When the rest of the computer industry zigs, Dell Computer Corp. zags. That's a big reason why Dell is a $32 billion company with a powerful, direct-to-the-customer business model.
Now Dell is at it again. During this period of economic upheaval, Dell has done better than most, winning new market share in PCs and moving into the enterprise arena - servers, switches, and storage products. But even Dell has had setbacks: Over the past two and a half years, the company's stock price has dropped more than 50%. Last year, Dell experienced big layoffs, eliminating nearly 6,000 jobs.
For most of the computer industry - for most companies, even - the predictable response to layoffs is to refocus with even greater intensity on pure performance. Dell, true to form, has had its own reaction: a first-ever round of intense corporate soul-searching.
At the company's headquarters in Austin, Texas, there's a new question: Beyond pure financial performance, what does it mean to be a great company? The man who is most engaged with this introspection is Dell president and COO Kevin Rollins, a former Bain & Co. vice president who came to the company six years ago and who is widely credited with bringing a consultant's passion for rigorous measurement along with him. Now, however, Rollins is obsessed with more than the numbers. He's devised a new initiative called "The Soul of Dell," which is designed to examine the company's culture and to find ways for Dell to be more than just the world's most efficient, relentless, and competitive machine.
Fast Company talked to Rollins about how the program originated and about the kind of place that he would like Dell to be.
Even in tough times, Dell has continued to perform. What told you that there was a new issue that you needed to address?
Every quarter, we do a "Tell Dell" survey with our employees. The good news is that 80% of our people consistently say that our strategy and our management is on track. But when it comes to the loyalty index, people have said that they like what we're doing, they think we're winning, but they don't know that they want to stay. To me, that was a screaming critique. It showed us that we needed to create a place where people believe in something bigger than, "If I do a good job, I'll make money, and if I don't, I'll get fired."
How much is this concern for employee development driven by market conditions?
When the company had a financial performance that was off the charts, everything was great. We were growing at 50% to 60% a year, we hired the talent that we needed from the outside - we did not have time to grow our own. It was a culture where you would either sink or swim. And if you sank, we would just get someone to replace you.
When the market environment changed, we said, "We've got to be more than just a great financial company. We've got to be a great company." What do great companies have? They have a culture. They have a leadership model. They have a reason or a purpose that attracts people beyond the financial rewards. You need to have more to weather the ups and the downs. After talking to a lot of people, we came up with the notion of the Soul of Dell.
Where did you turn for inspiration?
For more than a year, I've been reading about leadership. I started reading about the founding fathers, but more than just the best-sellers. I read books on Franklin, Jefferson, Monroe, and Washington. That led me to a book on Lincoln and one on Teddy Roosevelt. Because I have a fairly religious background, I looked at books that were semispiritual, and others that looked at leadership in terms of ideals and idealists.
Much of what the founding fathers believed in went beyond logic - and they believed it to their bones. Remember: If the British had won, all of those guys would have been gathered up and shot. They were passionate and highly idealistic. Although many of them were rich, they had an ethic that let them say, "Forget the wealth. I'm going to run the country, and I might get shot because of it." They had an idea that superceded their personal gain and the risk to their lives.
I thought that it was incredible. It made me start thinking about the soul of this country and the soul of its leaders. It was an interesting paradigm for a company to examine, as opposed to simply adopting the business paradigm.
Are there principles beyond leadership that this program addresses?
There's an ethical element. There are two quotes that I've been using. One is by Solzhenitsyn, from his 1978 Harvard commencement address, and the second is from Max Weber.
The one from Solzhenitsyn roughly says, "I've lived my life in a society where there was no rule of law. And that's a terrible existence. But a society where the rule of law is the only standard of ethical behavior is equally bad." Solzhenitsyn said that if the United States only aspires to a legal standard of moral excellence, we will have missed the point. Man can do better.
I thought that was a nice comment on the ethics of companies that say, "Well, legally, it was just fine." We believe you have to aspire to something higher than what's legal. Is what you're doing right?
And what did a 19th-century German sociologist teach one of the 21st century's great capitalist success stories?
Weber talked about ethical responsibility. We think that we have had an ethic of blame in business when what we need is an ethic of responsibility. So we've got something called a Business Process Improvement. We target cost savings that we can gain by doing things better. But it's a grassroots program. It says, "You have control of what goes on. If there's stuff that's broken, and you don't say anything, it's your fault. If ethics are violated and you don't say anything, it's your fault. It's not Kevin's fault or Michael's fault."
How does that work in practice?
On the business-improvement side, anybody can say, "I'm going to gather the appropriate people, learn the process, follow through, and see savings." On the ethics side, there are hotlines where anyone worldwide can call anonymously and be connected with an ombudsman. The only people who know about the calls are our ethics committee members and me. On the basis of calls to that line, we've investigated, we've disciplined, we've fired, and we've fixed issues.
A year from now, what words would you like to hear people use when they describe Dell?
Respect, integrity, honesty, and forthrightness. Outside the company, the only thing people want to know is how much money you're making. Internally, I would like our employees to say, "That's what I believe in, that's what the company believes in, and that's why I'm proud to be at Dell."
Sidebar: What's Fast
4 Ways to Feed Your Soul
In today's tough economic environment, most companies are fixated on their financial performance. But Dell has chosen a different route, focusing on the company's "soul." Here are a few lessons.
1. Use hard numbers to drive a soft revolution. While the "Soul of Dell" initiative focuses on culture and values-driven programs, its roots are as much in the metrics as any of the company's hard-driving business processes. How will Dell know if the program is working? The numbers on employee surveys will tell.
2. You can't buy cultural change off the shelf. Dell's business model is all about building a customized product. So too is its approach to designing and implementing cultural change. Rather than mimicking programs at GE, IBM, or Wal-Mart, the company is devising a program that fits Dell: "We have a direct culture," says president Kevin Rollins. "We sell directly; we communicate directly."
3. For unconventional thinking about leadership, throw out the conventional business books. Instead, Rollins, who studied the humanities in college, looked to biographies of Jefferson, Lincoln, and Washington. "George Washington wasn't the smartest guy," Rollins says, "but everybody followed him, because he inspired people to do better. We thought that was a very interesting model - an aspirational model."
4. Replace a culture of blame with an ethic of responsibility. From the factory floor to the boardroom, Dell employees are being put on notice that the success of the company lies in their own hands. If something is broken, it's an employee's responsibility to fix it - or to alert somebody who can.
Linda Tischler (ltischler@fastcompany. com) is a Fast Company senior writer.