DEC Is Dead, Long Live DEC : The Lasting Legacy of Digital Equipment Corporation

Rating:
Summary: Outstanding work!
Review: I may be a be prejudiced since Mr. Schein agreed to collaborate with me on this book (I was to write the technology section, which he apparently dropped) and then went back on his agreement when he ceased communicating with me after I did my part. That said, the coverage of the cultural aspects of DEC is reasonably good, but the authors miss the point entirely that DEC was merely a culture. Management malfeasance, technological gaffes, horrid marketing, and a centralization of power that defied the so-called "management martix" were equally responsible for the DECline. And have have two decades of journalistic, consulting, and analyst experience to back this up.

Still interested? Wait for the paperback, borrow a copy, or get it used!

Rating:
Summary: Needed to be written, needs to be read
Review: I recommend this book to anyone who is familiar with DEC or wishes to understand its enduring legacies. It is also a useful case study on who a company that was doing so well could ultimately fail; are Microsoft and IBM really immune from this fate?

I used DEC equipment during its heyday from the late 1970's throughout the 1980s. What I value most is how the technical experiences I recall from that time were given depth. The author's narrative binds together a collection of internal memos and personal recollections of many of those who were working at DEC when many of its fateful decisions were made. In general, responsibility for the ultimate failure of DEC to survive as a company is laid with the senior management, in particular with CEO Ken Olsen. The same attributes that made DEC great and innovative were the ones that lead to its downfall. Alas, DEC is not dead but lives on in all the innovations it introduced.

I would like liked to have seen some more details on the technical innovations and more exposure to the myths and legends that many of us were weaned on. But that was not the main thesis of the book so it's not a deficiency per se.

Though written in a straightforward and matter of fact way with little flourish, I was engrossed and quickly polished it off. This book needed to be written.

Rating:
Summary: A provacative read
Review: Many discussions and articles that chronicle the rise and fall of Digital simplify the failure to either "The president [Ken Olsen] blew it," or "They missed the PC revolution," or some combination of both. This book shows how the culture that so successfully nourished creativity and genius in the company's nascent days brought chaos, confusion, and internecine warfare in later days when the larger company faced a host of competitors and needed to efficiently produce commodity items. I think that the authors go a little too lightly on the role of (mis)management in Digital's failure, but they do a good job of bringing to light many other aspects of Digital's problematic history. The authors seem a bit full of themselves at times, but they have a compelling and sobering story to tell.

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Summary: The lasting lesson of DEC
Review: MIT Sloan School of Management Professor Edgar Schein does a marvelous job telling the story of the rise and fall of Digital Equipment Corporation, the former #2 computer maker in the world behind IBM. The business reasons behind DEC's economic failure have been widely reported (missing the advent of the PC, having too many projects going at once, failure to market products effectively, etc.) However, the big question to be answered is why did these failures occur? To quote one passage, "Why did an organization that was wildly successful for thirty-five years, filled with intelligent, articulate powerful engineers and managers, fail to act effectively to deal with problems that were highly visible to everyone, both inside and outside the organization?"

Schein looks at DEC's failure through the lens of its corporate culture, and how it prohibited their executives from making the decisions, and taking the actions necessary to survive. Fans of Ed Schein will know his famous "Three Cultures of Management" paper, in which he describes the "Executive", "Line Manager" and "Engineering" cultures, all of which must exist and be balanced against one another for an organization to survive. Schein argues that DEC was dominated by the engineering culture, which valued innovation and "elegant" design, over profits and operational efficiency. This engineering culture dominated even the top levels of DEC, where proposals to build PCs out of off the shelf parts that were readily available in the marketplace, were shot down because the machines were thought to be junk compared to the ones DEC could build themselves.

That DEC was able to survive for as long as it did was largely attributable to its ability to innovate in a field that was so new it had not yet coalesced around certain standard systems, software and networks. However, as the computer industry became in effect a commodity market, and the buyers began to value price over innovation, DEC found itself increasingly unable, and in fact, unwilling to compete. The engineering culture which valued innovation and required creative freedom, did not want to subject itself to the requirements of being a commodity player which demanded autocratic operational efficiency and control over how resources were allocated.

Although DEC is now long gone, even readers who were too young to use computers at the time of its demise will find familiar truths in this book. As the old saying goes, the fish in the tank does not see the water it is in. Neither do we often see the cultures in which we are ourselves embedded. The real lesson of this wonderful book is to show us how our corporate cultures often prohibit us from doing the right things, even when we can see them clearly. Sometimes culture is most easily visible in the things you need to discuss, but that are simply "not on the table" for discussion.

There are many lessons here too, for companies that seek to innovate new products and services, and how to balance the creative freedom desired by the engineering culture with the "money gene" culture of sound executive management. The names of companies that have failed to realize the full financial benefits of their technical innovations is too long to list here. But the DEC story is a must read for anyone who seeks to balance innovation with sustainable economic success in any organization.

Rating:
Summary: Helpful Assemblage of Facts about DEC as a Case History
Review: Professor Schein has written a helpful case history of Digital Equipment Corporation as a computer industry innovator from the perspective of its organizational culture. He draws successfully on his own direct observations during decades of consulting work, and involves others for their experiences as well in describing the organizational culture. The most helpful parts are in the form of notes and comments that occurred during the rise and fall of DEC. His main weakness as an observer is that he lumps too much of what was missing from DEC under his continuing references to the "business gene." The case history, as a result, is too light on other aspects of DEC.

Anyone who is interested in Professor Clayton Christensen's work on sustaining innovation will find deeper insights into why cultures encourage innovation failure by emphasizing one way of working on issues.

If you just want to understand the lessons of why DEC was ultimately unsuccessful as an enterprise, you only need to read Gordon Bell's postscript in appendix e. Like every other computer company at the time, DEC and its leaders did not have an actionable understanding of the implications of the ongoing productivity advances in semiconductors and how nonengineers liked to interact with computers. Our firm did consulting for another computer maker in 1978 to look at how to outperform DEC, and the vulnerability to semiconductor trends was clear then . . . even before the personal computer became important.

The book fails to explain why DEC was so insulated from profit disciplines that drive so many other companies. During its heyday, DEC and its fellow computer makers enjoyed exceptionally high rates of repeat sales (well over 90%) to the same customers. The reason: Software written for one company's machine often wouldn't work on another company's machine. So customers were stuck. It cost too much and took too much time to rewrite all that code. So you would stay with a vendor who was no longer competent for quite a long time. The challenge in the closed systems world was to sell the first machine to a customer, and make it work. In the open systems environment, you have to compete for repeat sales. For DEC, that was like AT&T having to compete with other long-distance carriers after having had a monopoly for all of those years. Ultimate failure should not have been surprising.

Rather than learning more about DEC, I would suggest that you focus on studying current computing industry technology leaders who have been consistently able to adjust their business models such as Dell, Business Objects, Cisco, QLogic and EMC. They have processes in place that DEC never had, and it's hard to learn to succeed by looking at a company that lacked such a key process. Clearly, the lesson of DEC is that working on organizational development in a technology company without creating an ability to perform continuing business model innovation is a waste of time.

As I finished the book, I realized that those who are hoping that boards will use better governance to ensure that high technology companies prosper are being way too optimistic. Few boards can hope to know enough to even understand whether or not the company is working on the right questions.