The WSJ reports that Dell is looking to sell its factories. It’s the death knell of their famed business concept, linking just-in-time production and Lean manufacturing to provide customers with customized products and fast delivery. The fact is, the business model worked unbelievably well for a few decades. Dell became one of the most successful and admired companies in the world. I remember a few years ago listening to former CEO (and an old B-school classmate of mine) Kevin Rollins talk about Dell’s management philosophy and thinking this was one of the great businesses of the era. I still believe that the company was doing extraordinary things.
But more than anything, that may be why the Dell has stumbled badly in the past three years. It was simply too slow to abandon a model that had been so wildly successful, but whose days were quickly passing, driven by the consumer switch to more manufacturing-intensive laptops produced cheaply overseas and purchased conveniently at retail outlets. Dell had (and still has) a truly great team of employees, a remarkable culture and a highly valued brand name (which is, unfortunately, eroding). But the company couldn’t generate the sense of urgency needed to acknowledge the external realities of a shifting market and make the necessary changes.
John Kotter has studied and written more on change than anyone. His most recent book, A Sense of Urgency, explains how typical it is for successful companies to struggle with change, burdened by the victories of the past. (For another classic example, recall Kodak and its excruciatingly slow recognition of the digital revolution.) Every company, every CEO is vulnerable to this myopic maladaptation. Forgive me for repeating the Gary Hamel quote once again—because I like it so much: “All companies are successful, until they’re not.”
