Once the dust settles on the current turmoil in the computer industry, it’s an even bet that Digital Equipment Corp and Data General Corp will present a fascinating case study for business schools on how to turn a computer company around and how not to do it. Five years ago, if you were to ask which of the two minimakers would ride the rough time ahead more successfully, 99 out of 100 people would have picked DEC for recovery, Data General for oblivion. Yet the figures alongside show that, in a quarter where DEC plunged back into the red, Data General made modest but real profits, and has even begun to grow again. Moreover this is nothing to do with a beneficial product cycle – the company is actually on the cusp of the switch to a new chip for its AViiON servers, the sort of switch that causes customers to pause. Rather it is a function of the fact that the company has remade itself not to become no more than a handmaiden of others, but as a purveyor of genuinely new products, notably its remarkably successful CLARiiON disk arrays. And from here forward, Data General looks much more likely still to be around in recognizably the same form than does DEC. What has been the difference in approaches to recovery? The most important was that where DEC went for a Big Bang approach of a kind that would unquestionably killed Data General and looks likely to kill DEC, the Marlborough, Massachusetts company went instead for a patient steady state approach that must have driven more hysterical shareholders mad, but which has worked. Instead of trying to sell everything that moved, regardless of how valuable it might prove in the future in order to raise cash and make the books look better, it settled for a wrenching five years of trundling along at a steady breakeven plus or – usually – minus a few million dollars, but never recording losses so big that its future was called into question. At the same time as it managed the decline of its minicomputer business, it started building new businesses for the future, first the AViiON servers, then the storage products. And rather than rush the design of the AViiONs, it designed them in such a risk-averse way that even if it had picked the wrong chip (it had), it would not create any serious problems because the software was totally isolated from the hardware. By contrast, DEC appeared to be in a state of abject panic to get back into profit as quickly as manifestly possible, and every other activity was ruthlessly subordinated to this end, so much so that the recovery was hopelessly botched, and if you start to examine the DEC of today, you only have to peel away a couple of layers before you start to realize that there is no there there
