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Volume
4, Number 5 August
1985
Three
Engineering
Managers Named Vice President
Philip Caldwell Talks About His Ford Motor Company
Experiences
Digital's
Mid-Range
Vax Product Strategy By Bill Demmer, vice president, Mid-Range Systems
Mike
Riggle
Named Senior Corporate Consultant
Jack
Mackeen
Appointed Group Vice President
LEST
Organizational Changes Announced
Corporate
And
U.S. Field Aa/Eeo Organizations Merge
Digital
Receives
Award For Corporate Contributions Programs
In recognition of their leadership in
developing and implementing Digital’s successful product strategy,
three Engineering managers have been promoted to vice president.
They are:
Bob Glorioso, vice president, High Performance
Systems and Clusters
Bill Heffner, vice president, Software Systems
Bill Strecker, vice president, Engineering
Product Strategy and Architecture
Each continues to report to Jack Smith, vice
president, Engineering and Manufacturing.
In announcing the appointments, Ken Olsen
noted, "It is in large part the result of their efforts that
Digital is now delivering the most integrated and compatible
networked products in the industry. The fundamental strength of
our current business and our confidence in the future comes from
the success of this integrated product strategy."
Bob Glorioso led the development of the VAX
8600, which was introduced last fall and is now being shipped to
major customers worldwide. He also partiÂcipated in the
development of VAXclusters, Digital's unique multiprocessing
technology. A Digital employee since 1976, Bob holds a B.S. in
electrical engineering from Northeastern University and M.S. and
Ph.D. degrees from the University of Connecticut.
Bill Heffner manages the VAX systems software
group and has led the deÂvelopment and enhancement of VAX/VMS, the
operating system which ties all VAX computers together with
Ethernet and makes clustering possible. Bill has been with Digital
since 1975. He holds a B.S. from Albright College in Pennsylvania and a
master’s degree in mathematics from Lehigh University in
Pennsylvania.
Bill Strecker is one of the chief architects of
the company's overall product strategy, including the VAX family.
In addition, he helped define the corporate strategy for
interconnecting products, including the impleÂmentation of
Ethernet, which allows products from different manufacturers to
exchange information. Bill also played a major role in the
development of VAXclusters. He has been with Digital since 1972,
and holds bachelor's, master's and doctorate degrees from Carnegie
Mellon University in PittsÂburgh, Pa.
"Make the product people need and want. Make it
at the lowest cost. Sell it at a fair price and make sure the
income is greater than the expenses. That's all it takes to
succeed in business," said Philip Caldwell, former Chairman of the
Ford Motor Company and current member of Digital's Board of
Directors.
"It's easy to talk abogt the strategy in
retrospect, but when it's being implemented, it's not always that
clear. I'd say one of the key jobs of every manager is to support
the company strategy and not to give in to personal preferences.
The whole organization has to feel secure, particuÂlarly when the
going gets tough," he advised the assembled Digital managers and
Board members.
He emphasized the need to be sensitive to the
signs of decline in an organÂization. The major sign at Ford was a
loss of market share in 1979-1980. "The product line had been
allowed to atrophy. New products were brought to market that were
neither properly conceived nor properly executed. The quality
wasn't on target and costs had been allowed to increase. And
perhaps most important of all, many of the basic planning systems
of the company had broken down," explained Caldwell.
There were some external factors over which
Ford had little or no control — for instance, government actions
with respect to safety and emissions and fuel economy. Also, the
U.S. demand for cars dropped from about 10.6 million units in 1979
to barely 8 million units in 1982. In addition, some 30% of the
existing U.S. automobile market went to imports.
In 1979, Ford experienced a financial loss in
the U.S., but made a profit because of its strong overseas
position. "Fortunately, 1980 was the worst year and 1981 was a
little less bad and so on. There's nothing more frusÂtrating than
to not know where bottom is; to not be able to start to build
because we hadn't found the base yet. Nonetheless, there are some
advantages to all of this; when you're under attack and everybody
knows you're at war, it's a little easier for the organization to
get the idea that something needs to be done.
"It was obvious that there was no way to stop
the erosion in market share unless we got our quality under
control. So, we took the time to write down simple little words,
like 'Quality is the No. 1 objective of the Ford Motor Company.'
The objective was quality because we wouldn't have -deserved any
customers if we couldn't provide what they wanted and deserved.
"The second thing we had to do was retool all
of the products; that was the whole development effort. And,
thirdly, we had to restore our product planÂning process, which
had been allowed to come down to hardly more than three years.
"When you're leading a large organization, you
can't issue a different set of instructions every day, every week
or every month. There has to be a central theme and there really
can only be one basic plan in an organization or it's going to
fall apart. We now plan at least 10 years ahead.
"The fourth change we made was just meat and
potatoes—getting costs in line. From 1980 to 1984, the annual
operating costs of Ford Motor Company were reduced by $4.5 billion
and that was in thousands of small items. If you ever believe that
all of the costs have been cut out of an organization, you're in
trouble. It's a never-ending process.
"In 1979, we had just slightly under 500,000
people worldwide in the Ford family. Today, there's something like
375,000. There's a lot of blood, sweat and tears in going from
500,000 to 375,000. There were husbands, wives, children,
communities, schools, and hopes and aspirations in each of those
affected families. And yet, it absolutely had to be done or there
would eventually have been zero employees.
"The fifth part of Ford's strategy dealt with
the people side of things. There are lots of ways to deal with
people and lots of kinds of programs. It doesn't matter what you
call it, or how you do it. We call it Employee Involvement at
Ford. It recognizes that there's not a single human being who
doesn't have something worthwhile to contribute. It's vital to
listen to all of those ideas out there.
"You see, if we don't care enough to create the
climate and we don't care enough to ask somebody, and if we don't
care enough to listen to what people tell us, then we won't
engender the attitude that results in suggestions and
participation.
"I don't think that American industry has yet
faced up to what I'll call the indirect element of the work force,
the indirect labor — that's us. We're not as efficient as we
should be, and I suspect we're having the great problems we're
having in competing with the Japanese almost as much because of
the inefficiencies in that part of the work force as all the
unionized inefficiencies that have been given so much publicity.
"I think the kinds of products — the systems —
Digital makes will make the difference in business efficiency. I
think your products are in the foreÂfront of improving the
competitiveness of American industry, and I surely hope that
you're thinking about it that way because it's not just computers,
it's systems, and the efficiencies that you can get with the use
of comÂputers when properly installed into a system.
"You know, I wouldn't be standing here unless
it had worked out. So, after losing $3.3 billion, in 1983 we made
$1.9 billion and, in 1984 we made $2.9 billion. Both were
records and, of course, that’s more than the $3.3 billion we lost.
But, let's be frank about it; we lost at least three years while
we were getting out of the ditch.
"Respectability and pride returned to the work
place. People recognized that integrity was wanted in the product
and quality needed in everything we did — quality in the way we
represented our company to the public, in the attiÂtudes in
dealing with each other, in our systems, in our research and
develÂopment, everything.
"Quality is a work ethic. It isn't something
for the quality control manÂager. After all, we should not need
any quality control managers anywhere. Just do the job right the
first time. Take away all of the parachutes, don't backstop
anybody, give everyone the opportunity to be personally
responsible.
"You have the good fortune to be associated
with a company that's never lost its reputation. Never let it
happen. It's not worth it. The reputation is based upon what
everybody in the organization thinks and does.
"We cannot control the forces that shape our
world, but we can control Digital Equipment Corporation.
Excellence is mandatory in everything we do; second best is no
good at all; and unpleasant situations only get worse if they're
not tackled. In other words, don't run away from the problems you
have. Management is not management without the courage and the
willingness to make and execute difficult decisions."
We must effectively market current systems,
introduce new systems on time, and become more cost-effective in
all of our efforts. These actions will help make Digital more
profitable and make the company the industry leader with its
compatible range of products.
The work in developing mid-range VAXs must be
accomplished within the parameters of Digital's financial
position. Over the last five years, while our operating profit
actually declined, our revenues increased by $3.5 billion. About
half of that drop in operating profit comes from the cost of
manufacturing and warrantying the product. The other half is an
increase in Field spending as a percentage of the revenue, and an
increase in Central Engineering and associated Manufacturing
projects as a percent of revenues. Of course, much of this
expenditure consists of reinvestments to help Digital remain at
the technological forefront. But, nevertheless, it becomes one of
the major items we must learn to control.
We are fortunate our revenues have continued to
grow over the past five years; not as fast as we had planned but,
nevertheless, at a respectable level. Unfortunately, our spending
has exceeded our growth in revenues and has put a major squeeze on
our profits. To deal with this problem, we must set very specific
and measurable targets for our revenues and our spending. In FY86,
the major corporate functions will have spending plans that do not
exceed 3% over what we spent in FY85. You will find this will
affect you directly in your day-to-day work.
If we're going to have a financial problem, it
is probably far better to have one that is within our control and
not one related to an inability to perform in the market. To help
improve Digital's financial metrics, we must penetrate all markets
we deem to be desirable. We also need a strategy and a set of
products that will assure a continued growth in our revenues.
The VAX
product strategy
The VAX product strategy is Digital's unique
ability to offer a broad range of compatible systems. In this
strategy, we achieve leadership via the uniqueness we can provide
in things like software—our operating systems software, our
layered products, Digital-generated application software and
software generated and written by third parties. Our systems
structures are also unique. Today it's clusters. Tomorrow we hope
it'll be multiprocessing. Today, Digital is recognized as a
leader, if not the leader, in networking. Of course, all of these
unique attributes of our systems depend on having an underlying
base set of state-of-the-art system components.
We started the early 1980s with a relatively
narrow price range across our VAX family. Last October we
announced the VAX 8600, which extended our price and performance
range upward, and this spring we announced the MicroVAXII, which
extended our price range downward.
At the high end, IBM and some other competitors
deal with the traditional mainframe market, where the price range
is in excess of $1 million. At the other end of the spectrum is
the personal computer and low-end systems world. We have
historically targeted VAX in the mid-range, and deliver compatible
processors to cover that range. If you look at IBM in that range,
you find they have four or five incompatible systems; each with a
family unto itself and none of which covers the range.
The fact that we can offer inter-system
functionality — whether in the form of clusters, connections on
the Ethernet or pure networking — puts us on a level that is
unmatched in the industry. If we consider the niche market
competitors, again we find our major attribute is this compatible
range of systems.
Our future VAX systems will lead to greater
efficiencies in Engineering, Manufacturing and Sales. With the use
of the MOS and ECL technologies, we're reducing the number of
basic circuit technologies required that cause extra investments
in manufacturing. By cutting this down, we can make significant
inroads toward helping Digital with its asset management and its
use of other resources. Likewise, the corresponding reduction in
the number of VAX systems to cover an ever-broadening price and
application range will serve to improve Digital's use of its
resources.
We often take for granted that when we come out
with a major advance in computing, like clusters, we make it out
of existing products rather than having to develop something
totally new from the technology up. Likewise, our VAXstation II is
built around the same MicroVAX chip that our MicroVAX II product
is. In other words, we are leveraging our basic system
developÂment and our basic processor developments into a range of
products and functionalities. And covering this entire range with
one set of software has a major impact on the efficiencies of our
activities in supporting and generating that software.
The single most important thing Mid-Range
Systems can do is introduce our new systems on time. We must bring
them to market on schedule and to the point where the numbers we
can produce meet or exceed our revenue projecÂtions. We also must
be sure that all of our new systems and new options are also done
in a way that allows both Manufacturing and Sales to produce and
sell the new products efficiently.
We must provide all the support we can in
marketing our current products — our VAX-11/750 and VAX-11/785
family products — because they will continue to be a significant
portion of the mid-range VAX family revenues this year. Therefore,
while they are older in an engineering sense to most of us, they
are our bread and butter for the immediate future.
The workload we have contracted to undertake in
FY86 means we're going to have to increase our productivity and do
more for the allocated dollar. In part, we must improve our output
by taking advantage of the design processes and methodologies we
have developed over the past couple of years.
All of us are directly or indirectly involved
in the productivity of our groups. It is up to you to accept the
responsibility; to see that that dollar you spend gets spent in a
place and in a way that will have the most leverage. If we don't
implement the strategy in a cost-effective manner, we will not
return to the financial metrics and measures that are important to
us as employees and to the investment community that we count on
to help fund our growth. We must execute our strategy in a timely
and cost efficient manner.
Mike Riggle has been named Senior Corporate
consultant, reporting to Grant Saviers, vice president, Storage
Systems. Says Grant, "Mike has been the technical cornerstone of
Digital's successful effort to become a world leader in disk
technology. This appointment recognizes his outstanding technical,
architectural and strategic contributions to the company."
A Digital employee since 1976, Mike is Group
Engineering manager for Storage Advanced Development and
Architecture, where he has concentrated on magnetic memories and
storage subsystems, including data base systems. His group has
been responsible for leading the development of the advanced
technology and architecture base for Digital's magnetic disk,
tape, floppy products and DSA (Digital Storage Architecture)
subsystem products. They have also done advanced product
development for the RA80 series of disk drives, RC25 disk drive,
UDA50 disk controller, HSC50 disk/tape cluster controller, and
RRD50 optical disk drive.
Before joining Digital, Mike was director of
engineering for Storage TechÂnology Corporation (STC). He holds a
B.S. in electrical engineering from the University of Minnesota.
Besides Mike, Dave Cutler and Bill Strecker are
the only Senior Corporate consultants at Digital.
Jack MacKeen has been named Group vice
president for the Business Computer Group (BCG) and Original
Equipment Manufacturers (OEM) Group, replacing Ward Mackenzie, who
left Digital in June after 18 years with the company. In his new
position, Jack reports to Ken Olsen. He had been managing the OEM
Group since December, and was named a vice president in March.
As part of this change, Jim Willis assumes
management of the BCG organÂization, reporting to Jack MacKeen.
Jim had been BCG Channels Marketing manager.
Several separate organizational announcements
made this spring have resulted in new titles for European managers
of Software & Application Services, International Sales,
International Engineering and the Danish subsidiary.
Reflecting an increased level of activity and
the strategic importance of engineering in Europe and in the
international arena, David Stone has assumed the responsibilities
of vice president of International Engineering and Strategic
Resources. He will manage all the International Engineering
activities in Europe and the resources assigned to the
international group at corporate level. In addition, he will drive
strategic plans related to collaboration with other companies in
Europe. He reports to Pier Carlo Falotti and Bill Johnson and
serves as part of the Corporate Engineering staff.
David Barlow has replaced David Stone as
European Software & Application Services manager. He served
Digital in Sales, then as European Technical Product Group
manager, and most recently, as country manager of Denmark. In his
new position, he reports to Pier Carlo and to Don Busiek.
Upon his return from INSEAD management
training, Niels Birkemose Moeller will replace David Barlow as
country manager for Denmark. Niels joined Digital in 1981 as SWS
manager in Denmark and has since developed that organization from
four people to more than 40, while bringing its level of customer
satisfaction to one of the highest in Europe.
Replacing Bobby Choonavala, who is moving to
Hong Kong as managing director of Digital’s Far East operations,
Dave Buckingham has been named InterÂnational Sales manager for
Europe. This group has been realigned to include responsibility
for: International Accounts (all large European accounts with
international and strategic importance to Digital), European DECUS
activiites (to ensure effective dialogue and cooperation with
DECUS), and a new Sales Communication and Development group (which
will set standards in all aspects of sales communication).
Management of the "channels" group, formerly part of International
Sales, has transferred to Marketing. Dave will continue to manage
European Educational Services until a replacement is announced.
To streamline Digital's efforts in the systems
and workstations engineering area, Jeff Kalb, vice president,
Low-End Systems and Technology (LEST), announced the following
organizational changes:
o The PRO 300 workstation efforts will report
to Dorn LaCava, manager, Micro Systems Development. This includes
all aspects of the PRO business.
o Other activities which support VAX
"Worksystems" — systems linked by networks which offer customers
complete solutions — now report to Steve Teicher, Group
Engineering manager, Worksystems Program Office.
o An Applications Planning Group has been
established and will be managed by Ron Ham, Applications and Base
Product Marketing manager for workstations.
Bonnie Bedell has been named Personnel
Programs manager for the Sales organization. She will report
functionally to Dick Walsh, Field Group Personnel manager, and
will also be responsible to the U.S. Area managers (Dave Grainger,
WACS; Chick Shue, NEAS; and Harvey Weiss, MASS) and to Jerry
Paxton, manager of Corporate Sales. Bonnie was most recently Group
Business manager, Personnel, for Computer Systems Manufacturing
(CSM). She joined Digital in 1971.
Pat Cataldo has been named Corporate
manager of Educational Services, reporting to Jack Shields, vice
president, Sales and Service. Pat replaces Del Lippert, who has
taken a leave of absence from Digital to serve as president of
NovAtel Communications in Calgary, Canada. In his new position,
Pat will be responsible for Digital's worldwide Educational
Services organÂization. During his 11 years at Digital, Pat has
managed GIA and U.S. Ed Services and, most recently, the Sales
Training organization. He holds an undergraduate degree in
economics from St. Francis College in Pennsylvania and an M.B.A.
from Boston College.
Judy Gustafson is now Personnel manager,
Peripherals & Supplies Group, reporting to Dick Walsh, Field
Group Personnel manager, and John Alexander- son, vice president,
Peripherals & Supplies. She was previously project manager for
the U.S. Field Personnel Business Planning Group. Judy came to
Digital in 1980, and holds a B.A. in psychology from Marymount
Manhattan College in New York.
Mike Marshall has been appointed
Northeast Regional Sales manager, reporting to Chick Shue, vice
president, Northeast Area States (NEAS). Since joining Digital in
1967 as a sales representative, Mike has held various positions,
including Philadelphia District Sales manager, Marketing manager
of IndusÂtrial Products, New England District Sales manager, and
his most recent post as NEAS Operations manager. Mike will
continue to manage the NEAS Operations group until a successor is
named. Mike holds a B.S. in electrical engineerÂing from Drexel
University in Pennsylvania.
Bob Murray has joined Digital as
Marketing manager for the Networks and Communications group,
reporting to John Adams, Strategic Planning and Marketing manager
for Distributed Systems. Bob had been vice president and director
of marketing for Commterm, Inc., of Billerica, Mass. In his new
position, Bob is responsible for planning and implementing
Digital's netÂworking and communications marketing strategy,
programs and promotional activities worldwide for DECnet and
interconnect products with other vendÂors' equipment. He holds
B.A. degrees in literature, psychology and journalÂism from The
College of St. Thomas.
Ed Reiss has been appointed Real Estate
and Construction (RECO) manager, reporting to Doug Hammond,
Corporate Administration manager. Since joining Digital seven
years ago, Ed has held management positions in the AcquiÂsition,
Planning, and Design groups within RECO. He holds a B.S. degree in
civil engineering from Cornell University and an M.B.A. from
Harvard BusiÂness School.
Susan Stanley has been named Human
Resource & Development manager for Finance, reporting to Libby
Fusco, F&A Personnel manager. In her most recent position,
Susan was the custom business partner supporting the Law
DepartÂment. She joined Digital in 1980, and holds a B.A. in
political science from the University of Maine' at Orono and a
Master's in organization development from American University in
Washington, D.C.
Effective Aug. 5, the Corporate Affirmative
Action/Equal Employment OpporÂtunity (AA/EEO) office is merging
with its U.S. Field counterpart. The new organization, managed by
Barbara Walker and located in West Concord, Mass., will focus on
both AA and EEO.
The EEO component will deal with areas of
compliance, including U.S. state and federal laws and regulations
affecting business practices. Newly- designed resources and
technologies will support EEO and ensure that it becomes part of
each manager's ongoing business practices.
In keeping with Digital's "Valuing Differences"
philosophy, the AA component will continue developing and
enhancing an environment that reflects DigiÂtal's values relating
to managing and working in a diverse workforce. The AA effort will
help managers understand the business connection between the
Valuing Differences philosophy and Digital's productivity and
profitability.
Digital has received a "Business in the Arts"
award for supporting various cultural activities and organizations
through its Corporate Contributions program.
The award, one of 20 presented annually by the
Business Committee for the Arts and Forbes Magazine, cited
Digital's cash and equipment grants,
employee matching gifts and employee
involvement. Particular .emphasis was placed on contributions to
cultural institutions such as the Kennedy Center in Washington,
D.C.; underwriting of the Boston Pops Summer Series on public
television; and partnerships with the Children’s Museum in Boston
and the Children's Discovery Museum in Acton, Mass.
The Business Committee for the Arts is a
national non-profit organization of business leaders committed to
encouraging new and increased support for the arts from the
business community. Digital was chosen by a panel of business,
foundation, government and artistic leaders.
The more international a U.S. company becomes
in its manufacturing, engineÂering and marketing activities, the
more successful it is; yet, the more vulnerable it becomes to
domestic protection and to foreign government tarÂgeting, which
can lead to government trade restrictions. We must strive for the
difficult path of discouraging foreign government targeting and
encourÂaging foreign market access without instituting U.S.
government policies that will provoke retaliation. As a result, we
should avoid using formal U.S. industrial policy to respond to
foreign government restrictions, since a U.S. "industrial policy"
inevitably would consist of policies to subsidize and protect
government-selected "winners."
Instead of targeted subsidies and protection,
we look to performance-based incentives that can enhance the
competitiveness of any entity that chooses to take advantage of
them. The R&D tax credit is an outstanding example. Enacted as
a part of the 1981 tax-cut, this incentive provides for a 25% tax
credit for incremental R&D spending. It is available to any
corporation, whether high or low tech, high or low profit, so long
as it increases its R&D effort. Legislation to make the
R&D tax credit permanent includes features that stimulate
greater corporate research contracts with universiÂties and
increase corporate donations of equipment to universities for
scientific training and research.
In a similar vein, Congress last year enacted
two important measures deÂsigned to target the process of
innovation rather than any one sector or product. The first was
the "National Cooperative Research Act", which modified the
antitrust laws as they apply to joint R&D among corporations.
This act removes any lingering concerns about the legitimacy of
cooperative efforts. The second measure is the "Semiconductor Chip
Protection Act", which will give a hybrid form of copyright
protection to semiconductor chip designs once they have been
realized in silicon. This act will provide a necessary form of
intellectual property protection for products such as MICROVAX II
and Digital's other semiconductor components. We are encouraging
Japan and other countries to enact similar national laws, that,in
turn, would provide the basis for international treaty protection
of semiconductor designs.
The above is excerpted from "Government Issues
Update" and summarizes remarks deliverd by Sam Fuller to the U.S.
Congress and Congressional staff members earlier this summer.