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Saturday, November 06, 2004

Michael Dell: “It’s a relentless desire to be better”

In July Michael Dell stepped down as CEO to focus on strategic initiatives within the company. Dell is now diversifying into media software, flat screen digital TVs, digital music players, photo printers and storage. They are aggressively marketing their products and services in Europe and Asia.Dell recently visited Emory University’s Goizueta Business School, where he /index.cfm?fa=printArticle&ID=828" target ="_blank"> answered wide-ranging set of questions.( Via Knowledge@Emory)
On change in role :-When you start a company all by yourself, you’re the treasurer, the secretary, chairman and CEO, and chief bottle washer. I’ve gradually been giving up some of these titles and spending a little more time with our customers and our product teams. Kevin [Rollins, CEO] and I will still do a lot of things together. We’ve found we get better answers working together rather than alone for things like basic operation reviews, organizational reviews and strategy development.
On Future of Dell and the Industry: - It’s a great industry with a bright future, although it’s not without its challenges. As an $800 billion market, it is an enormous landscape for us to explore. The underlying technology of computers continues to make fantastic progress, so we’re able to double the speed and double the performance roughly every two years, and that’s likely to continue. This tremendous amount of performance and computational power helps solve problems and brings down the price of these technologies so that they’re accessible to new users across segments. The wonderful thing is that this growth will bring enormous benefits to society.
On Success and avoiding complacency : -We are very self-critical and always looking for what we can improve. Our culture is about responsibility and fixing things, rather than about finger pointing. It’s a relentless desire to be better.
On criteria for offshoring decisions :- In our business you have to be close to the customer and respond in time to customer needs. So, we build computers in Texas, Ireland, China, Malaysia and Brazil that support local and regional customers. We also look at how conducive governments are to attracting companies like Dell. Ireland has a great national policy that encourages dramatic investment in new industries. They have attracted a disproportionate number of investments, and totally changed their economy. We look for that kind of environment, along with education levels, infrastructure, investment incentives and stability of environment. But, at end of the day you got to be close to the customer in order to offer the best service and deliver the product.
On customers facing negative experiences with outsourced customer service- User satisfaction in our industry is not all that great to begin with, so we need to do a lot better. I think more often than not it’s a cumulative set of frustrations that cause people to blame who they’re talking to for the problem as opposed to the problem itself. Polls tell us that satisfaction level and the technical competency in our centers is actually pretty fantastic.I think there are very talented folks all over the world, and companies like ours want to gain access to those resources. We have to remember that 97% of the people we want to sell to don’t live in the United States. Let’s say we go to China and want to sell our computers in China. China says they want to sell their stuff in United States. We can’t say, ‘No you can’t do that, we’re only going to sell to you.’ That doesn’t work; that’s not how a world economy works. In fact, China is already Dell’s fourth largest market in the world, and it’s growing at a very rapid rate. So, we believe in a global economy. We have folks in call centers all over the world -- Morocco, Bratislava, Slovakia, Canada, Texas and Idaho.
On Dell and Linux: We’re one of the largest suppliers of Linux servers in the U.S., and we see quite a bit of growth there, but we are not wed to any particular technology. Our business model is technology neutral.
On the role the Internet have in the growth of Dell - The Internet was awesome for Dell. We just had our tenth anniversary of dell.com, where we had 220 million visits in the last quarter. The Internet touches 85% of all transactions at Dell. It’s huge in terms of making us much more efficient and having a cost structure that is less than half of our competitors. It allows us to grow tremendously. We have frictionless orders, machine-to-machine communications, where a human never touches an order until it hits the factory. That gives us increased speed, improved velocity and a huge reduction of errors. We have a real time system. When we sell 130,000 computers a day it generates signals back to our suppliers and our supplier’s suppliers. It’s a pull system instead of a push system and the Internet is the center of that.
On the learning he has had as a business leader: I’ve learned to be curious, resourceful, ask a lot of questions and surround myself with a great team. I try to think about how I can make a meaningful impact, and that usually comes down to strategy as opposed to making specific decisions. It comes to things like culture, and what are the values and beliefs of this organization. Creating and encouraging a winning culture inside the company is a big initiative that’s as important to us as new products, new countries or how we serve our customers. It’s no longer sufficient to just desire to grow, you’ve got to be a leader who knows how to develop leaders and prepare them for the challenges ahead. We have any number of opportunities to expand the business, but you’ve got to grow the talent to support your plans. It’s been a continuing evolution in learning for me.
On leaders he admires: We constantly look for other [leaders] we can learn from. We’ve learned from Wal-Mart, 3M, GE, Toyota, BMW and E-bay. We don’t say we want to be just like them when we grow up, but there are things that we can learn from each of them that are useful to us. We also bring those folks in to share what we’re doing.
On What keeps him up at night? - We live in constant fear of failing. I’m concerned about people issues. How do we keep developing the next generation of leaders to support the growth opportunities we have? Are we making enough progress on the initiatives we’ve identified? I sometimes think about the order of things. We went after the development of servers first and now we’re going after printers. What would things be like today if we had gone after printers 10 years ago instead of now?
On advice to business students: What we need are people who are skilled in teamwork and able to work across an organization. You’ll be working with people from all over the world, so it’s not just [geographically dispersed] teams, but teams of very diverse people.
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