Convergys Technology What Does a Technology Company Look Like? (A look at Microsoft  and Digital aka DEC)  Gordon Bell Mic...
Three parts <ul><li>Observations on high tech organization cultures based on my experience at Digital aka DEC, Microsoft, ...
Microsoft Secrets  Cusumano and Selby <ul><li>Organizing and managing the company </li></ul><ul><ul><li>Find smart people ...
Sync and stabilize <ul><li>Incremental development… unless you engage with the market you don’t begin to understand it. </...
Microsoft <ul><li>Product and process. Architecture for // development </li></ul><ul><li>HBR Article: Architecture, interf...
DEC Cultural Beliefs (Ed Schein ms.) unconscious, shared, tacit assumptions  <ul><li>“ Rational & Active Problem Solving” ...
Digital according to Schein <ul><li>Individualism </li></ul><ul><li>Truth through conflict </li></ul><ul><li>Personal resp...
Digital-gb 1  <ul><li>Great responsibility, freedom, and trust in the individual.  </li></ul><ul><ul><li>“ Do the right th...
Digital gb-2 <ul><li>Focus on Customer.  Let them decide the strategy. </li></ul><ul><li>Profit is essential …all products...
DEC: Schein View of What’s Learned <ul><ul><li>“ 1. Don’t judge a company by its public face.  </li></ul></ul><ul><ul><li>...
VAX Planning Model
Gordon Bell’s 1975 VAX Planning Model...  I Didn’t Believe It! <ul><li>5x: Memory is 20% of cost 3x: DEC markup .04x:  $ p...
Why did Digital fail <ul><li>The top 3-5 execs didn’t understand computing </li></ul><ul><ul><li>Moore’s Law, Standards an...
Digital cost decline
Problems in decision making
NOD: No Output Division
The Technology Balance Sheet <ul><li>Eng. Specs:  </li></ul><ul><li>User view (e.g., data sheets, manuals) and Features, F...
No challenge, decade outlook.  Industry’s evolutionary path…  ¿ Que sera sera Gordon Moore projects another decade. Disks ...
Gordon's wag at Convergys critical technologies <ul><li>Software choices e.g. web services, programming environments to cr...
More tech <ul><li>DSL wired, 3-4G/802.11 j  nets (>10 Mbps) access </li></ul><ul><li>RAM is about 150$/GB (!)  </li></ul><...
Telepresence … being there while being here,  at another time, and  with time scaling <ul><li>Telepresentations </li></ul>...
Growth through acquisitions? Build them yourself? <ul><li>Pro’s: poor IPO market provides many opportunities. </li></ul><u...
Information Technology represents the largest investing category Source:  www.velocityholdings.com
Venture Capital vs.  Corporate Ventures …  <ul><li>Venture goals Independent Set by parent   </li></ul><ul><li>Measures of...
Can you buck the high failure rate for internal ventures? <ul><ul><li>Lack of agility versus startups </li></ul></ul><ul><...
Strategic Choices Multiple Paths for Growth  and/or Reinvention Exploit Assets/ Capabilities IntraVenture  Create New Mark...
The End
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Convergys Technology What Does a Technology Company Look Like?

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  • Indigenous and exogenous-- many companies are bankrupt. Show Stardent slides now! Standards: Either make it or follow it. If you fail to make it, then do it twice. C vs Bliss. Bite bullet early. DECnet vso OSI, Enet vs 802.4; Standards mean AI doesn&apos;t exist because it lacks a &amp;quot;Fortran&amp;quot;. Processes: we all hate them and may have left a co cause of em, but important to startup Plan: he who plans does; where does it come from? Most companies CEO hasn&apos;t the foggiest idea. &amp;quot;KHO sw comes from heaven when you have great hardware. We don&apos;t know understand what you guys do, but when we do, we&apos;ll buy it.&amp;quot; If you haven&apos;t done it before, you can&apos;t schedule it. CTO: prince or politician; X vs Y; GB &amp; Ben. engineers are adults Culture/team: I like openess Architecture: new slide with Venus... ksr Resources: tools... are they standard? Austek Management: SFF Encore, Ardent, and gaming the system as in Venus &amp; Marlboro (9000)
  • Although in many situations, the CV is blessed with greater resources than the typical venture-backed startup, the issues of organizational structures, staffing, and venture portfolio management are much more complex.
  • Convergys Technology What Does a Technology Company Look Like?

    1. 1. Convergys Technology What Does a Technology Company Look Like? (A look at Microsoft and Digital aka DEC) Gordon Bell Microsoft Bay Area Center Research
    2. 2. Three parts <ul><li>Observations on high tech organization cultures based on my experience at Digital aka DEC, Microsoft, and various high tech startups </li></ul><ul><ul><li>Is it scalable? </li></ul></ul><ul><ul><li>Built productively on appropriate technology? </li></ul></ul><ul><ul><li>Increase your platform & Technology Balance Sheet? </li></ul></ul><ul><li>Where will technology e.g for Telepresence and Convergys be in a decade? (Recall 1993.) </li></ul><ul><li>What can you do to exploit the options that technology provides to generate new business? </li></ul>
    3. 3. Microsoft Secrets Cusumano and Selby <ul><li>Organizing and managing the company </li></ul><ul><ul><li>Find smart people who know technology & business Hiring pool, interviews, turn-over… </li></ul></ul><ul><li>Managing creative people and technical skills </li></ul><ul><ul><li>Small teams, overlapping functional specialists </li></ul></ul><ul><li>Compete with products and standards NOT brand Bodies! </li></ul><ul><ul><li>Pioneer and orchestrate mass markets… try many </li></ul></ul><ul><li>Defining products and development processes </li></ul><ul><ul><li>Focus creativity on evolution and fixing resources </li></ul></ul><ul><li>Develop and ship products </li></ul><ul><ul><li>Do it in parallel, synchronize and stabilize </li></ul></ul><ul><li>Build a learning organization </li></ul><ul><ul><li>Improve through continuous self-critiquing, feedback, and sharing </li></ul></ul><ul><li>Attack the future… be or be in, the mainstream </li></ul><ul><li>Be first, be lucky, grow rapidly, maintain high, motivational stock price </li></ul>
    4. 4. Sync and stabilize <ul><li>Incremental development… unless you engage with the market you don’t begin to understand it. </li></ul><ul><li>Good enough first releases… also creates companies to fill in the blanks at next higher levels. Wait for v3? </li></ul>
    5. 5. Microsoft <ul><li>Product and process. Architecture for // development </li></ul><ul><li>HBR Article: Architecture, interfaces, int/ext developers </li></ul><ul><ul><li>Growing, increasingly valuable platform </li></ul></ul><ul><li>Small teams, interconnect with sync </li></ul><ul><li>One development site w/ research. Large capital expenditures. </li></ul><ul><li>Common language. Common development environment. …whole company tests (we eat our own dog food) </li></ul><ul><li>No single point of developer failure </li></ul><ul><li>Managers who create technology, make technical decisions </li></ul><ul><li>Quick decision making re. business etc. issues </li></ul><ul><li>Feedback from users…e.g. Do you want to send this to MS? </li></ul><ul><li>Learn from the past…v3 is great </li></ul><ul><li>Try things, don’t give up… be prepared to fail vod, webtv, … </li></ul><ul><li>An understanding and appreciation for the individual… stock </li></ul><ul><li>Research! </li></ul>
    6. 6. DEC Cultural Beliefs (Ed Schein ms.) unconscious, shared, tacit assumptions <ul><li>“ Rational & Active Problem Solving” </li></ul><ul><li>Giving People Freedom Will Make Them Responsible </li></ul><ul><li>Responsibility means Being on Top of One’s Job, and owning one’s own Problems. (He who plans, does.) </li></ul><ul><li>“ Truth through Conflict” and “Buy-In” </li></ul><ul><li>Internal Competition and “Let the Market Decide” </li></ul><ul><li>Management by Passion, but Work should be Fun and Enjoyable. Benign Manipulation or Controlled Chaos </li></ul><ul><li>Perpetual Learning </li></ul><ul><li>Loyalty and Life Time Employment </li></ul><ul><li>Moral commitment to customers </li></ul>
    7. 7. Digital according to Schein <ul><li>Individualism </li></ul><ul><li>Truth through conflict </li></ul><ul><li>Personal responsibility </li></ul><ul><li>Engineering arrogance </li></ul><ul><li>Market competition…let it decide </li></ul><ul><li>Paternalistic commitment to people </li></ul><ul><li>Organizational idealism </li></ul><ul><li>Moral commitment to customers </li></ul>
    8. 8. Digital-gb 1 <ul><li>Great responsibility, freedom, and trust in the individual. </li></ul><ul><ul><li>“ Do the right thing.” Open door-email. Scalability is a problem. </li></ul></ul><ul><ul><li>Paternalistic organization. </li></ul></ul><ul><li>“ He who proposes, does.” Very little was top-down </li></ul><ul><ul><li>Product managers are part of the product (conflict at low level) </li></ul></ul><ul><ul><li>Small, responsible teams. Make their own schedules. </li></ul></ul><ul><ul><li>CDC: Cray left, machines obsolete, ETA had no legacy, Price (CE0) thought top decides, bottom executes </li></ul></ul><ul><li>Conflict is good. Came from starting from M.I.T. Data decides </li></ul><ul><li>OK to have competing and overlapping technology/projects/products, but know when to cut them! When DEC started down, it had almost 10 platforms </li></ul>
    9. 9. Digital gb-2 <ul><li>Focus on Customer. Let them decide the strategy. </li></ul><ul><li>Profit is essential …all products were measured </li></ul><ul><li>“ Either make the standard or follow it, if you fail to make the standard you get to do it twice.” IBM PC versus 3 </li></ul><ul><li>“ Make what you can sell, not what you can buy.” Therefore: sell everything you make.” semi </li></ul><ul><li>Wilkes: “Stay in the mainstream”… SOS, ECL </li></ul><ul><li>Beware of complex structures. Buyer-seller relationships versus matrix </li></ul>
    10. 10. DEC: Schein View of What’s Learned <ul><ul><li>“ 1. Don’t judge a company by its public face. </li></ul></ul><ul><ul><li>2. A culture of innovation does not scale up; “functional familiarity” and “truth through debate” are lost with size; “do the right thing” becomes dysfunctional; managerial sense of responsibility changes with age and maturity; buy-in becomes superficial agreement. </li></ul></ul><ul><ul><li>3. If a culture of innovation only works at a certain small size, the organization must either find a way to break away small units that continue to innovate or abandon innovation as a strategic priority. </li></ul></ul><ul><ul><li>4. A culture that breeds success and growth over a considerable time becomes stable and embedded even if it contains dysfunctional elements; changing the culture means changing key people who are the culture carriers </li></ul></ul><ul><ul><li>5. Cultures are sometimes stronger than organizations </li></ul></ul><ul><ul><li>6. A successful technical vision will eventually create its own competition and, therefore, changes in technology and in the market conditions; dominant designs will emerge and commoditization will occur. </li></ul></ul><ul><ul><li>7. Successful growth based on a technical vision will hide business problems and inefficiencies until an economic crisis reveals them or until the business gene is switched on; recognition of those problems will not necessarily produce remedial action. </li></ul></ul><ul><ul><li>8. If a growing business lacks the business gene, the Board must act to introduce that gene. </li></ul></ul><ul><ul><li>9. If you try to do everything, you may end up not doing anything very well. </li></ul></ul><ul><ul><li>10. How the market evolves may not reflect either the best technology or the most obvious logic. </li></ul></ul><ul><ul><li>11. A technical vision that is right for its time can blind you to technical evolution </li></ul></ul><ul><ul><li>12. The value of “listening to your customers” depends upon which customers you choose to listen to. </li></ul></ul><ul><ul><li>13. The type of Governance System an organization uses must evolve as the organization matures </li></ul></ul><ul><ul><li>14. The events and forces act in unison” </li></ul></ul>
    11. 11. VAX Planning Model
    12. 12. Gordon Bell’s 1975 VAX Planning Model... I Didn’t Believe It! <ul><li>5x: Memory is 20% of cost 3x: DEC markup .04x: $ per byte </li></ul><ul><li>Didn’t believe: the projection $500 machine </li></ul><ul><li>Couldn’t comprehend implications </li></ul>System Price = 5 x 3 x .04 x memory size/ 1.26 (t-1972) K$ 0.01K$ 0.1K$ 1.K$ 10.K$ 100.K$ 1,000.K$ 10,000.K$ 100,000.K$ 1960 1970 1980 1990 2000 16 KB 64 KB 256 KB 1 MB 8 MB
    13. 13. Why did Digital fail <ul><li>The top 3-5 execs didn’t understand computing </li></ul><ul><ul><li>Moore’s Law, Standards and their effect </li></ul></ul><ul><ul><li>Platforms and their support </li></ul></ul><ul><ul><li>Levels of integration, make-buy, and ISVs </li></ul></ul><ul><ul><li>Competitor metrics: simply got “out of control” </li></ul></ul><ul><li>Destroyed their marketing organization, requiring a complex matrixed organization, but lacking ISVs </li></ul><ul><li>Didn’t exploit: printing (e.g. HP), networking (e.g. Cisco), the Web, and UNIX </li></ul><ul><li>Did: ECL mainframe, non-compatible PC, too many platforms, semi-fabs… </li></ul>
    14. 14. Digital cost decline
    15. 15. Problems in decision making
    16. 16. NOD: No Output Division
    17. 17. The Technology Balance Sheet <ul><li>Eng. Specs: </li></ul><ul><li>User view (e.g., data sheets, manuals) and Features, Functions, Benefit (FFB) </li></ul><ul><li>Eng. view (e.g., product structure, how to design) </li></ul>Technology Advisory Board Team, Product Architect, Engineering Culture Chief Technical Officer (Eng. VP) Manufacturing Specs. (i.e. How to Produce Product) Plan with: Schedule of Milestones & Resources Technology Future -- Financeability $s (Cash / Budget) Quality Design Methods/Processes External (industry), internal, & other standards Operational Management (ability to fulfil plans- specs, resources, schedule) Indigenous (i.e., skills,tools, & technical know how) & exogenous technology base (e.g., patents)
    18. 18. No challenge, decade outlook. Industry’s evolutionary path… ¿ Que sera sera Gordon Moore projects another decade. Disks are on the same rate of change…and are important Communications prices and capabilities are wild cards! Base Case Grand Challengeland Death and Doldrums Time Goodness 2000 2013
    19. 19. Gordon's wag at Convergys critical technologies <ul><li>Software choices e.g. web services, programming environments to create a growing, high productivity platform </li></ul><ul><li>Very large disks and distributed databases </li></ul><ul><li>More pixels – screens ~ productivity </li></ul><ul><li>Telepresence technologies for greater coupling, less travel… </li></ul><ul><li>Newer platforms in addition to wireless. Why not provide health care call centers? </li></ul>
    20. 20. More tech <ul><li>DSL wired, 3-4G/802.11 j nets (>10 Mbps) access </li></ul><ul><li>RAM is about 150$/GB (!) </li></ul><ul><ul><li>though 8GB is 3.4K so that is 400$/GB </li></ul></ul><ul><ul><li>64 bit addressing at the desktop </li></ul></ul><ul><li>Disk is 1$/GB IDE and 3.5$/GB for SCSI. </li></ul><ul><li>2K/month for 1.5 Mbps or . 12.5K/mo for 45 Mbps </li></ul><ul><li>Personal authentication to access anything of value </li></ul>
    21. 21. Telepresence … being there while being here, at another time, and with time scaling <ul><li>Telepresentations </li></ul><ul><li>Telemeetings and telecollaboration </li></ul><ul><li>The “work” </li></ul>
    22. 22. Growth through acquisitions? Build them yourself? <ul><li>Pro’s: poor IPO market provides many opportunities. </li></ul><ul><li>Con’s: integration is difficult… </li></ul><ul><li>Research or at least strong Advanced Development is essential </li></ul><ul><li>Look at the possibilities of internal ventures </li></ul>
    23. 23. Information Technology represents the largest investing category Source: www.velocityholdings.com
    24. 24. Venture Capital vs. Corporate Ventures … <ul><li>Venture goals Independent Set by parent </li></ul><ul><li>Measures of Profits, ROE, Image, ego, revenue, success IPO/Acquisition market share </li></ul><ul><li>Competition External Internal & external </li></ul><ul><li>Resources Scarce, but Plentiful, but entrepreneurial bureaucratic </li></ul><ul><li>Structure Simple, Complex, stand alone ties to corporation </li></ul><ul><li>Staffing CEO + small, Large teams, matrix, dedicated team fractional bodies! </li></ul>VC CV
    25. 25. Can you buck the high failure rate for internal ventures? <ul><ul><li>Lack of agility versus startups </li></ul></ul><ul><ul><li>Strategic soothsaying versus plain old work </li></ul></ul><ul><ul><li>No link to future viability of firm and lack of value proposition… is it essential? </li></ul></ul><ul><ul><li>Lack of responsibility: anyone in charge? Everyone is in charge </li></ul></ul><ul><ul><li>Resources: lack of committed integer people! </li></ul></ul><ul><ul><li>Resources: no entrepreneurs </li></ul></ul><ul><ul><li>Appropriate risk-reward structure </li></ul></ul><ul><ul><li>Bureaucratic rigor vs survive and thrive </li></ul></ul><ul><ul><li>Corporate interop aka interfaces to organization, culture, processes, etc. </li></ul></ul>
    26. 26. Strategic Choices Multiple Paths for Growth and/or Reinvention Exploit Assets/ Capabilities IntraVenture Create New Markets Re-Engineer Grow Share/ Profitability Increase Primary Demand Existing Markets New Products/Operating Platform Existing Products/Operating Platform Outside-In Perspective Inside-Out Perspective New Markets
    27. 27. The End

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