In the lessons that you've had over the last 20 years with all the changes and growth and turmoil, what would be some of the best lessons that you could share with managers about how you sell to customers?
As companies grow, it's pretty easy to kind of lose the plot in terms of what business is really all about. I think it sort of boils down to a couple of key things. You got to provide something that's valuable, that's differentiated. You got to understand the customer requirements and customer needs, and you got to translate those, given all the inputs, in our case, you know, technology ingredients into the right products and services.
And there is no average customer, you know, we have a wide range of customers, by type of industry and size, by geography, and then of course the technologies are moving as well. So we believe in kind of segmenting our activities around specific customers and really having our teams targeted into what those customers require, what the real needs are.
When you think about those customer-focused segments of the business, can you think back to a time when you had a particular challenge that you were able to identify, address, and then how did you work your way to daylight on taking care of what those customers needed after all?
One of the first things that we kind of decided as a company after the company was only a couple of years old was that we really wanted to serve the larger customers. The really big, you know, global companies. Kind of an ambitious goal for a small startup company with no outside capital, but we decided, hey, that's going to be really important for us. And so we started to understand, well, what does Exxon, you know, Exxon at the time, now ExxonMobil, what do they really need? And what are the requirements? Very, very different from a small business. What are the product requirements? What are the systems management requirements? How do you actually engage in a relationship with them? How do you evolve the right kinds of services? We quickly figured out that we had to have different products for, you know, consumers and small businesses and large customers. We had to have different services. We had to have, you know, teams that understood the language of those customers. And we had to kind of tailor everything we were doing to those customers, but the rewards were pretty fantastic.
And also, you know, those customers would be fantastic partners for us. In other words, they would really help us develop as a company and guide us to, okay, you're doing these things really well. Here are the things we need you to do in the future. Here are the things you need to improve. We'd like you to come with us to Russia. We'd like you to, you know, come with us to, because we need servers and here are the kind of servers we need. And so we really kind of, I think, guided our business around what these larger customers were telling us.
Were you there on that sales call the first day you went to Exxon? Do you remember that day?
I remember the first day when Exxon came to Dell. I mean, it was quite a panic because we never actually had many customers visit us. And it probably looked more like a big dorm room, you know, than a computer company. And we were scurrying around, you know, cleaning up the place and sort of, you know, getting some ties and trying to make it look a little more like a real business. Yeah, I mean, it was quite exciting for us. And now, of course, you know, we do a whole lot more for a company like ExxonMobil and many other big companies. I mean, what I've also learned is that these companies will develop a very long-term relationship, like 10, 20-year type of relationships. And both companies have to invest in it.
What would you say were the most pressing or key factor takeaways in terms of what you've learned about selling to customers that people should know?
I think first you want to listen, listen very carefully and ask a lot of questions and learn. I think you want to bring something that's differentiated and valuable. And then you got to execute. You know, pretty simple.
Michael, when you think about innovation, I talked to Gates and Schwab and Buffett, they talk about how big companies have difficulty engaging in the level of risk-taking that's natural for innovation. It's almost as if innovation is courage rewarded by bad headlines. You're supposed to learn from your failures, but I haven't met a Wall Street analyst or a media person that ever gives you, you know, kudos for a noble mistake that you're attempting. What's your advice and lessons around learning how to innovate in an organization and inspiring people to take the risks necessary?
You know, at the last large meeting we had with our leaders, the first thing I did was I showed about five examples of things that were different. They were risky, they were changes, and they all happened to work. Okay? First, you got to tolerate risk, and you got to be open about it and say we appreciate risk-taking. In fact, I'm going to evaluate our leaders on risk-taking. That doesn't mean recklessness. It doesn't mean we don't want that, but we do need to place some bets on things that we think are great opportunities for us, even if they have a three, four, or five-year horizon to them. They're not all going to work. That's just the way it goes. But we can make some informed and logical bets about things that we think are going to be big opportunities for us. And then we can celebrate those. And then also, if you have a failure, you know, well, that's all right. Now, if you fail every time, well, that's not okay. We're not interested in that. But you know, if you have an occasional failure and you learn from that, that could be actually great. So, you know, we want our teams to embrace risk and take on new things.
Could you take us through one of those examples of innovation and risk that was taken on, kind of what was the risk, and what might be feared in terms of the outcome, and then how did it work out for the better?
We have a lot of examples. I mean, one that comes to mind for me is, you know, dell.com. You know, when we started dell.com, and this will sound, you know, a little obvious now because it is, but at the time it wasn't so obvious. When we started dell.com, there was a big fear in the organization that this would somehow take away the role of the salesperson. And it was real kind of spooky and mysterious stuff when we first started this. And a lot of the salespeople are like, I don't know about this, you know, so the customer's going to be able to go online and order, and you know, what does that mean? What does that mean for us? You know, I sort of instantly knew what it meant. It meant productivity and it meant that our people would become more productive because they would be doing things that were more valuable and not doing the things that were less valuable. So actually the combination of the person plus, you know, dell.com would be much better than what we had before. But it was sort of a leap of faith and a trial and error in terms of how do you get it right and the compensation systems and all those kinds of things. You know, if you had kind of taken a much more cautious approach, it could have taken, you know, 3, 4, 10 years to do that. Well, you know, in our case it took, you know, 4 or 5 months. We said, 'We're going to do this.' You know, strap yourself on, here we go, baby, you know, because you know, we got to make the change.
And what would be your advice then having gone through that transition? This whole idea of conflict between the clicks and the bricks or the sales force and the so-called channel conflict. What would be your kind of fast-track advice for people in terms of building an organization around that?
I think it somewhat depends on the appetite for change and the history of change in a business. We've been blessed by having change as sort of a semi-constant in Dell's business. So our people tend to embrace change and they tend to view change as something that's a good thing. If you don't have that, well, that can, you know, it's going to take longer. You can't just go from no change for 80 years to now we're going to make big changes. It is one of these things where you kind of have to get people around the reality of, you know, whatever is occurring. You got to create a sense of urgency around the problems. You got to, you know, make sure people understand exactly why we're making this change. And then kind of make sure it happens.
When you think about the process of bringing together a team, as you're doing now, how would you engage them in such a way that you're picking the team and motivating the team so that you can get the best out of them? How do you go about the process of getting the best players and keeping them inspired?
Well, it's a lot of fun. I've done it before and I'm doing it right again right now. I think first of all, you've got to have a common set of goals and objectives that everybody kind of agrees on. And so the frequency of meetings could be fairly high, you know, as you're doing that. In our case, I mean, our team is meeting weekly and we're reviewing the business, how's the business going, what are our customers telling us, what are we delivering that they love, what are we not delivering, what are competitors doing, what do we need to change, you know, what do our kind of core metrics look like. But first of all, you want everybody to realize that we're all basically, you know, handcuffed together. And we all go up or down together. And you know, you don't have one guy succeeding, another guy failing. We're going to talk about how do we help each other succeed and what does each other need to cause ultimate success for the company. So really getting a shared set of goals that we're all locked on together.
When I talk to so many entrepreneurs and CEOs about this process of engagement with really creative, really passionate people, they come from diverse backgrounds. You want all of that, but it's natural for conflicts and contention to erupt. And some of that's a good thing and some of that's a bad thing. How do you harvest the conflict that comes from having really highly engaged people? I mean, some of these meetings a CEO doesn't invite outsiders to because they're so contentious. Could you talk about that?
You know, we love debate. Debate's fantastic, but you know, we love data too. So we're in fact, so you know, we're sort of a bunch of fact-driven folks and so we like to, you know, if we're having a discussion and it's getting fairly emotional and we don't have a lot of data, that's really not very useful. So we call it kind of call a timeout and say, okay, let's go get the following, you know, five pieces of information and let's come back and look at the data and then we'll decide what to do. But you know, the facts are our friend and we'll go with facts, you know, nine times out of 10.
When you think about the many large organizations, having that kind of level of debate is sometimes difficult. It seems that some people have come to the table a bit intimidated with being able to vet the tough issues. How do you draw people out so that they can give you the hard facts when you need them?
You know, it's almost a precondition for being on the team. You know, if you're not able to do that, I'm not sure it's the right team for you to be on. So first of all, I think you got to have capable folks. You don't want to have a group that's too large because then you just don't get the kind of participation that you want from everyone. You don't have engaging and deep discussions and you kind of go back to what are the principles of what we're trying to accomplish here and everybody sort of aligned together. We succeed or fail together and you know, we do it based around data and also we do it with a view towards what's going to be best for our shareholders, what's going to be best for our customers, and actually the right answer, you know, almost always is...
Michael, when you think about the process of setting strategy for an organization this large and this global, how do you go about doing that? What's involved?
In our case, you know, the senior leadership team, which is about 12 people, are essentially the key decision-making group for the company and are quite involved in setting the strategy for the whole company. Now, in each individual business, of course, you got a business leader who kind of owns the strategy, but the overall portfolio strategy, you know, certainly I as the CEO own it, but I'm involving this very capable team of leaders, many of whom were CEOs themselves, in doing this. So I think we'll get a much better answer that way. I think we'll get a more bought-in answer as opposed to trying to keep it, you know, confined to two or three people just at the very center of the company. That's kind of the way we're doing it, but we believe that the line leaders, you know, have to own the strategy themselves to be able to execute it.
How do you flow the information from the markets back to the line and up to the top of the organization so that you feel like you've got strategy that represents where the markets are headed?
Well, we have a pretty regular cadence of, you know, operations reviews and certainly regular metrics that tell us how the businesses are doing, you know, spend time in each of the businesses. And then if a business has either a lot of challenge or a lot of opportunity, we tend to spend more time on those businesses. So if it's new or if it's, let's say, in a bit of disrepair, you know, we'll provide some extra attention to it. If it's just kind of trucking along nicely and, you know, has a great strategy and things are under control, well, there's not a lot for us to do.
Can you share an example of an area where because of the strategy process you've decided to explore new territory or expand the business? I read that you were expanding into business consulting, enterprise consulting.
Yeah, services is a great example. I mean, we have a fast-growing services business. You know, 4 or 5 years ago it was under $2 billion, now it's a $6 billion business on a run rate basis. Expanding rapidly, particularly in managed services and infrastructure services for our clients as we kind of move from products to services. And so, let's say you're a company, you got 150,000 employees, we'll take over the management of the whole client environment, the desktops, the notebooks, the printers, the software, the moving them around, the help desk, the whole thing. So that's a big growth area of our business. And also helping customers deploy, install, and, you know, migrate to new enterprise solutions. So if you're doing a big, you know, email installation or big server virtualization project or a big database cluster, you know, there's a lot of services around those products that we're quite involved in.
Now, was that the process of looking at competition and looking at what the market needed? How did you... Could you walk us through maybe the time when you came to the epiphany that you wanted to go this direction or expand in this business enterprise?
