Living in Dell Time

Still, Dell is hardly coy about pressuring its suppliers to do better. It's a metrics-obsessed organization that measures everything, not least its suppliers' performance. It rates all of its vendors on their ability to compete on cost, technology, supply predictability, and service, and posts their scores daily on a password-protected Web site. Every quarter, the suppliers' executive team meets in Round Rock, Texas, where Dell is headquartered, with Garvin and his procurement lieutenants for a formal feedback session. In these meetings, dubbed QBRs (quarterly business reviews), suppliers are ranked against their competitors. Based on that comparison, they are awarded a percentage of Dell's purchases for the upcoming quarter. There's a direct, metrics-based connection between their performance and their Dell P&L.

Dell is cold-eyed in these assessments, unflinching and unsentimental. "You want competition -- suppliers that are fighting very hard for Dell's business," Garvin says. "You set a high bar and keep raising it, so suppliers have to continually redefine themselves in terms of their efficiency and reliability. Otherwise, they won't be around for very long."

Despite such tough talk, even Dell's alumni bristle at any suggestion that their alma mater beats up its suppliers. "If you aren't performing, Dell won't hesitate to take some of your business and give it to a competitor, so boo-hoo," says Jerry Gregoire, who was Dell's CIO from 1995 to 2000. "That's bullying? It's called holding the supplier's feet to the fire. If you want my business, you're going to have to meet my expectations."

And even winners don't get to rest on their laurels. In 1998, when Dell declared that Maxtor was its top-ranked hard-drive supplier for desktops, it held a brief ceremony at Round Rock and presented Maxtor's executive team with a trophy. The congratulations lasted for all of 10 seconds. "I picked up the award, and I hadn't even gotten back to my seat before the Dell guys start pounding the table and telling us that we'd better get our act together, that we're only a fraction ahead of the competition," recalls Maxtor's Cordano. "Then they proceed to drive this new set of metrics and expectations. And I'm thinking, Jesus, we just got ranked number one and we don't even get a minute to reap the glow."

Rollins grins when he hears this story. For all of its achievements, Dell is paranoid about success. Rollins doesn't want anyone feeling fat and happy -- not Dell's suppliers and especially not Dell's executives. "When you achieve your best performance ever, usually it's downhill from there," he says. "We'd rather push on to the next hill than dip into the valley. We have not yet seen our best performance."

Dell, which hit $45 billion in annual revenue this past July and is growing at a nearly 20% yearly clip, seems well on its way toward surpassing its goal of $60 billion within the next few years. And it's not letting up. Still relentlessly striving to get better faster, Dell intends to slash $2 billion in costs. CFO Jim Schneider has indicated that much of the cuts will come from manufacturing operations and the supply chain. That will put even more pressure on Dell's component makers. Michael Dell is fond of saying that in the high-tech business, you either grow or die. It all just happens much, much faster when you're living in Dell time.

Bill Breen is Fast Company's senior projects editor. Michael Aneiro contributed reporting for this article.