(continued from previous page)
History has also shown that trying to drive a company by emphasizing management science doesn't work that well. Often, you can recognize companies that have fallen sway to business school theory. They tend to follow five rules, in order:
1. Establish a brand so that customers pick you without thinking.
2. If that fails, cut costs.
3. If that doesn't work, buy someone.
4. Hire your friends (aka "some of the most accomplished people in the field") for the turnaround.
5. When giving a speech at a conference, your introduction should show a video of people from around the world playing with cell phones while thumping disco music from a bathhouse sound track blares in the background.
The last one is more of a personal option, but you get the general idea. A company could be selling nuclear fuel rods or buckets of whey, but the techniques and ideas would be the same.
Unfortunately, the success stories in the tech industry in the last several years have completely disregarded these rules. Google didn't spend at all on ads during its rise to search engine dominance. eDonkey--no hint of brand consultants there.
HP's a great example. Carly Fiorina emphasized brand when she first got to the company with an ad campaign featuring her. Then the Compaq Computer acquisition followed, with job cuts. She was also known to hold "rock star" events at HP locations with thumping music to generate enthusiasm.
Contrast that to new CEO Mark Hurd. He could be a descendant of the aliens that crashed in Area 51 for all most of the world knows. Few have shaken his lifelike hand or seen him in public. Yet, by working with component suppliers to devise new computer models, HP has raised its profits.
Interestingly, Dell has, for most of its history, been one of the companies most obsessed with customer service. Michael Dell occasionally dons a headset and fields customer service calls, according to sources. It buoys the spirits of the help desk jockeys and gives Dell, the man, a sense of what customers think.
The company has always consistently had one of the strongest brands with consumers. Apple may attract buyers in New York or San Francisco. But Dell gets everyone living between Rochester and Oakland. Check out full page ads in Parade magazine.
Yet in the past few years, it seems, Dell has moved away from these roots. Its consumer computers sell for more on average than HP's. It was great while it lasted but unsustainable in the long run without better quality or service. Instead, Dell has run on name recognition and doing what others do. As one exec integrated in the Dell empire told me recently, there's a lot of thinking, but not a lot of doing in Round Rock these days.
Dell is still the largest PC company in the world, but to regain its momentum, the company is going to have to hang out more at the mall.
Biography
Michael Kanellos is editor at large at CNET News.com, where he covers hardware, research and development, start-ups and the tech industry overseas. He has worked as an attorney, travel writer and sidewalk hawker for a time share resort, among other occupations.
See more CNET content tagged:
Missouri, PC company, Dell, Sony Corp.
7 comments
Join the conversation! Add your comment (Log in or register)
That's not to say that the tech reps don't know what you want or need. It also doesn't indicate that the Dell engineers don't know what the customers want and need, Marketing, etc.
What happens when the management gets "Fat" is that the ideas only make it to the assistant of the "Executive in charge of..." and no further. These assistants (otherwise known as Queen Bees) only want to satisfy their boss and they know that the boss has a tendency to shoot the messenger so if the Queen Bee doesn't like your idea then the communication never gets through, God forbid they're able to personnaly speak with one of these God-Like Execs.
Another phenomena occurs as a result, apathy. Once this sets in at a company then everybody is self stifled knowing that they have been there done that before and all it got them was a dirty look and a mind your own business.
Three words can sum up Dell's current problems "Fat and Content", OK it's really only two.
The only (and I mean the ONLY) reason Dell has chosen to incorporate AMD Opteron processors into their server line is to calm down Wall Street Analysts who where killing their stock value.
Don't think that the Dell engineers and Developers were not trying to get this into their product line but that meant that somebody at the top would have to disagree with an "Intel Only" mentality that IS deeply embedded at the top executive levels. So apathy killed their desire to get "beaten up" by administration or the Queen Bee once again and it never moved past the actual "Techies".
Dell doesn't have exclusivity to this phenom, HP went through it, IBM went through it as well as many others some made it some didn't (all the examples have so far made it).
Unless it is turned around while the company still has capital to burn then the "Fat and Content" phenom will slowly destroy a business and the funny thing is that the Executives won't have a clue as to why it is failing. But never mind the company failing the executives will leave the company with wealth while the workers leave with nothing.
company's wealth; there will be a bidding war for their obvious
incompetence (just like Carly), while the employees get left holding
the bag on a used-up shell of a company.
business world.. that's OK.. but consumers don't want a
business computer. Even Dells "pretty" line is butt ugly.. who
likes a 10 pound laptop with blue LEDs anyway?
Also.. the design is poor. Look at the first few gens of optiplex
desktops.. they put two usb ports in front (good).. but they had
them upside down and facing down. In addition, they were
pushed back so far in the case that most USB drives and dongles
would not even fit. You still had to get on your hands and knees
to insert a USB device... Brilliant.
When I purchased my laptop, I also spent an extra $350 to buy a 3 year technical support warranty, which at that time included coverage for any problems involving Windows. It didn't, however, include support for third party software like learning how to use Roxio software or anti virus software.
But shortly after I bought my laptop and tech support warranty, Mr. Dell decided to change what was covered in my contract. He decided to change his definition of third party software, to include Windows. So Dell no longer would help with any Windows related problems, which probably covers about 95% of the calls to Dell. I ended up spending over $300 so Dell could help me trouble shoot hardware problems.
To say that Michael Dell is unethical, is an understatement. With business people like Mr. Dell, I sometimes wonder (as a Psychologist who has been practicing for 30 years) whether they even have consciences.
Needless to say, I'll never buy a Dell again.
talks about the last place lots of McKinsey consultants ended
up...Enron.
Deep in the heart of Texas!
None of the 5 people I spoke with were really listening to the whole customer story. Especially the 2 in India, who were so polite it was annoying. I certainly got zero value from those discussions. I guess moving american jobs to India where the new employees add no value to the customer relationship is one reason Dell is headed down. Labor that is cheap but adds zero value to the customer is clearly a boneheaded way to manage a business.
The incredulity started with this doozey. Why on earth would a multimedia computer not have a default configuration that includes a 1394 Fireware i-Link port? The Dell configurator could certainly credit back $30 if a customer didn't want to import digital video onto their multimedia computer. This simple design mistake on Dell's web configurator probably cost Dell over $500 on our transaction alone.
When we tried to get a replacement for the multimedia (sans digital video import) computer, the sales person told us that Customer Care would refund the shipping. I expressed skepticism but he assured me it would happen. When customer care subsequently refused to credit the shipping, I canceled the $2500 replacement order. I mean really! Screw you, Mr. Salesperson. It was pretty amusing that the sales manager called back later offering $125 credit to reinstate the replacement order. Too late! I got a pc from somewhere else at a better value. So much for brand equity that Dell has created over the years.