Dell began as a flexible and customer-centric organization. But as it grew it suffered big organization disease and focused on itself more than the customer.
If you go to the Dell website today the first thing it asks you is whether you are a Home User, Small Business, etc. I don't want to answer that question, thank you very much, Mr Dell. And from years of testing and analysis I know that about 90 percent of customers don't want to answer it either. So why do you keep asking it?
Back in 2001, when customers came to the Dell homepage wanting to buy a laptop, there was a link on the homepage for "Laptops." That's what most people want: to buy a laptop, desktop, printer, server. They don't want to tell you if they're a home user, small business or government entity.
What about the government employee who wants to buy a computer for their home? Might they get a discount if they clicked on Government? These very classifications cause resentment and suspicion. Do governments get better discounts than small business? Are home user computers less powerful than small business computers? I used to believe that audience-based navigation was useful, but now I know that it often causes a lot more problems than it solves.
Why does Dell force you to choose an audience? Because that's how Dell is organized internally. I was once told that these internal units could not agree on how to share revenue if someone clicked on "Laptops." It's a classic problem for large organizations; I've often heard it said that an organization will kill itself long before it gets killed by the competition.
Dell wasn't always organization-centric. "From the start, our entire business-from design to manufacturing to sales-was oriented around listening to the customer, responding to the customer, and delivering what the customer wanted," writes Michael Dell in his autobiography Direct From Dell.
Michael Dell recognized the threats of silo-based, organization-centric thinking. He wrote that "The information systems group, for example, would say. "We're the information systems group and our job is to create information systems." Rather than, "We're the information systems group and our job is to facilitate the flow of information to our employees, customers, and shareholders."
Eric D. Beinhocker writes in his book The Origin of Wealth that organizations nearly always become less adaptable as they grow. "Growth creates interdependencies, interdependencies create conflicting constraints, and conflicting constraints create slow decision making and, ultimately, bureaucratic gridlock," Beinhocker writes, "The politics of organizations are such that local pain in particular groups or departments is often sufficient to prevent the organization from moving to a new state, even if that state is more globally fit."
Large organizations have many strengths but over the longer term they are their own worst enemies. "The virtual nonexistence of excellence that lasts multiple decades (again, less than 0.5 percent), and the extreme rarity of repeated excellence (again, 1 percent), brings us to a brutal truth about most companies," Beinhocker writes. "Markets are highly dynamic, but the vast majority of companies are not."
So, how to succeed in this modern ever-changing world? "Companies that are successful today-and, perhaps more importantly, companies that will be successful tomorrow-are those that can get closest to their customers' needs," Michael Dell writes.