Appendix for Edgar H. Schein “DEC is Dead, Long Live DEC”

This document, an appendix to Edgar H. Schein's book, critically examines the downfall of Digital Equipment Corporation (DEC). The author posits that DEC's collapse was not due to inevitable market forces or its corporate culture, but rather to the ignorance, incompetence, and poor decision-making of its top leaders and an ineffective board of directors.

Key failures identified include a profound misunderstanding of fundamental technological shifts, such as Moore's Law and the transition from ECL to CMOS architectures, exemplified by decisions made by CEO Ken Olsen. DEC's leadership failed to adapt to the layered structure of the computing industry, leading to an unsustainable number of hardware platforms, a flawed "make-buy" policy that manufactured uncompetitive components, and a neglect of software solutions in favor of hardware. The company also struggled to adopt or establish industry standards (like the PC and UNIX), instead clinging to its proprietary VAX strategy even as the market moved towards 64-bit systems and open standards. Furthermore, DEC misjudged IBM's service-led business model, pursued a direct attack on it, and suffered from internal organizational complexity that hindered adaptation. Despite leading in critical technologies like CMOS microprocessors, Ethernet, and laser printing, DEC's leadership consistently failed to capitalize on these opportunities, ultimately leading to its acquisition by Compaq in 1998 and then HP in 2002. The appointment of Bob Palmer as CEO after Olsen's departure further exacerbated these issues, as he provided little strategic leadership and failed to harness the company's significant intellectual capital.