Title:ExecutionWithoutExcuses.Authors:Stewart,ThomasA.O'Brien,LouiseSource:HarvardBusinessReview;Mar2005,Vol.83Issue3,p102,10p,2cDocumentType:InterviewDell'ssustainedcompetitiveadvantageisduetomorethanitsfamousbusinessmodel.Consistentexecutionrequiresreal-timeP&Lmanagement,anemphasisoningenuityratherthanoninvestment,andacultureofaccountability.MICHAELDELLFOUNDEDthecomputercompanythatbearshisnamein1984.Eightyearslater,attheageof27,DellbecametheyoungestCEOintheFortune500.SoonthebusinessworldwasabuzzwithtalkabouttheDellbusinessmodel,whichallowsthecompanytobypassmiddlemen,selldirectlytocustomers,andachievesuperiormanagementofinformationandworkingcapital."ThePowerofVirtualIntegration,"HBRcalleditina1998interviewwithMichaelDell.Sincethen,thecompanyhascontinuedtogainmarketsharewhiledeliveringbettershareholderreturnsthananyofitscompetitors.Initiallycapitalizedwith$1,000,Dellisnowworthmorethan$100billion.ThesecretofDell'ssuccessgoesbeyonditsfamousbusinessmodel.Highexpectationsanddisciplined,consistentexecutionareembeddedinthecompany'sDNA.Dellismorethananefficientfactory--it'sanorganizationthatcanturnonadimeandthathasdemonstratedimpeccabletiminginenteringnewmarkets.Thecompanynowemploys53,000peopleandoperatesinmorethan80countries.Lastmonth,itsfounderandchairmanreachedtheripeoldageof40.KevinRollins,aformerBain&CompanyconsultantwhobeganworkingwithDellbackin1993andjoinedthecompanyin1996,wasappointedCEOlastyear.ChairmanandCEOworkinadjoiningoffices.Thewallbetweenthemisglass,andithasalargedoorinthemiddlethatisneverclosed.Whileprovidingextraordinaryrewardstoitsshareholders,Dellhascreatedaculturethatexpectsgreatperformancefromitspeople.Inordertodoubleitsrevenuesoverafive-yearperiod,thecompanyhashadtoadaptitsexecution-obsessedculturetonewdemands,asRollinsandDellreveal.Todiscusshowthecompanyhassustaineditsadvantageovertwodecades,ThomasA.Stewart,theeditorofHBR,andLouiseO'Brien,anHBRconsultingeditorwhoservedasDell'sVPofstrategyfrom1999to2002,metwithRollinsandDellatthecompany'sheadquartersinRoundRock,Texas.Inthiseditedinterview,thetwodescribehowthey'veworkedtogethertorefineDell'sbusinessmodel,management-developmentstructure,andculture.TheelementsoftheDellbusinessmodelarenosecret:goingdirect,informationoverinventory,world-classmanufacturing,andsuperiorcustomerinformation.Everybodyknowsthese,sowhyhaven'tothercompaniesbeenabletocopyyourmodelorbeatyouatyourowngame?Rollins:ThesamereasonwhyKmartcan'timitateWal-Mart.WhatWal-Martdoesisn'trocketscience--it'sretailing.Whycan'teverybodybeWal-MartorJetBlueorSamsungorwhateverthebestcompanyintheirindustryis?Becauseittakesmorethanstrategy.Ittakesyearsofconsistentexecutionforacompanytoachievesustainablecompetitiveadvantage.SowhileDelldoeshaveasuperiorbusinessmodel,thekeytooursuccessisyearsandyearsofDNAdevelopmentwithinourteamsthatisnotreplicableoutsidethecompany.Othercompaniesjustcan'texecuteaswellaswedo.Dell:Cultureplaysahugerole.Asourindustrytransitionedtoastandards-basedmodelfromaproprietarymodel,withits40%grossmargins,protectedfranchises,andtiereddistribution,awholenewsetofbusinessdisciplinesbecameimportant.Thingslikecustomer-centricity,supplychainlogistics,andcashflowmanagementhadbeencompletelyofftheindustry'sradarscreen.Dellchangedthegame.Rollins:Westartedtalkingaboutreturnoninvestedcapital(ROIC),whichfocusesyouonhighreturnsatverylowassetintensity.Befor...
