Customer Reviews

Direct From Dell: Strategies That Revolutionized an Industry

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This is a terrific book for anyone who aspires to run or lead a business. Dell writes entertainingly about his childhood adventures -- not many teenagers were enterprising enough to research how to find all newly married couples and all people who took out mortgages in order to sell newspaper subscriptions! He was making an annual salary higher than most of his teachers just from his summer activities. His parents should have known they were in for trouble. The first part of the book is devoted to how he founded his business with $1000 of start up money and then all the ups, downs, and mistakes they made along the way. It is encouraging to read that it's not the mistakes that matter, but how quickly you acknowledge and address them that count.

The second part of the book has tremendously practical advice for almost any company. Why make the same mistakes that you could avoid by following his model for success? I daresay there is enough solid information here for any informed person to put into practice what Dell did to make a successful business. After having read a series of books on leadership, I can say that this is one of the most practical and hands-on ones as well as one of the most interesting.

Glad to see that Dell is now officially the #1 PC maker in the World following up on being the #1 in the World in workstations last fall and #1 in the USA for PCs in October 1999.I was reading a Wall Street Journal article about Dell and was impressed to see the generous compensation that Dell offers it's employees. MD definitely knows that people, including employees have value.Good to see Dells high ranking in Laptops in PC World. I wouldn't be surprised to see Dell topple Sony for the #1 spot in Laptops. Certaintly beating Compaq must be getting boring by now for Dell.Oh by the way, congratulations to Dell for taking the US server market from Compaq too.The book is excellent and a must read for any serious business reader.

This book's materials have been written by a person who has proven that the strategies do work. How come? He is the world's richest person under 40 worth at around US $21 billion in September 2000 (According to the Fortune magazine).

The materials are very practical and inspiring. However they tend to be mentioned quite repetitively. Dell's business model can be broken into its 3 golden rules: 1. Disdain inventory 2. Always listen to the customer 3. Never sell indirect

The book is divided into 2 parts: Part 1: places the context of Dell's history chronologically

- Chapter 1 and 2 outline Dell's early experiences with business opportunities (not just computers) and the early days of Dell Computer Corporation

- Chapters 3 and 4 outlines Dell's first setback (due to growing too fast) and how it has learnt from it (by expanding its focus from just growth to profitability, liquidity and growth)

- Chapter 5 shows some key lessons that Dell learnt during the early 90s, including understanding that facts are your friend, getting outside help (Dell got Bain's help) for objectivity and emphasising the planning function as a key element of its strategy

- Chapter 6 outlines further lessons such as dividing the company into profit centres by segmenting customers meticulously. Once profit and loss of various parts of the business are known, Dell understood that it should enter into the server business, which they then did

- Chapter 7 outlines Dell's extension into the internet and how that has been successful

Part 2: summarises the lessons learnt from Dell's history that could be applicable to other industries

- Chapters 8 and 9 outline the importance of choosing the right people and how to reward & motivate them (by linking reward to objective profitability measures; this can only be done once P&L of various segments of the business are worked out)

- Chapters 10 and 11 outline the importance of getting close to your customers - no matter what!

- Chapters 12 and 13 outline the importance of working together with suppliers to bring inventories down - focus on win-win partnering and not just 'screwing' the suppliers!

- Chapters 14 outlines the importance to be understand what differentiates you from your competitors

- Chapter 15 summarises Michael Dell's thoughts on the future state of the computer industry and the internet

The Dell story will be told many times over. Every once in a while we find a new way to serve a vast and hungry customer base. McDonalds may have been the last large revolution, but that formula can sell more than hamburgers. Dell has discovered how to deliver "fast-serve" computers and using the Burger King motto "Have it your way". Clearly the focus on customers has been the key strength, but the ability to control inventory, develop strong supplier arrangements, custom build and ship and use the "Lean Thinking" ideas, has created one of the most respected and successful companies of the decade. Will they continue to exceed all expectations in the next decade? I think so. First, using some of the ideas from "The 2,000 Percent Solution", by Donald Mitchell, Carol Coles and Robert Metz, Michael Dell asks the right questions. One can only succeed by asking the right questions (many of these questions may be found in "The 2,000 Percent Solution") Second, Dell has avoided the "stalls" that hamper progress in most companies: The Communications Stall (the message is not understood), The Disbelief Stall (We can't do it), The Traditions Stall (We've always done it this way), The Bureaucratic Stall (too many unproductive policies and procedures), The Misconceptions Stall ( based on poor assumptions) and The Unattractiveness Stall (not wanting to wade in murky waters). Dell should continue to soar directly upwards.

In business, a lot of words and phrases are overused to the point that they lose all their original meaning. "Paradigm" has to be one of the worst. The one that comes to mind when discussing Dell is "revolutionary". Dell is one of the few examples where a word this strong really applies. Taking $1,000 of startup capital to build custom PCs in a dorm room all the way to becoming the worlds leading computer manufacturer and the highest return on investment company in history (ROI = 14,000%) is impressive, but there have been many such basement-business-to-boardroom success stories. The revolutionary part was building the first manufacturing operation that relied on mass customization of an extremely complex product, and succeeding at it. Before Dell, such a technique was considered impossible.

I was struck by the Randian style of Dell's life. Oblivious to the critics laughing at his seemingly naïve attempt to challenge the large, dominant, and established players in a complex and technical industry, Dell proceeds to create an entirely new business and eventually dominates those same critics. Dell is a modern day, real life Henry Rearden, a prime mover whose success benefits the world over. He makes the impossible seem natural, and his modest demeanor masks an unimaginable and limitless drive for success.

Readers expecting an autobiography of Michael Dell may be disappointed; he glosses over his own life in barely half a chapter and quickly gets down to business, so to speak. I was mildly disappointed by this, as Dell seems like a very interesting guy. This was the right choice though, and considering Dell's own personality of economy this seems fitting.

It seems Dell has always been an uncannily direct person, starting in 3rd grade when he purchased a high school diploma from a mail order company in an attempt to save himself another 9 years of unnecessary education. This was a child destined to succeed. He was born with dollar signs in his eyes and was all about the Benjamins before most of us even knew what a Benjamin was. This pattern continued as he earned $2,000 by selling stamps on consignment though an advertisement in a stamp collectors journal. At age 16 Dell earned over $18,000 in one summer by selling newspaper subscriptions by targeting newlyweds from lists he compiled by canvassing county courthouses (the really funny part about that story was that when he told his high school teacher about this, she became angry because it was more money than she made). Finally, the real turning point: Dell's interest in computers leads him to begin upgrading computers for friends of the family. This becomes such a profitable hobby that Dell buys himself a BMW which he drives himself off to college in upon graduation from high school. You all know where things go from there.

From this entrepreneurial beginning, the book succinctly describes Dells early struggles and eventual rise to power. The book is written really as a managerial primer on what it really means to create a "customer oriented" company (again with the buzzwords - but in this case Dell really means it). Dell knows his likely target audience (as always) and the book is divided up into short chapters, each carefully labeled for quick reference. Each chapter is written like an executive summary, with bold headings marking each major subsection. Now that's high "skim value".

Obviously, this is one of those "books every manager should read". Otherwise the books appeal to the general pubic is probably pretty low. Still, anyone who likes a good story of success would enjoy most of the book, and could skip the business-heavy sections. Anyone with an entrepreneurial inkling really should consider checking it out though.

Dell succeeds in distilling the major reasons for Dell's success into a fairly compact book. And he goes on to describe how his philosophy is applicable to any and every company. While most management books are meaningless buzzword dictionaries, Dell crafts a real world guide to creating a successful company. Being customer oriented is more than a buzzword for Dell, it is a philosophy. Dell claims to spend upwards of 40% of his time dealing directly with customers, finding out what they want, need, and are unhappy with - name another CEO who is this committed to his customers. Dell respects his customers, which is exactly where many firms fail. Similarly being direct is no gimmick. To organize your entire firm around and just one level away from the customer is a guiding philosophy for the design of Dells corporate structure.

WOW: I cannot stop listening to the tape. Tons of ideas some of which I have copied for this review. BUY IT. LISTEN TO IT. DO IT. Three golden rules: disdain inventory, focus on the customer, always sell direct. Playing Judo with the competition. Think about your customers not the competition: your competitors are your industry's past. Swing for hits and not home runs. Change is constant, direct and temporary: danger and opportunity. Change is positive if you think that things are not as good as they can be. The internet means that only companies that are most efficient will get biggest market share. Building information relationships with suppliers and customers across the internet. Creating partnerships with your people, your customers and your suppliers. Just need a framework and a dream: think unconventionally - do the things that other people are telling you cannot be done. Speed to market, complete customer focus and the desire to get the best technology available for customers. Virtually integrated organisations. Direct model: customers drive what is produced not IT. Using commerce with consumers to build model for process with big organisations. Inventory management is key: inventory velocity. Understanding the economics of each part of the business: customer account P/L and product P/L. Need for data and facts to manage a complex business so you can figure out what you are not going to do. Segment by customer. Lowest variety for most expensive components. Internet as low cost, one to one customer contact with rich content: supplements phone, fax and face to face. Making the technical information for your people available to your customers. Course corrections via internet quicker: makes experimentation easier. Elimination of intercompany boundaries resulting in speed to market. Eliciting feedback from customers (face to face, on-line, focus groups and surveys). Responding to feedback. Biggest threat to Dell is not competition but own people. Therefore need to maintain a culture of being a challenger. The need for talent. The need for shared objectives, clear areas of focus, consistent communications and a common strategy. Keep involved in the detail: rapid decision making. Gathering spontaneous data. User chat rooms as data for change: immersing company in what customers market and world around are saying. Maintaining connection with people. Need to engender personal investment in people: shared success, responsibility and accountability. Individual investment cannot be inspired externally: ownership is the key. Willingness and ability to learn constantly key to people reaching their full potential. Can only encourage innovation by making it safe to fail. Although customers are a business' life blood, few business bother to take their pulse.

Dell's greatest strength is its ability to give the customer what the customer wants, and that includes easy ordering, the right product, fast delivery and good value. There are very few businesses that have figured this out. From the customer perspective, Amazon.com comes close, but Amazon.com has yet to become profitable. Part of the reason for Dell's success is its lean inventory and clockwork relationships with suppliers to ship and deliver to flexible and tight schedules. Dell has figured out how to avoid some of the roadblocks or stalls that keep others from winning. I am reminded of an Eight-Step process in THE 2,000 PERCENT SOLUTION that helps executives progress at 20 times the average rate, or get 20 times the benefit or save a huge percentage of the usual cost. This process requires understanding the importance of measurements and measuring everything about key activities, identifying where today's best practice will be in five years and starting to get there, identifying what the best-ever possible best practice could be and beginning to approach that ideal, carefully matching the people, incentive and task to get the best results, and repeating the process again because new and better ideas spew forth each time. Dell will be faced with changing technology, new uses of and for the Internet, new customer demands, new supplier issues and rapid growth. Dell has the history and the culture to develop 2,000 percent solutions to succeed in so many more new ways.

After reading this outstanding book by Mike Dell, you will understand why people say "whose Compaq?" and "Hewlett who?"

Direct from Dell offers the strategies of the world's youngest billionaire and one of the greatest success stories in American history.

Best of all, it's Mike's own words. I also recommend the tapes in Mike's own voice.

Direct from Dell is about a revolution in marketing and design.
It's about innovation. It's about strategies from the world's #1 pc maker and in the years to come, the #1 technology company in the world, bar none.

In the world of the CEOs of major IT companies, Michael Dell is like an open window on a Spring day. As a regular reader of the trade journals, hardly a day goes by without my reading about Gates, McNealy and Ellison etc. launching verbal grenades at each other. At times, it appears that their primary goal is to pump their egos rather than run a successful company. However, I cannot recall ever reading a negative comment about others attributed to Michael Dell. After reading this book, it seems likely that there is no memory lapse. While the descriptions are somewhat soft about the true competitive nature of the business of selling computer equipment, Dell explains much about how he views the world of business.
Without a doubt, his story is one to pay attention to. At 19, he dropped out of school and started a company that is now worth over 30 billion dollars. This tremendous growth in value was also based on sound business practices and not just due to a ride on the dot-com elevator. Those principles are elegant in their simplicity and effectiveness. Creating and supporting a quality product that is needed is always a way to success, although so many seem to have forgotten that over the last few years. Furthermore, although Dell clearly wishes to promote his company, the book is not a collection of marketing blurbs, but an honest look at the problems that incredible success creates. Always sounding like someone who really believes that the customer must be treated well, his statements never contain that false tone so prevalent in material churned out by marketing types.
Now that the dot-com bubble has burst, all companies doing business on the web appear to be facing hard times. With his practical approach and focus on the delivery of a quality product, you find yourself rooting for Michael Dell to continue to be successful. His is a company that should be a model for how to do it right without feeling the need to constantly stab at your competitors.

The book was written by the founder and current CEO of the number two computer manufacturer in the world, Dell Computers. It is written in two parts. The first part is written almost like a biography of Michael Dell and depicts some of his experiences he had while starting and running his first company. He takes us from childhood moments to today's challenges. He writes about successes and mistakes providing insight, hindsight, and lessons learned on each. In the second part, he writes to entrepreneurs who desire to do what he has done. It is written like a cookbook providing the recipes for success that he has learned. The second part incorporates all the ideals that were expressed in the first section.

There are a few themes that continue to appear in this book. The number one thing expressed is Dell Computer's selection of its method of bringing the product to the customer. This one concept is the driving factor in every other activity the company pursues. The author terms it the "direct method". It means selling straight to the consumer and avoiding the middleman. Dell further distinguishes its delivery method in that they customize each computer to the customer's order. It is, and was, a very different way to sell mass manufactured computers. The industry method has been for computer manufacturers to make a particular model, pass it to its distribution channels and let the retailers worry about selling the product, that is let the product sell itself.

Dell Computer makes nothing until it has received an order for it. They abhor the retail process. Michael Dell's book explains in detail the benefits to be obtained from such a practice. First and foremost, the computer industry is a constantly changing environment where new products are introduced at an astronomical rate. With the retail method (termed indirect), the manufacturer has to worry about getting the products that are on the self off the shelf and into consumers hands. This has resulted in considerable delays in introducing new technology to the individual consumer, as the company does not want to put a bigger, better, cheaper computer on the shelf next to its older version. Instead they pass these dinosaurs on to the unsuspecting consumer then restock with the new models which incorporate the new technology. Sometimes the retailers must make drastic markdowns in order to move these older products. These losses are borne by both the retailer and the manufacturer due to industry standard covenants.

Another major benefit of the direct method is that the company receives instantaneous feedback from its buyers. Offering a large selection of various components, Dell is able to immediately see the market's direction for various components. As consumers order directly, Dell is able to see market trend as it occurs. Armed with this information, Dell can alert its suppliers who can either plan to increase or decrease production. Dell has tapped its customers preferences and does an exceptional job at meeting their expectations. Their strategy mandates the incorporation of customer feedback into their process. They in sense acknowledge and cater to the boss - the client.

By seeing future trends so quickly, Dell is able to modify its product line as changes occur. New technology is embraced, and if successful, can be delivered within days to the consumer. Success rates can be measured within minutes of product offering due to the direct method.

As a byproduct of the direct method, and another leading theme of Michael Dell's book - inventory is king. Early in the company's history, they learned a valuable lesson: attempting to get ahead of the market, Dell made a large purchase of RAM chips which it used extensively in its products. Within days of their "look ahead" inventory purchase, new technology made the chips virtually useless. The company took a huge loss on the inventory and posted its first quarterly loss ever as a result.

The author explains that Dell now keeps only 6 days worth of inventory, where the industry standard is 40. He explains that he can incorporate new technology with 6 days to market.

Prior to reading this book, I would have only purchased a Dell by coincidence. Today I am sold. I will buy from this company.

The CEO, a college dropout, appears to have learned his lessons via `on-the-job" experience and does an good job of bringing them to the reader.