Ken Olsen, chair, Advanced Modular Solutions Inc., Boxboro

By Steven Jones-D'Agostino

PHOTO/FREDERICK PECK

Ken Olsen founded Digital Equipment Corp. in Maynard in 1957 -- and served as its president until his retirement in 1992. Under his leadership, Digital grew from a small start-up to a $14 billion company doing business in more than 100 countries.

He is now chair of Advanced Modular Solutions Inc. in Boxboro ó which he founded in 1992. It supplies computers, including fault-tolerant systems, storage systems and streaming video for education. It also provides computer consulting services. Its customers have included Lucent Technologies Corp. in Murray Hill, New Jersey; Eastern Bank in Lynn; Children's Hospital in Boston; and Boston College.

Advanced Modular Solutions has 40 employees and declines to reveal its annual revenues. It has yet to turn a profit.

Following are edited highlights of a May 13 interview with Olsen.

Olsen: Oh, no, I wouldn't like to make any comments about that except for maybe one thing. The key part of the growth of Digital was based on an idea that we got from Alfred Sloan's book My Years at General Motors. ... The idea, he said, was that you should take the company and break it up into units which are, in effect, separate businesses, and there should be a common framework for business units within the company. 

Each business unit should have the same accounting system and all the accounting figures should be given to each of the business units regularly and often. The business unit has a responsibility to compare that with their plans, and each one runs as if they're a business. The management, he said, should keep their hands off. In the later edition, Al said, "But youíve got to make sure they don't get into trouble." And the paradox between those two, of course, is the paradox of being in business. 

But, the thing that made Digital was that we did divide up into business units. Each business unit made their plans and each business unit followed their plans. And, with the motivation that came from having their plans, they did wonderful things. So you could say in effect, "hey, I can get the credit for Digital, but these business units did the work."

In effect, were those business units not only competing with other businesses outside of Digital but with each other, to some degree?

In some ways, they were competing for resources. They all shared the same sales force, the same manufacturing and the like. But, in general, they didn't compete with each other. They were [making] different sized-computers, and other things they were selling were not overlapping.

What do you think about the way Digital was run by your successor, Robert Palmer, until the company was acquired by Compaq last year?

Oh, you never ask a retired chairman what he thinks about his successors. The one thing which, of course, changed, and the thing which the board of directors never did understand was the way we ran the business units, where we gave responsibility. And the stockholders, analysts and the board got impatient with this idea of having individuals have responsibility, and the chairman [giving] leadership but in a quiet way. They liked forceful, dynamic, decisive, sometimes mean and cruel [leadership]. And so they criticized me for not firing people and things like that. It's a new world now, and the world of getting jobs done by people is gone. I still think it's better to work with people.

Is there a point where the founder of a company, or the CEO, if he/she is not the founder, has to step aside or go on to the next venture because they've outlived their usefulness with that company in terms of its stages of development, or can or should a good CEO or founder be able to grow with the company for quite some time?

I don't think that's the question. The founder should be able to, better than anyone else, grow. But, eventually, he should have developed a system that will run without him, and people to do it. Very few founders have been successful doing this, and we probably haven't figured how to do it. There are some inherent problems with it, but I don't think an automatic time [for a founder or CEO] is the goal. 

I think maybe the director's job should be to insist, over a period of years, that the job be organized so that one man isn't that critical and so that there are several contenders being developed for the job. The inherent problem with this, when you look at the history of companies, [is that] it often has been difficult to make changes. And probably one of the reasons is that, when the founder's there, or anybody's there, for a long time, the people below him are just filled with ideas of how they would do things and, in time, probably forget the good things.

What do you think about Digital's acquisition by Compaq in last year?

I don't know very much about it. All I know is what I read in the paper. So I'm in no more a position to make comments about that than anybody else is. 

How about Eckhard Pfeiffer? He recently resigned as CEO of Compaq, following a decline in sales for its latest first quarter and a desire by Compaq's board of directors for new leadership. Do you have empathy for him?

I don't know him well enough -- I don't know him at all. So the answer is, I don't, because I don't know that much about him.

Compaq is out looking for a permanent CEO. Have they contacted you?

No. I should let them know I'm available. [laughs] 

... What do you think is the most right about the shape of the computer industry these days ó and about the direction in which it is headed?

I guess I'm a critical person so I'm always thinking of the negative parts. The most right thing is the just marvelous equipment that's available for individuals, homes and kids. It's marvelous way beyond what we've ever dreamed. That's definitely the most positive thing.

With the explosion of the Internet, is there a possibility that it can supplant hardware/software?

No, it won't supplant it. It'll always take hardware and you'll always want to do computing locally. We had the equipment to Internet at Digital for 30 years. ... I could write a note in the morning and it would be in 156 countries immediately. ...

But there was once difference: Behind it all was a common job. Everyone was working together toward something and the thing that was positive was that it made friends. When people got together in large numbers at a sales meeting, they were friends. They hugged each other, even though they'd never seen each other before, because they were friends over the Internet. 

Unfortunately, I'm afraid, with the Internet today, people become loners. They talk to a lot of people but they're not working toward a common goal. I was at a sales meeting for a very large computer company and, at breakfast, every salesman sat alone. It might have been a commission sales plan that keeps them separate, but I think the Internet makes people loners. That's a concern.

But couldn't the same be said about networked computers? There's the well-known comic strip Dilbert, that makes fun of the computer worker who has to sit in a cubicle all day long tied to a network and a computer tube.

Yes. And that's part of the same thing, although they were sitting there before they had computers anyway. Now, the computer can help but it can also hurt. We've created a tool and we've got to make sure we use that as a tool to do good things. 

But, before computers, didn't people have to get up and go over to the next desk and actually talk to another human being more often perhaps they do now?

That's probably true, yes.

Is the new technology going to free us up so that we can re-engage in human contact?

I think, if we set about to do it, we'd organize it in order to do it. Some companies have everybody in a closed office with a door, and I think that's a mistake. You have to force people to interchange, to work together. And getting people across the country, across the world, to see each other and work with each other is important.

So, if you're going to have the modular furniture, have low walls, not high walls.

That's right, yes.

What's the biggest piece of advice you give to people about starting up or running a company?

I don't have one off the tip of my tongue. Usually, it depends on how the conversation is going. One of the problems, I think, is the tendency for people to have learned management from television. By that, I mean the boss is always making decisions and telling people what to do. The wise thing is to get people to make decisions themselves and hold them responsible for it. They work much harder if they made the decision because then they've got to make it work. If you make the decision, no matter how nice they are and how nice you are, there is always a little bit of pleasure to see the boss' ideas fail. 

You have said that eventually you will probably sell Advanced Modular Solutions to another company. At that point in time, would you look to start up yet another computer company?

Oh, I don't think that far ahead -- there are so many things to do. [It's] unlikely I would start another computer company.

Are you enjoying and having more fun now with this company than you did with Digital in your final years with it?

That might be true. It's too complicated a question, but it's somewhere near [enjoying the company and having more fun].

Is it challenging now, or are you doing pretty much the same things you did for all those years with Digital and it's really not anything new?

In some ways, it's the same. And in other ways, it's different in that I'm closer to the design, closer to the people and closer to the actual work.