| I just had the opportunity to view a tape of the Dec 17 DVN broadcast.
Now, this will be difficult for several reasons:
This was the first 'state of the company' broadcast I saw
I am NOT a manager
the first part of the meeting was missed
after the first hour, the taper switched the speed to super slow,
and my playback machine does not play super slow, so I
saw the rest of the tape at 150% normal speed
The structure of the meeting was Ken talking about business and changes that
are taking place. Then several speakers about:
Mgmt reporting system
Total Quality mgmt
Open Systems
VMS
fault tolerant systems
mainframes
and other product stuff that I can't recall right now
Then Ken came back out, and answered some written questions. I will now
relate my 'understanding' of what Ken discussed. I do not claim to speak
for Ken, Digital, or anyone, but since no-one else has posted anything, I
figured my thoughts were better then nothing. Enough of a disclaimer...
The tape started with Ken discussing what we do poorly. That was
communication. Engineers develop/test a product, give it to sales, then
complain that sales messed up.
A PLAN was discussed, and Ken discussed New York City with 8 million
people. An outsider would think NY must have a plan to feed all those
people, but a plan doesn't exist. And if a plan did exist, the people
would starve (like in Moscow). Every organization wants to control 'by
committee'. In NY, waste would be pointed to, but with control, people
would starve. The Corporation can't control, that's been proven.
Digital has faith in technology. People ask why Digital continues to invest
while at the same time introduce faster/cheaper products. We have faith that
those faster/cheaper products will feed demand. When we lose money, we
might say we didn't 'plan to make less, we planned to more' make money. We
won't make more every year. Success is measured in growth, and profit. It
costs to grow.
A weakness is that we put all our resources into technology. We need to
put more energy/money into telling our customers what we have. We need to
sell what we have. We have all the products we dreamed of 2 years ago, and
the products we'll have in 2 years will be marvelous.
Digital is breaking up into Business Units. That process is well under way.
Each Business Unit (BU) will have a business plan. The 30-40 BUs will
submit the plan to the Board of Directors, Executive Committee, and they will
be accepted, rejected, or told to be re-done. This is to encourage an
entrepreneur spirit. Ken listed 5 principles:
1 no one without responsibility tells others what to do ('a radical
switch'). Everyone will have more responsibility then
they have authority, but that's the way it is.
2. everyone will work for a business unit
3. those that propose, do
4. Budgets are sacred/stable
5. every BU reports to a person, not a committee
There are basically 3 groups:
1. those that generate products
2. those that integrate/market
3. those that sell
In theory, each group makes a profit on THEIR cost. Each group has a cost.
Account Managers will have responsibility, and there will be 2 layers above
them.
Ken outlines a problem in the field.
We sell an account in Munich. The Acct. Mgr goes to the District Manager
in Munich, for support of the account. While the DM is a good guy, he
has no incentive to provide the support. The DM has his own problems to
worry about. NOW, the budgets of the DM are gone, the Acct. Mgr has
authority and budget.
(NOTE, I will attempt to explain the way I interpret Ken's explanation.
Acct. Mgrs have responsibility for accounts. Others have responsibility
to support the acct mgr. Business Units will incur a cost for their
services, and will base pricing on that service. Apparently, the Acct.
Mgr will contract with the DM in Munich. The DM will incur a cost to provide
the service, set price based on that cost, make a profit, and now has
incentive to cooperate.
Done, back to Ken.)
The plan is, every cost makes a profit. Their will be a business plan
for every application.
We used to do pricing by committee. Sales controls discounts. A hard sell,
where time frame is long, will not produce a discount. An easy sell will
produce a discount, because the sell cost less to produce.
If the customer won't pay, we don't do it.
(the rest of the broadcast)
Questions, answered by Ken, (remember, this part was at 150% normal speed)
1. Should I stay in sales, it seems Field Service is where all the high
level promotions come from.
In Field Service, they've had a business plan for a long time. Every
one in Field Service gets 2 weeks of training a year, and now it's
up to 14 days. Once in a persons career, they get 6 months of training.
That's why Field Service gets ahead. There should be a message there.
2. Something about OEM sales, and credit being given and reflected in the
Profit and Lose.
If sales invests heavily, then gives the sale to a third party, no,
you won't get credit, [you have negative credit, this was stated
but I didn't interpret it to be a real negative credit]. The
corporation lost money. If you didn't incur any cost in the sale,
you don't get credit. Measurement will be based on return on
investment.
3. ( I can't do this question justice, but it was about market growth at 120%
and if growth at that rate doesn't happen, someone will get hurt)
(The shake out of the industry, and there are only a hand full in
PC's, MAINFRAME, etc left. Digital wants to be one of the remaining
players in the market.)
4. If networks are vital, why isn't there training in the field.
Ken discussed ether-net, and that we, to a large part developed
it. I missed most of this discussion too, but it revolved around
cheap/simple Thinwire, and Ether-NET products.
5. We measure Equipment and Assets, but where is the measurement of profit.
We need to measure growth and profit. 0 profit - high growth
and high profit - 0 growth are similar. It costs money to grow.
If we grow more then we planned, we are considered to be profitable,
if we grow less, we are considered to lose money.
6. Business price setting, how will it be done.
We are to make profit only once, only on the cost we incurred
to provide the product. Sales will not make a profit on what
the product is (engineering made that profit), sales will make
a profit on the costs associated with the sale.
7. Will BU's share Profit and Lose.
The system will be flexible. We can't go from measuring nothing,
to being stringent. Sometimes a BU will make money, some times
they will lose money. BU's need to make more then they lose.
6. Stock price, and considering AT&T and NCR, are we in danger.
Ken joked that AT&T is now less likely to target us
no one has any money
the junk bond people are going to jail
But, then he stated that we are Gentle men and women, but we
would 'fight tough' any attempt. Ken wanted to be modest, but
he sincerely felt Digital was important to this country.
The final words I heard were 'I wouldn't worry about it.'
Again, this is my recollection/interpretation. Any other comments would
be helpful to me, and others. I will attempt to answer any questions
on the content if I can. I realize this is not real clear, but I gave it
a shot.
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