DEC'd Out

New England Journal of Higher Education, The, Fall 2003 by Earls, Alan R

DEC'd Out DEC Is Dead, Long Live DEC: The Lasting Legacy of Digital Equipment Corporation, Edgar H. Schein with Peter S. DeLisi, Paul J. Kampas, and Michael M. Sonduck, Berrett-Koehler Publishers, Inc., 2003, $27.95

In a few short years, Digital Equipment Corporation has faded from the headlines and the consciousness of New England. But for at least the last half of its 40-odd year life span, Digital-or DEC, as it was often known-was the great exemplar for new businesses and a symbol of regional rebirth. Indeed, until its final years, it was headquartered in a recycled woolen mill in Maynard, Mass., that symbolically connected it to the faded primordial enterprises of every New England mill town. And to that humble headquarters, politicians, pundits and an army of customers trekked-to wonder, to buy and to emulate the second biggest computer-maker in the world.

DEC's achievements were legendary. Starting in 1957 with the help of an almost penurious $70,000 investment from pioneer venture fund, American Research & Development, the company gave life to founder Ken Olsen's vision of computing for the masses-defined at that time as almost anyone in engineering, research or education with a modest budget.

Almost from its inception, the company was profitable and growing. In an era when computer shipments at giant "mainframe" companies such as IBM were often measured in the single or double digits, DEC engineers produced handy and affordable machines with unit sales measured at first in the hundreds, then the thousands and eventually the hundreds of thousands. In short, Digital was a star as both a business and as a technical innovator, building successes in large part on its pioneering effort to commercialize the academic mode of inquiry, research and development that Olsen had learned as a graduate student at MIT.

DEC's reputation and fortune rose in tandem until the mid-1980s when the industry it had helped create suddenly bounded off in new directions-the personal computer, in particular. Digital's response to these new challenges was typically Digital-with lots of creativity and lots of new products and, alas, a complete lack of focus or sense of urgency.

Under a cloud, Olsen departed in 1992. The company struggled to regain momentum for a few more years and finally, in 1998 succumbed to the seductions of PC-giant, Compaq. Today, what's left of Digital is merged deep within California-based Hewlett-Packard, which acquired Compaq in 2002. To be sure, a fair number of the old Digital buildings-now sporting HP signs-still dot the landscape of Massachusetts and New Hampshire, but only a fraction of the former employees remain and the magic is gone.

DEC is Dead: Long Live DEC offers an objective analysis of how this once-tiny company grew to employ more than 125,000 people in a few decades, how it created its legendary products, how it spread management across the business world and how it ultimately failed. (Disclaimer: I worked as a consultant at Digital in its last years of its independent existence.)

Edgar H. Schein, the principal author of DEC is Dead, is an emeritus management professor at MIT's Sloan School and founding editor of Reflections, the journal of the Society for Organizational Learning. He consulted for DEC from 1966 to 1992. Fellow authors Peter S. DeLisis and Paul J. Kampas are both consultants with academic connections, the former at Santa Clara University and the latter at Boston College, while Michael M. Sonduck heads a management consulting firm.

DEC is Dead: Long Live DEC will be of interest to students of management, students of business history and academics since the story revolves primarily around the creation of a modern, research-based corporation inspired by the research university. DEC, for example, largely eschewed a hierarchical structure: typical business functions were submerged in a larger culture where employees were more or less collegial co-equals.

Unlike most businesses, say the authors, DEC did not function by command but by consensus among individuals and between groups, and consensus among managers. Even the ultimate consumers of the company's products were often part of a consensus-reaching process. Olsen often acted as an observer as much as a manager, occasionally playing the Socratic goad to his immediate reports-indirectly pushing them to resolve key points under discussion.

In good times, particularly as Digital was pioneering wholly new ways of designing, manufacturing, selling and supporting computers, this time-consuming and rigorous process of arguing out and negotiating every detail yielded good results. Where there was no clear roadmap to the future, this tentative, lurching and always fact-based process proved itself valuable. The company's products were widely admired, customers were fiercely loyal, and DEC employees became a kind of sub-cult within the larger fabric of business. They came to think differently from others and came to see no reason to ever change.

In particular, though, says Schein, if one were to make an analogy to the inherent characteristics of a living thing, Digital lacked "the money gene"-money was always a byproduct of doing things well, not the primary focus of the organization. Thus, when competition grew red-hot across the spectrum in the 1980s and 1990s, Digital simply couldn't adapt.