Thomas Swidarski Reveals He is Still Out of Touch With the Company's Problems
Brad Offers an Unlikely Olive Branch...
By Brad Friedman on 3/11/2006, 4:42pm PT  

Cleveland Plain-Dealer promises a feature article on Diebold's new CEO (and former head of its Elections Division) Tom Swidarksi in tomorrow's Sunday paper. (UPDATE: That interview is now posted here.)

In their preview for that article, they refer to his plan for "cutting $100 million in operation costs" and Diebold's "core business of selling and servicing ATM's and security systems."

"But it's the company's smallest business segment - electronic voting products - that occasionally envelops Diebold in controversy," they report. "And that fanfare contributed to the downfall of Swidarski's predecessor, Walden O'Dell."

The article tomorrow is, apparently, based on a video-taped interview with Swidarski which is available online here.

Despite being Diebold's "smallest business segment," approximately half (or more) of that interview is dedicated to their "Elections Business". Most newsworthy, perhaps, is Swidarski's continued failure to say whether or not he plans on selling off that part of Diebold. Previous interviews have given that same indication. It seems clear, they're looking to get the monkey off their back. Who can blame them?

For a transcript of the key parts in the interview concerning their "Elections Business," followed by a few of my thoughts about that, along with what I feel is a friendly invitation to Mr. Swidarski...from me...see below...

SWIDARKSI: [On their Election "Business"] The political side of the business is new to, uh, uh Diebold, and new to someone like myself. Uh, and that probably has been the biggest surprise in the business.
Q: So, do you see it as a business you intend to stay in?

SWIDARKSI: Well, the reason we got into it is because, uh, first of all we had a business in Brazil that moved through a similar cycle, interestingly enough. They had a paper-based system that was frought with all sorts of fraud and corruption issues and they moved to more of an electronic-based system. In the Brazil situation, the government decided they were going to move to an electric-based system in every one of their states. So they bought 350,000 devices at one time and installed them and they ran...And they had a whole debate about whether there should be a paper-based trail and how that works out and they worked their way through that. That led us, when, uh, we were looking at the other businesses to get into in the United States, to consider the election business which we never had before. And HAVA, which was the Help America Vote Act, was changing the way the election business was going to be run. So we thought, "timing was appropriate".

Um, it's been a very challenging business. It was a business which in this last year we did a very nice job in terms of profitability. We've got a good team in place. We've got good products. Good technology. It's one where we are very supportive of the customer base. And my job now, sitting in as CEO of Diebold is to determine: Do I have the right product set? Do I have the right customer set? Long term, is it the right business to be in? Much like security, much like self-service? And, you know, as such, make those difficult decisions.

I expect, you know, over the next over the next 3 to 6 months as I review all of these things, I'll be in a much better position to uh, to comment on that.

Q: Well, again, it's a business you ran for a number of years...

{ed note: Swidarski had previously been the President of Diebold's Elections Division before being named as CEO of the company overall}

SWIDARKSI: ...Right...

Q: So, I'm mean, you're more familiar ...

SWIDARKSI: ...Right...

Q: ...than the typical CEO might be...

SWIDARKSI: ...Right.

Q: ...And so is it, you've made a commitment at this point to develop the technology...?

SWIDARSKI: Oh, absolutely...

Q: Do you intend to stay in it?...

SWIDARSKI: Absolutely. We made large commitment. I mean we've got, um...The technology we brought out and the reason it's so good and the reason people like it, is because it's very intuitive, it's very user-centric. Well, we could basically utilize all the research and technology...we spend 50 million dollars a year in on R&D... So 50 million dollars a year relative to self-service or the ATM business...customers interfacing with the device.

Well, on the election side, the cry from the elections officials was something similar to an ATM. Thus we brought that kind of technology with that kind of research to it. People...the Elections officials love it, the, uh, consumers love it, the research has shown it's been well's much better in terms of addressing the issues of under-voting and over-voting...much better in terms of, you can have multiple-languages on a screen...first time ever, someone that's visually impaired can vote anonymously. And when you see someone do that for the first time, it's very moving.

By the same token, I have to remove myself from the closeness and my personal committment to it, because when I was running the business the last several years, my job was to make it the best business going. Make it the most profitable business.

Now as I step into the new role, my, my decision process is different. I need to look at all the business critically. Whose running the business? Do I have the right management team in place? And what's the right thing for our shareholders going forward?

At the same time, you know, we have an enormous customer base that we, uh, absolutely continue to support. And have a tremendous team of folks dedicated to this business, a hundred percent dedicated that will continue to run...and I think, uh, do a very nice job for the customer base.

A few thoughts on the interview from me...

Swidarski describes, in the interview (in a section I didn't transcribe) how they sell ATMs to banks with features that the customers (in this case, the banks) either use or don't. He says they manufacture Election equipment in that same way, allowing the Boards of Elections to use the equipment and the features as they see fit.

This underscores everything that is wrong with Diebold and the other privately owned and run corporations in the Voting Machine "business". What they don't seem to understand, and Swidarski still does not seem to get, is that providing equipment to be used in publicly run elections, supporting the most elemental aspect of democracy is not like supplying ATMs to banks.

Diebold has a responsibility, in the "Elections Business" to ensure watertight electoral integrity in such equipment (to their best of their ability) in the same way they have a responsibility to ensure wateright security/integrity/accuracy when it comes to the financial transactions that occur on their ATMs.

"Customers" who use Diebold's voting equipment, unlike the end-users who use an ATM, don't have the option to go elsewhere, use a different machine, or walk up to the teller window to make their transaction. There is also serious consequences, usually immediately discovered, when there are errors with an ATM machine.

There are no such consequences, or even ways for the "customer" to determine such errors usually, with Electronic Voting Machines.

Fundamentally, then, it seems that Swidarski continues to be wholly out of touch with the very purpose and responsibilities of his company in producing such equipment --- which, we should add, is ultimately bought and paid for by the tax-payer as opposed to a private company. We are the ultimate customers for his Voting Equipment and his responsibilities then are underscored by the Constitution of the United States. Not by laws or guidelines or even customer preferences and demands that otherwise drives consumer "self-service products" like ATMs.

Until he begins to understand that, and directs his company to act accordingly, under a different set of rules and procedures and benchmarks than are used to guide their consumer ATM business, they will continue to be desperately out of touch, constantly under attack, and their little 5%-of-their-overall-business adventure will continue to be a liability to their company in numbers which far outweigh the overall investment and profitability their company has finds in that particular "business sector."

If this interview is any indication, Swidarski actually seems to be a nice guy. At least, he comes across that way in this setting.

And so, in all honesty, I'd like to put the offer out there and on the record, that I'd be happy to discuss this situation and offer some advice to Swidarski on all of this.

Believe it or not, I actually feel I can help him and his company find their way to the right footing in how they handle so much of the "business" that they are desperately mishandling at this time. And they continue to do so, even in the three months since Swidarski has become CEO.

I am quite serious about the offer, and invite Mr. Swidarksi to feel free to give me a call. In all honesty, I'm happy to discuss all of these matters, and perhaps even help him and his company get back on track --- even while helping our country (which both he and I each live in) to restore the lost integrity which threatens to undermine our very democracy.

That is our "core business" as far as I'm concerned, and I do hope Mr. Swidarski will feel free to take me up on the offer. My phone number is easy enough to find (several of his employees have it on their voice-mail since they've refused to call me back.)

I'd love to hear from you, Tom.

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