Information Processing

Teaching Discipline to Six-Year-Old Lotus

Frank King is cracking the whip at the laid-back company

Keith H. Hammonds in Cambridge
Business Week

July 4, 1988

For Lotus Development Corp., it has become an embarrassing pattern. The company announces a product -- and the waiting begins. Months go by while software developers struggle to meet the delivery dates set by marketing people. Products are delayed. Customers fume. Analysts worry. Now, Lotus thinks it has an answer to its problem: W. Frank King III. Fresh from IBM, he's tough and slick. He has already imposed new discipline on Lotus' software development process. And he has charmed employees and customers, too.

King arrived on Mar. 23 as senior vice-president in charge of the company's crucial Software Products Group -- just in time for a crash course in late deliveries. Chairman Jim P. Manzi was announcing that the latest version of Lotus' top-selling 1-2-3 spreadsheet program, Release 3, would be delayed by at least four months. Then, on June 14, Lotus canceled Modern Jazz, a multifunction program for Apple Computer Inc.'s Macintosh computer that was far behind schedule. Another new product, Agenda, a personal productivity tool originally scheduled for release early this year, has been put off until at least July.

Delays are a critical issue for Lotus. The six-year-old company is still growing rapidly -- and profitably. But in the past six months it has fallen far behind rival Microsoft Corp. in both sales and profits. It hasn't developed new products to offset its dependence on 1-2-3, which still accounts for 70% of both revenues and operating profits. And now, by postponing Release 3, Lotus may be jeopardizing its lucrative spreadsheet franchise. ''They should be guarding that product with their lives,'' says one analyst.

Many observers, inside the company and out, attribute the failure to top management's lack of software experience. At Microsoft, Chairman William H. Gates III is a programming whiz. But at Lotus, marketers such as Manzi, the former newspaper reporter who earned $ 26 million last year, have dominated the company since founder Mitchell D. Kapor left two years ago. Software developers complain that product decisions have been made with little input from the company's programmers -- resulting in unrealistic deadlines.

CASE OF THE VAPORS

Now customers are getting fidgety. Just ask Jeffrey A. Zonenshine, associate director of end-user computing for Joseph E. Seagram & Sons Inc. He was waiting for the mainframe version of 1-2-3, announced 15 months ago and scheduled for delivery early this year. When it didn't arrive, he installed a competing spreadsheet from Access Technology Inc. called 20/20. The longer the delays continue, Zonenshine says, the more likely he is to stick with 20/20: ''It's acceptable to lag some period of time. But when the delay is excessive, there's pressure to change to whatever's hot.''

Enter Frank King. An electrical engineer by training, he taught himself programming while stationed outside Boston during the Vietnam War. Then he spent 17 years at IBM. He oversaw the RT PC, a slow-selling technical workstation criticized as underpowered and overpriced. But he was also vice-president for development at the division responsible for the new Personal System/2 computer line.

His first two pronouncements at Lotus were clear-cut. First, no more ''vaporware.'' Lotus' penchant for announcing products long before it could deliver them had been partly a ploy to keep customers from switching suppliers. But King argued that this created public scrutiny that was ''detrimental to the morale of the developer community.'' So he, the public relations department, and everyone else at Lotus stopped talking about the eight major products it has in the wings.

King's second edict: No more Modern Jazz. The original program, a combined spreadsheet/data base/word processor introduced in 1985 to much fanfare, fell flat in the face of a more powerful program from Microsoft. Modern Jazz duplicated a separate project aimed at producing for Apple computers a version of 1-2-3, which now runs only on IBM compatibles. ''Nobody was pounding down the door for Modern Jazz,'' says analyst Charlotte J. Walker of County Securities USA. ''It was going to be a tough sell. So why do it?''

But King's more important decisions have been less public, affecting the way Lotus' 700 software developers do their jobs. He has enforced a regime of daily and weekly meetings for code writers and program testers. Schedules now detail what each programmer is to do every day. He has instituted monthly gatherings of the entire Software Products Group. Nineteen newly appointed technology ''czars'' help make sure that all new Lotus products share standard systems and features. And King himself receives daily updates, through Lotus' internal electronic mail system, that list every software error that quality-assurance testers have found the day before.

Some fret that King, 48, may be imposing too much structure on traditionally informal Lotus. ''I always worry that IBMers are going to organize a $ 400 million company like a $ 50 billion company,'' says George F. Colony, president of consultant Forrester Research Inc. King says that he's ''very aware'' of such concerns. But he came to Lotus, he says, ''to effect change, to get things done. I like to get things done.''

'DISCONCERTING'

So far, the reaction from Lotus' software developers has been glowing. King understands the development process, employees say, far better than did his predecessor, Charles J. Digate, who has left Lotus and declines to comment. Now, says one programmer: ''Top management knows what developers do and can manage the organization.''

Customers still wonder when they'll see products. ''It's very disconcerting,'' says one, referring to rumors of more delays. ''At this point I have no idea what's true.'' In addition to the six products for which it has set delivery dates, Lotus is working on a group productivity program called Notes and a version of 1-2-3 for Unix, an increasingly popular operating system, or the software that controls a computer's basic functions.

Still, King's mere presence is an important signal. ''It's going to be a long summer,'' King concedes. ''It's very much an execution process now, just grinding it out.'' In other words, don't look for miracles. But King -- and Lotus -- may finally be getting their problems under control.

Copyright 1988 McGraw-Hill, Inc.