Round Rock Goes to Dell

It was a tag team made for computer success that suddenly went to Dell.

In July 2004, with the naming of Kevin Rollins to the CEO job at Dell, the Mike Dell and Kevin tag team was championed as inseparable and unbeatable. Michael Dell, the boy wonder who started the company out of a dorm room, had an instinctual feel for the personal computer business. Rollins, the ex-Bain consultant, could parse spreadsheets and bring financial scrutiny to every aspect of the business. But, as they say politely here in Boston, stuff happens. Product recalls, stalled growth, the ceding of the top market position back to Hewlett-Packard, and ongoing Securities and Exchange Commission scrutiny all conspired to make Dells seemingly unbeatable direct sales strategy, beatable.

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Now Rollins is gone, and the office space he shared with Michael Dell reverts solely to the companys namesake founder. So now what? Here is my free 10-point advice (take it for what it is worth) for what Michael Dell should do to get the company back on track.

1. Get out your credit card. Go to an anonymous location (not One Dell Way and not the home mansion) and order a system from your company. Now, do the same with a channel partner from HP and, wearing your best disguise, walk into Best Buy and buy a competitive box. Youll find out that the boxes cost about the same and the main differentiator is the service.

I had suspicions that Dell was in trouble last fall when a systems integrator (he builds security systems for banks) told me he stopped ordering from Dell because he felt he was always getting upsold, and the systems rarely arrived in the exact configuration (banks dont allow you to stray from the specs) he ordered. Returns were a nightmare. And that leads to the second part of my credit card advice for Michael: Call in with a problem in setting up the system. And then call back and say you want to return the system. By the way, this is my advice for all new (or renewed in Dells case) company executives: Go out and buy your product, those products of your competitors, and then return the product. Play the real role of the customer (listening in on the customer hotline doesnt count) and save the bucks you would have spent on consultants.

2. Get out of the game, phone, consumer and PDA business and concentrate on business-to-business computing. Game boxes take up extraordinary amounts of time and all the gamers do is complain that they could build a better box themselves. Phones, consumers and PDAs are consumer products with tiny margins and huge amounts of required handholding. The business computing space from servers, desktops and laptops is about to go through a huge upgrade cycle over the next five years as energy concerns, Vista and open computing reshape the business computing universe. Mike, play to your strengths, not to the hottest fad.

3. Innovate beyond manufacturing and direct sales. The innovation inherent in creating the direct, manufactured-to-order business was one of the great computer innovations (along with microprocessors and operating systems) of all time. The problem is you stopped there. You were late in the game in recognizing the resurgence of AMD, and you need to explain how Dells approach to security, scale and infrastructure development is different than anyone elses.

4. Be assertive in your move beyond Microsoft and Intel. You were dragged into offering AMD products by your customers. Microsoft still controls your upgrade cycle. Dont be pulled into echoing the Microsoft marketing messages. Business customers look to you for reasonable upgrade paths, replacement cycles that are right for their business environments and testing that reflects business needs. Businesses dont care about new desktop icons, but they do care about additional security features and easier systems management. Take those business features, give them a real in-house workout and report the results. You might make Microsoft unhappy, but your customers will remember you for your efforts.

5. Dont wait for the next computing curve—create the curve. Waiting for a demand curve to take off only means you will be one of a crowd. In five years all corporate data will be encrypted, but before that takes place systems and processes are needed that can help manage security keys and manage relationships outside a vendors firewalls. Why not be a leader in that discussion? Thin clients talking back to a corporate server is a great security and cost solution for some companies. Why not be a leader there also? Youve got the money, now get the desire.

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