uStrategy Implementation at Dell
Dell was one of the fastest-growing companies of the 1990s, and its stock price increased at the rate of 100% per year, delighting its stockholders. Achieving this high return has been a constant challenge for Michael Dell. One of his biggest battles has been to manage and change Dell’s organizational structure, control systems, and culture as his company grows.
Michael Dell was 19 in 1984, when he took $1,000 and spent it on the computer parts he assembled into PCs that he sold over the phone. Increasing demand for his PCs meant that within a few weeks, he needed to hire people to help him. Soon he found himself supervising three employees who worked together around a 6-foot table to assemble computers while two more employees took orders over the phone.
By 1993, Dell employed 4,500 workers and was hiring more than 100 new workers each week to keep pace with the demand for the computers. When Dell found himself working 18-hour days managing the company, he realized that he could not lead it single-handedly. The company’s growth had to be managed, and he knew that he had to recruit and hire strategic managers who had experience in managing different functional areas, such as marketing, finance, and manufacturing. He recruited executives from IBM and Compaq. With their help, he created a functional structure, one in which employees were grouped by their common skills or tasks they performed, such as sales or manufacturing, to organize the value chain activities necessary to deliver his PCs to customers. As a part of this organizing process, Dell’s structure also became taller, with more levels in the management hierarchy, to ensure that he and his managers had sufficient control over the different activities of his growing business. Dell delegated authority to control the company’s functional value