Michael Dell - The Man Behind DELL

            

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Themes: Corporate Social Responsibility
Period : 1984-2001
Organization : Dell Computers
Pub Date : 2002
Countries : USA
Industry : Computers

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Case Code : LDEN002
Case Length : 10 Pages
Price: Rs. 300;

Michael Dell - The Man Behind DELL | Case Study


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Michael - The Leader Contd...

Michael felt that good strategy and planning was based on viability and implementability. In other words, a strategy must be backed by the right people, organization and motivational system to make it a success. He hired talented people to take his company to multi billion dollar revenue levels.

Michael made it point to make sure that everyone at DELL felt that they were part of something great - something special - perhaps something even greater than themselves. He strongly believed that the ability to find and hire the right people. He always wanted to know if potential candidates were able to understand DELL's strategy and if they could help develop that strategy further. According to his recruitment principles, 'If you hire people with the potential to grow far beyond their current position, you build depth and additional capacity into your organization.' Recruitment in DELL was for succession and, in fact, everyone's job at DELL included finding and developing their successor as an ongoing performance plan.

Michael took part in the recruitment process of not only managers but also summer interns. He asked interns about their experiences at DELL and paid careful attention to their observations to see if they had any new perspectives on the company. If they had enjoyed their work at DELL and their strengths matched DELL's objectives, they were invited to join the company. Michael realized that with the growth of the company, people in many positions had to take on additional responsibility. To expect people to grow at the same rate as the company was, he knew, unrealistic. Michael believed that DELL's organizational structure should be flexible enough to evolve along with people. As a result, jobs were segmented and additional talent was brought in to fill new positions. In some cases, business units, product organizations or functional units were segmented to make them more manageable and sharply focused on opportunities.

However, this job segmentation confused employees. To overcome employee concerns, Michael decided to inform them why these changes were being made. This greatly facilitated incremental organizational adjustment. Michael believed that early communication about change would enable employees to see in advance the tangible impact of that change on their job opportunities and careers. Knowledge of their growth potential, he felt, would motivate them to work harder.

Job segmentation was not restricted to the lower cadres alone. Even the CEO's job was segmented twice. In 1993-94, Michael realized that there were more opportunities than he could pursue himself, so he asked Mort Topfer to join the company as the Vice-Chairman. In 1997, the job was segmented again. Kevin Rollins, a key member of executive team, was promoted as Vice-Chairman, and in March 2001, he was promoted as President and Chief Operating Officer.

Michael realized that aligning teams toward a common objective and creating same incentive system across the entire company would help direct everyone's talent toward creating value for customers and shareholders. At DELL, people worked in teams of two to receive, manufacture, and pack an order for delivery to a customer. The profit sharing incentive encouraged them to be productive as a team. Hourly metrics were posted on monitors on the factory floor so that each team could see if its performance met the company's goals. Michael also believed that 360 performance appraisals helped identify areas that might require further development or improvement and would also keep people focused on achieving their goals as a team. He believed that teamwork was all about people who were interested in each other's growth.

According to Michael, information was the key to competitive advantage. He gathered information about the company by 'roaming around' in company premises. Michael also continually brought information into DELL. Michael also believed in creating a company of owners. He believed that a company with an individual owner would be less focused - so he created a culture that made every employee in the organization, at every level, think and act like an owner in order to connect individual performance with company's important objectives (Refer Exhibit II for DELL's cultural objectives). At DELL thinking like an owner meant creating the best customer experience and enhancing shareholder value.

DELL's leader also believed in the philosophy of 'under promise and over deliver.' Generally most companies did the opposite - they made big promises to customers, but failed to deliver on those promises. This led to dissatisfied customers and the absence of repeat purchases. Michael firmly believed that the customer comes first. He believed that DELL's toughest customer was its best customer, as the toughest customer teaches the most. At DELL, employees not only respond to customer's problems but they are also willing to invest in coming up with a solution to the immediate problem. DELL built strong relationships with not only customers but also suppliers.

Michael argued that 'No one company can succeed by itself. We need help from our partners." He therefore developed strong alliances with vendors and was willing to share his knowledge with them. Suppliers were evaluated on cost, delivery, and availability of technology, inventory velocity, support to global business, and the ways business being done on the Internet, which emerged as terrific tool to elevate alliances to the greater efficiency levels. According to Michael these relationships were instrumental in the success of DELL; he even leveraged vendor relationships to achieve competitive advantage.

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