At age 34, Michael Dell had already become a high tech industry
legend. To commemorate Dell's 15th year in business, Michael authored a new
book, Direct
from Dell, which gives us a look at the straight forward approach he
used to turn his dorm room business into a multi-billion dollar corporation.
This book is a mixture of Dell history and Dell philosophy. Well worth the read
if you have an interest in patterning a business after the now famous Dell
direct model.
Michael held a book release party at the University of Texas Alumni
Association building for a diverse group of Austin technology and business
leaders who have been a part of Dell's success over the last 15 years. I was
very to honored to have been invited. During this event, several Austin notables
gave short speeches praising the impact Michael Dell has made on both the
University and the community.
University of Texas President Larry Falkner spoke about Dell's
influence on the University. He also poked a little fun at Michael by noting
that as one of the University's most successful students, he wasn't really sure
how much credit the University could take since Michael dropped out after his
freshman year, and that Michael was well known for working on his new business
rather than attending classes.
Finally, after letting the signed copy of the book collect dust on my
shelf, I pulled out the book and read it. And then I read it again. This book is
really a good read (especially if youy live in Austin) but it makes even more
sense several years later as we all look at the results.
Dell's book is really two books in one. The first part is a summary of
the history of Dell, from Michael's point of view. This section contains some
good lessons learned from the amazing hyper growth Dell experienced as it went
from PCs Limited to Dell.com. In this section Dell covers the crisis Dell went
through when the company financially "hit the wall". At that time, former Sun
Microsystems VP, Tom
Meredith was serving as Dell's CFO. This crisis changed Dell's approach to
many key business items including its approach to inventory management. This was
also the timeframe that Dell turned around its notebook computer business.
The real treasures in this section are centered on the evolution of
the Dell Direct model as well as the birth of the Dell.com web site. Michael
describes what he refers to as a "virtually integrated organization", one that
is linked by information rather than assets. Through this strategy, he worked to
bring customers and suppliers inside the business though the capabilities
of evolving internet technology. The fundamental results were speed, efficiency,
direct customer service, responsiveness to customer wishes, and a soaring stock
price.
Dell's Core
Philosophies
Part two of the book is devoted to Michael's business philosophies. A
sampling of some of these key ideas include:
- Hiring ahead of the curve - Michael outlines his belief in
choosing people with the future in mind as well as a consideration of the
challenges they will have to grow into.
- Segmenting the CEO - Michael explains why he split his duties
between himself, Mort Topfer, and Kevin Rollins in order to divide and conquer
Dell's wide spanning responsibilities through the Office of the CEO.
- Building a company of owners - Michael covers his passion for
engendering a sense of personal investment in each employee through
responsibility, accountability, and shared success.
- Staying allergic to hierarchy - Michael outlines his distrust of
overly rigid business processes as well as his encouragement of communication
across all business lines and levels.
- Mobilizing people around a single business goal - Michael
highlights his use of metrics throughout the company to measure progress, to
identify issues, and to tie compensation to the health of the
business.
- Developing products from the customer's viewpoint - Michael
reviews Dell's approach toward creating products based on customer input and
requirements instead of pushing new inventions.
- Targeting a customer of one - Michael explains that you have to
structure your business channels to tailor your focus to unique customer needs,
fears, sensitivities, and questions.
- Adding value "beyond the box" - Michael describes the importance
of looking beyond just the product at the total customer experience and the
service opportunities this may present.
- Aligning complementary strengths for success - Michael gives a
overview of the benefits of complementary partnering with suppliers for better
efficiency, faster feedback, and more tightly aligned products.
- Flipping the demand/supply equation - Michael covers the
importance of flowing inventory at a real time speed through the use of real
time information rather than using bulk manufacturing processes.
- Playing judo with the competition - Michael reveals Dell's
strategy for analyzing the profit pool of an industry and developing a strategy
for capturing market share through efficiency and lower prices.
