Can you believe a BusinessWeek headline like "Dell's Extreme Makeover"? We read about turnarounds and makeovers all the time. Only most of the time they don't turn, and they don't get made over. Most companies cut a lot of costs, make a lot of promises, but keep on doing the same stuff. They get worse. They get acquired, or they fail. And readers of this blog know that I've long chastised Dell as an example of a Locked-in company with little hope of turning around.
But, I'm changing position today. There's a LOT of the right stuff happening, and the seeds are being sown, doing what really works, for Dell to be a good future story.
Scenario planning for the future:
- Michael Dell admits in the article that he stuck to his original Success Formula of supply chain expertise feeding direct sales too long. He admits that future success requires a new Success Formula. Specific future scenarios aren't disclosed, but it is apparent that the company does not expect future markets to look like the markets of 1995-2005.
Focus on Competition:
- Management says Dell is "not trying to become like the competition"!! That is great, because winners do new and different things. They don't try to copy/catch existing competitors.
- Dell did not chase Apple into opening its own stores. Good move. Dell isn't Apple, and can't win trying to be like Apple.
- Dell was previously obsessed with its top, big customers. Big corporate accounts. It slavishly built a business trying to please the top 10%. Now Dell is winning by putting considerably more attention on customers it previously ignored: consumers, small business, medium business and government. This not only balances the company, it keeps Dell from chasing Locked-in customers into the same old fox holes.
Disruptions:
- Michael Dell has replaced 7 of his top 10 direct reports. That's a huge step in the right direction. GM should follow that lead!
- Dell has defied its old "direct to customer" mantra by taking consumer products into retail stores! The added cost to do that, and new skills required, must have shaken buildings at the Texas headquarters campus.
- A new head of design developed options customers could specify for their consumer computers. Manufacturing said it would violate the supply chain efficiency so "NO." Michael Dell over-rode the manufacturing group and said "do it." He reinforced that efficiency would not save Dell. Manufacturing would have to adjust to innovations for Dell to succeed.
- The company has reorganized away from products (how almost all tech companies structure – including Apple) and installed a new structure organized around MARKETS!! What a great way to quit being product-push and become market-learn!
White Space:
- A board member said that after eating dinner with Michael Dell he could see that this"journey at Dell is just in its first or second inning." Although not much White Space was discussed, this implies some big things are being discussed and planned for the future.
- The article says Dell is preparing to launch smart phone sales soon. This is critical, because smart phones are part of the market shift away from PCs. Dell has a lot of learning to do in that market to be part of the shift.
This is not a "done deal." I wish I knew more about Dell's scenario planning – to be sure the company has switched to planning for the future and away from planning from the past. And I really wish I knew more about what White Space is being planned. Because we know you can't transition by changing the big organization all at once. The behemoth needs some wins it can use to lead the migration. And seeing White Space projects, with a group shepherding them into the lifecycle, is a really critical step to follow-up the many Disruptions.
So things could still go badly for Dell. But they WON'T go as badly has they went from 2005 to 2007. From this one article, the first interview with Michael Dell since he took the reigns back in 2007, it is clear lots of the right things are happening to move Dell from the Swamp backinto the Rapids. There is improvement happening, and The Phoenix Principle looks to be in early implementation stages. If Michael Dell and his team stick with it, this could be a big winner for your portfolio!
