Conference 7.286::digital

    Makes me sick to my stomach, as I own 200 shares of /DEC stock.
    My break even point is $39 a share, and am thoroughly dis-
    illusioned with the corporate performance.  What is really going
    to happen to this company after the next big round of layoffs?
    Are we going to see the stock dip into the $20's?  How many
    people will become suicidal?  When do you unload the stock? I
    did feel positive about the company when I bought, and am seeing
    to much cutting in certain areas, that it really makes me wonder,
    "do the big boys really know what they are doing?"
    
    Concerned as an employee and an investor\
    
    bob
    

    
    Anyone see the Business Week article several months ago on
    Restructuring? The gist was that the "game plan" for restructuring
    is laid out by a small cadre of super-top-level, Harvard MBA 
    Management Consultants who have ZERO experience actually running
    businesses. 
    
    /ljj
    

    
    Phanthom Profits?  Our big problem is Phanthom Expenses!
    
    Once your die is cast (as our's apparently is to mindless reduction),
    it's nearly impossible to change or break out of the mold.

    We hear about the December 7th layoff...(probably to affect yours
    truly)
    
    And then I notice that the stock's at 32 and something.
    
    20's is getting nearer every day...
    

    may be when the stock hits 30, then people will look at it and say what
    a great buy, and its price will go up very quickly back up. if you dont
    need the money i think you should not care if it goes down, because it
    will eventual go back up. just be patient.

    /nasser

    The point of the base note was that eliminating employees as a strategy
    to improve a company's cash flow was unsuccessfull.  Digital is using
    this very same strategy, so can we reasonably expect Digital to succeed
    where others have failed ?
    
    As the article pointed out, reducing costs by a one-time staff
    reduction doesn't address the basic business problems that motivate
    cost-cutting.  For Digital it's equaly true and IMHO, if by the end of
    FY93 this company doesn't have :
      1) a viable marketing strategy planned and funded 
      2) business managers managing the business
    
    all the panic-driven cost-cutting in the world won't make this company
    a commercial success.
    
    David

    
    
    The nature of the business has changed.  Tiny machines can do whan big
    ones once did, therefore, revenues are samller. Margins suck because
    standard operating systems take away what was once a big differentiator.
    In the abscence of differentiation, price wars ensue.  
    
    Two possible solutions.  differentiate or play the commodity game.
    
    To differentiate is to continue the "VMS is better than UNIX" or
    convince the marketplace that "our UNIX is better than the others" or
    "our NT is better than the others".  Both require a big investment in
    terms of money and people.
    
    The commodity game requires us to cut costs, period.  Commodities get
    sold on the basis of price.  Price is a function of cost. This means
    we cut our headcount because it is the single biggest cost.  
    
    My suggestion is to do both.  The key is to cut those people who are
    not making our NT or UNIX better or convicing customers they are.
    
    -Ed
    
    -Ed

    
    For what its worth:
    
    DEC has several key strengths and we are not really playing to these
    strengths:  Networking, our new ALPHA machines, and our people for
    starters!  If we began to really capitalize on these strengths, I
    believe those shares would rise rapidly!  I still have held on to
    mine-no big numbers-but part of my retirement portfolio.  I also think
    that we should be moving rapidly into SI which could also be a big win
    for us.

re .7
There may well be other ways to diferentiate.  Low cost manufacturing is a 
very poor way to try to differentiate as there is almost always somebody 
who can do it at a lower cost.

We could differentiate by trying to please potential partners and OEMs 
by actually listening to their needs and providing them with systems that 
meet those needs.  This is an IBM strategy perfected over several years, and 
while we can all laugh at IBM, their AS/400 product line is as large as our 
company and very profitable.  Sun also used this strategy in the mid '80's 
through about '89 when they started getting a bit more cocky telling 
software companies what is good for them.

We could differentiate through better understanding our customers business 
and offering solutions aimed at helping them.  This would actually require 
us to have multiple groups in DEC work together so I doubt the atmosphere 
of today will allow that.  Competition for funding seems to be the order of 
the day.

We could differentiate by leading standards and getting there first.  This 
is obviously harder for us simply because of our history and reputation, 
but nobody said differentiation is easy.  PCs and WSs moving to WNT will 
provide some very interesting opportunities for managing data in a new and 
more complex heterogeneous environment.  Getting there first with a 
reasonable and affordable product set could be one example.  Standards can 
be de facto, even in networking.  Witness the great success Novell has had 
despite using XNS.

I spent some time with a guy who was able to differentiate soda ash.  He 
sifted twice and then put it into water proof bag instead of a plain paper 
bag.  He was able to double the price received at only a 3% increase in 
cost.  If soda ash can be differentiated, anything can.  Perhaps we are too 
narrow in our approach to looking for opportunities.

re .8
I know this may be heresy, but I think Digital is staffed with average 
people.  I think any time you have 105,800 of anything, you are going to 
tend to the median.  Our population is no better or worse than any other.  
We have some brilliant people and some louts.  We have a tremendous number 
of bright people who work hard.  I doubt we are much different in this than 
IBM, Kodak, Proctor and Gamble, or Data General.  Every company I work with 
thinks they can use the people they employ as a differentiator, when in 
reality they can use the system supporting those people as a 
differentiator.  I do not believe that you can always hire above average 
people to work on average projects at average salaries across all 
geographies.  This is not bad, just reality.  I find fighting reality to be 
poor use of time.

matt

Re: .8, key strengths

How do Digital's "people" differ from those in other companies so as to
be a "key strength"?

Lee

>>> How do Digital's "people" differ from those in other companies so as to
>>> be a "key strength"?

Good question.

I don't think Digital's people are any better or worse than the people who work
for our competitors (Hewlett-Packard, Sun, etc.). (Just my opinion--no factual
reason for saying this.)

But the culture and management style at Digital has assured that our people are
underutilized, and definitely not contributing as much to the company's profits
as our competitors' people do. (Once again, just my opinion.) The Digital
culture rewards people for doing what they want to do instead of doing what the
customers need for them to do. To me, the company's mantra is "Do your own
thing."

Unless Palmer can change the culture of the company, I don't see much hope for a
turnaround.

And the easiest way to change the culture is for the grim reaper to lay off
*most* of the middle managers in the next layoff cycle. (I define middle
manager to be anyone above a supervisor level and below a vice president.)

Vicki Meagher

    Re: them all...
    
    Can DEC break out of the 'restructuring mode' - probably.  BUT!!!
    
    Can we then break out of the mold which got us here in the first
    place?  I doubt it.  Especially from current actions and commentary.
    
    IF we have an idea of who and what we are...
       IMnsHO - the General Purpose, most things to most people computer
                company, is up-for-grabs and we certainly have the product
                lines (HW & SW) and potential...
              - checking out niches and 'core strengths' is NOT going to
                do it and is just another way of avoiding actually leading
                and actually taking responsibility
    
    IF we have or can acquire the skills...
       IMnsHO - we had them.  I hope we still do after the restructuring.
    
    IF we can motivate those people with the skills...
       IMnsHO - Yeah, sure!  Drive a foreign car, wear flashy clothes, and
                restructure -> layoff workies -> resturcture -> layoff
                workies.  Pause and shuffle VP's.  
    
    IF we can manage the people...
       IMnsHO - The organization chart could/should/might be...
                                      Pres
                           20 x Vice President
                          400 x Director
                         8000 x Manager
                       160000 x worker bees
    
              - If the top guy can't divide it into 20, find 20 capable
                eclectics, then he shouldn't be there...
              - If one (or more) of the 20 can't manage diverse areas then
                the top guy made a mistake - which is OK - and those of the
                20 unable to cope should go...
              - If there aren't 400 left in the company who can manage
                manage managers and not build empires, there certainly are
                good ones out there.
              - If a person can't manage 20 people, review and rate them on
                time, motivate and guide them, then they should not be in
                any kind of supervisory position.  
    
    Now look what we have -- an organization of 8421 people in management
    (somewhat less than Digital's 35K) able to build on the skill of
    160,000 direct contributors (somewhat more than Digital's entire
    127,000 peak population).
    
    IF Mr. Palmer can not/will not adjust management down to that level,
    then our prior-to-restructuring-problem problem will still be here IF
    we get out of restructuring alive.
    
    Do I have faith?   Do you?
    
    

	re .9:

> Every company I work with 
>thinks they can use the people they employ as a differentiator, when in 
>reality they can use the system supporting those people as a 
>differentiator.  I do not believe that you can always hire above average 
>people to work on average projects at average salaries across all 
>geographies.  This is not bad, just reality.  I find fighting reality to be 
>poor use of time.

	Too right, Matt. But some people have reality beaten down to
	a dull buzz in the background, and can live their lives without
	it.

	Btw, how ON EARTH could Digital claim to differentiate itself
	on the basis of its people?

	"We have the best people because:

		- Our pay and perks are the best in the industry
		- Every ambitious young person wants to work for one of
		  the big names in the industry - a household word
		- Time at Digital helps your resume/CV a lot
		- It's a good way to get on the fast track with the latest
		  technology
		- It's a pleasure to work for the best run company
		- Digital's superior marketing reputation is an irresistible
		  lure
		- We offer unparalleled job security
		- (Add your own...)"

      The real argument is

      "We have the best people (just as we have the best computers, the best
       software, the best services, the best culture, the best managers, the
       best ideas and the best darn company, because

		- WE'RE DIGITAL! (Who else could have done such a good job?)

	This brings me back to the beginning, and people who have successfully
	dispensed with reality. It also brings to mind Jack Shields' memo to
	the sales force about arrogance and complacency.

	/Tom

    We could only have the best people if we had good management that knows
    what the company needs, knows what talent is when they see it, and
    makes decisions based on facts, not political expediency or
    correctness.  Based on the comments about our management we have been
    making over the past few years, we can't be that good!  Digital's
    problem is that decisions are still being made based on myths and
    wishes rather than facts.
    
    Dick

    re: <<< Note 2227.11 by CASDOC::MEAGHER "Common sense isn't common" >>>
    
    >                     The Digital culture rewards people for doing
    > what they want to do instead of doing what the customers need for
    > them to do. To me, the company's mantra is "Do your own thing."
    
    I think this statement is somewhat of an injustice.  In the Field at
    least, the great majority of IC's who deal with the customers sincerely
    want to do the right thing for the customer, but often find themselves
    thwarted at every turn by Digital's internal thrashing.  Every staff
    person and manager wants to have a veto, but nobody wants to take any
    responsibility for the customer.  Just walk into a Field office and
    ask someone where the buzzwords "Sales Prevention Team" and "Customer
    Dis-Services" come from, and you'll get an earful.
    
    In the Field, we went wrong about six or seven years ago when it became
    easier for a person to "get ahead" in the company by playing internal
    politics.  Up to that time, the easiest way to succeed in the company
    was to be a true entrepeneur, try new ideas, and get new customers.
    Nowadays, people are scared to death to try new things, for fear that
    they'll be vulnerable to the layoff or that they'll be breaking some
    political taboo.  With this kind of negative reinforcement, the entire
    focus for career advancement is now politically-based, rather than
    performance-based.
    
    Laying off massive numbers of individual contributors will certainly
    cut expenses, but as long as the ones who are left are rewarded by
    management for political purposes rather than business purposes, the
    Company will maintain it's descending spiral into obscurity.
    
    Geoff