A marketer that changed the world
by vinay kamat
How Dell is Dell? Not a particularly simple question to answer. Yet, if you look at the computer major, and its highly-charged CEO, you will realise why leadership makes Dell different.
For, Dell is focused on cost, culture, and the customer. Ultimately, it all boils down to cost. Or the art of doing things simply, quickly, and effectively.
At Dell, leadership is cost management. Everything that Dell excels in has to do with cost. If a corporation comprises three parts--the supply chain, the demand chain, and the innovation chain--Dell leads in the first two. It ensures it has minimal inventory in its supply system even as it provides customers made-to-order products at high speed. By avoiding middlemen in its Direct-from-Dell model, the company develops intimacy with its customers.
An MIT study called Toyota the machine that changed the world because of its emphasis on continually declining costs, zero defects, zero inventories, and endless product variety. Dell, whose focus is as sharp, could easily be called the marketer that changed the world. What Dell did was to differentiate itself from other computer-makers by interacting directly with customers. As Michael Dell, the founder, put it: "While other compnies had to guess which products their customers wanted, because they built them in advance of taking the order, we knew--because our customers told us before we built the product."
This super-efficient demand chain, which has made Dell the biggest computer-maker, is now testing its future. The big questions: Can Dell roll out technologies at the same pace as Samsung? Can it create iconic products like Apple's iPod? Does it have Microsft's R&D muscle? Is Dell slipping behind like Sony? Should it have diversified into printers, hand-helds, and television sets at all? Is Dell now realising that a process innovator must be a product innovator as well?
Dell's problem lies in the industry it operates in: computers. Here prices are falling and margins are shrinking. And, in areas that Dell is diversifying into, the contest is severe. Even high-end computing, an area that Dell is now interested in, will not be easy to capture for a commodity-maker. For, Dell has been criticised for being just a piece-by-piece assembler and a savvy marketer with a tight supply chain, nothing more. In the world of hi-tech, you can either be an Apple, which rolls out iconic products, or a Samsung, which make huge bets on future technologies; you can't just be a just-in-time, made-to-order, seller. Can you?
Strangely, technology, the fuel for relentless product innovation, could power Dell still. For, tomorrow's customers would desire made-to-order gizmos in a world of hi-tech clutter. Convenience, customisation, and personalisation would be the key criteria for product success. This requires savvy marketers like Dell to spot the right technologies and rewire their supply-and-demand chains accordingly. Innovative products, which are actually assemblies of different types of components and technologies, can fail if their supply chains are suspect. So, vendors must meet demanding quality norms, tight supply schedules, and work to high customer expectations. Dell has flattened the learning curve in each area through its Direct-from-Dell model.
Behind every innovative technology lies a highly sophisticated supply chain. Even a small glitch can prove costly. Which is why Apple, which has encountered vendor-quality problems in its iPod Nano, is busy recalling defective music-players. The future of technology is about betting on dominant technologies and managing vendors with flexible supply chains. It is a future that Dell should be at home in.
But it's not the supply chain alone that makes Dell a highly clinical machine. It's also the values that Michael Dell, the founder, has hardcoded into the company. Business Week gave a glimpse of his style when Dell was faced with dissonance within the organisation:
Dell faced his top 20 managers and offered a frank self-critique, acknowledging that he is hugely shy and that it sometimes made him seem aloof and unapproachable. He vowed to forge tighter bonds with his team. Some in the room were shocked. They knew personality tests given to key execs had repeatedly shown Dell to be an "off-the-charts introvert," and such an admission from him had to have been painful.
In his insightful autobiography, Direct from Dell, the founder says the biggest threat to his company wouldn't come from a competitor. "It would come from our people...my goal has always been to make sure that everyone at Dell feels they are part of something great--something special--perhaps even something greater than themselves." This belief is vital for a company that can take pride only in its operational excellence, not in its tech or design skills.
Dell's autobiography details the creation of a virtual company and the people that helped nurture the Dell magic. It's plain objective was "to steer customers through the storm of technological options."
A bigger storm is coming. It is a world where virtual companies like Dell will have to learn to customise newer and newer technologies for its buyers. In other words, they will have to create the ultimate convergence offering by customising it. Can Dell do it? Yes, if it broadens and segments its customer base quickly to learn more from it. Which is why Dell's diversification may not be a bad thing after all.
How Dell is Dell? Not a particularly simple question to answer. Yet, if you look at the computer major, and its highly-charged CEO, you will realise why leadership makes Dell different.
For, Dell is focused on cost, culture, and the customer. Ultimately, it all boils down to cost. Or the art of doing things simply, quickly, and effectively.
At Dell, leadership is cost management. Everything that Dell excels in has to do with cost. If a corporation comprises three parts--the supply chain, the demand chain, and the innovation chain--Dell leads in the first two. It ensures it has minimal inventory in its supply system even as it provides customers made-to-order products at high speed. By avoiding middlemen in its Direct-from-Dell model, the company develops intimacy with its customers.
An MIT study called Toyota the machine that changed the world because of its emphasis on continually declining costs, zero defects, zero inventories, and endless product variety. Dell, whose focus is as sharp, could easily be called the marketer that changed the world. What Dell did was to differentiate itself from other computer-makers by interacting directly with customers. As Michael Dell, the founder, put it: "While other compnies had to guess which products their customers wanted, because they built them in advance of taking the order, we knew--because our customers told us before we built the product."
This super-efficient demand chain, which has made Dell the biggest computer-maker, is now testing its future. The big questions: Can Dell roll out technologies at the same pace as Samsung? Can it create iconic products like Apple's iPod? Does it have Microsft's R&D muscle? Is Dell slipping behind like Sony? Should it have diversified into printers, hand-helds, and television sets at all? Is Dell now realising that a process innovator must be a product innovator as well?
Dell's problem lies in the industry it operates in: computers. Here prices are falling and margins are shrinking. And, in areas that Dell is diversifying into, the contest is severe. Even high-end computing, an area that Dell is now interested in, will not be easy to capture for a commodity-maker. For, Dell has been criticised for being just a piece-by-piece assembler and a savvy marketer with a tight supply chain, nothing more. In the world of hi-tech, you can either be an Apple, which rolls out iconic products, or a Samsung, which make huge bets on future technologies; you can't just be a just-in-time, made-to-order, seller. Can you?
Strangely, technology, the fuel for relentless product innovation, could power Dell still. For, tomorrow's customers would desire made-to-order gizmos in a world of hi-tech clutter. Convenience, customisation, and personalisation would be the key criteria for product success. This requires savvy marketers like Dell to spot the right technologies and rewire their supply-and-demand chains accordingly. Innovative products, which are actually assemblies of different types of components and technologies, can fail if their supply chains are suspect. So, vendors must meet demanding quality norms, tight supply schedules, and work to high customer expectations. Dell has flattened the learning curve in each area through its Direct-from-Dell model.
Behind every innovative technology lies a highly sophisticated supply chain. Even a small glitch can prove costly. Which is why Apple, which has encountered vendor-quality problems in its iPod Nano, is busy recalling defective music-players. The future of technology is about betting on dominant technologies and managing vendors with flexible supply chains. It is a future that Dell should be at home in.
But it's not the supply chain alone that makes Dell a highly clinical machine. It's also the values that Michael Dell, the founder, has hardcoded into the company. Business Week gave a glimpse of his style when Dell was faced with dissonance within the organisation:
Dell faced his top 20 managers and offered a frank self-critique, acknowledging that he is hugely shy and that it sometimes made him seem aloof and unapproachable. He vowed to forge tighter bonds with his team. Some in the room were shocked. They knew personality tests given to key execs had repeatedly shown Dell to be an "off-the-charts introvert," and such an admission from him had to have been painful.
In his insightful autobiography, Direct from Dell, the founder says the biggest threat to his company wouldn't come from a competitor. "It would come from our people...my goal has always been to make sure that everyone at Dell feels they are part of something great--something special--perhaps even something greater than themselves." This belief is vital for a company that can take pride only in its operational excellence, not in its tech or design skills.
Dell's autobiography details the creation of a virtual company and the people that helped nurture the Dell magic. It's plain objective was "to steer customers through the storm of technological options."
A bigger storm is coming. It is a world where virtual companies like Dell will have to learn to customise newer and newer technologies for its buyers. In other words, they will have to create the ultimate convergence offering by customising it. Can Dell do it? Yes, if it broadens and segments its customer base quickly to learn more from it. Which is why Dell's diversification may not be a bad thing after all.
posted by vinay kamat at 5:29 AM
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