Conference 7.286::digital

3402.0. "Enrico Pesatori in Singapore" by ZPOVC::KUMAR (I was there with Andrew Wicks !) Thu Sep 22 1994 00:10

    	Enrico Pesatori is here in Singapore. An employee communication session
    was held about an hour ago. It included a very short Q & A session. I'll
    try to put in the points that Enrico made in his presentation. All of
    this is from memory !
    	He started out by showing a chart of the organisation. Next he
    concentrated on the CSD (Computer Systems Division) organisation.He said 
    that most of the problems of the company were concentrated in the SBU 
    portion of the CSD. When the VAXes were selling well in the early 80s, this
    portion contributed lots of revenue to the company. As soon as this
    portion strated doing badly, the whole company began started to
    decline. He also mentioned that in the meantime smaller companies which
    did fewer things started doing better in terms of profitability.
    	After that he outlined a few key points which management sees as
    imperative to return the company to profitability. These points were: 
    Focus -> Invest in areas where Digital can win.
    Execution -> In trying to bring SG & A costs down.
    More efficient distribution -> Working with partners.
    	He also showed a diagram which basically told us that we spent 20%
    of SG & A on the 20% of customers who spend more than US$ 1 million on
    Digital. And 80% of SG & A on the 80% of customers who spend less than
    US$ 1 million. This is clearly not the way to do business.
    	There were only about 5 questions asked. These ranged from
    questions regarding company re-organisation to salary freezes. Enrico
    said that the current organisation structure is the one that's going to
    be "cast in stone" as soon as the ABU structure is finalized. This will
    be done within the next 2 months. Everything else will revolve or 
    evolve around it.
    	As for salary freezes, when the company returns to profitability, this
    will be lifted. This could be as early as Q2. Another question was on
    whether there was a model which would be followed in deciding how the
    ABU will be structured, as was the case with the PCBU and SBU.The
    answer was that there is no model to follow and therefore the idea is
    to make it similar to the other 2 at least in terms of engineering and
    marketing. One message which kept coming back from Enrico was that the 
    market is forever changing. For example as soon as Digital's SG & A costs 
    are down to 20%, Compaq, for example, would have theirs down to something 
    like 10 %. So Digital needs to forever keep working on driving SG & A costs
    down. This would be done mainly through increasing our sales revenue 
    by selling more products. He also said that all the constant changes
    were not very good for employee morale. 
    	Overall, this was quite a good session although the Q & A was not
    too incisive. Enrico came across as a very frank person who knows what
    he's doing and where the company is going. The problem is by the time
    the changes get implmented at a lower level, it will get distorted.
    	 Moderators, if this belongs somehwere else please do the
    necessary. Thanks.
    
    Kumar

Did he say what type of stone is being used?

Mitch

    Pumice ?

    He's coming clean with us.

    yeah, these are the SAME messages and slides that he used in
    his townhall meeting in S. Francisco. He had a 22-cities (worldwide)
    tour to talk about the CSD and his plans for turnaround.
    
    I liked what I heard then.
    
    

    It's been two months and the message is still the same.  What's more,
    people appear to be working to carry it out!  I don't recall that
    previous organizational changes came complete with charts that show
    details about the fundamental problems of the preceeding organization 
    and how the new organization is going to fix them.  I found it a
    refreshing change and the most hopeful sign I've seen recently.
    
    	Enjoy,
    	Larry