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D/Slides/Masters/Dell/The Dell Case #1 “Strategic Leadership” and the Dell Case

D/Slides/Masters/Dell/The Dell Case #1

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Page 1: D/Slides/Masters/Dell/The Dell Case #1

D/Slides/Masters/Dell/The Dell Case #1

“Strategic Leadership”and the

Dell Case

Page 2: D/Slides/Masters/Dell/The Dell Case #1

D/Slides/Masters/Dell/The Dell Case #2

External Business Environment

V D S P

1

Strategies(Corporate,

Business, andFunctional)

3

KPIGoals

4External Growth

Strategies(Globalization)

5

Internal Strategies(Improvement incapabilities viacore competenciesalong the ValueChain)

6

Strategic Alliances(External)

7

Future Work Trends8

Business Model(s)

2

Cause-Effect Steps for Strategy Implementation

Improvement Capabilities:

-Commercial-Technological-Organization-Team

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D/Slides/Masters/Dell/The Dell Case #3

Strategic Leadership: Three Keys of a ExemplaryHigh Performance Organization

1What Are You

Deeply Passionate About?

3What Are The

Drivers of YourEconomicEngine?

2What Can YouBe the Best

In the World At?

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D/Slides/Masters/Dell/The Dell Case #4

How Many of YouHave Heard

of Dell Computer?

Source: B.A. Macy, Successful Strategic Change, Berrett-Koehler Publishers, San Francisco, CA (forthcoming)

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Dell

-80% to B to B-20% to Consumer-90 turns per year in inventory (Goal of 120) (5 years ago was 40) – measure in hours not days.-18-19 Gross Margin (Dell can run on only 10% Gross Margin)-38,000 people/35 Billion revenue-3 G.B.U.’s with 20-30 P/L centers-Go back 20 quarters (1997-now): WWW Market Share

o HP/Capital: 23%o IBM: 19%o Dell: 158%

-Goal: $62B by 2008o Customer Intimacyo Globalizationo Product Leadershipo Winning Culture

- 4,000 Dell people that manage others (1:10); 35,000 non-mgt.Non-supervisory, 39,000 total employees: 500 HR people WW.

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Market Share

1997 - 2001

IBM

HP

Dell

158%

-23%

-19%

Comparison of Dell’s Market Share with their Core Competition: 1997-2001

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Direct Business Model:(Dell Computers)

• Sell directly to consumers• Build products to consumer (customer) order • Eliminate retail mark-ups and costs• Reduce risks associated with large inventories of finished goods• Relationship with consumers• Leverage relationship with suppliers and consumers• Use information to enhance the Value Chain

____________________________Source: B.A. Macy, Successful Strategic Change, Berrett-Koehler Publishers, San Francisco, CA (forthcoming)

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DELL COMPUTER STRATEGY OVERVIEW

Grow to$66B

By 2008

Goal*

Build to order

Most efficient path to customer

Industry Standard Technology

Lower Cost Leader

Single PointAccountability

The Direct toConsumer

Model

Customer Intimacy

Globalization

Product Leadership

Winning Culture-People Leaders-Business Process Improvement -Diversity

BusinessStrategy

Talent Management

Leadership Development

Technology

Rewards/ Recognition

Cost Optimization

HR PeopleStrategy

People Planning

Performance Management

On Line Tools for Pay/ Performance

Compensation Differentiation

Low Cost Sites

Examples ofHR Key Tactics

Retention

Diversity

Leadership Pipeline

Employee Survey Trends

Savings Achieved

Key HRMetrics

* They have more than one goal!

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The Value Chain: The Dell Example

SuppliersMfg.

(assemblyonly)

ProductSupply

Centers ofCompetency ConsumerCustomers

VariousBusinessSegment

CorporateServices

ExpertiseCenters

______________________Source: Dr. Barry A. Macy, Successful Strategic Change, Berrett-Koehler Publishers, San Francisco, CA (forthcoming)

2001 Firm Level #265

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Suppliers Mfg. ProductSupply

ExpertiseCenters

Centers ofCompetency

VariousBusiness Systems

Customers

Consumers

CorporateServices

Dell Value-Chain

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D/Slides/Masters/Dell/The Dell Case #11

(SBU)Large customers*

(SBU)Small customers

(Business and consumer*)

(LOB)Large

Companies*

(LOB)Midsize

Companies*

(LOB)Government

andEducation*

(LOB)Small

Customers*

Dell’s Fast-Cycle Segmentation

Consumers*Small

Companies*Education*

Stateand

Local*Federal*

MidsizeCompanies*

LargeCompanies*

GlobalenterpriseAccounts*

In 1994, Dell wasa $3.5 billion company

In 1996,$7.8 billion

In 2001$ 31.9 billion

Source: B.A.Macy, Successful Strategic Change, Berrett-Koehler Publishers, San Francisco, CA (forthcoming)

* All of these are P/L Centers (30-35 P/L Centers)

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Dell Computer:

•Customer Intimacy (B) or (C)

•Globalization (C)

•Product Leadership (B)

•Winning Culture (C)

To accomplish Goal 2008-- 100% Increase In Sales Volume ($33B to $66B with 20%Increase in People)

PeopleCapabilities

OrganizationCapabilities

5 HRM Tactics:•Talent Mgt.

•Leadership Development

•Recognition & Reward Systems

•Technologies

Hiring for “FIT”-(Non U.S Future)

_____ * C = Corporate Strategy** B = SBU Strategy

4 Business Strategies:

Deliverables

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Dell

Business Strategy: Business results are dependent upon people and organization capabilities.

1. Customer Expectations

2. Globalization

3. Product Leadership

4. Winning Culture

Deliverables H.R. Strategies

People Capabilities

Value Chain

Organization Capabilities

1. Talent Management

2. Leadership Development

3. Reward/Comp. Design

4. Technology

5. Cost optimization (H.R.)

6. Costs and total people count

1. Costs.

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H.R. Technology Strategy - 1

Processes Systems Data Reporting

-Globalization -Globalization - Globalization - Globalization-Regional -Regional - Regional - Regional

Employee Proposition:-Hard place to work-Stock splits every 6 mo.-Success: Financial Rewards- Dot.com burst- Economy down-“9/11”- Stock flat (Dell)- Great business – NOT yet a “Great Company” – therefore, “Winning Culture” strategy (great business method – NOT great organization capabilities).

o Layoff: 2001 (Mgt. Problem)o Went to HR – What should we do?

-Great desire to “WIN” 1. Founder influence; 2. Hire great people; 3. Risk/Reward

Cost = $5/6M (supported by IS/IT/HR people)

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H.R. Technology Strategy - 2Employee Proposition: (Continued)

- Winning Cultureo People Leadershipo Entrepreneurshipo Spirito BPI (Business Process Improvement) Work Processo Inclusiono Diversity

- Adding (HR) to existing platforms- Leader lead environment by Dell

Leadership Development:

-4,000 training programs to-2,000 training programs to-Core training programs

o Business and Financial Knowledgeo Lead and Management of others 12 Training Programso Effectively communicatedo Deliver Result

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H.R. Technology Strategy - 3

H.R. Competencies: Process

Values

Beliefs

Competencies

Skills & Knowledge

HR Map

Experience & Skills

Knowledge

How Dell sells its product

What’s the solution? Strategy A Support Data Assumptions

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H.R. Technology Strategy - 4

• Job Movement: Goal is 2-3 years in a job + job has been improved/ look different

• H.R. Movement: Enhances opportunities/common thinking

• H.R. Reporting: All H.R. people report directly to Paul M.

5 yrs. NOW H.R. Headcount

-800 people- $56M

-574 people (370 in Businesses)-$24M (Budget) +-$8/9M – outsource (health & others)$33M

-370 Businesses Total-126 Corporate (85)-15 Training-20 (HRM)-10 Compensation-15 Benefits-5 Reporting-3 Career Mgt.• G.M.’s perspective:

- Right Hand: Finance person-Left Hand: H.R. person

• Future H.R. work: Where is the business going? Then H.R. is a “fall-over” -More global skills-More integration

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H.R. Technology Strategy - 5

• Leadership Framework:

• Functional and Horizontal Culture: (Centralization & De-centralization)

• Single point accountability:

• Dell’s needs for P&G Benchmarking:

1. Talent Management2. Leadership Development3. Performance Management System (linked to Dell’s values)4. Technologies – on-line staffing5. Value-added for individuals

• Speed up these processes

• Smaller number of people get a number of the experiences (fast track to work)

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Dell’s Core Competencies and Leader Model

Business Acumen Know how businesses work; knowledgeable in current and possible future policies, practices, trends, and information affecting his/her business and organization; knows the competition, is aware of how strategies and tactics work in the marketplace.

Intellectual Horsepower Is bright and intelligent; deals with concepts and complexity comfortable;described as intellectually sharp, capable, and agile.

Integrity and Trust Is widely trusted; is seen as a direct, truthful individual; can present theunvarnished truth in an appropriate and helpful manner, keeps confidences, admits mistakes; doesn’t misrepresent him/herself for personal gain.

Command Skills Relishes leading; takes unpopular stands if necessary; encourages direct and tough debate but isn’t afraid to end it and move on; is lookedfor direction in a crisis; faces adversity head on; energized by tough challenges.

Functional/Technical Skills Has the functional and technical knowledge and skills to do the job at a high level of accomplishment.

Customer Focus Is dedicated to meeting the expectations and requirements of internalcustomers; gets first-hand customer information and uses it for improvements in products and services; acts with customer in mind; establishes and maintains effective relationships with customers and gains their trust and respect.

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Dell’s Core Competencies and Leader Model

Priority Setting Spends his/her time and the time of others on what’s important; quickly zeros in on the critical few and puts the trivial many aside; cap quickly sense what will help or hinder accomplishing a goal; eliminates roadblocks;creates focus.

Problem Solving Uses rigorous logic and methods to solve difficult problems with effectivesolutions; probes all fruitful sources for answers; can see hidden problem;is excellent at honest analyses; looks beyond the obvious and doesn’t stopat the first answers.

Dealing with Ambiguity Can effectively cope with change; can shift gears comfortable; can decide and act without having the total picture; isn’t upset when things are up in the air; doesn’t have to finish things before moving on; can comfortablyhandle risk and uncertainty.

Drive for Results Can be counted on to exceed goals successfully; is constantly and consistently one of the top performers; very bottom-line oriented; steadfastly pushes self and others for results.

Organizational Agility Knowledgeable about how organizations work; knows how to get things done both through formal channels and the informal network; understandsthe cultures or organizations.

Building Effective Teams Blends people into teams when needed; creates strong morale and spiritin his/her team; shares winds and success in terms of the whole team; creates a feeling of belonging to the team.

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Dell’s Core Competencies and Leader Model

Developing Direct Reports Provides challenging and stretching tasks an assignments; holds frequentdevelopment discussions; is aware of each direct report’s career goals; constructs compelling developments and plans and executes them; pushesdirect reports to accept developmental moves; will take direct reports whoneed work; is a people builder.

Learning on the Fly Learns quickly when facing new problems; a relentless and versatile learner; open to change; analyzes both successes and failure for clues toimprovement; experiments and will try anything to finds solutions; enjoys the challenge of unfamiliar tasks; quickly grasps the essence an the underlying structure of anything.

Dell Note: First seven (7) leadership characteristics apply to all Dell jobs; 8 thru 14 apply only to those that “supervise/manage/coach” others