Lee -
Thanks to you and all for the supportive comments.
I have alluded to my discomfort with what I see as a shift in communication style by the top management at DELL going back to the shareholders' meeting. I said at the time that I was reminded of the attitude that Pfeiffer and Mason had in the 1997 CPQ shareholders' meeting, and I think I now have a better idea of what was bothering me.
That thing is the sense that DELL (and MSD himself) are now "spinning" the story as opposed to just telling it. edamo has talked about the difference between perception and reality. If management sets out to create a perception, they can do it in several ways.
They can take the MSFT approach - also used by Intel effectively in recent years. I would call this the "paranoia" spin. MSFT is sitting on a money machine, and their employees, shareholders and much of the general public know it. What are their risks about perception? Employees will think that nothing can derail the ship and become complacent. This is already a problem for MSFT. Shareholders can think that nothing can stop the juggernaut and bid the stock price to unreasonable levels. And so on. MSFT's stance on this has been to constantly set expectations lower than conventional wisdom, to say inside the company that the world could change tomorrow and turn MSFT into a buggy-whip company, to tell investors that the gains of the past can not continue forever... etc.
This "spin" is perhaps not what the top guys really think - but it is a possible and not unlikely view of MSFT, and one designed to keep the culture hungry and aggressive.
One can take the approach that Pfeiffer and to some extent Gerstner took - the "PC is dying" pitch. Looking at the areas where CPQ was increasingly disadvantaged by its business model and history, Pfeiffer did diversionary tactics - make a series of big acquisitions, shift the revenue model so dramatically that it is hard to draw comparisons with past performance, and when the cracks in the armor start to show up, claim that it is "an inevitable shift" in the industry with CPQ (or in Gerstner's case IBM) the best positioned to ride out the storm. "The PC is dead", "general weakness across the whole industry", and so on.
This approach draws on some underlying truth. There is no doubt that the PC industry is changing, that lower costs and a need to "wrap" the basic product with more infrastructure and services, and integrate the products more with telecommunications and information infrastructures, while making the products easier to use and less expensive to buy, will place huge pressure on the leading vendors. But there is also an element of "ignore the man behind the curtain" - in this case the less competitive business models of those producers.
A third approach is the one used most often by the internet companies, what I would call the "pioneer" argument. Sure, we have no profits and our business model has no clear prospect of generating any. But we're pioneers heading into a vast and fertile wilderness, rich with opportunity, and we are as likely as the next guy to grab the brass ring. We're smart guys, somebody will win the lottery, buy a ticket with us.
A fourth category is one used by Sun and a few others - the "ignorance is bliss" argument. Sun started the "network is the computer" pitch a long time ago. Of course, the network was never the computer any more than the wires are the telephone business. But it was a catchy phrase, and when networks became increasingly important as a part of everyone's experience, but no one really understood what infrastructure components were important, the fact that people had heard the "network is the computer" message created a lot of confidence in Sun - "I don't really understand this stuff, but hey, Sun, the network is the computer, those guys must understand it". The latest boast - "we put the dot in dot.com" - is an extension of that idea, and with even less basis in fact.
Over the past few months, DELL seems to be drifting into a spin that is somewhere in between the "pioneer" pitch and the "ignorance is bliss" pitch, with a dash of the "PC is dying" argument to add spice. According to this pitch, the PC is not dying - just the other PC vendors, who are being killed by DELL's innovative business model and relentless execution. The "ignorance is bliss" part is the repeated mantra of "be direct" and the mysterious value of the direct model. And of course the "pioneer" pitch - we are ground breakers, we are way smarter than the dinosaur companies we compete with, we can't tell you exactly how we will do it but we will get HALF OF THE MARKET within a few years, buy your lottery ticket.
It may be that there is in fact a plan to do everything that MSD claims he will do. But even a few years ago, DELL management was pretty crisp about how they intended to grow the business, what the near term proof points would be, and how that tied into a simple and clearly defined corporate philosophy that employees, customers and shareholders could understand, relate to, and count on.
I don't see that now. Increasingly, I see a gap between what is happening on the ground - tens of billions in long term supply contracts, the collapse of the enterprise strategy with no replacement offered, a highly visible abandonment of the services component as a part of the core business, the move into consumer products, which only a year ago was an area DELL shunned (for good reason) - and the "vision" that management is pushing.
There is no series of events that I can imagine which would give DELL 50% of the PC market - unless the definition of that market becomes so convoluted that the statement becomes true by definition. I was a lot happier when I could listen to what they were saying, look at what they were doing, and say to myself "yea, that works, that's consistent". What ever happened to undercommit and overdeliver? |
