Conference 7.286::digital

4185.0. "Jim Manzi and Digital" by GALVIA::SMITH () Fri Oct 13 1995 08:52

Now that Jim Manzi has exited IBM (Lotus) I wonder has anyone given a
thought to him heading up the recently announced Connectivity Software
Business Unit (CSBU). Sounds like he might be a reasonable candidate
for this software-only business. Would be a big win if he joined Digital
"in this role" - but would he be happy to operate in a position similar
to that he has just left? 

The attached also talks of other resignations of "top" executives from
IBM (Lotus).

Mark

Extract from:

<><><><><><><><>  T h e   V O G O N   N e w s   S e r v i c e  <><><><><><><><>

 Edition : 3409               Friday 13-Oct-1995            Circulation :  4565 
.
.
.
 IBM - Jim Manzi resigns from Lotus
	{The Boston Globe, 12-Oct-95, p. 1}
   Ninety-nine days after his company was swallowed by IBM Corp., Jim P. Manzi
 resigned yesterday as CEO of Lotus Development Corp., a move that could lead
 to  a"brain drain" at Lotus and turn a textbook takeover into a horror story.
   Lotus, the state's largest software maker, could also lose the independence
 and free-spirited culture that have been its hallmark - and that IBM promised
 to protect after it bought the Cambridge company in July for $3.5 billion.
   Manzi's sudden departure took much of the software industry by surprise, but
 many had predicted that IBM's classically bureaucratic culture would sooner or
 later drive the independent and impatient executive away.  Insiders said the
 43-year-old Manzi, whose career at Lotus had many ups and downs, bowed out
 after Louis V. Gerstner, chairman of IBM, rejected a plan to give Manzi more
 power within the giant company.
   Manzi's resignation could trigger the departure of a handful of top Lotus
 officials, effectively draining IBM of the company's greatest asset: its
 people.
   Sources said yesterday John Landry, chief technical officer, and Robert
 Weiler, Lotus' sales chief, have indicated they plan to leave the company,
 though Weiler is reported one of several people being considered to replace
 Manzi.  The IBM buyout, at a record price for the industry, made many Lotus
 employees wealthy.  Manzi's stock alone doubled to $78 million.

   Other departures

   Four senior employees have already left, including Lotus' chief financial
 officer, general counsel and a top product manager.  Defections have also
 claimed vital software writers, said Giles McNamee, a senior VP at First
 Albany Corp., an investment bank and major Lotus customer.
   Ray Ozzie, who created Lotus' most important new product, is under a
 contract that reportedly requires him to stay for an estimated 18 months.  But
 Manzi hinted yesterday that Ozzie was free to leave.
   "Slavery died with an amendment to the Constitution," Manzi said during an
 interview in his office overlooking the Charles River.
   Ozzie is the whiz behind Notes, a new breed of software that IBM wanted so
 much it was willing to buy all of Lotus.  While an exodus by Ozzie and others
 would spell trouble for IBM, investors seemed unfazed by Manzi's resignation.
 IBM closed up 1 3/4 yesterday at 92 1/4 on the New York Stock Exchange.
   IBM announced that its software chief, John M. Thompson, would head up Lotus
 until a successor to Manzi could be found.  Possible replacements include
 Weiler and Gian Carlo Bisone, marketing chief under Thompson.
   Even before the buyout, which began as a hostile takeover and followed five
 months of solicitations by IBM, relations between the two companies were
 marred by sharp disagreements.  Manzi said that he and Gerstner differed over
 how the combined companies could best make and sell software in the face of
 relentless competition from their mutual rival, Microsoft.

   Plan put forward

   "I have put my ideas on the table over the past 100 days," Manzi said.  "I
 have been straightforward about what my ideas are about running a software
 business and what is required for success."  Manzi would not elaborate, but
 analysts said his plan would have given him responsibility for almost all of
 IBM's software.  IBM is the world's largest software company with $12 billion
 in annual software sales, far more than the $1 billion Manzi supervised at
 Lotus.
   Manzi answered only to the Lotus board after being named chief executive
 nine years ago, and he reportedly was chafing within IBM.  Working in a large
 company not only gave him a boss but required him to build consensus for his
 ideas among the corporate ranks.  During a meeting with Lotus executives
 several weeks ago, according to a Lotus insider, Manzi sarcastically remarked
 that his "supervisor" had been pleased with a progress report.
   "I know I'm not the right person for the next leg of this journey or
 chapter" at Lotus, Manzi said yesterday.  "I just know it's not me."
   Manzi said he had largely decided to leave IBM during the last several weeks
 but had made no final decision before walking in to a regularly scheduled
 meeting with Gerstner Tuesday at IBM headquarters in Armonk, N.J.
   He said he presented no ultimatum to Gerstner and characterized the hourlong
 meeting as "purely conversational."  When it was done, however, Manzi's
 decision had been made, and Gerstner agreed with it.

   Message to workers

   Yesterday, he announced his resignation in a memo to employees that also
 cited his "heroes," Ray Charles and T.S. Eliot, and quoted bittersweet lyrics
 from the  pop musician Steve Forbert.  Manzi had no contract with IBM and is
 free to join a competing business, but he said he has no plans yet for his
 future.
   Manzi joined Lotus in 1983 and helped it mature from the small "techie"
 company founded by Mitch Kapor into an industry leader.  Manzi brought to
 Lotus the management skills he developed as a McKinsey & Co. consultant.
   He helped promote Kapor's 1-2-3 spreadsheet as a vital business tool - the
 reason many businesses bought their first personal computer.  After becoming
 chief executive in 1986, Manzi continued the culture of informality that
 Kapor brought to Lotus, though corporate growth constrained it somewhat.
   In contrast to many other computer companies, Lotus had no dress code and
 encouraged a free flow of ideas.  It was praised for the day care and other
 benefits it offered employees, and early on it offered spousal benefits to gay
 couples.  Manzi in many ways set the tone: Three years ago hew wowed employees
 by posing as Aretha Franklin and wearing a dress at the company's 10th
 birthday celebration.

   Fault found

   But Manzi's management skills have also drawn wide criticism.
   Lotus in the mid-1980s dominated the spreadsheet business, only to lose its
 lead to Microsoft.  Moreover, some analysts believe Manzi should have better
 promoted Notes, its next-generation product that helps workers collaborate on
 documents over a computer network.  In 1994, Lotus lost nearly $21 million.
   Manzi's resignation "is the best thing that ever happened to Lotus," said
 McNamee of First Albany Corp., which has 500 Notes users.  "They're real good
 about health care benefits, but as a business organization, these guys didn't
 make money."
   In question now is Lotus' independence.  Analysts said choosing a new chief
 executive from IBM's ranks, rather than from within Lotus, would signal
 tighter control of the company by IBM.
   But both IBM and Manzi yesterday said that his departure would not alter
 IBM's pledge to allow Lotus executives to run their own shop.  Manzi said IBM
 would honor its commitment to continue worker benefits packages for two years.
   Edwin Gillis, Lotus chief financial officer until last month, said Manzi's
 resignation meant little for the company's independence.  The staff turnover,
 he said, "strikes me as not at all unusual in an acquisition. ... It's not
 fatal."  He said Manzi deserved credit for building the Notes business,
 winning a high price for the company from IBM and nurturing the work force.
   But Manzi was also considered the protector of Lotus' independence and
 culture within IBM.  "He was providing a lot of cover for Lotus," said Stuart
 Woodring, an industry analyst with Forrester Research Inc. in Cambridge.
 "There's nobody else who is going to play that role for the whole company."
   Said Kapor, the Lotus founder, "The natural course of evolution for Lotus is
 to lose its identity and be absorbed.  Perhaps the brand name will remain, but
 it will become just one more part of IBM with no particularly distinctive
 identity."

Just what we need, a bad-boy multimillionaire.
If you looked at the dent he put in IBM's treasury,
you'd see this character has already helped Digital
plenty.  It's fitting that he and his legacy products
retire and make way for the next generation of
client-server software.

    
    	Jim Manzi is an egotisticial, mercurial manager who rode a
    successful software product into the ground (1-2-3) by failing to
    understand changes in the marketplace. He also has a reputation for
    being a "screamer" to his underlings. In the last four years he has
    had over 50 executives quit or be fired by him. A friend of mine who
    served briefly as a senior executive at Lotus refuses to speak about
    his exeprience there, except to say the happiest day of his life was
    the day he told Manzi to "shove it".
    
    	Of course, that might make him perfectly at home here ;-)...
    
    	On the other hand, I think we now have a chance to really promote
    LinkWorks. I'd give Ozzie a small country for starters and put him in
    charge of LW with all the resources we can muster. Now that would be a
    coup.....
    
    
    		the Greyhawk

    Front page Wall Street Journal article yesterday blasted him as a jerk,
    for lack of a better word.  Digital does not need him.
    
    

    
    > jerk
    
    (thumbs through Digital Dictionary)
    
    ahhh perfect for senior management
    
    
    
    
    \_spike_/

  These replies have convinced me that Manzi's departure is probably a good
thing for Lotus. However, a major loss of talent would be bad news. 
  I have an uneasy feeling about this whole deal. About 10 years ago, IBM took
over a telecomm company (Rolm). Same situation: small freewheeling company
taken over by conservative giant. The cultures could not coexist, and Rolm
became history for all practical purposes. 
  I don't think Lotus's culture can last more than 6 months under IBM, regard-
less of what IBM promises. When its culture goes, so will much of its brain-
power. Then what?

    RE. .5
    
    So what, should be the reaction. Manzi's departure and the inevitable
    failure of the IBM/Lotus conglomeration should be viewed as relatively
    good new for us. The influence that Lotus had during the last few
    years certainly wasn't any any way helpful to our cause. Perhaps, as the
    Greyhawk has stated, we can now compete against Notes with Linkworks
    and get some share of the groupsware market. I'm not going to hold my
    breath on that, but at least the Lotus/IBM thing makes our Allicance
    with Microsoft all the more important. We may be able to screw up the
    marketing of most of our SW stuff, but the MS coattails seem strong
    enought to pull us along. At least the one thing we do very well -
    produce an excellant NT platform - is something that we can count on.
    
    Maybe we should encourage Manzi to go to work for HP to help speed up
    their slide into well deserved oblivion again. Or how about Sun. Can
    you see Scott McNealy and Jim Manzi having peaceful strolls on the
    California beaches, discussing the relative merits of UNIX vs. NT. The
    mind boggles at the end of a long week.
    
    -OFWAMI-                                                            

    I can't help but wonder what Tim Halversen, Len Kawell, and Steve
    Beckhardt think about Ray Ozzie always being mentioned as the genius
    that built Lotus Notes single-handedly. It's sort of like the folks
    who think Cutler invented VMS on his own and ignore the major
    contributions of Dick Hustvedt and others.

    I've mentioned that thought to Len a couple of times, but he never
    responds....
    
    				Steve

The day that IBM bought Lotus I said that the top creative people at Lotus
would bail out ASAP.  (Yes, this sounds a little self-serving, but I have
lots of witnesses, because I was boring everyone with this... :^))

It has started.  First Manzi, then one of his top VPs, and I stand by my
prediction that the defections have just started.  (Pure speculation follows)
Does anybody know whether the top Lotus people got some kind of stock options
which expired this week?  It has been 4 months almost to the day since the
announcement.  Could they have been waiting to cash in some options before
resigning?

To me this deal sounds like IBM and Apple all over again.  Taligent was
announced with great fanfare as the ultimate alliance, but the philosophical
and cultural differences between the two companies sank it like a rock.  Lotus
and IBM is the same.  As Manzi said during his interview, "Being President of
a $1B company is different than being a division director in IBM, and I am
not the man for the latter job".

Stay tuned for *lots* more of the most creative people to follow Manzi out
the door, and leave IBM holding the bag with a product which will be unable
to sustain either quality or new features in the next series of releases.

It is real nice to see IBM making very public mistakes (buying Lotus, keeping
OS/2), while Digital is doing a lot of the right things (the alliance with
Microsoft, 64-bit databases from both Oracle and Ingres, the entire Alpha
line, MCS taking over maintenance of Compaq systems which will get us into a 
lot of accounts we are frozen out of now, etc).  Our lack of marketing is
still hurting us, and our dedication to stove-pipes could still kill us,
but at least publicly we are looking better and better...

-- Ken Moreau