Strategic Leadership

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Strategic Leadership and the Dell Case
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Cause-Effect Steps for Strategy Implementation
1
External Business Environment
V D S P
3
Strategies (Corporate, Business, and Functional)
2
KPI Goals
4
5
External Growth Strategies (Globalization)
Business Model(s)

• Improvement
• Capabilities
• Commercial
• Technological
• Organization
• Team

Internal Strategies (Improvement in capabilities
via core competencies along the Value Chain)
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7
Strategic Alliances (External)
8
Future Work Trends
3
Strategic Leadership Three Keys of a
Exemplary High Performance Organization
1 What Are You Deeply Passionate About?
2 What Can You Be the Best In the World At?
3 What Are The Drivers of Your Economic Engine?
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How Many of You Have Heard of Dell Computer?
Source B.A. Macy, Successful Strategic Change,
Berrett-Koehler Publishers, San Francisco, CA
(forthcoming)
5
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
• HP/Capital 23
• IBM 19
• Dell 158
• Goal 62B by 2008
• Customer Intimacy
• Globalization
• Product Leadership
• Winning Culture
• - 4,000 Dell people that manage others (110)
  35,000 non-mgt.
• Non-supervisory, 39,000 total employees 500 HR
  people WW.

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Comparison of Dells Market Share with their
Core Competition 1997-2001
Market Share
IBM HP Dell
158
-19
-23
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
Goal
The Direct to Consumer Model
Business Strategy
HR People Strategy
Examples of HR Key Tactics
Key HR Metrics
Grow to 66B By 2008
Build to order Most efficient path to
customer Industry Standard Technology Lower
Cost Leader Single Point Accountability

• Customer
• Intimacy
• Globalization
• Product
• Leadership
• Winning Culture
• People Leaders
• Business Process
• Improvement
• Diversity

Talent Management Leadership
Development Technology Rewards/
Recognition Cost Optimization
People Planning Performance Management On Line
Tools for Pay/ Performance Compensation
Differentiation Low Cost Sites
Retention Diversity Leadership
Pipeline Employee Survey Trends Savings
Achieved
They have more than one goal!
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The Value Chain The Dell Example
Suppliers
Mfg. (assembly only)
Product Supply
Centers of Competency
Consumer
Customers
Various Business Segment
Corporate Services
Expertise Centers
______________________ Source Dr. Barry A.
Macy, Successful Strategic Change,
Berrett-Koehler Publishers, San Francisco, CA
(forthcoming)
2001 Firm Level 265
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Dell Value-Chain
Suppliers
Product Supply
Expertise Centers
Mfg.
Corporate Services
Centers of Competency
Various Business Systems
Customers
Consumers
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Dells Fast-Cycle Segmentation
(SBU) Large customers
(SBU) Small customers (Business and consumer)
In 1994, Dell was a 3.5 billion company
In 1996, 7.8 billion
(LOB) Large Companies
(LOB) Midsize Companies
(LOB) Government and Education
(LOB) Small Customers
In 2001 31.9 billion
Consumers
Small Companies
Education
State and Local
Federal
Midsize Companies
Large Companies
Global enterprise Accounts
All of these are P/L Centers (30-35 P/L Centers)
Source B.A.Macy, Successful Strategic Change,
Berrett-Koehler Publishers, San Francisco, CA
(forthcoming)
12
Dell Computer
To accomplish Goal 2008-- 100 Increase In Sales
Volume (33B to 66B with 20Increase in People)
5 HRM Tactics
4 Business Strategies
Deliverables

• Talent Mgt.
• Leadership
• Development
• Recognition
• Reward Systems
• Technologies
• Hiring for FIT-
• (Non U.S Future)

• Customer Intimacy (B) or (C)
• Globalization (C)
• Product Leadership (B)
• Winning Culture (C)

People Capabilities Organization Capabilities
_____ C Corporate Strategy B SBU
Strategy
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Dell
H.R. Strategies
Business Strategy Business results are
dependent upon people and organization
capabilities.
Deliverables

• Talent Management
• Leadership Development
• Reward/Comp. Design
• Technology
• Cost optimization (H.R.)
• Costs and total people
• count
• Costs.

People Capabilities Value Chain Organization
Capabilities

• Customer Expectations
• Globalization
• Product Leadership
• Winning Culture

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H.R. Technology Strategy - 1
Processes
Systems
Data
Reporting

• Globalization -Globalization -
  Globalization - Globalization
• Regional -Regional
  - Regional - Regional

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

• 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).
• Layoff 2001 (Mgt. Problem)
• Went to HR What should we do?
• Great desire to WIN
• 1. Founder influence 2. Hire great people
  3. Risk/Reward

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H.R. Technology Strategy - 2

• Employee Proposition (Continued)
• Winning Culture
• People Leadership
• Entrepreneurship
• Spirit
• BPI (Business Process Improvement) Work Process
• Inclusion
• 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
• Business and Financial Knowledge
• Lead and Management of others 12 Training
  Programs

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H.R. Technology Strategy - 3
H.R. Competencies Process
Values
Knowledge
Beliefs
HR Map
Competencies
Skills Knowledge
Experience Skills
How Dell sells its product Whats 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

• 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.

• 800 people
• 56M

• 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
• Dells needs for PG Benchmarking
• Talent Management
• Leadership Development
• Performance Management System (linked to Dells
  values)
• Technologies on-line staffing
• 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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Dells 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. Intellec
tual Horsepower Is bright and intelligent deals
with concepts and complexity comfortable descr
ibed as intellectually sharp, capable, and
agile. Integrity and Trust Is widely trusted
is seen as a direct, truthful individual can
present the unvarnished truth in an
appropriate and helpful manner, keeps
confidences, admits mistakes doesnt
misrepresent him/herself for personal
gain. Command Skills Relishes leading takes
unpopular stands if necessary encourages
direct and tough debate but isnt afraid to
end it and move on is looked for 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
internal customers 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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Dells Core Competencies and Leader Model
Priority Setting Spends his/her time and the
time of others on whats 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 effective solutions
probes all fruitful sources for answers can see
hidden problem is excellent at honest
analyses looks beyond the obvious and doesnt
stop at the first answers. Dealing with
Ambiguity Can effectively cope with change can
shift gears comfortable can decide and act
without having the total picture isnt upset
when things are up in the air doesnt have
to finish things before moving on can
comfortably handle 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 Knowledgeabl
e about how organizations work knows how to get
things done both through formal channels and
the informal network understands the cultures
or organizations. Building Effective
Teams Blends people into teams when needed
creates strong morale and spirit in 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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Dells Core Competencies and Leader Model
Developing Direct Reports Provides challenging
and stretching tasks an assignments holds
frequent development discussions is aware of
each direct reports career goals constructs
compelling developments and plans and executes
them pushes direct reports to accept
developmental moves will take direct reports
who need 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 to improvement 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