Surfing the High Tech Wave
Chapter Beginning.
Summary.
The March Massacre of 82.
After the massacre.
Judith Clarke on Comdex 82.
The story the booth tells.
When George Canova left, Jack Messman became acting President. But Jack
had no desire to run a computer company--a field he had little interest
in--in Utah--a place he had little interest in. He set about the task of
finding a president to lead Novell out of it's time of troubles.
Jack started by looking for local talent. He talked with Jack Davis. Jack was certainly interested and knew the situation, but he had just accepted the Presidency at Praxis and felt he needed to follow through on that commitment.
Jack talked with Reid Clark, the VP of international sales--one of the company's bright spots of the time. International was providing 30 or 40 percent of Novell's sales. Reid declined.
He talked with Dave Geurarro. Dave was a good talker, and Dave had a plan. It sounded good enough that Jack made him CEO while he continued the search for a permanent president.
It was on Dave Guerrero's shoulders that the unpleasant task of bringing
Novell's costs in line with it's revenue fell most heavily. He conducted
the series of layoffs in 1982 that followed the March Massacre. He shrank
Novell to about twenty people by June of 82. It was a thankless task, and
no one thanked him. At each layoff cycle (there were three) he would say,
"We've cut deep so we won't have to cut again." Even among those
who survived there were bitter complaints that he was doing hare-brained
things. Dave was a man of action. In his mind action, good or bad, was
better than no action. He was desperate, and with good reason--Novell sales
were dropping as fast as the employee count.
After the layoffs Dave pursued long-shot ideas, because there were no sure-shot
ideas available. The printer and the computer had both proved wanting in
the open marketplace, so trying to boost sales of those products in the
general market was fruitless. The LAN was coming, but it wasn't ready,
so no sales gains could come from it.
The choice he saw was pursuing specialty markets--niche marketplaces--and the foreign marketplace. Dave was not exceptional in this thinking. Niche markets and foreign markets are time-honored places for electronics companies to survive when the mainstream US domestic market rejects their products. Wang word processing machines were sold for years after personal computers had overtaken their capabilities. They were sold to customers who already had Wang installed bases. Commodore, Digital Research and Atari survived and prospered for years after their products were no longer in the demand in the US mainstream personal computer marketplace. Commodore in particular used profits from their European sales to try again and again to penetrate the US marketplace. So Dave's strategy was disappointing in that it was abandoning the mainstream domestic market, but it might have been viable.
After May Dave spent most of his time looking for specialty deals to cut domestically while Reid and Craig pursued the general-purpose markets overseas. One such deal involved turning the terminal computer into a point-of-sale system.
Dave's actions staved off Novell's collapse by perhaps six months. But Dave's action wasn't all that Novell needed. It needed vision, and a plan that the remaining organization could buy into. Dave could act, but he couldn't provide those other essentials. It was never clear to those left at Novell what Dave was planning, and he produced no vision that others could coordinate with. He could act, but he couldn't end the chaos; by fall he was out of grace. Meanwhile Jack Messman continued the hunt for a president.
While the calamities of spring and summer were crashing in, the roots were
being deepened for the one product that would in the end save Novell. By
summer the LAN was being demonstrated to the sales force and selected customers.
By fall the Novell's presidential office looked out onto a changed view:
there were now vultures sitting outside looking in.
One of the strengths of the free market business system is its handling of failure. In some social systems the failure of an organization is hard to officially recognize so it lurches on--consuming resources but producing little value from them. In other social systems the phrase "head on a platter" isn't a metaphor. In the fall of 1982 Safeguard was ready to put the "good handling of failure" theory to the test. Through the spring and summer they had been unable to find president who would treat Novell as a going concern, so by fall they were looking for someone that would take the company for salvage value.
The first to come along was a businessman from New Jersey who had done some pioneering work in bar code readers and was now head of a company in Haupage, New Jersey. His original introduction to Novell had been through the point-of-sale project Dave had worked on. He saw the LAN technology as interesting and wanted to meld it into his New Jersey operations. He proposed buying the company and taking it back east. He would have had it, but Safeguard looked at his offering price and decided it was too low. Safeguard continued looking.
Next Jack Messman saw a light part the clouds and cast off the gloom. He was contacted by Sandy Shipley--a man with considerable interest in a floppy disk drive maker, and a man who was looking for a captive outlet for his drives. Shipley liked Novell, and he agreed to become president in October 82.
"I still remember the day," says Reid Clark, "I looked out my window and there was a limousine, one of the stretch kind, with a uniformed chauffeur, and out steps Sandy Shipley." Sandy was the president that took Novell to Comdex 82. He was also the president that gave Dave Geurraro the axe. But his tenure was short.
A week after Comdex the dark clouds hovering over Novell came back together with a snap. It turned out Sandy had "exaggerated some of his claims" and he was moved out quickly when that came to light.
This left Safeguard with a rudderless company once again and the man from New Jersey still waiting in the wings, or, depending on your point of view, in the tree flapping his wings overhead while the sun beat down mercilessly. Safeguard was trying to cope with its failure, but each time they handed it off, the orphan kept coming back whining for more attention.
Chapter Beginning.
Summary.
The March Massacre of 82.
After the massacre.
Judith Clarke on Comdex 82.
The story the booth tells.