Voice
Communication in Business Volume 2
Essays on telecommunications,
1981-2002
This
review of The IBM Way, from Business Communications
Review for July-August, 1988, does not have anything to do with
PBXs, but it leads into after-sale support, the subject of the
following article.
Buck Rodgers in the 19th
Century
(Business Communications Review, 1988)
If one looks for them,
the similarities between IBM and AT&T are quite striking. Both are
gigantic companies employing and managing vast numbers of workers;
both are based on highly complex modern technology; both became
powerful by selling a service rather than a product; in spite of a
service orientation, both are manufacturing giants, able to hold
their own even in today's world markets; and both, in spite of a
happy customer base, have been attacked by the US Government and
forced to change the way they do business.
Their principal
difference, however, is even more striking. AT&T, through Bell Labs,
is easily the leading research and development organization in the
world. In spite of the current success of a couple of IBMers in the
superconductivity field, it would be hard to think of IBM the same
way one thinks of Bell Labs. On the other hand, IBM is the world's
leading marketing organization; here, comparison with AT&T brings up
a laugh. This naturally leads one to wonder about the relative
importance of R&D vs. marketing, and if perhaps both companies might
not have something to learn as telecommunications and computers
become more and more intimately related.
As a communication
consultant with an engineering education and background, a lifetime
of experience makes me consider Herb Tarlek of WKRP in Cincinnati as
the prototype of all salesmen. This image is reinforced every time
Communication Resources sends out an RFP for a client, or my partner
and I attend some grand seminar where a vendor proudly unveils his
latest left-handed kumquat squeezer. Extracting meaningful
information from a salesman is an exercise in futility. On the other
hand, without salesmen, nothing would happen. Going into business
for yourself is the easiest way to learn this basic fact.
In this context, I
decided to keep The IBM Way, by Buck Rodgers (Harper and Row,
1986), even though it came from the book club last year because I
forgot to send back the little card. It turned out to be quite
interesting, however, and now that it is out in paperback, many more
people will rush out to buy it. It reveals many things about how IBM
has become so successful, things that AT&T (and many other
companies) would do well to ponder. But there are a few things it
leaves out. And those things need to be pondered as well, even by
IBM.
When I was in my last
year in engineering school, I gave serious thought to going to work
for IBM. In those days, the early '50s, computers and nuclear
reactors were the two glamour fields, singing their siren songs to
engineers approaching graduation; computers seemed to me to be
vastly more interesting. However, the E-school at good old U.Va. had
a senior English course which required each of us to do a study of
some major corporation. The idea was to show us how to use the
library to find professional information and to make sure we had
some idea about how to organize it. And that is why I went to work
at Bell Labs. After reading about the IBM spirit and THINK signs and
studying extracts from the IBM Song Book, I knew I would not fit in.
What finally drove me
into the arms of the telephone company, however, was Chapter 8 of
Thomas Wolfe's You Can't Go Home Again (the book was required
reading for the same course, but it is truly a great work in spite
of the way English Professors admire it). I wrote up my paper by
quoting Mr. Wolfe on right-hand pages and displaying matching quotes
from current literature about IBM on the facing pages. The match was
quite startling, and not altogether flattering to IBM. I got an A on
the paper, but it was many years before I found out that Wolfe's
"Federal Weight, Scales and Computing Company" was not IBM, but
rather, his somewhat disenchanted view of National Cash Register.
But by then I knew that Thomas J. Watson, Sr., had started his
career at National Cash under J. H. Patterson, one of the most
interesting and creative industrialists the world has ever known.
And because I had read Samuel Crowther's 1923 biography, Buck
Rodgers gave me a real sense of deja vu.
Marketing, as viewed by
Patterson and Rodgers (to say nothing of several Watsons in
between), is the basic building block of any business. And marketing
is more than salesmen wearing three-piece suits and smiling a lot.
Salesmen should be trained in a variety of ways so that they know
their product, their customer, and the field their customer works
in. Patterson used classrooms, visual aids (including slides and
movies), dramatic simulation of sales situations for training
purposes, etc., etc. Rodgers describes the same things, and extends
Patterson's ingenious techniques for rewarding employees by giving
them a chance to earn more and obtain other types of recognition for
success.
Marketing, to either
Patterson or Rodgers, includes all contact with the client
("everybody sells") from the greeting by the switchboard attendant
to straightening out billing errors. And marketing is not just
selling a product and running off to spend the commission; marketing
includes after-sale support as well. Technicians, like salesmen,
wear suits and dress the part of an IBM employee. Presumably, they
are as skilled at keeping the equipment going as the salesmen are at
selling it in the first place. All employees are aware of the way
that their actions reflect on IBM, and IBM seems to make quite an
effort to make them proud to be IBM representatives.
But now we come to the
great gap in Rodgers' book. How do you finance after-sale support on
the scale he recommends? He describes 17,000 hours of work put into
relocating the computers for McDonnell Douglas Automation, for
instance, with no clue about the cost or who paid it. There is a
passing remark about how IBM service, if a separate company, would
be in the Fortune 100, but no further clarification. In the old
days, when you rented computing service, the monthly rental, as in
the telephone industry, covered support. Indeed, when I researched
my college paper, several sources cited the importance of IBM's
continuing income from rental, even if they never installed another
machine. But when IBM unbundled, as when the Bell System was split
up, the customer was forced to buy a product rather than subscribe
to a service. Once the product is sold and the profit realized, how
does one generate continuing income to finance continuing support?
The answer is apparently
related to service contracts, etc., but no discussion is offered.
And this would be very valuable information indeed, to judge from my
conversations with various telecom vendors who are trying to offer
service contracts and still make a living. Maybe AT&T knows how to
do this properly; indeed, their willingness to support AT&T PBXs
sold on the "secondary market" suggests they do. The next trick is
to get the customer to understand fully the concept of life-cycle
cost rather than initial purchase price. If IBM has succeeded in
selling this, they are even better marketeers than I have always
thought.
Of course, maintenance,
if not modifications and upgrades, can be minimized by better
design, and this is certainly something that large scale integration
has demonstrated in the past few years. Although Rodgers gives
little attention to technology and R&D, he does mention his
participation in IBM's great leap forward into the world of stored
program control with System/360. This paralleled the development
stored program control for ESS at Bell Labs, roughly in the decade
between 1955 and 1965. We were asked why ESS didn't use a commercial
computer for control, and we pointed out that the half hour down
time in 40 years expected of a telephone central office was far
beyond the reach of any commercial computers then available. Indeed,
one of the things ESS showed was how reliable systems could be built
with less reliable components by using redundancy, internal
diagnostics, etc.
Rodgers gives the cost
of System/360 development as $5 billion. The number generally used
for No. 1 ESS was $200 million. It would be hard to say which was
the better deal, or which advanced civilization more. But the main
thing that pops out with 20/20 hindsight is that technology moved
away from both IBM and AT&T from the mid-60s on. The development of
the microprocessor and electronic ROM and RAM by many companies of
the Silicon Valley type blew things wide open. It is hard to realize
that in 1970 the System/360 in its larger size had 512 K of core
memory (the equivalent of today's RAM), the amount in the PC on
which I am typing this article, and ESS had a core equivalent of
about 25K bytes plus a ROM equivalent of about 715K bytes in its
program store.
This memory, small in
bits but gigantic in hardware and expensive by today's standards,
limited the user interface in either system, requiring skilled
technicians to prepare and run programs and keep things working.
User modifications and changes where hardly practical. But today,
thanks to inexpensive microprocessors and memory, space is available
for software to make the user interface much more "friendly." This
minimizes much of the need for vendor involvement. Or, when such
involvement is required, remote access from a centralized skilled
group can keep costs down. Thus after-sale technical support for
both computers and telephone equipment is easier and less expensive
to render, making more attention to human relations practical. And,
at IBM, that is very important indeed. If, as a salesman, you lose
an account, Rodgers blandly informs us that you have to pay back all
commissions you thought you had earned in working with that client,
plus any that may have been earned by your predecessors.
This little shocker
takes us right back to Thomas Wolfe and the frantic character in his
novel who was struggling with Mr. Patterson's newly invented quota
system. It is certainly good business to have employees treat
customers well, but one wonders if damage might not be done by
excessive use of the stick rather than the carrot. On the other
hand, those of us who have had to deal with "experts" from the
telephone industry who expect us to damn well be grateful for their
splendid but not always useful products can't help but wonder if a
little adjustment away from the carrot might not be in order.
The IBM Way is an
interesting book, and one well worth reading. But I get the feeling
that there is more to the story than Buck Rodgers has told us.
Certainly 19th century courtesy, integrity and general competence,
inherited from Mr. Patterson, are wonderful things, and all too rare
in the competitive business world. But somehow, I keep thinking of
the Apple TV ad that shows two executives watching employees
bringing in a personal computer to do a job that can't be done with
company equipment. Maybe what I am trying to say is the salesman
alone is not enough. A good, novel or different product from a hot
R&D group may also be a factor. The bushy haired guys in dirty jeans
and T-shirts out in the lab may be just as important to a company's
survival as the sartorially resplendent sales reps conditioned to
make you happy with last generation systems.
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