It's the Value Proposition, silly

DEC Is Dead, Long Live DEC

Edgar Schein

The passing of Steve Jobs and Dennis Ritchie came in the same year as the passing of Kenneth H. Olsen, the founder and long-time CEO of Digital Equipment Corporation (DEC). DEC went from a 1957 startup to being a $14B company, second largest in the world to IBM in the computer industry in 1987. Along the way they built computers that were both very popular and very influential. It's no exaggeration to say that the people who built them and worked on them built much of the modern computer industry. Then, in about ten years, DEC went from pinnacle to oblivion, absorbed into PC maker Compaq and then Hewlett-Packard. Schein's book attempts to explore what happened, and why DEC failed as an independent entity.

The book is written from the perspective of a management consultant, and as you might expect, it ferrets our many management and organizational issues. Ultimately, Schein claims the failure was due to the lack of a "business gene" in the organizational culture. This is, from my perspective, naive. DEC's failure came because the company gradually lost its way, and lost the ability to present a compelling value proposition to its customers, who turned, when they could, to less expensive solutions. It wasn't the failure of strategy (although the strategy was incoherent), it was the ridiculous expense of VAX and Alpha systems that sunk DEC. Schein's book seems to miss that central point.