Conference 7.286::digital

2087.0. "Investor's Daily story on Bob Palmer" by HERON::SPALT () Wed Sep 02 1992 09:02

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DIGITAL EQUIPMENT'S PALMER:

CEO-TO-BE Aims to move firm out of the slow lane....

By Ted Bunker
Investor's Daily
New York

								      
	Robert B. Palmer is picking up the pace at Digital Equipment 
Corp., a welcome relief for those frustrated with Digital's slow 
motion in recent years.
	Tapped in July to take the reins of Digital from founder
Kenneth H. Olsen, who plans to step down as president and chief 
executive Oct. 1, Palmer is already starting to shake things up with 
his decisive management style.
	A plan long opposed by Olsen to pay all Digital salespeople
at least partly with commissions got a green light shortly after 
Palmer was named to succeed Olsen. And Palmer has ordered Digital's 
notoriously contentious engineering staff to pull together in an 
effort to slim down Digital's product lines.
	At the refurbished Civil Warers Maynard, Mass., woolen mill 
that serves as Digital's headquarters, the differences in style
brought by Palmer stand out like sunshine lancing through shadow, And 
company followers say the light frightens some Digital veterans.
	Olsen, a cerebral, moody manager who fostered competition 
among staffers, built an organization that at times seemed chaotic 
even to those in charge. Olsen sometimes reversed the decisions of his 
managers, and he encouraged others to question organizational 
commitments.
	By contrast, Palmer is said to resist changing decisions once 
they are made. Former colleagues say he favors clear line of 
authority, demands accountability and lives up to his own commitments.
	Palmer, who previously was Digital's vice president of 
manufacturing and logistics, declined repeated requests for an
interview. But internal communiques bespeak a style that differs 
sharply in at least some respects from the way Olsen works.
	In one memo to Digital managers this month, Palmer outlined a 
task he had given to William D. Strecker, the engineering chief who 
featured prominently in two management shuffles earlier this year. 
Palmer inserted a very unusual demand for unity.
	"I'm asking Bill to develop and drive a process to ensure that
Digital's products and technologies are rationalized," Palmer wrote, 
according to a source familiar with its contents, Strecker, he 
continued, would settle controversy - over which products to kill, for 
instance - through an "open and honest debate."
	"Your support and cooperation with Bill is needed and 
expected." Palmer added.
	Such Orders would not be out of the ordinary at most 
corporations. But at Olsen's Digital, former employees and analysts 
say, staff always has been allowed to comment on - or even attempt to
change - tasks expected of them."
	Palmer's firm tone also came out in a televised address he 
made recently to Digital's staff, according to a transcript provided 
by the company.
	"I have zero tolerance for a 'lack' of honesty and integrity,
"Palmer told his anxious troops after he was named to succeed Olsen. " 
I also believe in 'non excuses' management... I don't expect to make 
excuses for my own performance, and I don't want to hear excuses from 
those who report to me or those who report at any senior level of 
management."
	In the same address, Palmer denied that he planned to begin 
axing thousands of jobs in the next few weeks. But he then went on to 
say that Digital needs an overhaul and it is clear the company has too 
many employees.
	As restructuring goes forward, he said, "It is inevitable that 
we will find many activities that do no add sufficient value to our 
company to retain. " If other tasks can't be found for workers engaged 
in those activities, he went on, "We have no choice but to eliminate 
redundant work and excess employees in order to become competitive."
	Talk like that has thrown the fear of unemployment into many 
Digital veterans, according to industry analysts. And management has 
fueled those concerns by acknowledging that as many as 15,000 jobs
must be shed soon.
	Palmer tries to show respect for the feelings of his staff, 
according to current and former Digital executives such as James 
Osterhoff, who served as Digital's chief financial officer until late 
1991.
	Palmer understands, Osterhoff said, that "you can't keep an 
organization healthy if you have excess costs in it... He's a 
disciplined business manager.
	Palmer, 51, is a former semiconductor industry entrepreneur 
who joined Digital in 1985 and became the company's manufacturing 
chief five years later. The executive gained a nickname - Rapid 
Robert - for the alacrity with which he went about reorganizing and 
reducing Digital's manufacturing operations. He shuttered, sold or 
redirected 10 of the 35 plants he controlled, cutting thousands from 
the payroll. Palmer apparently appreciates rapid Action. He's a 
downhill skier who also drives a Porsche. He's an avid runner -- he 
averages six miles a day and can finish a marathon in under three 
hours. A debonair Texas native given to tailored suits. Palmer is also 
independently wealthy, the result of his participation in a successful 
start-up, Mostek Corp. In 1980, United Technologies Corp. Bought the
semiconductor maker, which Palmer helped start in the late 1960's not 
long after he left Texas Tech University with a master's degree in 
physics.
	Palmer contrasts with Olsen in many ways. Olsen drives a 
Lincoln, enjoys a long and stable marriage and has lived in the same
area for 40 years. Palmer is a divorced father of two children who has
moved from one coast to the other at least once in his career.
	Palmer is a "very diplomatic, never egotistical" man given to 
self-deprecating humor, said Mark Steinkrauss, who was Digital's 
director of investor relations until last spring.
	"You'll have a lot more crisp decision-making out of Bob,"
Steinkrauss predicted. "He's a no-nonsense kind of guy."
	Palmer has "no reluctance at all to crack the whip," said
Wes Melling an industry analyst at Gartner Group a consulting firm in 
Stanford, Conn. Looking at Digital after Olsen tapped Palmer to 
succeed him, Melling said, "You really see the beginnings of the 
imposition of some serious discipline, which was long overdue and 
seriously needed."
	Melling and other analysts say Digital's biggest problem lies 
in effectively marketing its products, which remain topnotch in the 
view of many customers. But Palmer lacks significant experience in 
direct marketing and sales.
	So did Ken Olsen. And that was one deficiency that haunted the 
company which became known for inept marketing and sales techniques.
	To change that, Palmer will cut salaries of all salespeople by
10% but allow them to make up the difference in commissions if a sales 
quota is met. A Digital spokesman said the plan will take effect in
January. Olsen had opposed the payment of regular commissions to all 
salespeople, arguing that they would motivate sellers to put their
own interests over those of customers.
	But simply motivating the sales force won't solve all 
Digital's marketing problems, which reputedly reflect Olsen's disdain 
for the whole function. Analysts like Melling say Palmer has to 
recognize this and rapidly build Digital's marketing muscle.
	To do that, Palmer may have to recruit fresh talent from 
outside the company. Former colleagues expect him to reach outside
without hesitation noting he quickly recognizes his own deficiencies.
	Few expect him to dither over what to do - a welcome change 
from the slow moving decision making that has bogged Digital down in 
the past.
	"Bob keeps talking about how he's going to move slowly," said
one source close to the action. "We don't see any evidence of that."