Venture Development:

Be Different

Case Study:  Dell Inc.

Strategies that Revolutionized an Industry

By: Vadim Kotelnikov

Founder, Ten3 Business e-Coach Inspiration and Innovation Unlimited!

 

 

"Dell's story is the stuff high-tech legends are made of."

~ Forbes ASAP

 

 

Case Studies New Business Models Listening To Your Customer Dell Inc. (case study), 3 Golden Rules, New Business Model

Chronology of Growth1,3

  • 1984  19-years old Michael Dell registers Dell Computer Corporation with $1,000 in startup capital.

  • 1987  Dell establishes its first international subsidiary in the United Kingdom.

  • 1988  Dell raises $30 million in its initial public offering, bringing the market capitalization of the company to $85 million.

  • 1991  Converting its entire product line to the highest-performing Intel 486 microprocessors, Dell demonstrates its commitment to rapidly delivering the latest technology to its customers.

  • 1992  Dell achieves more than $2 billion in sales, which represents a remarkable 127% increase.

  • 1993  "Liquidity, profitability, and growth" become a company mantra, signifying its shift from a focus on growth alone to more balanced priorities.

  • 1996  Dell challenges the traditional market for premium-priced servers based on proprietary technology with its introduction of its PowerEdge server line. In less than two years, PowerEdge vaults Dell from the 10th position in market share to the 3rd largest server vendor in the world.

  • 1994  Dell launches its new Latitude notebook line with record-breaking battery line. The company launches also Dell Japan and opens its first operations in the Asia-Pacific region, which has become the fastest growing international startup in the company's history.

  • 1998  Dell Inc. becomes the number two manufacturer and marketer of personal computers in the world. The company grows five times faster than the industry rate. Its stock rises more than 200% - the largest share-price gain in the S&P 500 and the NASDAQ 100. Dell solidifies its Internet leadership when it's sales top $12 million per day over the Internet. The company opens an integrated sales, manufacturing and support center in China.

  • 1999  Dell becomes the No.1 PC company in the United States. To accommodate its growth, Dell opens new manufacturing facilities in U.S.A. and Brazil. Sales over www.dell.com top $35 million per day.

  • 2004  Annual revenue of Dell Inc. exceeds $41 billion. The company ranks No. 6 on Fortune magazine's Global "Most Admired" list.

 

 

Thinking Unconventionally and Making a Difference1

Selected Breakthrough Innovations

  • 1984  The company becomes the first in the industry to sell custom-built computers directly to end-users, bypassing the dominant system of using computer resellers to sell mass-produced computers.

  • 1986  Dell unveils the industry's fastest-performing computer, pioneers the industry's first thirty-day money back guarantee, and offers the industry's first onsite service program.

  • 1996  The company's quiet bid to sell custom-built computers over the Internet quickly becomes a public revolution when the company announces that sales over www.dell.com have exceeded $1 million per day. Dell introduces also its first custom custom-made web links for customers. Called "Premier Pages", the links allow customers to tap directly into the company's own service and support databases.

  • 1998  Dell establishes web-based connections with its suppliers to speed the flow of inventory and quality information.

The Three Golden Dell Rules

  1. Disdain inventory

  2. Always listen to the customer

  3. Never sell indirect

Developing The Fast-Paced Flexible Culture

By: Michael Dell1

  • Set a Common Goal. Mobilize your people around a common goal. Help them feel a part of something genuine, special, and important, and you'll inspire real passion and loyalty... More

 

 

The Power of Vision and Business Concept

One focused vision made Dell the world's leading direct computer systems company. One bold concept direct customer contact has made Dell one of the most successful companies in the world.

Delivering the Best Possible Customer Experience

Dell's climb to market leadership is the result of a persistent focus on delivering the best possible customer experience by directly selling computing products and services online and through catalogs.

Yin-Yang of Customer Value Creation

"We put a great deal of emphasis on understanding what drove customer satisfaction, whether it was response times on the telephone, quality of products, valuable features, or the ease of experience in using the product. Engaging the entire company from manufacturing to engineering to sales to support staff in the process of understanding customer requirements became a constant focus of management, energy, training, and employee education," writes Michael Dell.7

Focus On the Best Solution, not the Best Technology

 

"We know what we are and what we're not. We are a really superb product integrator. We're a tremendously good sales-and-logistics company. We're not the developer of innovative technology," says Mort Topfer who helped revive Dell's fortunes in 1990s.

As Fortune wrote: A Dell mantra is that today's technology is tomorrow's commodity. Dell waits until the cost of that technology falls low enough for it to be stuffed into computers at state-of-the-art factories and then sold direct at a cheap price, which allows the company to drive for share.

Teaching Innovative Thinking

"It is really dangerous if everyone in a company starts thinking the same way", writes Michael Dell1, Chairman and CEO of the Dell Computer Corporation. "The danger comes when you fall into the trap of approaching problems too similarly. You can encourage your people to think about your business, your industry, your customers innovatively. Ask a different question or word the same question in a different way. By approaching a problem, a response or an opportunity from a different perspective, you create an opportunity for new understanding and new learning. By questioning all the aspects of our business, we continuously inject improvement and innovation into our culture. How can we teach people to be more innovative? Ask them to approach a problem in a holistic sense."

Problem Solving Strategies: 4 Levels

Turning Problems Into Opportunities

Make the Most of Incidental Interactions

"Dell is the kind of company where everyone rolls up sleeves and get personally involved in the details of our business every day," says Michael Dell, the Founder of Dell Computers. "This is, in fact, how we got to be successful: As managers, it's not enough to sit around theorizing and reviewing what those who report to us do. We frequently meet with customers and attend working-level meetings about products, procurement, and technology, to tap into real source of our company's experience and brainpower.

"Why bother? It's a way to get close to our people, for certain. But that's not all. Our day-to-day involvement in the business helps us establish and allows us to maintain one of the Dell's critical competitive advantages: speed. In this case, "staying involved in the details" allows for rapid decision making because we know what's going on... More

Getting Feedback from Customers and Suppliers

"Turn your customers into teachers," advises Michael Dell, the Founder of Dell Computers.

Dell start their innovation process with asking their customers, "What would you really want this thing to do? Is there a different way to accomplish that?" Then they meet with their suppliers and ask, "Can we do this in a different way?" Then they try to come up with a totally different approach that exceeds the original objectives.

Yin-Yang of Value Innovation

 

To continually bring information from the outside world into Dell, with an eye toward staying as competitive as they can, Michael Dell uses a variety of innovative approaches. He says, "I also enjoy roaming around outside the company to see what people think of us. On the Web, nobody knows I'm a CEO. I'll hang out in chatrooms where actual users commonly chat about Dell and our competitors. I listen to their conversations as they discuss their purchases and their likes and dislikes. It's a tremendous learning opportunity."1

 

 Discover much more in the

FULL VERSION of e-Coach

Dell Competitive Strategies...

Sustainable Competitive Advantage...

New Business Model...

Venture Management at Different Growth Stages...

Ignoring Conventional Wisdom and Looking at Things Differently...

Building a Learning Culture...

Creating a Competitive Culture...

People Partnership...

Managing Creativity...

Questioning Everything...

Asking Effective Questions...

Encourage Smart Experimentation...

Preventing Bureaucracy...

Continuous Improvement Strategies...

Virtual Integration...

Incentive Motivation...

Employee's Incentives to Improve Efficiency...

Reward System...

Learning from Failure...

Freedom to Fail...

Measuring Innovation...

Market Segmentation...

Customer Partnership...

Listening To Your Customers...

Turn Your Customers Into Teachers...

Focus on Customer Satisfaction...

Value Innovation: EON Solution...

Coaching Corporate Customers...

Adapting to Cultural Differences...

Simplicity...

Just-In-Time Manufacturing...

Timely Advertising...