Michael Dell

ORGANIZATIONAL LEADERSHIP AND BEHAVIOR

MODERN BUSINESS LEADER ANALYSIS

TABLE OF CONTENTS

Introduction

Background

Management Style

Accomplishments

Lessons Learned

Conclusion

References

Introduction

When searching for a billion dollar management, a company's success should always be defined by its strategy and its ideas - and it should not be limited by the abilities of the people who are running it. The best combination is a management team that has both experience and intellect, and can respond quickly in a dynamic and constantly changing industry. Michael Dell, Dell Computers.

Background

Michael Dell, born in February 1965, is the chairman of the Board of Directors of Dell, the company he founded in 1984 with $1000 and an unprecedented idea to build a relationship directly with customers.

For Michael Dell, the remarkable success of his company is the fulfillment of a childhood dream. As a kid in Houston, Texas he knew he would someday have a business in a gleaming corporate building. The young Dell proved to have keen business instincts. When he was 12 years old, he worked as a water boy and dishwasher at a Chinese restaurant and saved enough money to start a stamp collection. Subsequently he made $2,000 by selling the stamps via mail order.

The computer helped him succeed in another business: selling subscriptions to the Houston Post. Reasoning that potential new subscribers could be obtained from lists of public records at the local courthouse and with the use of the computer he sent out personalized letters with subscription offers. He earned enough money to buy his first BMW.

Michael Dell's father, an orthodontist, and his mother, a stockbroker for Paine Webber, wanted Michael (who is the second of three sons) to become a doctor. When he entered the University of Texas in 1983 he obliged his parents by enrolling in premedical courses. But on the sly, he began a new business selling computers.

He became something of an expert on computers by taking his computer apart and examining its insides, and during visits to local computer dealers, he often felt that his knowledge of computers was above the sales people. Operating out of his dorm room, he bought remaindered IBM and IBM-clone computers from local dealers, upgraded them and sold them both door to door and through mail order. When his parents found out what he was doing, they were angry and asked him to quit. A compromise was reached. Mr. Dell would put his business on hold until he finished the school year; if sales during his summer break were not good, he would return to college. Mr. Dell never returned: In the month that ended just before the fall term began, he sold $180,000 worth of PCs. He set up a shop call PCs Ltd in Austin, and, by the end of 1984, his sales had reached $6 million.

Management Style

Michael Dell said, "There is nothing quite like experience." The Dell organization had to learn the basic steps that most companies learn when they are much smaller in size. The company was moving in the right direction with the emphasis on liquidity, profitability, and growth. Mr. Dell felt a cultural issue was challenging the company. The company had created an atmosphere in which everyone focused on growth. Mr. Dell felt a need for the company to shift the focus away from an external orientation to one that strengthened the company internally.

Michael Dell believed it is important for leadership to be intuitive, but not at the expense of facts. Without the right data to back it up, emotional based decision-making during difficult times will inevitably lead a company into greater danger. That was precisely what was happening to Dell Computer.

Michael Dell stated, "when you are a leader of a company, be it large or small, you can't do everything yourself. In fact, you can't do much of anything by yourself. The more talented people you have to help you, the better off you and the company will be. A fresh set eyes distanced from the day-to-day reality can often provide an objective perspective."

Sharing the power. For any company to succeed, it's critical for top management to share power successfully. You have to be focused on achieving goals for the organization, not on accumulating power for yourself. Hoarding power does not translate into success for shareholders and customers - pursuing the goals of the company does. You also need to respect one another, and communicate so constantly that you're practically of one mind on the most important topics and issues that face the company.

Plan or die. Planning is one of those areas where experience counts as much as intellect. The elements of a strong management team will allow the company to look beyond the twelve-month framework and study the true potential of the business long-term. Planning is not a quarterly event but an ongoing process. And it is not just an internal initiative, but also a system that involves every part of the supply chain, customer and employee base. The planning process reveals a number of key issues about the organization, its facilities, infrastructure, and growth opportunities.

Planning is nothing without execution. Michael Dell's strategic plan starts with a business contract, which is an agreement among all parts of the organization concerning the product they intend to deliver. Each phase has its own criteria for achievement. From the beginning everyone signs on: from design and manufacturing to finance, sales and services and support. The phase review process becomes a robust planning architecture for the development of each product because it fosters team responsibility and accountability.

The planning process is both bottom-up, in terms of what the individual business thinks it can achieve, and top-down, in terms of what