most of the
RISC-based systems in the industry. But the world doesn’t stay
still. Our competitors will keep introducing faster and better
systems, and we’ll have to work hard not only in developing
new technology, but also in reducing our overall cost
structure so we can maintain our leadership position in
price/performance. That’s what sells product today; so that’s
how we have to win.
But
for the long-term, we’ll be on the new playing field created
by these capabilities we’ve just announced. There Digital is
primarily an integrator of both products and services, with
capabilities far ahead of the competition, and lots of running
room.
In describing
the role of senior managers under the New Management System,
we often use the word "coach." This is not a new or additional
responsibility for senior managers. Rather it’s our way of
emphasizing a style of management that many in this company
have used before and that is very important to our future
success. This style is applicable not just for senior
managers, but throughout the company.
For me, a good
manager is by definition an excellent coach, and differs
considerably from a traditional "boss." The word "boss"
conjures up images of an authority figure who gives orders and
works down a pyramid. The word "coach," on the other hand,
evokes comparisons from the world of sports.
For example, the
best football coaches have the ability to maximize the
performance of their individual players - improving the
individual skills that are needed and doing so in such a way
that all players feel accountable for their own behavior. A
coach is ultimately responsible and technically can act as a
"boss." But the difference in attitude is essential to
success.
In the coaching
model at Digital, the "players" are entrepreneurs who work for
a larger team. The coach should make sure they think and act
like entrepreneurs, running their own businesses. The coach
makes sure they have the tools and equipment they need and the
field to play on. But primarily the coach empowers the
individual players to make their own decisions, to do what
they know must be done and to do it well.
If the player
needs help, the coach is available to give advice. If things
aren’t going well, the coach may put an arm around the player
and deliver some hard messages. If a player isn’t performing,
the coach will tell that person; and, occasionally, the coach
has to remove a player from the game.
Coaches have the
full spectrum of management responsibilities. But the good
ones also have the ability to inspire the people that the
company has asked them to be responsible for and to help them
to maximize their own potential. The less dependent the
players are on the coach the better the team tends to
function.
Basically, when
we talk about the role of the "coach", we’re emphasizing the
importance of good management. To be a good coach, you have
standards and measures, and you reward good performance, but
you don’t want to act as a policeman. You want the individuals
to know what the boundaries are, but you don’t put up any more
boundaries than you need to play the game. You empower the
entrepreneurs to get what they need to get the job done.
In an integrated
environment such as ours, the entrepreneurs have several
possible sources of guidance and assistance, not just the
manager to whom they report. Similarly, on a football team, in
addition to a head coach, there are many assistant coaches,
some of whom
have particular
specialties. But the head coach creates the environment that
fosters the independent decision-making the team needs.
Good management
does not mean vigorous top-down management. There are
exceptions, of course. Maybe once in five to ten years an
emergency arises, and the head coach has to say — "Today I’m
going to be boss, and this is what everybody’s going to do."
But companies that are run top-down do not develop
entrepreneurs, and we need entrepreneurs to succeed in our
diverse and rapidly changing markets.
The management
model gets clumsy when it includes people who just give advice
or have the authority to say "no" but aren’t responsible for
results. A coach is responsible and does not let extraneous
resources get in the way of running the team or interfere with
inspiring the players and creating an entrepreneurial
environment.
When we talk
about the need for "coaching" we’re just signaling that we all
need to be good managers and not revert to a top-down
authoritarian approach. We need to remember that even the
military, which is often seen a top-down authoritarian
organization, needs to foster individual achievement. The best
armies are made up of people who in the heat of battle have
the ability to create, to be entrepreneurial, and take
advantage of the situation. Armies that wait for one boss to
tell them precisely what to do tend to lose the war.
If you are
fortunate enough to have such good people that they rarely
need coaching, there are other ways you can add value to the
team. For instance, you can improve the quality of the
resources available to your people and take care of other
matters that might otherwise distract them and prevent them
from concentrating on winning.
This emphasis on
coaching says to every employee in the company that Digital is
yours. You’ve got to do whatever is necessary to protect it
and make it successful. The same principles apply if you are
the manager of a business unit or a secretary who decides to
save money by not ordering unnecessary supplies and making
sure that travel is done in the most efficient, cost-sensitive
way. You can take entrepreneurial responsibilities no matter
what your job and no matter where you sit. You can help run
the business and make a contribution to it.
The coach
creates an environment that enables entrepreneurial behavior
at all levels of the company. We don’t want people to limit
themselves by a restricted notion of who they are and what
they should do. No matter where you sit, you can and should
manage well whatever the company has asked you to be
responsible for.
Key events
beginning in 1987 heralded the end of one era and beginning of
another for the Information Technology (IT) industry. These
events included the creation of the Open Software Foundation
(OSF), Digital’s introduction of Network Application Support
(NAS) and IBM’s introduction of Systems Application
Architecture (SAA).
From the
introduction of mass produced computers in the early 1950s to
that benchmark year of 1987, customer emphasis was primarily
on employing information technology for the creation of
vertical functional excellence. In other words, applications
were centered on tasks within vertical functional domains,
including research, engineering, manufacturing, finance,
sales, personnel, etc. Digital’s departmental computing
strategy was clearly aligned with the market’s demand for
vertical functional excellence in this era.
Having made
large investments in mainframes, minicomputers, and personal
computers, by 1987 business management became alarmed that
substantial increases in spending for information technology
were not providing equivalent increases in overall business
performance. In fact, researchers could find no significant
overall correlation between IT spending and business
performance in large corporations. On the other hand, Japanese
corporations were becoming increasingly successful in the
global market with significantly lower investments in IT.
What was the
problem? One key element, it appeared, was that functional
excellence was often achieved at the expense of end-to-end
enterprise excellence. As a result, business management has
begun to shift its emphasis from vertical functional
excellence to horizontal enterprise excellence. Here, the
applications emphasis is on end-to-end processes such as
Requirement-to-Product, Lead-to-Order, Order-to-Delivery,
Problem-to-Repair, and Inquiry-to-Answer. As implied by their
names, these end-to-end processes each span multiple
functions. Interestingly, horizontal processes are generally
quite similar across industries and geographies.
It is important
to note here that vertical functional excellence is still
important, but it must be accomplished within the overarching
context of end-to-end enterprise excellence. One example is
the end-to-end process of Requirement-to-Product. Engineering
might have the world’s best CAD tools, but if they build
products that don’t meet customer requirements, no customer
value is created. Another example is Inquiry-to-Answer. An
account manager may have the world’s best training, but if a
customer asks a unique question and there is no supporting
end-to-end knowledge network, no value is delivered to the
customer.
This change in
market emphasis has pervasive implications for IT vendors and
customers alike. A summary of some of the requisite changes to
Digital’s business is shown below:
Era Ending 1987
Era Beginnin in 1987
Focus
of Digital the Comapny:
Internal
Workgroup Independence
Workgroup Interdependence
External
Alliances
Corporate Independence
Corporate Interdependence
Strategy
Functional Solutions
End-to-End Solutions Driven
R&D
Single-Vendor Product
Multivendor Product
Innovation
Integration
focus
of Digital's Interface to Customers:
Applications
Functional TAsk
End-to-End Business Process
Products
Systems
IT Infrastructure (NAS)
Service
Product Support
Systems and Software Integration
Sales
Contact
Middle Management
Top Management
Today, Digital is working hard to shift
its focus from the left-hand column to the righthand column
to respond to the shift in customer needs. Examples of such
efforts include the following:
o
We are increasing our focus on internal end-to-end business
processes to both improve
our business performance and also to gain insight that we can
share with our customers,
o We are beginning to realize and communicate that open
systems are essential for creating horizontal enterprise
excellence. The real win for customers is when they have
end-to-end business process applications that run on and
exploit the benefits of open systems.
o We are beginning to shift our
applications investments to horizontal enterprise excellence.
Included here is providing leadership applications (directly
or in partnership) for horizontal processes such as Computer
Aided Logistics and Computer Supported Collaborative Work.
In summary, as Digital evolves within this
major global market shift, many of our existing talents and
competencies still apply to the emerging context, though many
of our priorities and perspectives do not. In some ways,
everything in our world is still there, but it has been turned
upside down. Customer emphasis is shifting to horizontal
enterprise excellence from vertical functional excellence.
Market pull is becoming stronger than product push. Software
is selected before hardware. Interdependence is becoming more
important than independence. When the dust settles, Digital,
other information technology vendors, and customers will
emerge as more effective and more efficient businesses. But we
will all be quite different from what we were in 1987.
by Bruce Davidson, manager, Employee
Assistance Program; Sue Andrews, program manager, U.S. Drug
Testing; and Ron Glover, manager, Corporate Personnel Policies
and Procedures
Digital’s drug testing program - started
in January 1990 in response to government requirements and
obligations — has only affected a small number of employees in
the U.S. But an increasing number of companies, including some
of Digital’s largest customers, have initiated broad drug
testing programs for all or many of their employees. What are
these customers seeking?
Some companies, particularly in oil and
chemical industries, have safety critical jobs, where lives
could be lost or catastrophic damage could result if a job
isn’t done properly. They view drug testing as part of their
overall safety program and as a risk- management expense. They
can’t afford a major oil spill, or a refinery explosion, or a
major chemical leak. Drug testing is one part of a range of
initiative intended to reduce the risk of catastrophe. They
view it as "preventive maintenance," and regularly test their
equipment and their people.
Other companies connect drug testing with
their total quality management programs. For instance,
Motorola, winner of the Baldridge quality award, is convinced
that drug testing is part of the base by which you arrive at
quality of work and service.
All these companies are concerned not just
with illegal drugs, but the use of prescription or legal drugs
that have a negative impact on an employee’s ability to
function at the work site. In many instances this includes the
use of alcohol, whichs when used during work hours,
or in excess, or when the individual becomes dependent on it,
can leave someone impaired and unable to do their job
successfully and safely.
Many companies look not only at their own
employees but also at contractors and suppliers as important
contributors to their ability to deliver safe and high quality
products and services. They think of their supplier base as
like an extended part of the enterprise and expect their
suppliers to comply with their drug testing requirements.
In terms of commitment to a safe,
high-quality, drug-free work environment, Digital’s concerns
do not differ from those of these customers. In attempting to
reach this goal Digital has attempted to establish programs
that fit the company’s culture and values.
Digital focuses on "managing for
excellence.". We believe that anyone who is using drugs or is
dependent on alcohol and other substances will find it very
difficult to maintain high standards of work performance.
Therefore, focusing on employees’ performance on the job and
managing for excellence are critical components in maintaining
a drug-free workplace.
Managers are in key positions to work with
their people to help them achieve their goals and set
realistic norms around excellence. Very often, they are the
first to see indications of problems or changes in the work
performance of their people. More critically, they can also
set norms that say it is okay to get help if you need it.
Managers need to recognize that and coach and nudge and push,
if necessary, to help those people get where they need to be.
In today’s high-pressure environment it is
sometimes difficult to tell if non-productive behavior is the
result of substance abuse, or work-related stress, personal
problems or family difficulties. We don’t want the manager to
diagnose. We have programs like Employee Assistance in the
U.S. to help work with employees to find out what may be
contributing to their problems.
Over 80% of the people who utilize
programs like Employee Assistance are self-referrals. These
people come well before somebody else has identified a serious
performance problem. They realize that they are not doing as
well as they should, and they want to do something about it.
Fortunately, people feel safe coming to
Employee Assistance for confidential help and counseling
before problems have reached a point where they’re seriously
disrupting their performance and productivity — before the
manager has to intervene formally.
In some cases of substance abuse and
dependence, people get into a "condition of denial," where
they minimize or fail to see how their use of various
substances impacts their lives. They’re clouded by the
chemicals that they use and may be the last ones to realize
they’re in trouble. Friends sometimes can hold a mirror to us
and say, "Something seems wrong. You aren’t doing as well as
you were six months ago." Managers become part of that support
feedback system.
Research in the U.S. has shown that the
workplace increasingly is where most people perceive their
social supports — rather than church, home or neighborhood.
People look to and identify with their boss, their secretary
and their fellow employees as the primary support systems. The
traditional ways that people dealt with stresses and strains
15-20 years ago simply aren’t there.
Managers who are managing for excellence
will recognize when a new factor is influencing behavior. They
will identify people with performance problems that might be
due to drugs or alcohol much earlier than a program based
solely on the evidence of a drug testing program. But this
approach puts a lot of weight on managers who must deal with
individuals one-on-one, without a guide book to tell them
precisely what to do.
Meanwhile, major customers of ours who
face the risk of catastrophic disasters are pushing the
technology of drug testing. They are testing the limits of the
law to see what they can and can’t do, and they are pushing
their suppliers to abide by the same rules as their employees.
When someone comes onto their site to service computer systems
in safety- sensitive locations these customers insist on the
same kind of assurance that a person is drug and alcohol-free
as they require of their own employees. If their approach
works well for them, we believe their competitors will almost
certainly follow suit. Their drug testing programs will serve
as examples for other businesses and other industries, and
drug testing will spread, with, or without government
compulsion.
As we work with these customers, we
continue to increase our understanding of the appropriate use
of drug and alcohol testing as a part of an overall program of
managing for excellence. We believe that in some cases testing
may be a helpful component in a comprehensive initiative that
includes clear policies, employee education, training for
managers and real opportunities for employees to volunteer for
confidential counseling before deterioration in work
performance requires their managers to take action.
We want to minimize the need to use
periodic, intrusive measures to find out whether or not
somebody is doing something illegal. Our approach is to manage
performance and strive for excellence. In this approach, the
manager’s role is essential for success.
We have made investments in people and
want to help them to reach and maintain their full potential,
contributing to the company, their families and the community.
Mike Mancuso, group manager, Independent
Software Vendor (ISV) Group, now reports to Bill Demmer, vice
president, VAX Systems & Software (VSS), in addition to
reporting directly to Dorn LaCava, vice president, UNIX-based
Systems and Software (USS). This dual reporting relationship
highlights the increased role his group will play in
applications marketing.
Since its inception in 1988, the ISV Group
has focused its recruitment, development and merchandising
activities on both VAX/VMS and RISC/UNIX applications. They
handle these activities directly and in conjunction with other
Digital organizations: the Field for recruitment, Engineering
groups for development support, and Integration Business Units
(IBUs) and Channels Marketing for merchandising programs. As a
result of these efforts, more than 2,400 UNIX-based
applications are now in Digital’s worldwide portfolio.
According to Mike, "We see very strong VMS
development activity with application providers. More than
1,300 VMS solutions, of which 50% are brand-new to Digital,
have been added to Digital’s portfolio in the last couple
years.
"The continuous customer interest in
existing and emerging VMS-based applications is our strongest
line of defense against those who question Digital’s
commitment to its VMS business partners and users," he added.
"VAX/VMS systems continue to be a major source of revenue for
Digital and its development and distribution communities."
The connection between the VSS and 1SVG
organizations is designed to enhance VMS applications
recruitment, support and merchandising activities. "Ours is
the primary program for access into Digital for application
developers: the program is open to everyone and is easy to
use," explains Mike. "Often we act as a program manager,
indirectly, working with and driving existing organizations to
get the job done. If no structure exists or if the job is
particularly important to the business, we will work it
ourselves."
The group’s responsibilities within the
VAX world are similar to those for the RISC world. First, the
ISV Group will bolster its broadbase recruitment activities,
identifying application developers interested in developing
their solutions for the VAX platform. All developers brought
into the program are eligible to take advantage of a variety
of business and support tools, including ISVNet; development
systems at reduced prices for purchase or lease; access to
Development Technology Centers for hands-on experience and
dedicated technical support; a listing in SOFTbase, Digital’s
online worldwide reference database, which is also the basis
for catalogs; and use of the Digital "Authorized Solution
Provider" logo.
Second, the ISV Group will strive for a
fresh, objective look at applications key to driving VAX/VMS
business in the high-end, mid-range and desktop markets. "We
have to challenge our current applications thinking to ensure
the right mix of solutions for these systems," says Mike. "If
solution leaders or emerging leaders are not currently running
on Digital’s VAX/VMS environment, we will recruit, support and
design merchandising activities to increase market and
license share. If they are currently available on Digital’s
platform, we will work with the IBUs to use ISVG’s integrated
broadbase and targeted services as needed."
Manufacturing Industry Marketing, a
cluster of business units reporting to Dave Copeland, vice
president, has been restructured to align more closely with
customers’ industries and the Account Business Unit structure.
Nine new Integration Business Units (IBUs) replace four former
ones.
The Manufacturing Cluster had been
horizontally focused and sales people often had to go to more
than one marketing group for account support. Sales will now
have IBU contacts specifically identified for Account groups.
With a closer relationship between the IBUs and sales,
marketing programs and strategies will match Account
requirements and customer needs.
The four old IBUs were: Engineering
Systems Group (ESG), Computer-Integrated Manufacturing
Marketing and Product Development (CMPD), Research and
Development Systems (R&D), and Sales and Distribution
Systems (SDS).
The nine new IBUs and their managers
are as follows:
Aerospace, Diane Albano
Automotive and other Discrete
chemical, Gelnn Armbruster
Consumer Electronics , Open
Consumer Packaged Goods, Eli Lipcon
Electronics, Don Jenkins
Forest, Mining, Metals, Glass and
other Prcess Mfg., Rufus Sanders
Oil and Gas, Randy Levine (acting)
Pharmaceutical, Nancy Strecker
One of the new IBUs — Consumer Electronics
— will be based in Japan close to the hub of the business
supported.
Diane Albano, Don Jenkins, Rufus Sanders
and Nancy Strecker are new IBU managers. Eli Lipcon and Glenn
Armbruster held similar positions in the past.
Diane joined Digital in 1981 and has been
in sales since 1983. Most recently, she was the Account Group
manager for Raytheon where she was a five-time DECathlon
winner.
Don joined Digital in 1976 as a Technical
Sales Support specialist, and has held several positions in
Product Management and Base Product Marketing. Don played an
instrumental management role in setting Digital’s factory
floor strategy and executing it, which has resulted in Digital
having the lead in this key segment.
Rufus joined Digital in 1980 after
spending 11 years at TRW in MIS. Prior to TRW, Rufus was a
Sales Representative for IBM. While at Digital, Rufus has been
a Group IS Manager, the Maynard Plant manager and most
recently Manufacturing manager, Disk and Subsystems Product
Creation Unit.
Nancy joined Digital in 1979. For the past
five years Nancy has held the position as the Grumman
Corporate Account Manager. She won four DEC 100, Baton and
DECathlon awards, and the Grumman team won the first Circle of
Excellence Account Team Award for the Aerospace Industry.
The U.S. Team has announced that, in
recognition of the importance of their positions and their
close contact with customers, ten senior managers in the U.S.
Area have been named vice president. Their responsibilities
remain as before. The new titles are as follows:
Frank Branca, Northeast Region vice
president, U.S. Digital Services;
Lynn Busing, Services Industry vice
president, U.S. Digital Services;
Tom Colatosti, Eastern States Sales vice
president;
Ruth Gaines, Telecommunications and
Networks vice president, U.S. Digital Services;
Bob Hult, Western Region vice president,
U.S. Digital Services;
Michael Jackson, North Central Region vice
president, U.S. Digital Services;
Ed Kamins, Distribution vice president,
U.S. Sales;
Tony Morris, U.S. Government Sales vice
president;
John O’Keefe,
Complementary Solutions Organization vice president, U.S.
Sales; and "Mel Ray, Education and Consulting Services vice
president, U.S. Digital Services.
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