Conference 7.286::digital

    
    had a story on DEC cost cutting, possible lay offs, expenses out of
    control, etc.  They reference an internal document they had obtained. 
    I don't recall any official DEC quotes, comments, or statements
    supporting the story.
    
    rkp

    Someone in the office here heard a report on CNN about this announced
    $1B plan (with layoffs "likely").  I've been trying to get some text on
    the matter for use in our local NEWS system (not as gospel truth, of
    course, but we need to know what our customers are hearing), but I
    have yet to see any.
    
    If someone finds a story (it's gotta be in the Glob by 12/13, no?), I'd
    appreciate a transcription of the text.  Thanks.
    
    -- Russ

The WALL STREET JOURNAL, Dec 12, 1990  (page A2)

Digital Equipment Reassigns Executives, Begins Cuts, Probably including Layoffs

By John R. Wilke, Staff Reported of the WSJ

DIGITAL Equipment Corp. quietly reassigned two major executives and began a
$1 billion cost-cutting effort expected to bring its first ever layoffs,
possibly as soon as next month, insiders say.

The expense cuts are sketched in a series of memos circulated among senior
executives by John H. Smith, Digital's senior vice president for operations,
which were obtained by this newspaper.

David W. Grainger, vice president of Digital's huge U.S. sales and service
organization, was reassigned to handle relations with distributors and
resellers. The move sidelines a fast-rising executive once considered a
candidate for president.

Donald P. Zereski, formerly vice president for customer service, will assume
Mr. Grainger's position and some added responsibilities. The new assignments
resolve a tense standoff between the two executives and significantly broadens
Mr. Zereski's authority, executives say.

GROWING ANXIETY
The shakeup underscores growing anxiety in the top ranks of the nation's second
largest computer maker as it struggles to cut costs, reverse slow sales and
counter a resurgent International Business Machines Corp., the industry
leader. A spokesman confirmed the changes, which weren't announced, but said
neither executive was available for comment.

Digital's worries are reflected on the companies electronic-mail network, which
has been crackling with criticism. "Out here in the trenches, management is
not considered part of the problem, but rather *the* problem, says an
electronic-mail message sent to Mr. Smith and seen widely across the network.

Other missives complain the company has been burdened by too many middle
managers protecting their turf. An employee reports that her group has five
managers - overseeing six workers. A chorus of electronic catcalls greeted Mr.
Smith's effort to trim expenses by declaring that workers wouldn't be repaid
mileage for auto use within something called the "virtual office", a 25-mile
zone around Digital facilities. The hasty edict was quickly rescinded.

Layoffs and deeper cost-cutting will be welcomed by Wall Street, which has
criticized the company for moving too slowly. Digital eliminated 3,000 positions
last fiscal year through a voluntary severance program and has said that it
hopes to cut 5,000 to 6,000 more the same way in the year ending June 30. But
insiders say Mr. Smith now plans to reassess the voluntary program at the end
of the December quarter  and - if results remain weak, as expected- will order
the first layoffs in the Maynard, Mass.-based company's 33-year history.

SHARP PROFIT DROP
Digital's results have been weak for more than a year. In its first quarter,
ended Sept. 30, net income fell 83%, to 26.2 million, or 21 cents a share, or
a 1% decline in revenue to $3.09 billion.


J.P. Stevens, a Dean Witter Reynolds Inc. analyst, said that for Digital to stay
competitive it must continue to consolidate manufacturing and administrative
sites and pare some 12,000 jobs from the payroll or 123,000. Kenneth H. Olsen,
Digital's president and founder, who long resisted calling to cut jobs, seems
to have come around. "We don't have people standing around doing nothing," he
says, then changes his mind. "Well, I'm sure that we do. But not where I can see
them."

Mr. Olsen says Digital is nonetheless in good shape to weather a recession with
1.6 billion cash on hand and a raft of new products. Indeed, Digital appears
prepared to exploit the recession, and the troubles of its smaller competitors,
to grab market share - even if it comes at the expense of quick profits. Mr.
Smith, Mr. Olsen's top manager, recently made the strategy explicit: "Profit is
our focus, but revenue generation is far more important - that is our future.
At the same time, he emphasized tougher expense controls.


The sales organization may be taking much of the heat, but the problems appear
more widespread. Critical product-design projects have been hurt by political
infighting. Morale is poor in the sales force, which still isn't paid
commissions, sales people complain.

Digital's auditor, Coopers & Lybrand, was critical of a key part of the
company's organizational structure in a recent confidential review for
management. It called the structure "too far removed from the business, lacking
in clear directions and goals." The report also found a lack of accountability
in budgeting and a "lack of upper-management involvement" in designing internal
control systems. It said customer service and invoicing are slow.

So, Digital is scrambling again to reorganize itself. Its top strategists
recently circulated a study - entitled "Why is IBM growing and what should
Digital do about it?" - in which a broad reorganization of existing business
units is recommended, including "redeploying New England resources to fast
growth markets", such as Japan, and stressing sails of the flagship VAX line in
Europe. Another goal was a stronger focus on industry-standard Unix-based
machines working in tandem with proprietary, higher margin products.

At the same time, Digital engineers are feverishly working on a project
code-named Alpha to succeed the VAX - the computer design that fueled Digital's
explosive growth through most of the 1980s. Analysts say the new processor,
based on reduced instruction-set, or RISC, technology, will offer sharply
higher performance at less cost.

Digital shares closed yesterday at $54.625, off $1.357, in New York Exchange
composite trading.

    I knew that if we waited long enough we'd find an opportunity to reuse the 
    old B$ST slogan...
    
    Al
    

	... not 10:30p, I would have beat you in with that!  Thought of it on
the way home tonight!

	A more serious topic might be how virtually exact quotes from THIS 
conference got in the WSJ article.  Not the way to win friends and influence 
the cost-cutters!

    I've heard a number of people talk about a billion dollar problem
    at DEC. They've been refering to talk of there being 10,000 employees
    making more then $100,000 a year.
    
    I'm not too worried about the stuff that looks like it came from
    notes in general or this conference in spicific. It was all widely
    passed around in mail as well. I would be surprised if most people
    in the company hasn't seen it. With stuff sent that widely there is
    always going to be some idiot who wants to show up to a reporter.
    
    The stuff that worries me is the stuff the WSJ got that was suppost
    to be circulated only among top level people. When those people are
    irresponsible with distributions that is scary. The Coopers & Lybrand
    report and the study RE: IBM should not have made the press. 
    
    The Coopers & Lybrand study sounds like something that could have
    come from this and the MARKETING notesfile by the way. And for less
    money. :-) But at least it shows that we may be getting some value
    from them. I may actually for YES on next years proxy to retain them.
    For the first time as I usually vote no.
    
    			Alfred

    Look at the bright side :
    
    Kinzelman got quoted in the WSJ !
    
    Scooter

    Another bright item---the publicity for our electronic mail system.
    It shows that we use what we sell.
    
    If anybody happens upon a copy of the Coopers & Lybrand study, please
    post it in this conference for comment and criticism.  I wonder if it
    uses text from this conference?
        John Sauter

         Yeah, but I was slightly disappointed that they didn't try to
    explain/describe Notes, which is obviously where they got the
    "electronic catcalls" from.  Their readers are getting more astute in
    that area.  I think they can handle it.
    
                                        Greg

    Mick Prokopis is heading up a group of folks across most areas of the
    Corporation on cutting 1 billion in expenses by the end of this fiscal
    year.  He was appointed by Jack Smith 3-4 months ago and has been
    mentioned on DVN's and in articles in Digital newspapers.  Mick has 
    set up a series of Cost Captains in areas like purchasing, Training,
    Telecomm, Travel, Facilities each of whom have targets to meet. 
    
    Mick and his group are tightly connected to DELTA Employee
    Involvement so your ideas are reaching them for consideration.
    If you have proposals or ideas for cost cutting in any area send them
    to DELTA and they will reach the right folks to act on them.
    
    
    

    
    It's not true that the WSJ was necessarilly referring to Notes.  The
    Kinzelman memo, which has prompted another note in this conference
    damning whoever leaked it _from_ this conference, came to me in mail
    about six times.  I also saw copies of messages bewailing the "virtual
    office" idea, in mail.  If I saw them in mail, then it's possible that
    the WSJ's source was mail.
    
    Let's not overestimate the importance of this conference.  We've
    decided in the last few months that Jack Smith _must_ read it (remember
    the "more easy stuff" excitement?), and now we've decided that when the
    Wall Street Journal wants the scoop on DEC, they log into this
    conference?  I think both Jack and the Journal have a broader pool 
    of sources.
    

   Why do I get the feeling that we are nickle and diming ourselves into
   oblivion.
   
   Watch my lips folks... We are not going to survive a recession/depression
   by hatcheting here there and everywhere, alone. Now is the time to get
   agressive. Hell, lets target wang and DG, between them, they must have a
   few billion dollars worth of installed customer base. UNisys is stumbling,
   lets go for them. Hell, why don't we counterbid against AT&T for NCR.
   Compaq are chasing a new chip source. Why don't we try to remedy the
   mistake we made  in the past, and start OEMing our chips...
   
   All I seem to see, is Cost reductions, that end up cutting productivity,
   and notably a large number of the suggestions are tainted with "sour
   grapes" i.e. Field people saying how come Engineering need all of those
   computers, and Engineers saying how come field people get to go to Hawaii.
   Let's stop acting like children and get back to work.
   
   We are not going to survive, by cutting off our arms and legs (and hearts),
   and putting buckets over our heads, and cowering in a corner. We are going
   to survive (and expand) by being agressive in a marketplace where we have a
   lot more to offer than our competitors, and a lot better chance of
   providing it.
   
   Peter Q. (who majored in Ecomonics at University)
   
   
   p.s. flames are off now.... :-)
   

    
         While I too received mail messages on some of the topics the WSJ
    mentioned, I saw far more in various note conferences.  It is not
    guaranteed that their source was notes, but it is very likely.
    
         Just FYI, one does not need to "...log into this conference..."
    in order to receive information from it.
    
                                     Greg

    
    	The memo which was originally intended for upper management
    	did go astray in some cases and copies did end up in areas not
    	expected.  Therefore, we can't assume that one of the senior
    	people leaked it.
    
    	Also, I wouldn't get too enthusiastic about the mention of
    	electronic mail.  What if a casual reader wonders how WSJ
    	tapped into the system.  Just how secure are DEC's machines,
    	anyway?
    
    	Of course, the answer is The Journal didn't tap in.  Someone
    	sent hardcopy to Mr. Wilke of several memos written both on
    	high and in the trenches.  Probably that person is in the
    	Greater Maynard area since Wilke is with The Journal's Boston
    	bureau.
    
    	There's a lot of frustration and confusion going around now as
    	we are all aware.  Leaking material like that doesn't help at
    	all.  Not at all.

>    	The memo which was originally intended for upper management
>    	did go astray in some cases and copies did end up in areas not
>    	expected.  Therefore, we can't assume that one of the senior
>    	people leaked it.

    Maybe we can't assume a senior person leaked it to the WSJ but one
    of them had to have given it to someone who shouldn't have had it
    or it would not have gone astray. Or are you assuming someone swiped
    it from a senior manager?

    		Alfred

    Shhhhht! The strategy is WORKING!!
    
    Franc.

Perhaps the leaks were deliberate.

    Didn't Nixon have this problem?....wasn't his name.."deepsomething".
    
    

 Digital - Reassigns executives, begins cuts, probably including layoffs
	{The Wall Street Journal, 12-Dec-90, p. A2}
   [This is the entire article - TT]
   Digital Equipment quietly reassigned two major executives and began a
 $1 billion cost-cutting effort expected to bring its first-ever layoffs,
 possibly as soon as next month, insiders say.
   The expense cuts are sketched in a series of memos circulated among senior
 executives by John H. Smith, Digital's senior vide president for operations,
 which were obtained by this newspaper.
   David W. Grainger, vice president of Digital's huge U.S. sales and service
 organization, was reassigned to handle relations with distributors and
 resellers. The move sidelines a fast-rising executive once considered a
 candidate for president.
   Donald P. Zereski, formerly vice president for customer service, will assume
 Mr. Grainger's position and some added responsibilities. The new assignments
 resolve a tense standoff between the two executives and significantly broadens
 Mr. Zereski's authority, executives say.

   Growing Anxiety

   The shakeup underscores growing anxiety in the top ranks of the nation's
 second-largest computer maker as it struggles to cut costs, reverse slow
 sales and counter a resurgent IBM, the industry leader. A spokesman confirmed
 the changes, but said neither executive was available for comment.
   Digital;s worries are reflected on the company's electronic-mail network,
 which has been crackling with criticism. "Out here in the trenches,
 management is not perceived as part of the solution, or even as part of the
 problem, but rather THE [italics - TT] problem," says an electronic-mail
 message sent to Mr. Smith and seen widely across the network.
   Other missives complain the company has become burdened by too many middle
 managers protecting their turf. An employee reports that her group has five
 managers - overseeing six workers. A chorus of electronic catcalls greeted Mr.
 Smith's effort to trim expenses by declaring that workers wouldn't be repaid
 mileage for auto use within something called "the virtual office," a 25-mile
 zone around Digital facilities. The hasty edict was quickly rescinded.
   Layoffs and deeper cost-cutting will be welcomed by Wall Street, which has
 criticized the company for moving too slowly. Digital eliminated 3,000
 positions last fiscal year through a voluntary severance program and has said
 it hopes to cut 5,000 to 6,000 more the same way in the year ending June 30.
 But insiders say Mr. Smith now plans to reassess the voluntary program at the
 end of the December quarter and - if results remain weak, as expected - will
 order the first layoffs in the Maynard, Mass.-based company's 33-year history.

   Sharp Profit Drop

   Digital's results have been weak for more than a year. In its first quarter,
 ended Sept. 30, net income fell 83% to $26.2 million, or 21 cents a share, on
 a 1% decline in revenue to $3.09 billion.
   Jay P. Stevens, a Dean Witter Reynolds Inc. analyst said that for Digital to
 stay competitive it must continue to consolidate manufacturing and
 administrative sites and pare some 12,000 jobs from the payroll of 123,500.
 Kenneth H. Olsen, Digital's president and founder, who long resisted calls to
 cut jobs, seems to have come around. "We don't have people standing around
 doing nothing," he says, then changes his mind, "Well, I'm sure that we do. But
 not where I can see them."
   Mr. Olsen says Digital is nonetheless in good shape to weather a recession
 with $1.6 billion in cash on hand and a raft of new products. Indeed, Digital
 appears prepared to exploit the recession, and the troubles of its smaller
 competitors, to grab market share - even if it comes at the expense of quick
 profits. Mr. Smith, Mr. Olsen's top manager, recently made the strategy
 explicit: "Profit is our focus, but revenue generation is far more important -
 that is our future." At the same time, he emphasizes tougher expense controls.
   The sales organization may be taking much of the heat, but the problems
 appear more widespread. Critical product-design projects have been hurt by
 political infighting. Morale is poor in the sales force, which still isn't
 paid commissions, sales people complain.
   Digital's auditor, Coopers & Lybrand, was critical of a key part of the
 company's organizational structure in a recent confidential review for
 management. It called the structure "too far removed from the business,
 lacking clear directions and goals." The report also found a lack of
 accountability in budgeting and a "lack of upper-management involvement" in
 designing internal control systems. It said customer service and invoicing are
 slow.
   So, Digital is scrambling again to reorganize itself. Its top strategists
 recently circulated a study - entitled "Why is IBM growing and what should
 Digital do about it" - in which a broad reorganization of existing business
 units is recommended, including "redeploying New England resources to
 fast-growing markets" such as Japan, and stressing sales of its flagship VAX
 line in Europe. Another goal was a stronger focus on industry-standard
 Unix-based machines working in tandem with proprietary, higher-margin
 products.
   At the same time, Digital engineers are feverishly working on a project
 code-named Alpha to succeed VAX - the computer design that fueled Digital's
 explosive growth through most of the 1980s. Analysts say the new processor,
 based on reduced instruction-set, or RISC, technology, will offer sharply
 higher performance at less cost.
   Digital shares closed yesterday at $54.375, off $1.625, in New York Stock
 Exchange composite trading.

    WE RECEIVED FOLLOWING PARABLE AND WOULD LIKE TO SHARE WITH YOU...

    ANONYMOUS...

     

    WE RECEIVED FOLLOWING PARABLE AND WOULD LIKE TO SHARE WITH YOU...

    ANONYMOUS...

     
There once was a town by a river.  The townsfolk decided that they
needed a bridge to cross the river.  After building the bridge, it was
decided that they needed a watchman to take care of the bridge. With the
addition of the watchman, it was determined that a supervisor was necessary
to make sure the watchman did his job.  With the addition of the
supervisor, the town now needed an accountant to make sure that salaries
were paid and the expenses were kept straight.  Well, you guessed it, next
it was determined that the books should be audited, so they hired an
controller.  The first thing that the controller saw was that expenses were 
way out line for the work that needed to be done.  He immediately set out to 
cut expenses, and his first action was to, you guessed it again, he got rid 
of the watchman! 

    RE-1
    
    Hey?...this same parable was this summers('90) label for a company
    from Holland called Philips.They too are hacking there way into cost
    saving actions.Thousands and thousands of its workers have already
    been layed off.
    
    Here is another parable for sharing.
    
    A rowing competition was setup between Philips and Sony.
    Sony sends 8 people to row the boat and 1 for the steering.
    Philips sends 1 man to row their boat ans 8 for the steering.
    Eventualy Sony wins the game and goes home satisfied.
    Philips top management pulled themselves back in a room meet with
    each other to study what went wrong.A conclusion came out of that 
    meeting which they thought was the answer to the problem.
    Their statement in front of the press was this,
    "Our man who was rowing the boat,was not motivated enough to win
    the race".
    
    ;)

    It has aways been in DEC that the people who caused the the problem are
    asked to solve the problem.  These people never see themself as the 
    problem.  This is what is happening today.  Layoff Manufacturing folks
    and keep nonrevenue generating middle and upper manager.  If it were 
    not for the Manufacturing folks DEC would not have any product to sell.
    If DEC is going to continue to be a profitable company it need to
    generate better and more revenue manufactured goods not less.  I see
    the present course of action the company is taking eventually killing 
    DEC.  DEC is good at manufacturing PRODUCT not selling consulant
    services.  DEC need to stick to what it does best.

I was more than a little pissed off by the WSJ article.  Do to the
word-for-word precision of the quotes it is clear that someone collected
a set of hardcopies and sent the to the Journal.  This was no case of
a "journalist" overhearing an innocent conversation, but rather a
diliberate stab in the back.

Could this be a case of a trooper who thought a desparate act might
help Digital?

Not likely.

This stinks of office politics.  The fact that stuff like this gets into
the press shows what the real trouble in Digital is:  Politics is
killing this company.  Leaking stuff to the press is politics.

	... of stock in the "products" anymore, they're commodity items! The
value-added services they WILL pay for, however, and we are striving to be-
come better at marketing and delivering them.

    Cost cutting???  Get serious.  Travel still goes on as usual, at least
    from what I can observe.  Just in the last two weeks, Employee
    Communications ran FIVE!!! off-site, third-party-run sensing sessions
    to find out how employees feel about internal communications.
    
    I mean, f'krissakes, is this crap never gonna stop?  I nominate
    the whole Employee Communications Group for the package.

    This reply was deleted in hopes of keeping my job.
    	Greg
    

    In addition to cost-cutting inanities like no office supplies, one move
    really gores me where it hurts.  There's a company-wide freeze on Loan
    of Product.. 'LOPA' gear.  I support large channels customers..
    resellers, where one well-placed system can theoretically leverage tens 
    or possibly hundreds of systems.
    
    Luckily, we were able to petition the local DM for absolution.
    
    Ironically, the LOPA freeze comes right on the heels that all
    profitability and asset control belongs to the Account Manager.
    
    Right.
    
    karl

-- Forwarding (particularly upwards) encouraged --


A fable for our times (prompted by the non-availability -- an appearance, not a 
reality, I guaranteee -- of viewgraphs this week). 

One winter day the master of the town stable went to the village reeve to pick 
up a weeks worth of hay for his horses.

"Sorry", said the reeve.  "As you know, last autumn the soothsayer predicted 
that this would be a very difficult winter.  And indeed, verily, so it is. In 
order to conserve expenses, the baron has ordered that hay expenses must be 
reduced.  Although I have a stack of hay left, it is reserved for critical 
stables alone.  In order for your stable to be designated as critical, you must 
submit a request to the baron via the chancellor of the exchequer, the lord high 
bishop, and the interim groom of the backstairs.  If it is approved, then you 
may have some hay."

Now this was a nuisace to the stablemaster for only about three whits.  

Of course, it was out of the question to actually apply for a critical 
designation for his stable, because one would run the fairly significant risk of 
having it designated non-critical and made a candidate for demolition instead.  

However, this particular stable master had been through many winters in the past 
and had, of course, accumulated his own "reserve" of hay immediately upon 
hearing that a hard winter was predicted.

As long as he could get hay from the reeve, this reserve was untouched. As soon 
as the inevitable attempt to "cut hay expenses" arrived,  the stablemaster would 
begin to use his private reserve to buffer his horses from starvation, while 
withdrawing EXTRA hay from any supplies that might, from time to time, be made 
available by the reeve -- in order to replenish his private reserve, from which 
he was feeding the horses.  And of course, the less regular or predictable the 
supply from the reeve, the larger the private stack the stablemaster would 
maintain in order to keep his horses fed.

Now, throughout the barony, this scene was repeated unto a hundred- and a 
thousand-fold.  The effect on the difficulty of the winter was the reverse of 
what the baron intended.  As soon as the soothsayers' prediction was confirmed 
and the edict to cut hay expenses promulgated, the total amount of hay allocated 
to private reserves instead of horses throughout the kingdom increased 
dramatically.  The net result was that ultimately, the rate of consumption of 
hay was unchanged, while the amount of hay held in reserve was increased.

 The right way to reduce the cost of hay for the barony would have been to 
encourage stablemasters to pool or decrease their private reserves while 
guaranteeing that enough hay would continue to be distributed to feed everyone's 
horses -- combined with an ACTIVE program to identify and slaughter non-critical 
horses (not stables).  The baron's approach was faulty because it was based on 
the false premise that most stablemasters are naive about how barons act during 
hard winters.

Moral:  "It is easy to conserve hay by removing horses.  But it is difficult to 
remove horses by conserving hay."

 

    Wondering aloud: How many of the aforementioned $100,000/year employees
    are actually going to get laid off? Not many,I imagine,since the
    people charged with cutting $1B are mainly those people.
    
    Ken