Comparison of Michael Dell and Andy Grove as successful entrepreneur
Michael Dell in his early life thought himself as an entrepreneur and realized that the key to build a successful business is to develop a strong and “direct relationship with the customer” (p. 58). He executed his first business lesson about developing a direct relationship with the customer when he issued his first product catalog at the age of 12 and advertised that in local trade journal. In 1984, he started his own business and started selling his personal computers. His main focus was to reduce any intermediaries and to satisfy customers’ expectation by placing “the customer at the epicenter” (p. 55). He used the leverage of the power of the internet, email, phone calls and faxes to gather all the information regarding customer choice and preference. Dell experimented once by trying to sell his products with an indirect approach but soon learned his lesson and promised not to steer away from the company’s original vision.
The company’s strategic approach to success was to use a ‘bottom-up’ tactic instead of ‘mass customization’ based on customers’ demand. Dell manufactured products after they had received the order from their customer. This strategy gave them a competitive advantage over other companies on determining their customers’ wants and preferences. In addition to their competitive advantage, the strategy also helped the company with inventory backlogs and cash flow problems. Hence the childhood lesson was proving to be the winning lesson and other companies were following that path through getting in touch with their customers.
The winning strategy was well complemented by providing the best quality at a reasonable price. The strategy proved its worth even during the worst recession times and was still making profits for the company when other companies were preparing to exit. This well proved business strategy may not be feasible to all the companies especially that require wide spread distribution channels and bit more than ‘made to order’ inventory in hand. But later, further research showed that by implementing the automation process even companies like this can become successful by using to Dell’s business strategy. This automation process triggers the machine to machine transactions which reduces administrative costs and help increase profit.
Dell faced its biggest challenge when they launched Olympic in the market. This high tech product promised to bring fortunes for the company. Later Olympic proved to be Dell’s biggest mistake even though it was technologically most praised product but yet able to meet customers’ expectations. In reality it was actually too complicated for the customers to use. This is when Dell realized that to make the bottom up strategy bulletproof, he needs to involve everyone – even engineers and technicians in creating valued products for customers. Dell felt that the information was not passed to the engineers and technicians and which caused this chaos for the company.
Unlike Michael dell, Andrew Grove had more challenging childhood. He had survived the scarlet fever and marginally escaped from the Nazis attack. His fearful childhood gave him the strength and courage to become the man he is now. He self-taught himself and after graduating from Berkeley he cofounded a high –tech company named Intel. In the 60s he became the world’s largest chip maker and time magazine named him Person of the Year for his role in fueling the computer revolution.
During Grove’s three-decade-plus journey towards this success, he had to overcome a lot of hurdles. His unique way of dealing with crisis has been the backbone of modern leadership management. He shared his vision with his two partners and together they successfully build the most powerful chip without increasing the cost. This was just the beginning of what later became, Intel. His prophecy and the essence for the company was the foundation of the success of Intel. He described it as the three legged tool which included execution, strategy and the third leg being marketing. The success of the company depended on the perfect balance of this three legged tool.
The first crisis Intel faced was when their competitors started to make better products and were selling them at a lower price. Grove identified the core of the crisis being wrong strategy and poor execution. The threat became so big that Intel had to leave the memory chip business market. Grove went out of the company to analyze the crisis and found a solution from an outsider’s perspective. After long three years, Intel introduced microprocessors which was the think tank of the computer. This important lesson learned by Grove helped present companies to overcome many unwanted situations. The philanthropist also believed that some paranoia is necessary to keep the company always focused on its track.
Intel faced its biggest crisis when its credibility was questioned during the launch of the Pentium processor because of a minor design error. The suppliers called off the shipments and Grove had to reassure the world about the soundness of the chip but the previous tension was not helping the cause. The leader described this as a “strategic inflection point” (p. 141). The strategic inflection point is best described, when a company faces a drastic change in their business which effects the potential of the business at a greater magnitude. But Grove thinks that strategic inflection point can help the company reinvent themselves while reacting to the intense pressures. The key is to identify this point ahead of time by identifying multiple directions out of the situation by experimenting early. Under Grove’s leadership Intel became a successful company in the late 90’s. It was his fore sighting skills and incomparable management skills that helped the company achieve this success.
Despite of different backgrounds, upbringing and academics, Andy Grove and Michael Dell contributed immensely towards modern management. It is their theories that was implemented in recent times which brought tremendous success to our economy. Grove’s career could have ended in his childhood if he had not overawed the Nazi nightmare. His business challenges could have also impacted his long and successful career but he turned his threats and made them his opportunities to grow.
Michael Dell also had career ending threats especially during the launch of the Olympic line of products failed to deliver customer expectations. His own mantra of building direct customer relationship was questioned. Despite he managed to align the organizations goals in putting the customer in the epicenter and continue to provide quality products.