Recession, S-Curves and Digital Equipment Corporation - History of Computing: Learning from the Past - page 187

many commentators and most directors, when contacted, were unwilling to talk about
their time on the board of DEC. Many did not understand the technology or the busi-
ness but still made decisions that impacted the company direction. One member that
did agree to discuss their time on the board commented that the decision to replace
Olsen was not voted on. He also stated that they decided on Palmer without looking
outside the company as he appeared to understand the PC business. Their decision
was based on videos they had asked senior managers to complete stating what they
would do to rescue the company. Palmer took coaching in video techniques prior to
recording his video. 6 Board meetings became increasingly acrimonious once DEC's
profits declined and General Doriot died, leaving Olsen isolated. Olsen tried in vain
for many years to get his senior managers to give him realistic budgets to give to the
board. 7 In 1992 the board asked for an austerity budget and Olsen asked for a budget
for growth. This clash plus a reluctance to cut as many heads as the board had asked
for led to the board asking Olsen to leave.
In conclusion, one of the many factors contributing to DEC's downfall was missing
the S-curve in the mid 1980s and not having a strategy to recover. They left it too late
to move to RISC architecture allowing competitors to capture the workstation market.
They were riding the wave during the 1960's and 1970's but their success made them
try to get into larger markets rather than their traditional ones. They missed the PC and
workstation revolution by focusing on IBM's business and their profits suffered as
margins were eroded. However, they could have recovered in the late 1990s had they
realised that they were on the next S-curve and a leader in the field of the internet. The
Board's decision to select Palmer to succeed Olsen was taken in haste and with little
apparent though as to what the company direction should be. He was chosen mainly
because the board though Olsen had missed the PC revolution.
References
1. Schein Edgar, H., DeLisi, P.S., Kampas Paul, J., Sonduck Michael, M.: DEC Is Dead,
Long Live DEC: The Lasting Legacy of Digital Equipment Corporation. Berrett-Koehler,
San Francisco (2003)
2. Allen Thomas, J., Scott Morton Michael, S.: Information Technology and the Corporation
of the 1990s. Oxford University Press, Oxford (1994)
3. Glenn, R., George, H.: The Ultimate Entrepreneur: The Story of Ken Olsen and Digital
Equipment Corporation. Contemporary Books, Chicago (1988)
4. Theodore, M.: Conquering Uncertainty: Understanding Corporate Cycles & Positioning
Your Company to Survive the Changing Environment. McGraw-Hill, New York (1998)
5. Christensen Clayton, M.: The Innovator's Dilemma. Harper Collins, New York (2006)
6. Tracy, K.: The Soul of a New Machine. Back Bay Books, Boston (2000)
7. Praven, A.: Jumping the Technology S-Curve. IEEE Spectrum, 49-54 (June 1995)
8. Bower Joseph L., Christensen Clayton M.: Disruptive Technologies; Riding the Wave.
Harvard Business Review, 43-53 (January-February 1995)
6 Interview with Olsen's personal assistant October 2009.
7 Ken Olsen's memos in the Ken Olsen Archives at Gordon College, Massachusetts.