Dell’s Management Secrets

Dell never ceases to amaze. Think of it was the Wal-mart of IT. It is now targeting revenues of USD 60 billion by 2006 (from the current USD 40 billion), maintaining a 15% growth rate. Business Week has more on the Dell Way:

Michael Dell expects everyone to watch each dime — and turn it into at least a quarter. Unlike most tech bosses, Dell believes every product should be profitable from Day One. To ensure that, he expects his managers to be walking databases, able to cough up information on everything from top-line growth to the average number of times a part has to be replaced in the first 30 days after a computer is sold.

But there’s one number he cares about most: operating margin. To Dell, it’s not enough to rack up profits or grow fast. Execs must do both to maximize long-term profitability. That means products need to be priced low enough to induce shoppers to buy, but not so low that they cut unnecessarily into profits. When Dell’s top managers in Europe lost out on profits in 1999 because they hadn’t cut costs far enough, they were replaced. “There are some organizations where people think they’re a hero if they invent a new thing,” says Rollins. “Being a hero at Dell means saving money.”

It’s this combination — reaching for the heights of perfection while burrowing down into every last data point — that no rival has been able to imitate.

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.