Lessons from Michael Dell, the world’s biggest PC maker
March 20, 2006 | 12:00am
It’s customers that made Dell great in the first place, and if we’re smart enough and quick enough to listen to customer needs, we’ll succeed. –Michael S. Dell
After earlier having successfully invited the world’s wealthiest Chinese taipan Li Ka Shing of Hong Kong to invest in the Philippines with their joint venture Watsons retail chain, SM Group founder Henry Sy will soon be helping to bring in another world-class billionaire to the Philippines. In unique advance advertising for his upcoming biggest "Mall of Asia" on the Manila Bay reclamation area, America’s fourth wealthiest billionaire, 41-year-old Michael Saul Dell of the world’s biggest personal computer manufacturer Dell Inc., will fly in at 7 a.m. and fly out 12 noon via private jet on March 22 to launch his call center called "Dell Philippines Contact Center."
Environment and Natural Resources Secretary Angelo Reyes was right when he jokingly told Anvil Business Club officers last week: "In this world, when money talks, nobody interrupts." Dell Inc. has market capitalization of nearly $70 billion, $56 billion in revenues, $4.78 billion in operating income, $9 billion in cash and 65,200 employees. Practically the entire who’s who of Philippine politics and business will welcome the founder and chairman of Dell Inc., according to our sources.
Among those expected to grace the Dell launching are President Gloria Macapagal Arroyo, Trade Secretary Peter Favila, SM Prime Investments president and China Bank vice chairman Hans Sy, Ayala Group CEO Jaime Augusto de Ayala, PLDT president Napoleon Nazareno and other VIPs. Can Philippine leaders convince Dell to invest more in the Philippines and help our economy surpass India in call centers and other allied industries?
With initial plans to hire 700 employees, Dell will probably become the largest call center in the Philippines on one floor. This facility is the newest addition to Dell call centers in the US, El Salvador, China and India. The Dell call center in India employs 10,000 people. Early this year in Xiamen City, south China, I saw the vast manufacturing facility of Dell near the modern airport. The only other manufacturing facility in Asia is located in Penang, Malaysia.
No other Americans are wealthier than Dell except Bill Gates and Paul Allen of Microsoft – ranked first and third – and legendary investor Warren Buffett, who is ranked second. Dell is estimated to have a personal net worth totaling $18 billion. According to Forbes magazine, the young tycoon has regularly been selling his stocks in his publicly listed firm and has been pumping cash into his private investment firm called MSD Capital based on Wall Street, New York City. His other assets include the 377-room Four Seasons Resort Maui in Wailea, Hawaii, as well as stockholdings in IHOP, NorthWestern and the restaurant chain Steak ’n’ Shake in Indiana state.
In the history of America’s economic rise to superpower status, there have been not a few legendary entrepreneurs from the small but successful Jewish minority who become famous brand names: Michael Dell for personal computers; the German-Jewish immigrants who founded the two rival finance giants Lehman Brothers and Goldman Sachs; fashion tycoons Ralph Lauren and Calvin Klein; Polish-Jewish immigrant Esteé Lauder, who turned her name into a top cosmetics brand; the four Polish-Jewish immigrant siblings who started Warner Brothers, the film-giant rival to the 20th Century Fox film studio of German-Jewish immigrant William Fox; John Hertz of the rental car giant; the Bloomingdale family in retail; and German-Jewish immigrant Levi Strauss, who pioneered the world’s first denim jeans.
Born in Houston, Texas to a rich Jewish family which cherishes their ethnic identity and cultural heritage, Michael Dell was smart but didn’t excel in his academic studies. In high school, a teacher once commented that he "would probably never go anywhere in life." As a 15-year-old student, he bought an Apple II as his first computer and he took it apart to understand its design and how it was assembled. Three years later he started selling upgraded personal computers (PCs) and add-on components out of his dormitory room at the University of Texas in 1983. Even then, the college kid already declared that he wanted to ultimately beat IBM, then the world’s biggest computer maker.
In 1984, Michael Dell started his company with start-up capital of only $1,000 and dropped out of school. In contrast, Compaq was established two years earlier in 1980 with $100 million in capital. Today, Dell is the world’s largest PC maker while Compaq is gone, now merely a part of Hewlett Packard (HP).
How did Dell leapfrog from a small Texas firm into the world’s undisputed leader in PCs? He turned the whole PC industry upside down by skipping the middle man and selling directly to the mass customers, introducing revolutionary innovations in PC manufacturing – developing a process to mass-produce individually made-to-order computers. Dell allowed customers to use the Internet to order personalized computers. He challenged prevailing manufacturing systems and business marketing strategies in PCs, thus enriching himself beyond his wildest dreams and making himself a most admired entrepreneur.
More than just vast wealth or fast-growing corporate revenues, when his firm celebrated its 21st anniversary last year, Fortune named Dell the most admired company in America and the third most admired in the world. In 1992 Dell became the youngest CEO ever to be ranked in the prestigious Fortune 500 roster. He has also been honored as "Entrepreneur of the Year" by Inc. magazine, "Man of the Year" by PC magazine, "Top CEO in American Business" by Worth magazine, and "CEO of the Year" by Financial World and Industry Week.
Proof that business tycoons are not infallible supermen, Michael Dell’s firm in 1993 stumbled due to extremely rapid growth, canceled a secondary offering of stocks, posted quarterly net loss, temporarily withdrew from the notebook-computers market and had to revamp its operations across Europe. There were even reports some of Dell laptops catching fire that year. Dell lost its leadership in the consumer market to Gateway and other rivals. Similar almost to the phenomenal high-growth China economy which has recently put in breaks to reform and balance priorities, Dell then gave priority to liquidity and profits together with his high-growth focus. In the same year, Upside magazine eventually cited Michael Dell as the "Turnaround CEO of the Year."
What are the business or technological innovations that have made Michael S. Dell an icon and world leader in entrepreneurship?
• In 1984, his firm became the first in the industry to sell custom-built computers directly to end-users, effectively bypassing the prevailing dominant system of computer resellers selling mass-produced computers.
• In 1986, he introduced the industry’s fastest-performing computer, a 12 MHz, 286-based system. In the same year, his firm pioneered the first-ever 30-day money-back-guarantee scheme in the PC industry. The firm also offered the industry’s first-ever onsite service program.
• In 1990, Dell became the first computer company to market its products through consumer retail stores like Best Buy and CompUSA. In the same year, he made Dell Computers the first firm in the industry to leave this segment after the entrepreneur realized this retail-store strategy didn’t fit his financial targets.
• In 1994, Dell introduced its PowerEdge server line as its bold challenge to the traditional market for high-priced servers based on proprietary technology. In the same year, Dell launched its first ever custom-made web links for customers called "Premier Pages."
Michael S. Dell said: "Our ultimate objective is to be a great company in all ways. To accomplish that requires determination with a clear sense of purpose, persistent enthusiasm about what we’re trying to achieve, and an understanding of our broader accountability as a global citizen. It also requires a culture that is not just special, but self-sustaining."
What are the secrets to the inspiring and phenomenal Dell success saga? He said: "The elements of the Dell business model aren’t a secret: direct customer relationships, information over inventory, world-class manufacturing, superior customer information, and consistent execution. These tenets have provided us with a strong foundation that gives us a competitive edge in the present and directs our plans for the future."
Michael Dell as a bold corporate visionary reminds me of the Bible’s young David who boldly defeated the giant Goliath, reminding all of us that nothing is impossible for those who believe, persevere and dream big.
Whether entrepreneurs, professionals, homemakers or even political leaders, we should set our sights higher. We should learn from the career of Michael S. Dell in terms of his focus on high productivity, non-stop innovation, astute and wise deployment of resources, a visionary leadership humble enough to admit mistakes and acknowledge the truth when wrong, and his world-class benchmarks of true success.
Thanks for all your messages. Comments, suggestions, jokes and even criticisms are welcome at wilson_lee_flores@yahoo.com or wilson_lee_flores@hotmail.com
After earlier having successfully invited the world’s wealthiest Chinese taipan Li Ka Shing of Hong Kong to invest in the Philippines with their joint venture Watsons retail chain, SM Group founder Henry Sy will soon be helping to bring in another world-class billionaire to the Philippines. In unique advance advertising for his upcoming biggest "Mall of Asia" on the Manila Bay reclamation area, America’s fourth wealthiest billionaire, 41-year-old Michael Saul Dell of the world’s biggest personal computer manufacturer Dell Inc., will fly in at 7 a.m. and fly out 12 noon via private jet on March 22 to launch his call center called "Dell Philippines Contact Center."
Among those expected to grace the Dell launching are President Gloria Macapagal Arroyo, Trade Secretary Peter Favila, SM Prime Investments president and China Bank vice chairman Hans Sy, Ayala Group CEO Jaime Augusto de Ayala, PLDT president Napoleon Nazareno and other VIPs. Can Philippine leaders convince Dell to invest more in the Philippines and help our economy surpass India in call centers and other allied industries?
With initial plans to hire 700 employees, Dell will probably become the largest call center in the Philippines on one floor. This facility is the newest addition to Dell call centers in the US, El Salvador, China and India. The Dell call center in India employs 10,000 people. Early this year in Xiamen City, south China, I saw the vast manufacturing facility of Dell near the modern airport. The only other manufacturing facility in Asia is located in Penang, Malaysia.
No other Americans are wealthier than Dell except Bill Gates and Paul Allen of Microsoft – ranked first and third – and legendary investor Warren Buffett, who is ranked second. Dell is estimated to have a personal net worth totaling $18 billion. According to Forbes magazine, the young tycoon has regularly been selling his stocks in his publicly listed firm and has been pumping cash into his private investment firm called MSD Capital based on Wall Street, New York City. His other assets include the 377-room Four Seasons Resort Maui in Wailea, Hawaii, as well as stockholdings in IHOP, NorthWestern and the restaurant chain Steak ’n’ Shake in Indiana state.
In the history of America’s economic rise to superpower status, there have been not a few legendary entrepreneurs from the small but successful Jewish minority who become famous brand names: Michael Dell for personal computers; the German-Jewish immigrants who founded the two rival finance giants Lehman Brothers and Goldman Sachs; fashion tycoons Ralph Lauren and Calvin Klein; Polish-Jewish immigrant Esteé Lauder, who turned her name into a top cosmetics brand; the four Polish-Jewish immigrant siblings who started Warner Brothers, the film-giant rival to the 20th Century Fox film studio of German-Jewish immigrant William Fox; John Hertz of the rental car giant; the Bloomingdale family in retail; and German-Jewish immigrant Levi Strauss, who pioneered the world’s first denim jeans.
Born in Houston, Texas to a rich Jewish family which cherishes their ethnic identity and cultural heritage, Michael Dell was smart but didn’t excel in his academic studies. In high school, a teacher once commented that he "would probably never go anywhere in life." As a 15-year-old student, he bought an Apple II as his first computer and he took it apart to understand its design and how it was assembled. Three years later he started selling upgraded personal computers (PCs) and add-on components out of his dormitory room at the University of Texas in 1983. Even then, the college kid already declared that he wanted to ultimately beat IBM, then the world’s biggest computer maker.
In 1984, Michael Dell started his company with start-up capital of only $1,000 and dropped out of school. In contrast, Compaq was established two years earlier in 1980 with $100 million in capital. Today, Dell is the world’s largest PC maker while Compaq is gone, now merely a part of Hewlett Packard (HP).
How did Dell leapfrog from a small Texas firm into the world’s undisputed leader in PCs? He turned the whole PC industry upside down by skipping the middle man and selling directly to the mass customers, introducing revolutionary innovations in PC manufacturing – developing a process to mass-produce individually made-to-order computers. Dell allowed customers to use the Internet to order personalized computers. He challenged prevailing manufacturing systems and business marketing strategies in PCs, thus enriching himself beyond his wildest dreams and making himself a most admired entrepreneur.
More than just vast wealth or fast-growing corporate revenues, when his firm celebrated its 21st anniversary last year, Fortune named Dell the most admired company in America and the third most admired in the world. In 1992 Dell became the youngest CEO ever to be ranked in the prestigious Fortune 500 roster. He has also been honored as "Entrepreneur of the Year" by Inc. magazine, "Man of the Year" by PC magazine, "Top CEO in American Business" by Worth magazine, and "CEO of the Year" by Financial World and Industry Week.
Proof that business tycoons are not infallible supermen, Michael Dell’s firm in 1993 stumbled due to extremely rapid growth, canceled a secondary offering of stocks, posted quarterly net loss, temporarily withdrew from the notebook-computers market and had to revamp its operations across Europe. There were even reports some of Dell laptops catching fire that year. Dell lost its leadership in the consumer market to Gateway and other rivals. Similar almost to the phenomenal high-growth China economy which has recently put in breaks to reform and balance priorities, Dell then gave priority to liquidity and profits together with his high-growth focus. In the same year, Upside magazine eventually cited Michael Dell as the "Turnaround CEO of the Year."
• In 1984, his firm became the first in the industry to sell custom-built computers directly to end-users, effectively bypassing the prevailing dominant system of computer resellers selling mass-produced computers.
• In 1986, he introduced the industry’s fastest-performing computer, a 12 MHz, 286-based system. In the same year, his firm pioneered the first-ever 30-day money-back-guarantee scheme in the PC industry. The firm also offered the industry’s first-ever onsite service program.
• In 1990, Dell became the first computer company to market its products through consumer retail stores like Best Buy and CompUSA. In the same year, he made Dell Computers the first firm in the industry to leave this segment after the entrepreneur realized this retail-store strategy didn’t fit his financial targets.
• In 1994, Dell introduced its PowerEdge server line as its bold challenge to the traditional market for high-priced servers based on proprietary technology. In the same year, Dell launched its first ever custom-made web links for customers called "Premier Pages."
Michael S. Dell said: "Our ultimate objective is to be a great company in all ways. To accomplish that requires determination with a clear sense of purpose, persistent enthusiasm about what we’re trying to achieve, and an understanding of our broader accountability as a global citizen. It also requires a culture that is not just special, but self-sustaining."
What are the secrets to the inspiring and phenomenal Dell success saga? He said: "The elements of the Dell business model aren’t a secret: direct customer relationships, information over inventory, world-class manufacturing, superior customer information, and consistent execution. These tenets have provided us with a strong foundation that gives us a competitive edge in the present and directs our plans for the future."
Michael Dell as a bold corporate visionary reminds me of the Bible’s young David who boldly defeated the giant Goliath, reminding all of us that nothing is impossible for those who believe, persevere and dream big.
Whether entrepreneurs, professionals, homemakers or even political leaders, we should set our sights higher. We should learn from the career of Michael S. Dell in terms of his focus on high productivity, non-stop innovation, astute and wise deployment of resources, a visionary leadership humble enough to admit mistakes and acknowledge the truth when wrong, and his world-class benchmarks of true success.
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