SOME LESSONS LEARNED FROM SOME GREAT COMPANIES
November 25, 2013 3 Comments
I recently had the honour of delivering the address at the 20th annual “IT Old Timers” lunch in Sydney, Australia.
It was suggested by the organisers that one of the topics I should cover in my speech was what I had learned from some of the great companies that I had worked for in my 40+ year career in the IT industry.
In preparing my presentation it became very clear to me that we really needed to think about redefining the definition of what actually constituted a great company to include some measure of longevity, as most of these so-called great companies that I had worked for had long ago faded into oblivion.
Companies where I worked, that had led the IT industry during their heyday, included Digital Equipment (DEC), Data General, Wang (where I was a VAR) and Sun Microsystems who were all bright shooting stars that eventually had dramatic flameouts, and which either completely disappeared into the pages of IT history or were absorbed into larger companies who then also managed to build their own demise. One such example is Digital Equipment which was absorbed by Compaq which was then absorbed by Hewlett Packard.
Nevertheless, they all taught me lessons that have stayed with me, and all of them had an impact on my belief systems and my management style. Here are just three of the key ones:
Never turn your back on your competition no matter how big your lead … I learned this lesson early in my career at International Harvester which, while not being an IT company, was where I started my IT career. IH dominated the global farm equipment and heavy truck market for decades and who, despite the very visible arrival of Japanese competitors, chose to disregard the seriousness of their competitive intent. These Japanese competitors arrived in the market with better technology, better products and better pricing yet IH believed that the IH dealer network and customers would remain loyal under any and all circumstances. They didn’t, and IH didn’t survive. The same was true with DEC who could not accept that PCs were a serious threat that would cannibalise the market position held by minicomputers. Ken Olsen, DEC founder and CEO, was famously quoted as saying “There is no reason for any individual to have a computer in his home”.
President and CEO of Remington Products Victor Kiam (1926-2001) summed it up well when he said “In business, the competition will bite you if you keep running, but if you stand still, they will swallow you.”
Complex organisational structures ultimately confuse everyone … I learned very early on in my career to dislike complex organisational structures particularly matrix organisations (see “Stupid management ideas” posted August 29, 2011). Giving people multiple upward reporting lines tends to confuse responsibilities and loyalties, adds to administrative overheads, and slows down decision making. DEC added unnecessary complexity internally with its profusion of product lines, and also managed to confuse its market with differing and sometimes competing but similar products from each of them. For example, a university could basically buy the same products from the Laboratory, Education or Commercial groups sometimes at different prices, depending on which part of the company wanted the business the most at that time, or even just depending on the whim of the salesmen. I am always nervous when I see any company overcomplicate its organisational structure, which is sadly something I have been seeing happening increasingly in SAP, one of my few surviving employers.
As the father of lateral thinking Edward de Bono said “Dealing with complexity is an inefficient and unnecessary waste of time, attention and mental energy. There is never any justification for things being complex when they could be simple.”
You don’t have to be big or complex to become bureaucratic … One of the reasons that I left DEC in 1984, was that I had become disillusioned with the bureaucracy. When I had joined DEC in 1977 it was a fast moving, dynamic organisation with little internal political intrigue. As the organisation grew, and the matrix flourished and spread it became more political and more siloed, hence becoming slower and more cumbersome. When I then joined Data General it was about one quarter the size of DEC with revenues of less than $1B, and had not yet managed to fall in love with the madness of a matrix organisation. Sadly, DG didn’t need a matrix to slow it down, as Edson de Castro, founder and CEO, made every decision from his office in Westborough, Massachusetts. For example, a country CEO could not take a decision to offer even a 10% discount on a major competitive sale, most often against an incumbent DEC, without direct approval from the DG Global CEO. We could spend weeks waiting for an approval from de Castro, which made the prospective customer doubt whether we were even serious about winning their business, and regularly lost us the deal.
Brazilian politician Jaime Lerner summed it up well when he said “Bureaucracy is like a fungus that contaminates everything.”
What I realised, while going through this exercise of reviewing my past to prepare my speech to the IT old-timers, is that every company that we work for has the opportunity to teach us important lessons while we are there, and that for me, even with a few wrong steps in my career, it was all worthwhile. I have also come to understand that my 45 years, so far, in the IT industry have been much more defined by the people that I worked with than by whatever company or its products we were fascinated with at the time. (see “My son is in typewriters” posted July 8, 2010).
Great companies come and go and great products come and go, but ultimately having great people is the only true sustainable competitive advantage.