Conference 7.286::digital

    I've worked with Digital sales people and with sales people at other
    companies. They are different. I've worked with some really good sales
    people at Digital so I wouldn't say that we attract only bad ones. Just
    different types.
    
    On the other hand the processes which our salespeople have to work
    with are without a doubt a serious block to their success. That in
    my opinion is why our sales force looks and performs so poorly.
    
    			Alfred

         -< Wall Street Journal article ( posted without permission) >-
--------------------------------------------------------------------------------
Striving to Adapt: At Digital Equipment, A Resignation Reveals Key Problem:
Selling;  Moving Goods but Making Scant Profit, Firm Ousts Head of Its 
Sales Force;  Board Puts Pressure on CEO

By John R. Wilke Staff Reporter of The Wall Street Journal

             Just last month, Digital Equipment Corp.'s chief executive
          officer, Robert B. Palmer, had reason to believe the loss-plagued
          computer maker was turning around: Reports from the sales force
          indicated revenue was holding up and new products were taking off.
             But Mr. Palmer was jolted by a rude surprise. While product sales
          weren't bad in the company's fiscal third quarter, service revenue
          was off sharply, sales costs were rising and rampant discounting was
          swallowing any possible profit. The resulting $183 million loss led
          to a run on Digital's stock, lower credit ratings and new worries
          about the future of a company once regarded as among the best in the
          business because of its well-engineered machines.
            In the wake of the poor results, the board of directors is giving
          the 53-year-old Mr. Palmer one more quarter to show new progress
          toward a turnaround, company insiders say.
             At a board meeting last week, it also agreed with Mr. Palmer --
          who inherited a company burdened by the excess of its huge successes
          throughout the 1980s -- that the company's No. 2 executive, sales
          and marketing chief Edward E. Lucente, had to go. Mr. Lucente
          resigned yesterday, effective immediately. Digital named Enrico
          Pesatori, head of its fast-growing personal-computer unit, to
          succeed him.
             Mr. Lucente, 54, regarded by some as a possible successor to Mr.
          Palmer, is apparently being held accountable for not cutting
          expenses deeply enough and losing control of a huge and expensive
          push to close business at the end of the latest quarter. Both Mr.
          Lucente and Mr. Palmer declined comment.
             Indeed, selling strategy is a central challenge for Digital. The
          company faces problems that have long proved intractable with its
          sales force, which Mr. Lucente, once one of International Business
          Machines Corp.'s star sales executives, couldn't get into shape.
          Years of neglect by top management formed the sales force into "the
          worst in the world" in individual productivity, Mr. Palmer said
          shortly after taking the CEO job 18 months ago.
             Long paid on a salary basis without commissions, Digital's sales
          force attracted "the opposite of the kind of person drawn to sales
          across the rest of the computer industry -- it wasn't a risk-taking
          culture," says Jack Falvey, a management consultant. And at about
          20,000 strong, the sales force now accounts for almost a fifth of
          Digital's work force of 92,000, down from a 1989 peak of 126,000.
             But it is certain to shrink. The board also backed an accelerated
          cost-cutting plan likely to slash the work force by an additional
          20,000 people in the next two years, which will prompt another
          charge against earnings, people close to the company say.
             But Mr. Lucente's departure could also add to turmoil in the
          senior ranks, which have already been reorganized repeatedly. In a
          year on the job, Mr. Lucente rapidly consolidated power, touching
          every aspect of the company's operations and filling essential posts
          with loyalists. "Everything that wasn't nailed down, he owned," a
          sales executive says. Another says that Digital management "is going
          to discover Lucente's people are now running most of the company."
             Mr. Lucente's ouster, according to people familiar with the
          board's deliberations, was also a rejection of an abrasive and
          autocratic management style. "People were afraid to tell him the bad
          news," despite worsening conditions in the field, says one person.
             Digital has lost more than $3 billion in the past three years in
          its so-far unsuccessful struggle to adapt to a changing market. More
          computer buyers want smaller machines that run on standard software,
          not the proprietary VAX systems that have been Digital's mainstay.
          Annual revenue is stagnant at about $14 billion.
             Digital has products that address the new needs, including
          personal computers, and a speedy new microchip, the Alpha. But
          companies like Digital that are shifting to standard, low-margin
          products also need different distribution channels, such as retail
          stores and direct-mail sales. Mr. Palmer's problem is that Digital
          doesn't have a large number of those channels open. Without them, he
          still must rely on the sales force. After last quarter's disastrous
          results, Mr. Palmer said Digital had too many salespeople -- but
          added that the company can't cut them without forfeiting revenue.
             For a long while, Digital's products were the hottest alternative
          to mainframe computers, and because they were cheaper, they almost
          sold themselves. But when competition arrived, the Digital sales
          staff was hopelessly outclassed. Digital founder Kenneth H. Olsen
          had always preached that the company should never sell customers
          something they didn't need, so Digital's salespeople spent much of
          their time dwelling on technical explanations, and did little hard
          selling.
             The lack of commissions for years drove away good salespeople.
          When commissions were put in place by Mr. Palmer, the new system
          backfired under Mr. Lucente's oversight, insiders say. Some salesmen
          sold product at little or no profit to pump up volume -- and their
          compensation. The sales force has been reorganized over and over,
          the latest shakeup overturning a new structure that Mr. Palmer
          himself put in place. When top management wanted middle managers cut
          from the sales ranks, they asked middle managers to carry out the
          order. So, many front-line people serving customers got the ax while
          the bulk of managers remained.
             Russell Forquer, a former Digital salesman in Erie, Pa., was one
          of the people let go. Only weeks before he was dismissed in December
          1992, he was given a raise, a bonus and a trip to Hawaii, to
          recognize his strong performance along with several hundred of
          Digital's other top salespeople. Mr. Forquer says he sold $2.1
          million in Digital equipment in his last year, but was let go in an
          across-the-board cost-cutting move. But when his boss's position was
          eventually eliminated, Mr. Forquer says, he was able to find another
          sales-management job with the company.
             "They were supposed to eliminate the overhead in the sales force,
          not the people on the street making sales," he says. "But the
          old-boy network was too strong." He contends upper management "has
          no idea what is going on in the trenches."
             Today, he still sells Digital computers, "the best on the
          market." But he sells them for one of the company's outside
          distributors, which yields a lower profit for Digital. He did more
          than $1.7 million in sales in his 11 months away from the company.
             Although Digital, which is based in Maynard, Mass., retains many
          top-notch salespeople, its sales productivity overall is wanting.
          Hewlett-Packard Co., which recently surpassed Digital as the No. 2
          computer maker behind IBM, has revenue roughly equal to more than
          $300,000 for each employee. Digital's current revenue per employee
          is half of that, at $155,000.
             Indeed, Digital's engineering-driven culture had long placed
          sales and marketing in the back seat. At a 1990 exposition of the
          company's products, for instance, a special area was set up to show
          customers some of the hottest products the company still had in the
          development laboratories. But the night before, while the exhibit
          was being set up, salespeople who needed a preview were barred from
          the area; the show's manager erected a wall of large potted plants
          to keep them from seeing what was inside.
             John Whiteside, a software engineer and management specialist who
          left Digital in 1992, says isolation of the sales force from the
          engineering heart of the company caused its products "to become more
          and more detached from market realities and what customers were
          telling the sales force that they actually wanted. Without that
          input from sales, we were blind to that."
             At the same time, he says, "the engineering community often
          wouldn't explain products fully, or when salepeople would ask for
          help from the field, they'd be told to figure it out for
          themselves."
             In the latest quarter, insiders say the new sales-commission plan
          may have helped deepen the loss. They say that discounts or other
          sweet terms were struck in the field, without adequate management
          controls, and that this lack of oversight is being placed at Mr.
          Lucente's door.
             Meanwhile, with so much talk about the need to shrink the sales
          force, those who are left are on edge. "People are scared. Tap
          someone on the shoulder and they're liable to jump a foot in the
          air," says a top salesman. "Everyone's working flat-out to make
          their fourth-quarter numbers -- yet a lot of them know that on July
          1st they're history."
             Some salesmen staunchly defend Mr. Lucente, saying he represents
          the toughness and discipline that has long been lacking at the
          company. But it was Mr. Lucente's harsh management style that
          clinched his departure, say people familiar with last week's board
          meeting. One person at the meeting says the board received reports
          that his senior management group was "riven by resentment and anger"
          over what was described as Mr. Lucente's domineering management
          style.
             Last month, for instance, Mr. Lucente visited Dallas to meet some
          of his troops in an attempt to boost morale. His message: I'm here
          to listen -- ask me anything. But when a salesman requested
          elaboration of the company's software strategy, which he called
          "unclear," Mr. Lucente shot back that he was "sick of answering this
          question," according to one attendee. Mr. Lucente then "took his
          head off, belittling him in front of the whole room. Needless to
          say, no one else asked anything."
             So Digital turned to the 53-year-old Mr. Pesatori, effectively
          making him second in command. Under the direction of Mr. Pesatori, a
          former senior executive of Ing. C. Olivetti and Zenith Data Systems,
          Digital has jumped from also-ran to one of the top 10 PC makers,
          with more than $1 billion in sales last year. The unit recently
          turned profitable, and its sales continue to grow at more than a
          100% annual rate, executives say.
             Indeed, the PC unit is poised to overtake Dell Computer Corp. in
          sales. It will bring in higher revenue in the current quarter than
          Dell posted in its just-reported fiscal fourth quarter, insiders
          say.
             More important, the Italian-born Mr. Pesatori's unit, which is
          battling in a brutally competitive market, has succeeded in building
          a structure that Digital now hopes to establish on a broader scale.
          The unit has become profitable by selling machines through retail
          and other indirect channels, not through Digital's traditional and
          costly direct-sales approach.
             "Enrico clearly understands the direction the business has to
          go," says Jay P. Stevens, an analyst at Dean Witter. "He's shown he
          knows how to make a low-margin, volume-driven business profitable."
          Mr. Stevens notes that Digital has said it hopes to redirect its
          sales model so that about 60% of its business flows through indirect
          channels, with the rest through the direct sales force. As it now
          stands, that ratio is 75% direct sales to only 25% indirect.
             As for Mr. Lucente, Digital announced that he will become
          executive in residence at one of the graduate schools of Carnegie
          Mellon University, his alma mater.
             The latest events are a bitter turn for Mr. Lucente. He has been
          in the upper echelon at three companies now, but always missed the
          brass ring. Barely a year ago, Digital hired him with hopes he would
          tighten and professionalize its sales force.
             Mr. Lucente spent 31 years at IBM, and was seen as one of a
          handful of candidates for the top job before leaving in 1991 for
          Northern Telecom Ltd., where he was the second-ranking executive. He
          resigned early last year.
             At IBM, one of Mr. Lucente's assignments was to turn technicians,
          office workers and manufacturing workers into salespeople. It was a
          difficult and unpopular task.
             When he was hired by Digital, many analysts applauded, predicting
          cost-cutting and more aggressive sales incentives would improve
          overall results. At the time he announced Mr. Lucente's hiring, Mr.
          Palmer said: "I don't think I've interviewed so many people for any
          one position . . . it took a while, but I'm confident that we now
          have the right person."
             Now, the departure of his hand-picked lieutenant reflects badly
          on Mr. Palmer. And it has heightened the pressure on him to produce
          results. An executive close to Mr. Palmer denied last night,
          however, that he had been given an explicit performance deadline by
          the board.
             "They didn't put a time clock on this," he said. "But there isn't
          a CEO in America anymore who isn't on trial every day."

          
                                DEC's Directors

             -- Robert B. Palmer, president and chief executive of company.

             -- Vernon R. Alden, former chairman, the Boston Co.

             -- Philip Caldwell, senior managing director of Lehman Brothers,
          	retired chairman of Ford.

             -- Colby H. Chandler, retired chairman of Eastman Kodak.

             -- Arnaud de Vitry, engineering consultant.

             -- Robert R. Everett, retired president of Mitre Corp.

             -- Kathleen F. Feldstein, president of Economics Studies Inc.

             -- Thomas P. Gerrity, dean, Wharton School of the Univ. of
          	Pennsylvania.

             -- Thomas L. Phillips, retired chairman of Raytheon.

             -- Delbert C. Staley, retired chairman of Nynex.
             

>    I've worked with Digital sales people and with sales people at other
>    companies. They are different. I've worked with some really good sales
>    people at Digital so I wouldn't say that we attract only bad ones. Just
>    different types.
>    
>    On the other hand the processes which our salespeople have to work
>    with are without a doubt a serious block to their success. That in
>    my opinion is why our sales force looks and performs so poorly.
 
    I spent a summer at Motorola in their communications sector.  The
    company and the 6-Sigma program are great.  Lesson #1 taught is that
    people perform to the level the process allows them to.  So if you find
    a function underpeforming inevitably it implies the process is brocken. 
    Lesson #2 taught is to fix the process not the people. 
    
    Greg
                 
    

re .0

You took the quote out of context.  The statement was past tense, when Palmer
took over.

    RE .0
    
    I have no doubt that Digital has some of the best sales people
    in the world. Take the handcuffs off of them and they
    can outperform anyone.
    
    		-Jim-

    And, to put the statement in context, if memory serves, Palmer
    indicated that 'we have the worst sales force' and it precisely was NOT
    the responsibility of the sales force. He put the blame pretty squarely
    on sales management and marketing for not doing the right training,
    product positioning, demand creation, etc etc. He did not intend it as
    a slam at our sales people. And, the quote is now over 12 months old.

I am no expert in sales however I would think that the best sales
commision system would be to give the sales person X percentage of
the profit earned on a sale.  A decent base salary would be allocated
to get them through dry times and I also would put no upper limit on
the amount that they could earn.  Sales people should be able to
get rich on thier territories if they are good enough.  

Each product in the sale would then be credited with a fixed 
amount for the product.  This would allow the sales force to
have an overall number to work with for the sale and the
more they discount the more it cuts into thier own commision.

Is this not the way it works here at Digital?

    A percentage of actual profit is difficult, if not impossible, to
    administer (especially with OUR admin systems).  One approach I've seen
    that did work was to break all products out into groups based on
    approximate gross margin (or some other profit-related criterion) and
    then pay a varying percentage of selling price for the different
    groups.
    
    Something of this sort makes it MUCH easier for the sales rep and his
    management to arrive at the same commission number at the end of the
    pay period.  There is probably mothing more demoralizing to a
    commissioned sales rep than constant bickering about the money due her.  
    
    

    re: .6  "quote is over 12 months old"
    
    Even though Palmer's statement about "having the worst sales force" is
    over twelve months old, it still holds validity. For one thing, many of
    the same people who caused that situation are still around, and are
    *still* planted squarely in the path of progress.  We still have our
    share of empire builders and people who aren't interested in dealing
    with customer issues and concerns. They're interested in contorted
    metrics and risk avoidance, without any concern about where these
    tactics will damage our future.
    
    Sometimes, radical surgery is the only cure, when you can't precisely
    locate the diseased parts. If Mr. Pesatori reduces direct sales to
    a shadow and shifts support to the channels, a lot of excellent DEC
    employees will lose their jobs. But it would also eliminate many of
    the true problems once and for all. If the company survives, then it
    can rebuild the direct sales force once again. Maybe this is the true
    gamble that Palmer will have to take ...
    
    Geoff

    We're not selling Tupperware.  Selling EDI requires knowledge of
    networks, communications protocols, value-added networks, etc.  Sales
    of EDI generate sales in RDB, DecForms, DecMessage Q, OFTP, etc. and so
    on.  Often it's the first Digital box in a big blue shop, paving the
    way.
    
    Let's not toss out the baby with the bath water here, relying on a
    Wal-Mart approach to sell our wares.  We DO have some great salespeople
    out there who's work helps keep me employed.  If management is
    incapable of identifying and supporting them whilst cutting the
    deadwood then...maybe it's time to find the RIGHT management, not
    merely change it like underwear.
    
    						Tex (NOT in sales)

...and people accuse me of wearing out the cliche.

(The e needs a little dohicky over it but this is MSDOS via kermit to
 VMS to notes....)

    I am a rep out in Dallas.  I would say that DEC has some of the most
    creative and resourceful reps around...  because they have to.  We also
    know much more about client's concerns and how to treat the enterprise. 
    Opposed to Microsoft, let's say, where the reps are clueless in how to
    talk to the customer and comprehend his/her problems.  Ask them a
    question about why Word and Excel are better than Lotus equivs great. 
    Beyond that, forget it.  They also carry no loyalty.  Even if we bring
    them into an account, they'll give the same messages to the customer
    with HP and NCR.
    
    Our NT specialist ends up teaching them about NT and why its so
    important...  COM, CORBA, OLE v. Taligent.
    
    ..Larry

    re: .12 and our Sales force ...
    
    >I am a rep out in Dallas.  I would say that DEC has some of the most
    >creative and resourceful reps around...  because they have to.  We also
    >know much more about client's concerns and how to treat the enterprise. 
    
    I too, am cut from this mold. I talk solutions with customers, and I've
    spent seven years learning the intimate details of the industry that I
    support. But that's not the issue.
    
    The issue is: Does our work and our *way* of working lead to profitable
    sales? The answer today is NO. It used to, because the customers were
    willing to pay top dollar for hardware, for solutions, and for peace
    of mind. Back then, our profit margins were big enough to cover any
    mistakes we made in our corporate strategy or management.  But today
    is different, and we have to make changes.
    
    Their are many people in this company who are doing outstanding jobs.
    But if they're doing the wrong thing, then it doesn't matter *how* well
    they're doing it. The company has to have a person in charge who can
    properly judge today's market strategy (industry vs. product) and put
    DEC back on track with the right plan to capitalize on today's market.
    I'm not smart enough to say what that is, but I am able to see that
    what we are doing today isn't working.
    
    Geoff

    
    Also, as I understand it:
    
    	o the sales force is still saddled with the problem of a maze
    	  of products, 
    	o only a few of which any one person can develop enough
    	  understanding of to sell effectively,
    	o and an unclear, and often contradictory corporate strategy so they
          have no easy time knowing what, if they were to sell it to their
          customers, will still be supported a year or so from now.
    
    
    Add that all up and its a wonder they can do the job at all.
    
    Steve
     
    

    Anyone want to venture a guess as to how the change in warranty
    for our storage products and now the Sable are affecting the reps?
    
    The quote system will not quote uplifts on these devices automatically,
    so reps have to sit with their calculators figuring it out manually
    and forcing the numbers into their quotes.
    
    I've assisted reps who have numerous and varied storage devices on
    their quotes and some have spent DAYS trying to pull it all together
    (all storage devices do not have the same length of warranty)!!!
    
    I'm amazed all our sales reps aren't stark, raving mad.
    
    Karen
    
    

    Well. speaking for THIS rep, I don't (WONT!) deal with this ridiculous
    issue. I understand my client business. I understand the role that
    technology in general, and more sepcifically OUR products and related
    services can help my client achieve it's business objectives...BETTER
    THAN THEY COULD WITH HP, IBM, OR COMPAQ (and you BETTER believe they
    are our competition!). I don't have the TIME to rassle with this stuff.
    I tell mny client what the on-site warranty is, and have an MCS Base
    rep follow up to either uplift or put in a "tickler" file.
    
    Folks, I've got to move MILLIONS of dollars of $25k - $50k systems to
    feed my family. I've got to understand in depth MANY technologies, and
    apply these to a very compl,ex, multi-division customer with (believe
    it or not!) as much internal politics (yet MUCH less divisiveness since
    their privately owned) as we do. Until we simplify towards some degree
    of consistency (sp?), I can't handle this part.
    
    Later,
    
    Steve

    Re:16
    Amen, Amen, Amen.
    I'm on a corporate account with multi-territory responsibility. The
    amount of time wasters in this company which detract from actual
    customer sales are ridiculous.  I've given up selling much of anything
    direct, unless on very big sales.  I simply don't have time to fool
    around with our complicated and arcane AQS system, don't have time or
    patience to deal with our "lead-time" problems, don't want to spend all
    my time with customer complaints about short-ships, and can't get
    involved in customer service complaints or licensing issues etc etc. 
    Until we implement systems allow me to effectively do my ONE JOB (which
    is Sales !!), I will continue to be so distracted as to impact my
    performance.  

    re:15
    Well, I'm trying to do the right thing for my customer, to give them a
    complete solution, not only for the sale up front, but for the service
    after the sale is done.  I want them to be :-) happy before, :-) during and
    :-) After the sale.   In order to do that, I spent about 2 days
    trying to figure out this storage works service-add on 'stuff'.
    
      After talking with 5 people, both in MCS and decsale, 
    I think I finally got it.  But it added, let's see,... 1,5,
    8...10...15 line items to my quote. What a pain!!!  The customer just
    looks at me with his eyes crossed, and just shakes his head in
    amazement at how difficult this is.
    
    This cost me time, cost decsale time, cost the local MCS reps time and,
    worst of all, cost the customers time and goodwill...and he is buying a
    VAXcluster system from us.   Gee-willickers!!!
    
    In talking to decsale, they indicate it will be a YEAR before this is
    fixed.  This "new improved" service also applies to the sable line.
    This is absurd.   And then the quote system itself is a pain to work
    with; who ever heard of being part number oriented.  Customers and reps
     think of 2100's, rz26's, Pathworks, linkworks, 
     DEC 10,000 clusters[I wish ;-)], not FM-ex612-12 or DV-415db-EA's or
    QM-0TLAA_AA.  I spend more time looking up the right part number,
     instead of talking to customers.  but this is a string for another note...
    
    trying to do the right thing
    
    Frank

    Try installing the stuff,wondering what half the numbers are and what
    they consist of. My example of the worst :
    Storageworks stuff,its all Ba35*-**
    Get one of the splats wrong and you end up with psu instaed of an hsj40
    enclosure.Ridiculous!
    At the end of the day its all well and good that some clever dick
    somewhere can decipher part numbers in his sleep but if it costs one
    sale then its TOO EXPENSIVE!!
    "Well sorry sir you ordered a -DA when the small print in the DECdirect
    catalogue clearly states that with a -MA you need a -CA."
    The truth is you need an MD ,just to talk to them about it.
    My customer buys everything from a reseller because the reseller
    doesn't insist on using our stupid part system.
    He phones up and says "I want an HSJ40,six shelves and 24 rz26's,when
    can you deliver?" He's not interested in what they are "really" called.
    He just wants to spend money.
    
    
    Imagine going into a garage......
    
    "Yes sir I know you want the Ford Maverick but its actually a
    Fd-01002-fwd.Also the catalogue clearly states that to get an engine
    with it you have to order an Fd-01002-fwe.Paint is an Fd-01002-fa and 
    seats are an Fd-10002-fws."
    Er OK I'll order it.
    
    
    Some months later.
    
    "Hello can you hold please............................
    No sir the Fd-01002-fwe is on product hold....also the salesman should
    have told you that you can't order wheels on the same order that has to
    be handled by our FORDwheels direct line.No sir you'll have to talk to
    your salesman I can't tell you when its being shipped."
    
    I dont think so!!
    All I can say is we MUST have good products for them to put up with
    it.
    Geoff                                                         

    It's not just on the sales end. MCS puts up with the same stuff while
    trying to service things in the field. I can't call and ask what the
    part number is for the floppy drive in a DEC 320p laptop. First, I have
    to know that the part number for the 320p is PCP-17. Ridiculous.
    
    We also convert all of the multi-vendor parts from the vendor part
    number (which all of our parts providers use) to a DEC xx-xxxxx-xx
    format part number. BUT! I have to order the part using the vendor part
    number, then it arrives in our local logistics under the DEC part
    number (and no trace of the vendor part number). Wastes time and
    money...
    
    Harry