The Butcher’s Bill


chopping-block-Dell-EMC

Watching a real butcher work is akin to watching a surgeon. They are experts with their tools, which are cleavers and knives instead of scalpels and stitches. They know how to carve the best cut of meat from a formless lump. And they do it with the expert eye of a professional trained in their trade.

Butcher is a term that is often loaded with all manner of negative connotations. It makes readers think of indiscriminate slaughter and haphazard destruction. But the real truth is that a butcher requires time and training to cut as they do. There is nothing that a butcher does that isn’t calculated and careful.

Quick Cuts

Why all the discussion about butchers? Because you’re going to see a lot more comparisons in the future when people talk about the pending Dell/EMC acquisition. The real indiscriminate cutting has already started. EMC hid an undisclosed number of layoffs in a Dec. 31 press release. VMware is going to take a 5% hit in jobs, including the entire Workstation and Fusion teams.

It’s no secret that the deal is in trouble right now. Investors are cringing at some of the provisions. The Virtustream spin out was rescinded after backlash. The tracking stock created to creatively dodge some tax issues is now so low that it needs a ladder to tickle a snake’s belly. Every news day brings another challenge to the deal that is more likely to sink it than to save it.

In order to meet this rising tide of disillusionment, Dell and EMC are pulling out all the stops. Expect to see more ham-handed decisions in the future, like cashiering entire teams and divisions in order to get under some magical number that investors like and will be willing to support in order to make this mega merger happen. Given Michael Dell’s comments about investors during his run to make Dell a private company, I’m sure he probably has a very sour taste in his mouth thanks to all this.

Butchers work to make the best possible product from the raw materials given. There are no second chances. No do-overs. You have to get it right the first time. That very reason is why all this scrambling looks more like the throes of a desperate gambit instead of a sound merger strategy.

Prime Cuts

All companies that merge have duplicate jobs. It’s a fact of business. Much of the job overlap comes in the administrative side of the house. Legal, accounts, and management teams all have significant overlap no matter where you go. And while those teams are important for keeping the lights on and getting the bills paid, the positions represent redundancy that almost never gets trimmed away. Staff positions keep the machine moving. That means they stay.

Assuming that no one inside of either organization wants to cut staff positions, how can we approach something resembling more sane carving that accomplishes the same goals without leading to the hemorrhaging that will come from large-scale indiscriminate layoffs?

  1. Kill off needless products. While I’m sure this is an on-going process, there are some pretty easy targets for this one. Haven’t sold that SKU in two years? Gone. Wind down support and give a discounted upgrade to something you do support. Kill off SKUs that exists solely to win awards.
  2. Reduce products by collapsing product lines. You don’t need two entry-level products for iSCSI storage. Or five different enterprise-class arrays. Kill off the things that overlap or directly compete against each other. Who survives? The one that sells better. The one that has better tech. The one that costs less to support. If you’re going to pinch pennies in other places, you had better start doing it here too.
  3. Management reductions need to happen too. For all the talk of reducing engineering teams and creating synergy, it’s surprising how often managers escape the layoffs. They’re almost like professors with tenure. Well, it’s time for them to prove their worth too. If their department is gone, so are they. If they are an ineffective manager, pay them a severance and let them earn their role somewhere else all over again. And that goes double for the 500 CTOs that seem to have sprung up inside large organizations lately.

You’d think these things were obvious and easy to figure out. Yet these are the kinds of decisions that get overlooked during every merger.


Tom’s Take

Layoffs hurt lots of people. It’s never fun when your teammates and friends get sacked. But you can be smart about who goes and how best to make the new company survive and even thrive. Chopping away at the company with a machete is like a horror movie. People are going to scream and cry and you’ll be lucky to live through the end. Instead of taking that approach, be smart. Make the best cuts you can from what you’ve got. Find ways to package the parts no one might want with other parts that people find attractive. Do what you can to use as much as you can. Think like a professional butcher. Don’t act like an amateur one.

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