Monday, February 18, 2013

In Defense of Ken Olsen

When Digital Equipment Corporation (DEC) "refused" to change with the times, business pundits all over the place chose to blame Ken Olsen for his "lack of leadership".  
What most of those business pundits didn't seem to understand is that there is a difference between a gradual evolution of a market and a sudden disruption of it.
What DEC experienced in the last years of Olsen at its helm was not only the perfect storm, but a simultaneous tectonic movement that essentially obliterated Digital's market.
Many "experts" stated that DEC should have moved faster to sell PCs in spite of the fact that IBM never made money on them and that other nimbler players such as Compaq were taking over that very low margin industry.  MOST of the profits in the PC sector were being captured by Microsoft and Intel (as is still the case today).
No, DEC didn't have a chance on Earth diving into the PC industry (which eventually they did and the results were disappointing  to say the least).  The alternative was fighting simultaneously both Intel and Microsoft at the same time that the profits from its core business were rapidly vanishing.   
So, save a "Steve Jobs" that comes to the business world every 100 years or so, nobody could have rescued DEC, and yes, DEC died.
Let's put it in sport terms to better understand the predicament DEC was at in the 1990's:
DEC was the best basketball team on Earth, with the best manager.  They were ready to compete in the Olympics.  But then, three weeks before the start of the games, they were informed that soccer was going to be the discipline in which they were actually competing.  
Even the best basketball team, with the best manager is going to be shredded to pieces if the game changes completely.  And it is not for lack of leadership or competence.  THIS is what happened to DEC.
Eventually, all companies will probably go bankrupt or merge with another one, so the caliber of an entrepreneur is not the final destiny of his creation, but how high he propelled it.
In 1986 Fortune magazine stated that Ken Olsen was "arguably the most successful entrepreneur in the history of American business."
THIS statement still stands true today.

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