I’m at the Dell Annual Analyst Conference this week and Dell has a problem. You see, one of the consequences of going private is that Dell doesn’t have quarterly reporting anymore. That means we don’t get regular updates on how it is performing in market except from Dell competitors and the Analyst Psychic Friends Network. Neither source has proven to be that accurate. Dell is apparently doing well and it is celebrating its 30th anniversary year. It has also followed Microsoft and HP to eliminate Forced Ranking, which is improving employee satisfaction, retention and innovation. And it is clearly now more able to focus on customers because it doesn’t have the distractions associated with the financial analysts, at least not to the same level as it once did. Michael Dell’s opening comment was “we aren’t opening a can of whoop ass, we are opening a whoop ass factory.”
Let’s talk about Dell as a private company.
One of the nice things about Dell’s CEO is that he actually meets with and chats with the analysts personally. Most CEOs in tech firms talk at analysts but they rarely do one-on-ones. Some that do tend to get very defensive. I often don’t blame them because a number of my peers have historically used their time to imply that they could do the job better or to play “stump the CEO,” with inane long-winded questions whose entire purpose seems to be to improve the analyst’s status.
Dell seems to weather this far better than most and chats with us like a regular person. This is incredibly refreshing and tends to endear Michael Dell to those of us honored by the time he spends with us. I can’t overstate the importance of a non-royal CEO. An approachable attitude tends to allow the CEO to be more connected to staff, customers and analysts. At the core of many CEO failures is the lack of that connection.
Dell’s message is broken into three segments. The first is Transform. Recognizing that the market is in flux, one of the biggest problems is the need to transform IT from the way it was to the way it needs to be. At the center of this is the requirement to stay closely coupled with customers in order to anticipate their needs and perform the critical role of technical advisor. One example of this was driving pricing of flash to that of magnetic media because speed is critical to this transformation. The key initiative is the Future Ready Data Center.
The second segment is “Connect.” Dell reports that, unlike most competitors, Dell is growing share in PCs and has been over the last five quarters. This is where not doing the quarterly reports hurts the most because it isn’t until this annual event that we get a divisional update. Apparently, Dell is growing across the board, which is in sharp contrast to the belief that Dell was having issues like many of the other global firms. Here, Dell spoke about partnerships ranging from Oracle to Cloudera. It is the strength of those partnerships that often positively defines Dell.
Clearly, security is a major problem for everyone this decade. With the U.S. and China pounding on each other and Eastern Europe turning into a massive source of criminal attacks, the focus on security has never been more important. Tracking a massive number of security events a day, Dell has mobilized to address this threat as a primary and heavily resourced goal. It isn’t going to get better and Dell recognizes it has to put a resource on the problem, not only to protect its clients but to protect itself.
This disruptive change in how computing is done and addressing the related threat has been the focus of many of Dell’s acquisitions. This is because threats like this either kill existing firms or form a growth opportunity. It is aggressively developing what it believes is the most flexible platform to help IT move between public and private solutions. It isn’t fighting this trend. I doubt any vendor can. It is embracing it and focusing on helping customers find the right mix of on-premise and public resources to best balance the conflicting needs of compliance and cost savings.
Wrapping Up: Corporate Fountain of Youth
Reigniting the entrepreneurial spirit is at the core of Dell’s efforts, recognizing that most tech firms are going through a painful mid-life crisis. A similar crisis in the 80s wiped out many of the leaders of the prior wave and that lesson hasn’t been lost on Dell. Going private and returning Dell to a near start-up mentality where technical advancement, market leadership and customer satisfaction can trump the excessive focus on quarterly results, which I believe is at the core of why firms have a mid-life crisis.
In the end, by going private, eliminating Forced Ranking, and shifting back to more of a pre-public startup-like mentality, Dell is attempting to find the equivalent of a corporate fountain of youth. It is still too early to be sure this will work, but the results reported today suggest it is working. I think that alone makes Dell’s experiment worth watching.