In Direct from Dell, founder and CEO Michael Dell tells how he started his company from a dorm room at the University of Texas with less than $1,000 and built it into an industry powerhouse with a market capitalization of well over $100 billion. What makes Dell Computer unique is "Not what it sells, But rather how it sells it". Dell was first in the PC industry to pioneer the “Direct-Selling Model”, a method that competitors are only now starting to embrace. By cutting out the intermediary and creating a direct link between manufacturer and customer, Dell was able to provide customers with high-speed computers that cost less and that were more adaptable to meet customer needs. Founded on a deceptively simple premise to deliver high-performance computer system directly to the end user-Dell Computer is the envy of its competitors. It has consistently grown at two to three times the industry rate. It’s stock went up more than 200 percent – the largest share-price gain in the S&P 500 and the NASDAQ 100 in the year 1998.
The book is neither a memoir nor a complete history of Dell Computer Corporation. Rather it provides examples and advice for start-up business owners on ways to handle change and the importance of constant communication with employees, customers, and suppliers. He offers some innovative ideas for encouraging employees to think outside the box and for suppliers to work as partners with the company for everyone's benefit. Dell also has provided strategies for using the Web to enhance sales and empower information throughout business.
The efforts put by Dell were astonishing: A 19 year-old with $1000 starts a company, remains at the pinnacle and on top of changes in the industry for 10 years. And watches the stock rise 36,000 percent over another decade as his company becomes the second largest maker of PCs in the world and the largest in the U.S.
CONTENT IN BRIEF
"Direct from Dell" is divided in to two parts, with seven and eight chapters respectively.
The book explores what have come to term Dell’s “competitive strategies” – speed to market; superior customer service; a fierce commitment to produce consistently high quality, custom made computer systems that provide the highest performance and the latest relevant technology to their customer; and an early exploitation of the Internet.
In Part One Dell describes how these strategies took hold, born of good times and bad, as the company grew and changed and grew some more.
In Part Two Dell describes how he had enhanced these strategies, and how, by finding innovative ways to combine technology with the information his company gleaned from their direct relationships with employees, customers, and suppliers.
CONTENT IN DETAIL
The first part discusses Dell's history in chronological order. From its early success and immense growth afterwards over a period of becoming a professional organization and developing the core of the "Direct selling Business Model" until finally expanding systematically on vertical, horizontal and geographical axes based on well-developed principles.
It had always made more sense for Dell to build a business based on what people really wanted, rather than guess at what he thought they might want, this was the official beginning of what is called the “Direct Selling Business Model”. One can really attribute the evolution of Dell and its success story in the computer industry to their “Direct Selling Business Model” .The Direct Model has been evolved from the basic idea of eliminating the middlemen, and is based on direct selling – not using a reseller or the retail channel. The Direct Relationship – first through telephone calls, then through face-to-face interactions, and now through the Internet – has enabled Dell to benefit from real-time input from real customers regarding product and service requirements, products on the market, effective Inventory Management, and future products they would like to see developed.
In the First part Dell discussed the problems that he faced while starting his business and latter developing it globally. He suggested certain strategies that he had learned from his good and bad experiences:
Ø No matter what one’s industry is, one has to identify potential problems early – and fix them.
Ø Involve your customers early in the development process, as they are your most valuable focus group – Listen early and Listen well.
Ø Communicating is one of the most important tools in recovering from mistakes as it enables to diffuse the fear of the unknown and focus on the solution.
Ø Under Promise and Over Deliver.
Ø For any company to succeed its critical for top management to share power successfully, as one has to focus on achieving goals for the organization, but not on accumulating power.
Ø Plan or Die. Planning is one of those areas where experience counts as much as intellect. One needs to insert more discipline into one’s planning process, as it is hard to anticipate the ups and downs of business cycles that one had actually never experienced before. Above all one has to remember that planning is nothing with out execution.
Ø Divide and Conquer – when one has got a huge market opportunity, the only way to handle it is to divide and conquer i.e. Effective Segmentation of the Market.
The second part of the book details Dell's management principles: creating powerful partnerships, building a company of owners, learning directly from the source, developing a customer-focused philosophy, forging strong alliances, bringing your partners inside your business, differentiating for a competitive edge, and thriving on change in the connected economy.
In the Second part Dell discussed how he had enhanced his competitive strategies - which are mentioned as under:
Ø Mobilize your people around a common goal. Help them to feel a part of something genuine, special, and important, and you’ll inspire real passion and loyalty.
Ø Invest in mutual long-term goals by hiring ahead of the game.
Ø Looking at learning as a necessity, not a luxury.
Ø Study the obvious for non-obvious solutions. If you’re trying to solve a customer’s problem, go and ask him how he’d like to see it solved. This kind of problem-solving “empathy” leads to innovative thinking.
Ø Make failure accept as long as it creates learning opportunities.
Ø Communicate the goals of the organization to everyone.
Ø Treat all employees as owners, even if they technically aren’t yet.
Ø Marry high tech and high touch.
Ø Run with suggestions your customers provide.
Ø Always think bottom line – but not just yours. Consider your customer’s bottom line as well. Can you save them money, while enhancing your partnership with them?
Ø Go beyond your products or services, and make yourself valuable to your customers as an advisor. Be a student of your customers as they can provide a much-needed perspective on products and services.
Ø Exploit the talents and investments of the experts.
Ø Keep your friends close and your supplier’s closer.
Ø Communicate directly with the decision-makers and don’t underestimate the value of information.
Ø Flip the equation: Don’t settle for the standard supply/demand relationship – it doesn’t work anymore. Work toward demand/supply. The benefits to both sides in terms of time, market flexibility, cost-savings, and competitive advantage are immeasurable.
Ø Think of the customer and not of the competition.
Ø Turn your competition’s greatest strength into a weakness. Study the “Game of Competition”: Exploit its weakness by exposing its greatest strength.
Ø Expect change and plan for it. Rather than seeing it as a potential threat or problem, welcome it as an opportunity.
Ø Exploit the Internet. The Internet is the most effective and pervasive change agent in this connected economy. Use the Internet to break down traditional boundaries as it enables to connect more directly with people, customers, and suppliers; it can enable to work faster and become more adept at riding the ways of change.
Ø Integrate your business – virtually. Search for ways to partner virtually in an effort to eliminate steps, enhance efficiencies, and provide a better total customer experience.
In the last part of the book Dell has concluded that these are the true roots of strategies that should continue to help us – and you – revolutionize our industries for a long time to come.