By CATHY BOOTH THOMAS | DALLAS
Posted Sunday, June 29, 2003; 14.08BST
It's easy to think of Dell Computer president and COO Kevin Rollins as just a fun-loving fiddle player who sings wisecracking lyrics about rivals at company gatherings in Round Rock, Texas. But don't be fooled. Rollins is also a polished management professional who runs the brutal day-to-day business of the world's No. 1 PC manufacturer. Thanks to Rollins, Dell has not only survived the tech downturn but thrived, capturing 17% of the worldwide market. He doesn't have time to sit around and fiddle these days, what with Dell aiming to ship 25% more units this quarter over last year. "We've got a tough-minded corporate ethic. We expect our leaders to deliver," says Rollins matter-of-factly.
No, Michael Dell has not stepped aside. The 38-year-old whiz kid is still very much at the helm as chairman and CEO, but he and Rollins, 50, are "two in a box" — Rollins' own term for an operating system that has proved hard to beat. Just ask the merged Hewlett-Packard/Compaq, which dropped from 17 to 15.8% of the worldwide computer market and is now eating byte-dust as No. 2. "Most companies became nervous and conservative during the downturn, but Dell used it to step on the gas," says research company IDC's vice president Roger Kay. Under Rollins' leadership, revenues quadrupled to nearly $37 billion.
How does Dell do it? Direct sales. Back in 1994, largely at the behest of Rollins, then a consultant at Bain & Co., Dell jettisoned sales through retailers. In 2001, when much of the tech world was still in denial, Rollins slashed 5,700 jobs while stepping into his current role as COO. "We saw the downturn coming," says Rollins. "Because of our direct-sales model, we were talking to suppliers and customers daily." Next step: Dell got aggressive on the supply chain, cutting inventory from seven days to three and building to order only. They slashed prices at home, then turned abroad. Competitors scoffed at the idea of direct sales overseas, but sales in China, Japan, France and Germany were up 39% in the first quarter over last year. The product mix expanded too. Dell took on H-P and IBM in servers and services; and teamed up with EMC on storage.
Oddly enough, Rollins wasn't happy. A Mormon with a deep philosophical streak, he saw Dell morale suffering. "The company was in a bit of a slump, the stock was down, sales on a plateau, so I began looking at ways to improve the culture to weather the down currents," says Rollins. (He's read Arnold Toynbee and John Locke, but says the U.S. Founding Fathers most inspired him.) Two years ago, he launched the Soul of Dell initiative, setting out an ethic of zero tolerance for unethical behavior. "We got wealthy. That was our culture," says Rollins bluntly. "But we didn't want just that." Dell had to be an inspiration too. "To be a great company," he adds, "we've got a long way to go." Which may be why it's No. 1, after all.
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