Gordon Bell Microsoft Bay Area Center Research

1. Convergys TechnologyWhat Does a Technology Company Look Like?(A look at Microsoft and Digital aka DEC) Gordon Bell Microsoft Bay Area Center Research

2. Three parts • Observations on high tech organization cultures based on my experience at Digital aka DEC, Microsoft, and various high tech startups • Is it scalable? • Built productively on appropriate technology? • Increase your platform & Technology Balance Sheet? • Where will technology e.g for Telepresence and Convergys be in a decade? (Recall 1993.) • What can you do to exploit the options that technology provides to generate new business?

3. Microsoft Secrets Cusumano and Selby • Organizing and managing the company • Find smart people who know technology & businessHiring pool, interviews, turn-over… • Managing creative people and technical skills • Small teams, overlapping functional specialists • Compete with products and standards NOT brand Bodies! • Pioneer and orchestrate mass markets… try many • Defining products and development processes • Focus creativity on evolution and fixing resources • Develop and ship products • Do it in parallel, synchronize and stabilize • Build a learning organization • Improve through continuous self-critiquing, feedback, and sharing • Attack the future… be or be in, the mainstream • Be first, be lucky, grow rapidly, maintain high, motivational stock price

4. Microsoft • Product and process. Architecture for // development • HBR Article: Architecture, interfaces, int/ext developers • Growing, increasingly valuable platform • Small teams, interconnect with sync • One development site w/ research. Large capital expenditures. • Common language. Common development environment. …whole company tests (we eat our own dog food) • No single point of developer failure • Managers who create technology, make technical decisions • Quick decision making re. business etc. issues • Feedback from users…e.g. Do you want to send this to MS? • Learn from the past…v3 is great • Try things, don’t give up… be prepared to fail vod, webtv, … • An understanding and appreciation for the individual… stock • Research!

5. DEC Cultural Beliefs (Ed Schein ms.)unconscious, shared, tacit assumptions • “Rational & Active Problem Solving” • Giving People Freedom Will Make Them Responsible • Responsibility means Being on Top of One’s Job, and owning one’s own Problems. (He who plans, does.) • “Truth through Conflict” and “Buy-In” • Internal Competition and “Let the Market Decide” • Management by Passion, but Work should be Fun and Enjoyable. Benign Manipulation or Controlled Chaos • Perpetual Learning • Loyalty and Life Time Employment • Moral commitment to customers

6. Digital-gb 1 • Great responsibility, freedom, and trust in the individual. • “Do the right thing.” Open door-email. Scalability is a problem. • Paternalistic organization. • “He who proposes, does.” Very little was top-down • Product managers are part of the product (conflict at low level) • Small, responsible teams. Make their own schedules. • CDC: Cray left, machines obsolete, ETA had no legacy, Price (CE0) thought top decides, bottom executes • Conflict is good. Came from starting from M.I.T. Data decides • OK to have competing and overlapping technology/projects/products, but know when to cut them! When DEC started down, it had almost 10 platforms

7. Digital gb-2 • Focus on Customer. Let them decide the strategy. • Profit is essential …all products were measured • “Either make the standard or follow it, if you fail to make the standard you get to do it twice.” IBM PC versus 3 • “Make what you can sell, not what you can buy.”Therefore: sell everything you make.” semi • Wilkes: “Stay in the mainstream”… SOS, ECL • Beware of complex structures. Buyer-seller relationships versus matrix

8. VAX Planning Model

9. 100,000.K$ 10,000.K$ 1,000.K$ 100.K$ 10.K$ 1.K$ 0.1K$ 0.01K$ 1960 1970 1980 1990 2000 16 KB 64 KB 256 KB 1 MB 8 MB System Price = 5 x 3 x .04 x memory size/ 1.26 (t-1972) K$ Gordon Bell’s 1975 VAX Planning Model... I Didn’t Believe It! • 5x: Memory is20% of cost3x: DEC markup.04x: $ per byte • Didn’t believe:the projection$500 machine • Couldn’tcomprehendimplications

10. Why did Digital fail • The top 3-5 execs didn’t understand computing • Moore’s Law, Standards and their effect • Platforms and their support • Levels of integration, make-buy, and ISVs • Competitor metrics: simply got “out of control” • Destroyed their marketing organization, requiring a complex matrixed organization, but lacking ISVs • Didn’t exploit: printing (e.g. HP), networking (e.g. Cisco), the Web, and UNIX • Did: ECL mainframe, non-compatible PC, too many platforms, semi-fabs…

11. Problems in decision making

12. NOD: No Output Division

13. The Technology Balance Sheet Plan with: Schedule of Milestones & Resources Eng. Specs: User view (e.g., data sheets, manuals) and Features, Functions, Benefit (FFB) Eng. view (e.g., product structure, how to design) Quality Design Methods/Processes External (industry), internal, & other standards Manufacturing Specs. (i.e. How to Produce Product) Indigenous (i.e., skills,tools, & technical know how) & exogenous technology base (e.g., patents) Chief Technical Officer (Eng. VP) Operational Management (ability to fulfil plans- specs, resources, schedule) Team, Product Architect, Engineering Culture Technology Advisory Board Technology Future -- Financeability $s (Cash / Budget)

14. Grand Challengeland Goodness Base Case Death and Doldrums 2000 Time 2013 No challenge, decade outlook. Industry’s evolutionary path… ¿Que sera sera Gordon Moore projects another decade. Disks are on the same rate of change…and are important Communications prices and capabilities are wild cards!

15. Gordon's wag at Convergys critical technologies • Software choices e.g. web services, programming environments to create a growing, high productivity platform • Very large disks and distributed databases • More pixels – screens ~ productivity • Telepresence technologies for greater coupling, less travel… • Newer platforms in addition to wireless. Why not provide health care call centers?

16. More tech • DSL wired, 3-4G/802.11j nets (>10 Mbps) access • RAM is about 150$/GB (!) • though 8GB is 3.4K so that is 400$/GB • 64 bit addressing at the desktop • Disk is 1$/GB IDE and 3.5$/GB for SCSI. • 2K/month for 1.5 Mbps or . 12.5K/mo for 45 Mbps • Personal authentication to access anything of value

17. Telepresence… being there while being here, at another time, and with time scaling • Telepresentations • Telemeetings and telecollaboration • The “work”

18. Growth through acquisitions?Build them yourself? • Pro’s: poor IPO market provides many opportunities. • Con’s: integration is difficult… • Research or at least strong Advanced Development is essential • Look at the possibilities of internal ventures

19. Information Technology represents the largest investing category Source: www.velocityholdings.com

20. Venture Capital vs. Corporate Ventures … Venture goals Independent Set by parent Measures of Profits, ROE, Image, ego, revenue, success IPO/Acquisition market share Competition External Internal & external Resources Scarce, but Plentiful, but entrepreneurial bureaucratic Structure Simple, Complex, stand alone ties to corporation Staffing CEO + small, Large teams, matrix, dedicated team fractional bodies! VC CV

21. Can you buck the high failure rate for internal ventures? • Lack of agility versus startups • Strategic soothsaying versus plain old work • No link to future viability of firm andlack of value proposition… is it essential? • Lack of responsibility: anyone in charge?Everyone is in charge • Resources: lack of committed integer people! • Resources: no entrepreneurs • Appropriate risk-reward structure • Bureaucratic rigor vs survive and thrive • Corporate interop aka interfaces to organization, culture, processes, etc.

22. The End