Conference 7.286::digital

    I understand that Ken banged the Engineering Bird Cage on Monday
    afternoon. Not all of the parakeets have been assigned new perches yet.
    Not all of the parakeets necessarily have new perches. For those at the
    bottom of the bird cage, watch out for lots of pecking and scratching
    and you know what from above. :-)!
    
    I would like to think that these changes would make a difference but
    until there is a change in the value/culture system it's not very
    likely. In a briefing this morning, I asked whether any of the strategy
    setting activities that have been going on as a background activity to
    the reorganization had started with a foundation based on market needs
    and dynamics rather than products and technology. From the answer I
    received it appears that a focus on "Channels" is as near as we can get
    to this idea.
    
    So watch out for more ruffled feathers and increased preening coming to
    a perch near you.

    It was interesting not to see the the *U* word anywhere.  I know the
    UNIX-based Software & Systems (USS) group has been exploded and the
    remains scattered about, and I wonder how we are going to present the
    "we are committed to UNIX" message to the world.
    
    Mark
    
    

"UNIX" is spelled "OSF" these days.

    Does anybody know if the following is true:
    
    	On Monday all the senior VPs put a piece of paper into a hat with
        their names on each. KO then put his hand in and drew out one
        piece of paper and threw it away. The remaining pieces of paper
        were taken out and read. The one with Strecker's name on it was
        missing and he was fired.
    
    	The remaining VPs then wrote down the name of each major group
    	on pieces of paper and throuh them into the hat. One by one they
    	each took a piece of paper out in order until all the papers
    	were taken. They then opened up the pieces of paper and Ken
    	wrote a memo declaring them to be in charge of all areas that they
        had chits for.
    
    Someone please tell me it wasn't done that way. Sure seems like it was
    to me. I see PCSG are in a different group to NT now and other
    wierd things. Who is this Frank McCabe chap? What's his claim to fame?
    
    Dave

Ahhh Gi'day...�

	      Stone has now got U*x, O*F and NT responsibility.

    	I give the new "organization" less than a month before we see the
    next reorg. Fasten your seatbelts for the bumpy ride ahead.

>    wierd things. Who is this Frank McCabe chap? What's his claim to fame?
    
    Frank McCabe was VP of Corporate Quality before this. I hope this means
    the company has finaly realized that only line managers can really
    do anything about quality.
    
    			Alfred

    I couldn't find Jack Smith's name on the reorg announcement. Comment?
    
    
    				herb
    
    
    		

    Couldn't find Sims or Hindle either.  I think it means that their
    portions of the organization weren't on the memo.

>    I couldn't find Jack Smith's name on the reorg announcement. Comment?

	Two things come to mind. First, maybe everyone whose name was on the
	list reports to Jack. Second, not all organizations in the company 
	were on the list I saw. Other organizations were listed but without
	VPs under them. Jack could fit in their somewhere.

			Alfred

The version of the reorg chart that I saw recently did include Jack Smith:


				Ken Olson
				President and CEO
					|
			Jack Smith	|
			Senior VP ------+
			Operations	|
					|
			----------------+----------------
				everybody else.

This is from memory, as it was in a meeting a couple of days ago.

    The copy of the org chart I have clearly states:
    
    ENGINEERING TEAMS
    
    Notes:  All top level managers have dual reporting relationships to
    Ken Olsen and Jack Smith.
            Group names and managers are shown to indicate movement of
    resources into new teams.  Final organizational structures will
    probably be different.
            Only engineering responsibilities shown in most cases.  Other
    Corporate details omitted.
    
    
    Clearly, this is just the initial phase of the engineering moves, and
    other functional restructuring will occur over time.
    
    Mark
    

   Worldwide News                                                 LIVE WIRE


         Changes in Engineering designed to sharpen marketing focus
                      and to eliminate redundancies 

  Several organizational changes within Engineering were announced 
  earlier this week during meetings between Ken Olsen and the 
  engineering groups.  Ken explained that the changes are intended to 
  create closer linkages between Marketing and Engineering to reflect 
  customer needs and return the company to profitability more quickly.  
  He said they will also eliminate redundancies and overlaps in product 
  sets, particularly in hardware.

  "We don't plan to give up on our traditional strategy of maintaining 
  our product development investments and continued support of our 
  customers,"  Ken said. "We're sharpening our focus as a marketing 
  company, and we will continue to make adjustments that keep us on a 
  clear path to providing what the markets need."

  Following are the five Engineering teams announced at the meeting: 
    Corporate Research, managed by Sam Fuller; 
    Manufacturing/Logistics and Component Engineering, managed by Bob 
    Palmer; 
    Software Engineering, managed by David Stone;
    Department Systems & SME, managed by Charlie Christ;
    Global information Systems, managed by Frank McCabe.
  The managers will have dual reporting relationships to Ken and Jack 
  Smith.

  "We should always be looking for ways to cut costs and improve 
  efficiency. There is motivation in hard times to do this, and we'll 
  continue doing it," Ken said. "Through good times, we maintained a 
  strong balance sheet and financial position.  As a result, when 
  recessions come -- and they always do -- we're able to maintain our 
  product development investments and support our customers."

        Re: .12

>    Clearly, this is just the initial phase of the engineering moves, and
>    other functional restructuring will occur over time.

        I just hope that they finish all the details of this
        reorganization before they start the next reorganization. 
        It's hard to tell when one reorganization ends and another starts.

        					B.J.

    Are they just "rearranging the deck chairs on the Titanic"?
    

    RE: .15
    
    >Are they just "rearranging the deck chairs on the Titanic"?
    
    Get enough deck chairs and you can lash up a raft.
    

    Deck chairs sink.
    
    I suppose we could try to decide whether the apprpriate metaphor
    (analogy?) to Digital would be wooden deck chairs or metal deck chairs.

	Well, word of the latest shake-up has made into that bastion
	of truth and journalistic integrity, the Boston _Globe_.
	The paper quotes Nikki Richardson as saying about Strecker,
	Saviers and LaCava, "We don't know where these folks are
	going to end up."  But: "They are still employed."

								paul

    Hey Tom, 
    
    	great idea for your next Notes p_n: 
    
               "Anyone can float with a wooden DECk chair".
    
    
    :-)
    
    /a
    

    Hee, hee, hee, hee, hee!!!!!
    
    I need more comic relief like that after the Q3 report and the DCU
    wars.  Thank you!		:-)	:-)	:-)

From New York Times "Business Day" section dated Saturday, April 18, 1992:


		MAJOR UNIT DISSOLVED AT DIGITAL
		-------------------------------
                
 		Move May Lead To Huge Layoffs

	Boston, April 17 - The Digital Equipment Corporation, still reeling
from last week's announcement of a $294 million quarterly loss, is radically
overhauling its corporate engineering structure in a move that analysts
expect to lead to huge layoffs. 
The company has not made an official announcement, but in response to an in-
quiry for today it confirmed a report circulating among analysts that it was 
dissolving its hardware engineering group and moving its functions into the 
marketing division.
The reorganization, the company's second in less than six months, leaves 
several longtime Digital vice presidents without roles at the company.
	A Radical Shift 
	---------------
	The move to place hardware engineering under marketing represents a
radical shift in the corporate culture of Digital's, which for all its 35 
year history has been heavily focused on engineering.  Ken Olsen, Digital's
founder and had always contended that the company should concentrate on
building excellent products that would essentially sell themselves. 
	Terry Shannon, a consultant in Ashland, Mass., who follows Digital, 
said he did not believe that the move was a knee-jerk reaction to the 
quarterly loss. He added that it seemed as if Digital's marketing vice 
president, William Johnson, had convinced Mr. Olsen it was time for the 
company "to have products the customers want, rather than building products 
and having to convince customers to buy them."
	David Smith,a consultant at the International Data Corporation in
Framingham, Mass., and former Digital engineer, said: "I heard marketing was 
going to be running the show, and I didn't believe it.  This could signal a 
fundamental change in the way the company does business."
	30,000 Jobs Could Go
	--------------------
	Mr. Smith said he believed that the move was a direct reaction to 
Digital's sagging business fortunes. "Ken Olsen is clearly less than pleased 
with the way the company is being run by his senior managers," he added. 
	George Colony, president of Forrester Research in Cambridge, Mass., 
said, "This may be in preparation for rather massive layoffs." He estimated 
that Digital needed to cut 30,000 employees from its payroll in order to get 
its costs in line.
	"This could signal the elimination of a lot of redundant functions in
engineering," he said.
	The depth of Digital's financial woes has surprised industry analysts.
The announcement by the company of its new Alpha microprocessor in February was 
hailed by many as a significant technological achievement that would form the 
platform for Digital's computers for the next decade. Digital is also 
receiving accolades for its recent entry and strong showing in the direct-mail
personal computer business. 
	Margins Too Low on PC Sales
	---------------------------
	But the margins on PC sales are too low to offset slumping sales of 
Digital's mid- and high-end VAX computers. And computers employing the Alpha
chip are not due out until late this year or early in 1993. Analysts say that 
these problems and Digital's continuing battle with internal cost reductions 
are making it difficult for the company to turn things around.
	A Digital spokeswoman, Nikki Richardson, said the move was not a 
reaction to last week's earnings announcement and was intended "to reinforce 
the marketing orientation of the company and get engineering close to the 
customer again." The company said no executives were available to discuss the 
matter, but Ms. Richardson said Mr. Olsen had set the move in motion to 
provide a better alignment between engineering and Digital's customers.
	She added that a recent organizational change, which had split 
hardware and software engineering into two separate organizations, had 
"severed engineering's link to our customers."
	Under the new plan, engineering will be broken into four areas, each
part of a separate Digital business unit. Robert Palmer will be responsible
for manufacturing and logistics and for component engineering; David Stone for 
software engineering; Charles F. Christ for departmental systems and small to 
medium-size enterprises, and Frank McCabe for global information systems.
	Three Executives in Shuffle
	---------------------------
	Suddenly without a role is William Strecker, 48 years old, who headed
Digital's hardware engineering unit. Mr. Strecker is a highly respected 
computer architect who did critical work on Digital's best-selling VAX 
computers and played a major role in setting Digital's product strategy for 
the last four years.
	In addition, Dominic LaCava, who built Digital's low-end systems 
business, and Grant Saviers, most recently responsible for Digital's personal 
computer and peripherals business, saw their jobs disappear in the shuffle. 
The spokeswoman said the three had not left the company and would find roles 
in the new organization.
	An internal Digital memorandum two months ago suggested the company
was planning to cut $400 million from it engineering budget. Mr. Smith, the 
analyst, said the move reinforced Digital's intention to cut out "perpetual
projects" - long term development efforts that have yielded no sales or 
profits.
    

    RE: .17
    
    >Deck chairs sink.
    
    The ones on the Titanic didn't.  On modern cruise ships they're
    probably all plastic and webbing, but then, modern cruise ships are
    probably unsinkable, right?
    

Source: Dow Jones News Service
Headline: Digital Equipment -2-: Second Reorganization In Two Months
Time: Apr 20 1992 0820

  By John R. Wilke 

  Dow Jones Staff Reporter 
 

  BOSTON -DJ- Digital Equipment Corp. sidelined three senior executives in the 
besieged computer maker's second sweeping reorganization in as many months. 

  The surprise move underscored an air of crisis at the nation's second 
largest computer maker, based in Maynard, Mass., and set the stage for a new 
round of layoffs as it scrambles to staunch further losses. 

  Digital said it would disband a newly created engineering group and 
distribute its tasks to marketing units, stripping chief engineer William D. 
Strecker of his duties. While Strecker remains a vice president, he appears to 
have lost the influence he wielded as a member of Digital's core executive 
committee and a key architect of the VAX computers that fueled wild growth in 
the 1980s. 

  Strecker ''has been part of the backbone of Digital's culture for two 
decades,'' said Marc Schulman of UBS Securities Inc. 

  Also derailed in the move were F. Grant Saviers, who headed personal 
computer and peripherals operations, and Domenic LaCava, who built computer 
systems based on Unix operating software. 

  A spokesman portrayed the reorganization as an effort to bring product 
engineering closer to customers. But to some, it suggested disarray. ''It's 
incredible,'' said Jay P. Stevens, an analyst with Dean Witter Reynolds Inc. 
''They had just created this organization in February'' and given Strecker 
significant new responsibility. 

  But Digital was stunned by an unexpectedly deep third-quarter loss of $294.1 
million, as revenue fell 7.6 pc, to $3.25 billion for the period ended March 
28. When the loss was disclosed April 9, executives hinted at sweeping new 
measures to restore profitability. 

  A senior Digital manager said president and founder Kenneth H. Olsen ''feels 
we haven't gotten the revenue growth we should have from the $1.6 billion a 
year we've been spending lately on product engineering.'' Olsen had earlier 
told managers he thought $400 million could be squeezed from engineering and 
research costs. 

  Analysts expect Digital Equipment to take its third major restructuring 
charge in the fourth quarter, which ends June 30, to cover the cost of 
additional work force reductions and plant closings. The company still had 
$694 million in reserve as of March 28 - representing the unused portion of a 
$1.1 billion - charge taken in 1991's fourth quarter but now says it may need 
even more for the coming year. 

  Digital has said dismissals will resume May 1 after it assesses results of 
an existing early retirement program. Digital employed 116,000 people as of 
March 28, down from a peak of 126,000 in 1989. 
                   -V- 

  For complete article, see today's edition of The Wall Street Journal. 

   8:20 AM
categoryIndustry I/CPR 
categorySubject N/PER 
categoryMarketSector M/TEC 
categoryGeographic R/MA R/NME R/US 
categoryCompany DEC 
---DOW JONES

     A "successfull" reorg. is possible ONLY if/when KO decides to take
     it into his own hands to eliminate the waste at the top for good! 
    
     

    .-1
    
    KO has been at the top during all of these problems.  Perhaps he should
    reorganize by letting SOMEONE ELSE reorganize.

    I find it hard to believe that all of the obviously BAD reorg.
    decisions where NOT the result of KO being influenced by top
    managment. KO is the only person in top management clearly
    seen as trustworthy to make "the right decision" based on what
    this company stands for. Wanna take a vote? KO would win the majority
    easily!                       

    Re: .27
    
    Wouldn't get mine.
    
    An organization is a reflection/magnification of the man in charge.  
                                                         PERIOD!!-----^
    
    Should an organization profess its stumblings to be because of 'the
    economy', 'commoditization', 'market uncertainty' or just about any
    other fuzzy external cause, then the organization is UNWILLING to look
    too deepply into a mirror.  If an organization is unable to recognize
    its flaws, so too is the person in charge.
    
    
    don
    

    
    
    	I'll vote YES only because the problem confronting the company
    	now is one solely of trust. Our problems are not technical or
    	for that matter that related to the economy but solely a basic
    	lack of trust among people at all levels of the organization.
    
    	I believe Ken is the only person right now who could get this
    	company back on track ..... I put my trsut in him, however not
    	in many others. 
    
    	I have been here for 17 years ..... 

    and I back it up by keeping my 870 or so shares until he gets it back
    up to 200.  -- Fred

    Me too! I think KO will get us back on track and the stock will be
    worth more; perhaps never anywhere near $200, but much better in
    relation to book value than it's been in some time.
    
    I'm leaving my stock in too as I SERP out.
    
    Fred    :^)
    

    Let's see now.  KO will get us back on track by putting together a team
    we can trust to rebuild the business...
    
    Whose fault is it that many of us can't trust the current team?
    
    It's not like KO is coming bask out of hibernation or retirement.

Another way of looking at it is that everything that is within the range
that seems to be acceptable has already been tried.

One year, engineering and marketing are combined.  The next year they are
not.  One year, the segmentation is by system size, the next year it's by
VAX/non-VAX.  Around and around we go.

When these vice presidents are reassigned, the work that was done by that
segment moves like a fluid into another bucket.  Reorganization is not just
reassignment, or is it?

    re Trust In Ken Olsen.. whenever I listen to him I get a headache.
    Either he's really out of it, or so brilliant that I can't follow him.
    
    km

    Neither.  He speaks in parables, and you have to be able to interpret
    them.  If you don't know how, you won't understand anything he says.

>   Neither.  He speaks in parables, and you have to be able to interpret
    
    Yup, "parables".  Always liked that method myself and recognized it in
    his speaches.  Was taught about them at an early age, just like KO and
    many others.  For some it stuck, for others not.  Used big time in an
    old, big book.  The non-parablers always have a hard time with the
    parablers, as I have experienced it. -- Fred

re .33:

"Prepare three envelopes."

    
    	I think his goal is to make us think and do what is right.
    Unfortunately, that seems to be a rapidly disappearing skill. I can't
    begin to count the number of times some bozo takes something very
    literal, and have to come back with, "he did not say be stupid!".

    	I liked his quote in this past Monday's Boston Globe. When asked
    about the recent reorg, he said something to the effect of, "I don't
    have to explain my actions to the press, since they'd just screw it up
    anyway, and I don't have to explain it to the employees." I hope he
    doesn't forget that he WILL have to explain it to the BOD and
    stockholders...But that's why you don't understand him, you're not
    supposed to.