STORY OF DELL READS LIKE A CLASSIC BUSINESS FAIRY TALE
Learning from the greatest business leaders of the world
Michael Dell is the founder and CEO of Dell Technologies, one of the world’s largest technology infrastructure companies. He was born in 1965, 10 years after Steve Jobs and Bill Gates – not quite old enough to be part of the first wave of the computer revolution but one of the first generation to grow up with computer technology.
Dell was fascinated with gadgets from a young age and when he was 15, he bought one of the first Apple computers and disassembled it to see if he could put it back together. Though he was really interested in computers, Dell entered the University of Texas as a premed student in 1983. He spent his spare time upgrading PCS and selling them from his dorm room, making good money. At the end of the first year, he decided to drop out of university.
In 1984, he officially launched his company, under the name PC’S Unlimited and began to make computers from off-the-shelf components. He sold his products direct, avoiding middlemen and was able to offer lower prices than the major brands.
In 1985, PCS Unlimited manufactured its own-brand computer, the Dell Turbo PC. It caught up quickly. Computers were assembled and dispatched within 36 hours. This business model became a cornerstone of his company’s success. It allowed him to offer competitive prices to the customer because of low inventories and zero middlemen.
Dell went public in 1988, with a market capitalisation of US $ 80 million, making him a multimillionaire by age 23. By 1992, Dell became the youngest-ever CEO of a Fortune 500 company.
Dell set up telephone-based technical support and customer service teams to reassure customers about buying direct, rather than from a retail outlet.
The company forged close relations with its suppliers, demanding keen prices and ‘just in time’ delivery. As the company was growing suppliers began to set up facilities close to the factory to service the growing giant. In 1986, the company opened manufacturing facilities in Ireland and subsequently in Malaysia, China and Brazil.
In 1992, Dell made its products available through recognised retail outlets fuelling further growth. But this dramatic expansion nearly derailed the enterprise, leading to a shortage of liquidity and in 1993, the company’s first operating loss.
Dell recognised that he needed more management talent. He hired top executives from other related companies and poached engineers from Apple to develop and upgrade Dell notebooks. The company pulled out of retail, which had contributed growth but not profits and focused on its original concept of selling direct.
Profits recovered in 1994 and five years of explosive growth followed, with sales growing at nearly 50 percent every year.
In 2001, Dell overtook Hp-compaq as the best-selling computer brand in the world but Compaq took back the number one slot in 2002. Dell fought back and regained the position for the period 2003-2006.
Dell handed over the role of CEO to Mike Rollins in 2004, staying on as Chairman. However, he took it back in 2007 amid concerns that the company was faltering, as old competitor Hp-compaq held its number one position in computer sales. Compaq also introduced a new range of TVS, cameras and handheld computers, forcing Dell to lower prices to compete.
Dell then realised that he relied solely on an innovative business model and logistical skills rather than on innovative products. Remodelling his concept, he introduced a new range of computers and focused increasingly on servers and storage. New web forums were launched to deal more effectively with customer complaints and harness useful customer ideas.
Dramatically, Dell moved back into retail outlets. “The direct model has been a revolution,” he said, “but it’s not a religion”.
Fast forward to 2018 and Dell’s prospects seem bright. Dell is now worth an estimated US $ 70 billion – nearly triple what the buyout valued it at five years ago.
What lessons can we learn from Michael Dell? Innovate when you see an opportunity
Dell always said, “There’s got to be a better way of doing it.” When he sees an opportunity, he wants to take full advantage of it. Dell recognized the huge opportunity of better personalised service and cheaper laptops in a market that was gradually warming up to personal computers in a big way. He took advantage of it.
As he says, “Don’t spend so much time trying to choose the perfect opportunity, that you miss the right opportunity.”
Fuel your passion
Dell believes in entrepreneurship. He wants leaders to find what moves them and then go ahead with its full-steam. He says, “Whether you’ve found your calling or if you’re still searching, passion should be the fire that drives your life’s work.”
Failure is part of life
Dell has gone his whole career failing from one project to another but he has always maintained that what he learned, in the end, is invaluable. In his words, “Recognize that there will be failures and acknowledge that there will be obstacles. But if you learn from your mistakes and the mistakes of others, you will realise that there is very little learning in success. It’s through curiosity and looking at opportunities in new ways that we’ve always mapped our path at Dell. There’s always an opportunity to make a difference.”
You can learn as you go
So many business leaders want everything to be perfect before they launch their product or service into the market. This is the wrong way to go about business. Dell says, “One of the things I benefited from when I started this business was that I didn’t know anything. I was just instinct with no preconceived notions. This enabled me to learn and change quickly without having to worry about maintaining any kind of status quo, like some of my bigger competitors.”
Focus on your dreams
Dell says, “The key to happiness and success is to listen to your heart and let it carry you in the direction of your dreams. I’ve learned that it’s possible to set your sights high and achieve your dreams and do it with integrity, character and love. And each day that you’re moving toward your dreams without compromising who you are, you’re winning.
Don’t try to please everyone
This is a common misconception that business leaders fall into. They try to please everyone and reach out to every person they see. A much better strategy is to brand yourself effectively and create value for a smaller focused crowd; this helps you develop a strong presence with your target audience. As Dell says, “The idea of being all things to all people is a thing of the past.”
Define your success
Without comparing with others, you should focus on creating success the way you want it and in the life that you choose. Dell says, “If you’re happy, that’s probably the most important thing. Everyone probably has their own definition of success, for me it’s happiness. Do I enjoy what I’m doing? Do I enjoy the people I’m with? Do I enjoy my life?”
Have courage in face of danger
So many times entrepreneurs reach a certain point from which they can’t come back but don’t take that extra step. Whether that’s in terms of your mindset, your business or your life, you simply can’t create value for yourself if you give in to fear. Dell says, “Sometimes you just have to belly up to the bar and take a chance. We made some mistakes but we also had the strength to work our way out.”