Conference 7.286::digital

2134.0. "A Possible Future" by 37580::HHOLMES () Fri Sep 25 1992 18:01

ANATOMY OF A CORPORATION



The company is distressed about the slipping profit margin and try to identify 
ways to recover.  They look at the discretionary spending, like travel and 
training, and put procedures to curtail them.  The employees start to lose 
their technical edge as products advance, and it becomes impossible to visit 
the remote customers that are potential for future sales.  And the profit 
margin continues to decrease.

They look at what is perceived as waste, excessive orders of office supplies, 
contract workers, furniture, and facility equipment.  They put controls in 
place to curtail these wastes and encourage the use of recycling of durable 
office supplies and equipment.  The added lose in productivity caused by the 
time spent tracking these items, the costs of movement and storage of the 
surplus for future use, and the unprofessional appearance of these "dog-eared" 
overused supplies adds to the lose of competitive edge that the company once 
held, and the profit margin continues to decrease.

The company reduces head-count to better reflect income per employee, without a 
major modification to the work that needs to be done on a daily basis.  The 
customers are confused, seeing different faces at their site almost on a daily 
basis, they can't seem to get anyone to their site when they need them, and 
commitments made are being missed, because there is no transition from the 
first person to the next as to what the customer wants or needs.  And the 
profit margin continues to decrease.

The company institutes a practice to eliminate all activities that do not 
directly contribute to the "Profit Line" of the company.  Such activities as 
company picnic's, recognition dinners, and other moral building activities.  
The employees moral, as well as their productivity, decrease even further while 
they ponder their worth to the company.  Things that were done because it was 
the "right thing to do" all of a sudden become "not my job", and the profit 
margin continues to decrease.

They begin to look, in earnest, at ways to substantially impact their expenses, 
thus widening their margins.  They eliminate, or seriously impede the ability 
of employees to get to the customer's sites, with the escalation of mileage on 
company cars to be eligible.  They attempt to make the Sales organization 
"hungry" by offering a compensation plan, label this commission, for sales 
goals by cutting their salaries by 10 - 20% and then giving it back to them 
when they make their goals.  The effect is more excessive waste in additional 
mileage on the cars, to qualify, causing the customer to wait for the person to 
arrive via "the long route", or no visit at all due to lack of transportation.  
And, a de-motivated sales force that have to receive both a cut in pay and the 
lose of their "sales tool", their car, to make sales calls.  And the profit 
margin continues to decrease.

The company divests itself in activities that they are sponsoring in the 
community that have no direct correlation to their primary function, computers. 
Activities such as Golf Classics, Auto Races, Balloon Races, all that carry 
their name.  The company identity begins to get more and more vague in the eyes 
of potentially new customers, and current customers begin to wonder if the 
company will still be around tomorrow.  They begin to question the value of 
continuing to rely on this company for their future needs, and the profit 
margin continues to decrease.

The licensing practices of the company, of it's newest technology, has caused 
increased competition on their market.  The other companies are producing 
comparable products, utilizing the technology, cheaper than the company can in 
house.  More and more of the companies "old customer base" are turning to the 
new suppliers for their computer solutions.  And the profit margin continues to 
decrease.

The new President takes over with a new agenda, "we will re-design the 'Supply 
Chain' to make it more efficient and easier for our customers to receive their 
products and services from us.  In doing so, we will become more competitive 
and lower in cost."  The effort is undertaken in earnest, and plans are created 
and put into place to implement.  The only problem is that orders are not 
coming in the front end of the process, that would create product and services 
to be put out of the back end. And the profit margin continues to decrease.

    A more basic problem confronts Digital, even more basic than the
    "supply chain".  It is "what is our value-added"?

    We're struggling from one political base to another, from one anecdote
    to another because no one has had the foresight and integrity to track
    the cash put into a business plan and the cash received from customers
    for its successful execution.

    The lack of management and financial discipline is something we stopped
    being able to afford four years ago and only in 1992 did Digital get
    the wakeup call.

    
    Hey, no problem.......DECworld was a "tremendous success". right??
    Sales has all it can do to handle all the orders, right??
    We're gonna be okay, ..... right??!!   Well........right???