Management lessons from Michael Dell
16 October 2015 -
The billionaire CEO of PC manufacturer Dell has an interesting management style more akin to the boss of a fast-emerging start-up rather than a global giant. Here, Insights takes a look at what other managers can learn from his unique approach
Dell’s recent purchase of data storage provider EMC for a mammoth $67bn (£44bn), the biggest takeover in technology history, is a stark reminder to its rivals that the PC manufacturer intends to make its mark in this data-driven, mobile-focused tech era.
Starting the company from his dorm room in 1984, founder and chief executive Michael Dell has experienced the various highs and lows of entrepreneurship, and we take a look at some of the key insights managers and bosses can learn from the Texan.
Based upon his idea that manufacturers could make greater profits by selling PCs directly to consumers rather than through a conventional indirect retail channel, Dell began his operations in Room 2713 at the University of Texas 31 years ago, and grew his enterprise into a $50billion (£32bn) global business with more than 100,000 employees.
Initially, generating between $50,000 and $80,000 (£32,000 - £52,000) annually in revenues in the 1980s, Dell become the world's largest PC maker by 2001 with a 12.8% market share, with the firm pioneering selling PCs via the internet.
In 2013, Michael Dell shocked the tech and financial industry by taking Dell Inc. private for $24.4billion (£15.79bn) in the biggest management buyout since the Great Recession, after 25 years on the stock market. Supported by private equity backers Silver Lake Partners, the buyout was motivated by Dell’s frustrations with the direction of the company in the face of an ever-declining PC-selling industry.
Meanwhile, the popularity of tablets, smartphones and cloud computing services has seen brands like Google, Apple and Amazon surpass Dell in marketability and customer demand. Therefore, the purchase of EMC, the world's largest seller of data storage systems, marks the biggest step forward by Dell since the takeover, as its founder vows to diversify its operations by becoming a leaner IT services giant with higher profit margins.
Here are four ways Michael Dell has made his pioneering company so successful.
Embrace Risk like a Start-up
During an interview at his former University, the Texan, who calls Dell the “biggest start-up in the world”, revealed his intentions to restore a “start-up culture” to their organisations by encouraging and prompting new ideas and solutions to expand their business.
“The idea here is that you want to embrace risk,” Dell said. “You want to embrace risk and not be afraid. Big companies, as they grow, tend to not want to take on risk.”
Dell advises small business owners to frequently determine their “point of impact”, by asking bosses to work out what specific direction the company needs to take to meet business objectives and how they, personally, can make the biggest impact – a substantial challenge as an organisation expands.
"When I had a small amount of employees I was doing everything," he said. ''But now I have thousands, I am completely focused on strategy."
Surround yourself with the best people
Whether it be employees, investors, partners, suppliers or any other business relationship, Dell advises executives and entrepreneurs to be around the best possible people to help develop an organisation.
These smart people will challenge organisations and force them to think differently.
In 2003, Dell said: “Try never to be the smartest person in the room. And if you are, I suggest you invite smarter people … or find a different room.”
Learn from Mistakes
In an interview with Dean Thomas Gilligan as part of the VIP Distinguished Speaker Series in 2009, Dell pointed to how people react to mistakes as a key part of the development of a great leader.
Admitting that his corporation has gone through tough times during his tenure, Dell said the best leaders assess and identify their mistakes quickly and work to transform those faults into an opportunity to improve their people, products and services.
Image courtesy of Oracle PR
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