Decline of Digital Equipment Offers Lessons for Microsoft
Microsoft has piled up so many stresses on its corporate body in the last 10 months that it must beat almost insurmountable odds to remain healthy and viable, a business strategist said today.
Mon, September 09, 2013
Computerworld — Microsoft has piled up so many stresses on its corporate body in the last 10 months that it must beat almost insurmountable odds to remain healthy and viable, a business strategist said today.
"There's something endemic in technology companies that they are not built to last," said Peter DeLisi, founder and president of Organizational Synergies, a Fremont, Calif. strategy consulting firm. "The larger and larger they become, the more they spin out of control. In a highly empowered culture like Microsoft or DEC, the pieces are loosely held together. And in a crisis, down they go."
DeLisi was not predicting the collapse of Microsoft -- the Redmond, Wash. firm is a member of the Fortune 50, with revenues in its latest fiscal year of $78 billion -- but current and former Microsoft employees have been struck by the parallels between the company's current situation and that of DEC, or Digital Equipment Corporation, which in the late 1980s was the world's second largest computer company. By 1996, DEC had disappeared, sold at a fire sale price of $9.6 billion to Compaq.
And DeLisi knows DEC -- specifically its downfall. A 16-year-veteran of the Maynard, Mass. company, half of those as a strategy, IT and organizational culture consultant to DEC's largest enterprise customers, DeLisi wrote a seminal paper on the company's decline, "A Modern-Day Tragedy: The Digital Equipment Story," in 1998. Five year later he co-authored the book, "DEC is Dead, Long Live DEC" with Ed Schein, a former professor at the MIT Sloan School of Management and one of the world's foremost authorities in organizational behavior.
Computerworld spoke with DeLisi after seeing his paper mentioned numerous times in a semi-underground blog, "Mini-Microsoft," purportedly written by a current Microsoft employee, when the blog's author posted his or her take on Ballmer's retirement. Among the several hundred comments left by others -- most anonymously -- were dozens referencing DeLisi's description of DEC's downfall.
Those with time at Redmond saw similarities between the tale of DEC and today's Microsoft:
"I spent 12 years at Microsoft after leaving DEC in 1994," stated one anonymous commenter. "The time between DEC's first [layoffs] and its closing shop was brief. DEC in its heyday had 140K employees, large cash reserves (no debt) and was the 2nd largest computer company in the world (behind IBM).
"DEC missed early entry into the PC market and was not able to catch up; similar to Microsoft missing on mobile. Missing the market, sound familiar? [emphasis in original].