August 26, 2006

Dell digs deeper

Knowing when and how to let go may be an acquired taste. It’s certainly one a number of once-stellar-performing companies, like Dell, have yet to acquire.

This weeks’ Business Week searches for the causes of Dell’s recent market decline:

“… its predicament may be intractable. Dell remained slavishly loyal to its core idea of ultra-efficient supply-chain management and direct sales to consumers, even as rivals have stepped up their game and markets have shifted to take away some of Dell's key advantages. Instead of adapting, critics say, Dell cut costs in ways that compromised customer service and, possibly, product quality.”

A Dell competitor is quoted saying:

"They're a one-trick pony. It was a great trick for over 10 years, but the rest of us have figured it out and Dell hasn't plowed any of its profits into creating a new trick."

Bigger Isn't Always Better describes how size and success conspire to do in many companies that reach the top spot in their industries. In Dell’ case, the same operational focus that made it so formidable when it was at the top of its game is getting in the way of finding its next big thing. Instead of cultivating imagination, the stock-in-trade of every successful grower, Dell seems addicted to the fixer’s strategy of ever improving execution.

Former Dell managers say that ideas that break from the "Direct from Dell" business model are discouraged. When your market has changed, doing more of the same with greater intensity usually digs you deeper into the hole you don’t want to be in.


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