Friday sales story for lunchtime - Digital disruption or back to the future ?
Updated: Aug 31, 2019
I first heard the term “Digital disruption” in the late 80’s when I joined the computer firm Digital or DEC, now part of HP. “Digital disruption” in 1989 was when 300 UK Digital sales reps, on route to Boston USA, were forced into an emergency landing at Gandar airport in Newfoundland. The DC8 plane they chartered could not fly across the Atlantic on a single tank of fuel, a trivial fact emerging somewhere over Greenland. The emergency hit the US news channels so Digital disruption has been alive and well for some time !
In the late 80’s Digital or DEC were challenging IBM, ICL, UNISYS, BULL, and Burroughs with a family of mid-range computers that challenged the culture of “mainframes” for corporate computing. DEC in 1986 was enjoying spectacular growth with sales of $14 billion and 120,000 staff making it the 2nd largest computer maker in the world - astonishing when you think about how brands can change over time.
The Digital VAX computer was way ahead of its time with “clustering” technology to handle distributed peak workload, plus an uber sophisticated operating system techies loved called VMS. By the late 80’s the decade long boom for Digital VAX servers had softened as customers wanted not just mid-range computers but more Open Systems that were not proprietary to any single manufacturer. Despite this shift Digital accelerated development of the proprietary VAX VMS platform. They launched the superfast DEC Alpha 64 bit computer range when the market was turning and wanting a more open and cheaper proposition.
Unfortunately for Digital some geeks in MIT came up with a “free” operating system called Unix. It allowed any software written for Unix to run on any computer that could process Unix commands. Customers wanted open systems and UNIX applications promised freedom from vendor lock in. Within months all software developers began porting their IP on masse to Unix allowing it to sell on any server platform - HP, ICL, Sun, Data General, Sequent, Pyramid, IBM et al.
Overnight the balance of power in the market shifted from the hardware platform makers controlling the market to the software firms and SI’s. A 20 year market norm had changed in under 2 years.
Ken Olsen, Chairman of Digital, no fan of Unix, uttered the legendary quote “Unix is snake oil” setting DEC back in the Open Systems server race and they never really recovered. This was another chapter in Digital’s disruption story and tech companies to this day still back the wrong horse with numerous examples from the telecom and technology market.
SO WHAT HAVE I LEARNED SINCE 1986 ?
Well technology firms consistently create products that are simply ahead of their times and that you need to keep your partner eco-system in synch with your capabilities as a vendor. Vendors need to treat partners as partners and remember that loyalty comes from having balanced relationships. Partners will always develop solutions that help them first and their end customers and will not always do what the vendor asks or demands.
Success in the tech industry is never guaranteed even if the product is a premium offering….
DEC had a premium product and they chose not to pay commission to its reps believing no doubt that the product brand would sell its self. Instead they wanted reps to be give unbiased advice and paid higher basics and had a car scheme that was to die for. I am sure the accountants in the industry would have some sympathy for this policy but it created complacency and not urgency.
From this time, and in the following years, I have learned that sales division performance is always impacted by appropriate compensation plans. Rewarding performance and overperformance is a business necessity as you need star players to offset the attainment gap where many sales team members don’t attain 100% of quota year on year.
Sales staff also crave recognition and the acknowledgement that comes with achieving your target in a given year. In DEC not achieving your DEC 100 annual number, put you in the equivalent of a leper colony. Top hitters always strove to hit their DEC 100 and then go onto to win the DECATHLON award for the top 10% globally. Being in this elite club absolutely drove top performance and being seen at the “top of your game” is still a big motivator for top talent.
I also saw how a local branch team structure can galvanize teams into action each quarter and make everyone feel accountable. When DEC or Digital became a European business aligned by verticals something got lost in the mix and the local team culture became diluted. I sense that this issue is till alive and well in many Tech firms I deal with where staff are not clear on who does what in a given locality. Being a Territory Field Sales Rep teaches you the importance of the local maintenance paying customer. In the case of DEC many of its customers began to buy 3rd party maintenance, 3rd part compatible storage and memory, exacerbating the challenges it already faced. This trend is comparable to any technology customer today.
Fast forward to 2019 and account erosion and technology shifts will weaken the largest vendor installations if you fail to adapt and cover your local customer installations.
In today’s “Tech” economy Digital disruption is creating Digital opportunities for customers and Tech providers alike. Digital disruption is also creating brutal trading conditions for firms heavily reliant on old ways of doing business – “buying up front” or on premise licensing.
If a company like Digital, once the worlds No 2 and a brilliant product company can fail then there is a lesson for any company in the Tech market.
Food for thought - Will