Michael Dell - The Man Behind DELL

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Michael - The Leader

In 1993, DELL faced a cash crunch, because of which it had to cancel its plans to make an initial public offering. It also posted its first (and only) quarterly loss in its history. Michael realized that the company had been growing 'too quickly,' at a pace much faster than the market According to company sources, 'The new order of the business was liquidity, profitability and growth - in that order.' Instead of wasting time in denying that company had a problem or trying to explain it away, Michael decided to get outside help and appointed consultants Bain & Company. Soon, a set of metrics was developed to determine which business units were succeeding and which weren't. Groups identified as 'not performing well' were examined closely. If they could be improved, they were informed how they could do so; and if they could not be improved, they were closed down to cut losses. A new framework, which was all about assigning responsibility and accountability to managers, was set in the company. Subsequently, DELL's business, and financial performance improved significantly.

By the end of 1993, Michael was even awarded the 'Turnaround CEO of the year' by Upside Magazine (Refer Table III for various awards won by Michael).

Table III
Achievements of Michael Dell

Source: ICMR

Michael always believed that business was all about building teams and building talent in the organization. According to him, it was the most essential component of success as diversity of ideas and input helped a lot in making better decisions. Michael always encouraged his teams, even if some of their products failed or had to be scrapped. He tried to motivate them to work better on their next product.

In April 1993, John Medica, who had led the development of Apple's PowerBook, put in charge of the Notebook division at DELL. By the time he took over, one product had already been canceled and the development of other products was taking longer than expected. After a realistic assessment of the situation, it was decided that only one of the products under development - the Latitude XP - would be competitive in the market. They had to cancel several products that were in the development stage and focus on the Latitude XP. This de-motivated the engineers who had spent a lot of time and energy developing the products that had been canceled. To motivate them, Michael reinforced DELL's strategy to the notebook group and encouraged them to pull together to make the Latitude XP a success.

Michael laid emphasis on implementation instead of mere planning. According to Michael, "Planning is nothing without execution." He informed his clients that strategy was all about what is being done and not about what is being said. He reflected the integration of doing with saying and believed that it was critical to know and understand customers and respond to their needs and wants. This belief formed the foundation of the direct model, which permitted customers to specify and design their own systems to meet their needs.

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