This morning, Michael Dell, CEO of Dell Computers came to University of Toronto to have an informal talk with faculty and students. It was nice to see that CEO would do something like that, most often, CEOs give talks that are structured and usually there isn't much interaction from the audience, apart from a question and answer period. But this time, it was a panel discussion followed by questions and answers from members of the audience.
Professor David Naylor, President of the University of Toronto first gave welcoming remarks about Michael Dell and welcoming him to the University of Toronto. Did you know that Michael Dell started with only $1000 to start Dell Computers in 1984. In 1992, he became the youngest CEO ever to earn a ranking on the Fortune 500. He is the author of Direct From Dell: Strategies That Revolutionized an Industry, about the rise of his company and his business strategies. In 1998, he formed MSD Capital and in 1999, he and his wife formed the Michael and Susan Dell Foundation, a philanthropic organization. He serves on the US President's Council of Adivsors on Science and Technology, the Technology CEO Council and the governing board of the Indian School of Business in Hyderabad, India.
After Prof. Naylor spoke, then the attention turned towards the panel discussion that addressed questions from Professor Roger Martin, Dean, Rotman School of Management and Linda Nguyen, Student, Bachelor of Business Administration, University of Toronto Scarborough. Dell spoke about how Dell Computers dealt with customers directly through phone and internet, now Dell is selling their computers into retail markets such as Walmart and Costco. Before, I never used to see physical Dell computers in stores, just only when people bought them online. Now, I just saw a Dell laptop for $500 at Walmart and also in shopping malls.
One of the questions asked by Prof. Roger Martin was how can Dell manage change into the future. Michael Dell answered that there is a need to reintroduce risk into the business. There needs to be an investment in fundamental R&D to get traction in new technologies and trends like mobile computing. There was nothing new here, all companies are reinventing and investing significant amount of money into R&D because it is R&D that helps a company manage risk and get a leg up on its competitors. Dell is well positioned into the future because according to Michael, Dell is well represented in government and educational institutions. There is more opportunity with customers that are fickle and are constantly changing computer technology.
The second panel question had to deal with what are the environmental strategies for Dell to become “green”, which was asked by Linda Nguyen. Michael Dell responded that Dell has been an environmentally conscious company. In the 1990s, Dell tried to create a recyclable chassis which many engineers felt was impossible. Another example is that Dell was the first to offer free recycling in the world. Michael mentioned about the website dell.com/earth which is a real-time ticker that shows how many dollars are saved by customers through buying products from Dell. According to Dell, $12.2 billion dollars have been saved due to energy efficiencies. Dell introduced the Blade server that uses 19% less energy than its nearest competitor.
A third panel question dealt with how Dell is delving into services computing than products, following IBM and HP, with IBM having its services computing business. According to Michael Dell, products are changing into services. He gave an example of a large company that makes airplanes that starts with “B” where several million users are buying services to use Dell products. Dell is very focused on infrastructure services and how to simplify infrastructure, not applications. Michael says that competitors make money by making the customer service process complicated. Competitors will charge an arm and a leg to stay with a particular customer until the customer’s requirements are met, and the customer starts lured into buying more products. Dell’s model is different, where Dell gave an example of how there is an online simplification segment and service where quotes and orders are customized according to the customer’s requirements.
I did not know that Michael Dell stepped down as CEO of Dell in 1994, but now has returned back to the helm last year. This was the end of the panel discussion, and the opening up the floor for questions from the audience. The first question was what inspired you to start up Dell as the company? Michael Dell replied that he was fascinated with business and companies and he saw an opportunity of how PCs were being developed and sold, and thought of a better way of doing this. This reminds me of how all companies get developed, entrepreneurs look at the market to see what is happening, and decide what particular segment needs to be improved and targets that segment. So nothing new here.
The second question from the audience was what are personal traits for success to give to aspiring entrepreneurs. Michael responded curiosity, the ability to think out of the box, and experimenting, not being afraid to make mistakes. Again, nothing new here, this is typical for any successful entrepreneur. The third question was what is next to grow the business. Michael responded that Dell needs to broaden itself to cater towards different customer markets. Dell is a leader in capturing product awards. The audience member that asked this question talked about Dell’s successful XPS line of notebooks such as the M1330. Last year, Dell had 14 notebook platforms and this year will come up with 40 notebook platforms. So customers have a wide range of choice to decide what type of notebook suits towards their needs. Dell is a gaming leader, and Dell needs to take a lot more effort towards product design and innovation. The fourth question addressed a mentor from EEStore that is joining Dell, who is developing a new way of making lower energy capacitors and energy storing devices. Dell is evaluating these new technologies, but is taking a cautious approach because according to Michael, many of these technologies never see the light of day.
The fifth question addressed key points of advice to entrepreneurs for starting up businesses. Michael Dell that businesses fail because there is too much funding which gets all used up. According to Dell, there is no perfect plan so entrepreneurs cannot wait for the perfect plan because it will never happen, and you will lose opportunities. Entrepreneurs need to experiment , learn and make mistakes. Again, nothing really new here, this is pretty much common sense. The sixth question asked is design aesthetics in laptops and computers a good thing. This is a trend in the industry as is with mobile devices such as cell phones, it is part of personalization. For Dell, it leverages personalization of factory infrastructure and customization before Dell was mass product using the same reference design. The device should be a reflection of you.
The seventh question dealt with how Dell is working to be a market leader in social computing. Michael responded that Dell outsells the nearest competitor by two times. Cloud computing is a big area of focus. For big search providers, social networking sites and video content sites, Dell has created custom businesses for them by dealing with the customers, coming back with prototypes, then bringing in a rack of servers that fit the customer specifications. Finally, the eighth question was what are the gaps in the IT industry that would require interdisciplinary areas in energy conservation. According to Dell, when you do a product/service, you are part of the ecosystem and so you are responsible for managing it. He said that companies need more intercultural and interdisciplinary students. That wasn’t really anything new, everybody knows that. Compound inventions are the most unpredictable but provide the most impact. Entrepreneurs are good at taking existing pieces and rearranging them to form new businesses, but not good at predicting the future.
In summary, Dell’s conversation was not thought-provoking as many of his answers were standard answers that any successful CEO would provide. However, it was nice to finally get to see Michael Dell in person.
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