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February 01, 2007
Dell Needs A New Business Model--Can Michael Dell Provide It?
The real news behind the news that Michael Dell is coming back to run the company he founded is that the business model innovation he invented doesn't work anymore. Can he provide another one?
Dell's brilliance was in process innovation--building a whole new level of supply-chain efficiency that matched corporate demand with incredible global manufacturing and transportation of product. But efficiency has been commoditized in recent years. Lots of companies can do efficiency well.
Dell needs to move from a cost control model to an innovation that develops new, personalized solutions for people. And, from what I read this morning, it needs to move away from a top-down, command-and-control leadership culture towards a much more open, collaborate and integrative culture. The fact that Dell couldn't hire a marketing chief for three years under Kevin Rollins may have been symptomatic of the centrality of power under his reign.
Leading open, global collaborate networks is perhaps the single most important CEO skill these days. Think distributed information, power, creation and production. Building an innovation culture that iterates off deep knowledge of your consumer base is just as important.
Bringing Michael Dell back may revive morale but it doesn't solve Dell's real problem--designing a new business model around innovation and design thinking. Read Wikinomics to get a better understanding of this.
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Michael Dell has been at the company the entire time, you can't bring back what has always been there. Impossible. What has been missing is Dell's reported financials, they have been lost in action for several quarters now. What Dell needs is some product that people want to buy. Apple with a quarter of Dell's sales outearns Dell.
Posted by: christofay at February 2, 2007 12:25 AM
very much appreciate the perspective on Dell and our direct business model. Dell's direct business model has been under-estimated and "not suppose" to succeed since day one.
However, over 23 years, and every curve in the road Dell hits, Dell's direct model has defied conventional wisdom.
Many assume that Dell's direct model is all about efficiency and supply chain management. However, the direct model is not just a "process". Dell's direct model is also about relationships- the 1:1 relationships with customers.
Before you throw the model out, understanding the value of customized technology or services specifically designed to meet the customer requirements is important. The direct relationshhip with customers delivers added value to business and consuumers and is a business advantage for Dell.
Posted by: RichardatDELL at February 6, 2007 05:45 AM