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A Design Strategy for Dell

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The Design Management elective was one of the highlights of my MBA experience here at Imperial.

Good design = good business. And just like any other business discipline, good design management stems from a systematic, thoughtful and informed approach to design.

For this individual assignment, I chose Dell and I took the role of a design management consultant. I then crafted a strategic plan on how Dell could make a better and more efficient use of design and designers.

Once I identified the Design Management that Dell currently adopts, the strategic plan addressed:

i) how this company can make a (better) strategic use of design, broadly understood in terms of processes, practices, collaborations with design consulting companies etc.;

ii) how design can fit within the company’s existing business model and activities or how the business model needs to be changed accordingly;

iii) how Dell could concretely implement these changes towards a more effective use of design;

iv) how the implementation of the previous changes will help repositioning the company on the market, and what benefits are expected (e.g. in terms of profits, image, reputation, market share, etc.).

Submitted in partial fulfilment of the requirements of the Imperial MBA degree and the Diploma of Imperial College London. I was awarded a Distinction for this Design Management elective.

Published in: Business

A Design Strategy for Dell

  1. 1. Design Strategy forDell Inc. Izam Ryan Imperial FT MBA candidate 2013/14 Izam.ryan13@imperial.ac.uk| http://about.me/izamryan Imperial College LondonBUSINESS SCHOOL
  2. 2. This document outlines a strategic plan for Dell to apply design led thinking to build a competitive advantage. exclusively prepared for Dell Inc. (“Dell”) in my capacity as a design management consultant
  3. 3. strategy 01 table of contents fit 02 implementation 03 repositioning 04 conclusion 05 appendix 06
  4. 4. 4 Dell does not have a well known competence for design management and isn’t currently a design leader Dell as a “fast follower” In a recent interview with Verve magazine, Dell’s VP of commercial sales describes the company as being a “fast follower”. This is borne out in a recent study by Engadgeton the most highly recommended laptops that showed that, while Dell laptops featured some unique features, they were mostly “me-too” products that followed on from other manufacturer’s true innovations. I would argue that although Dell makes good laptops, it is actually the market leaders in the premium segment like Apple and Toshiba who are championing design driven products and servicesthrough their brands. In fact, Apple’s brand is so strong, that, together with Microsoft and Google, are the only three IT companies to have placed in the top 20 Superbrandsin both the Consumer and Business segments. This brand strength is a result of Apple’s strong design led strategy that has developed in to their competitive advantage. as-is analysis of Dell Sources: Welch, C. (2014), Engadget(2014) and Superbrands(2014) strategy
  5. 5. 5 Although Dell has made some inroads in co-creation, Dell’s end user experience is not known for quality Dell is innovative in some aspects For example, in China, Dell Design Studio has been experimenting with co-creation and crowd-sourcing laptop cover designs. Dell also works closely with OPI the nail lacquer makers to make laptops a fashion accessory. Dell have a new focus on customer service Recently the company has implemented systems and processes to track, measure and manage the quality of customer service. This focus by senior management (the CEO himself) and tying in financial incentives to achieving net promoter score (NPS) emphasise that Dell is reorienting itself to not just deliver excellent products but also an excellent customer experience. as-is analysis of Dell Source: Tianyu, Y. (2010) and Abay, M. (2014) strategy BUTend users experience the Dell brand holistically through several touchpoints– not all of them are physical. Therefore, cosmetic designs may only superficially impact the Dell brand if customer service is bad
  6. 6. 6 Dell’s reputation and differentiation was built on its direct sales business model while using internal designers Dell’s direct sales business model This business model uses subcontractors to assemble commoditised parts in to a custom built-to-order PC.Although it frees up Dell to focus on other parts of the business, there has been an apparent under investment in designover the years. In a 1998 HBR interview, Michael Dell explains that historically, Dell’s R&D is focused on process and quality improvements in manufacturing. This is consistent with the company adopting a “fast follower” approach to technology, focusing instead of building its advantage in cost leadership. But today that advantage has evaporated Today, built-to-inventory and standard “off the shelf” commodity hardware is good enough for most tasks. The trend is now customers buy cheap commodity hardware through discount online retailers like Amazon. Today, value has also been created by design and integration and a human-led approach, which Apple has championed. as-is analysis of Dell Sources: Magretta, J. (1998), Lafley, A. G. et. al. (2013), McGrath, R. G. (2013) and McCracken, H. (2013) strategy The direct sales business model is not a big enough differentiator for Dell. Dell needs to explore design lead strategies.
  7. 7. 7 Competitors are successfully using design led thinking and stealing a march against Dell Apple is both a cost leader and a differentiator In fact, Apple has in recent years achieved better cost and operating efficiency than Dell, while maintaining market- leading innovation. Perhaps most importantly, Apple uses an in-house design teamthat has one of the highest productivity ratios in the industry. I would argue that this excellence in design led thinking leads to Apple’s current market power in the tablet and laptop market. If Dell isn’t careful, Apple may encroach on its business Although Dell’s business is predominantly in serving large enterprise, Apple’s continued growth may eat away at Dell’s market share as users bring their own devices to work in this “consumerisation” of IT trend. This is where users bring their own devices from home in to the work place. as-is analysis of Dell Source: Heracleous, L. (2012) and Snyder, B. (2013) strategy Dell is at risk of being caught flat-footed by the competitive threat of Apple
  8. 8. 8 In this increasingly complex world, there is a need to simplifysystems Case example of Philips In 2006, Philips organized a corporate event that showcased the importance of a human-centric approach to product design. Using a very simple set of guiding pillars: Designed around humans Easy to use Technologically advanced the company showcased new products and services that embodied these pillars. Dell has a key opportunity to do the same with the IT industry. In my own experiences using Dell’s current website –I found it to be confusing with many different sub-brands that didn’t have a clear value proposition. to-be analysis of Dell Source: Siegel, A. (2013) strategy In the same way that Philips was able to design innovative products by emphasising the human-centric design element, so too can Dell reinvent itself and carve out a leadership spot in the industry.
  9. 9. 9 Dell should make a conscious design decision and define it’s mission as being: to simplifyIT for end users. Current Dell mission statement Dell’s current mission statement is “to be the most successful IT systems company in the world by delivering the best customer experience in all markets we serve”. Unfortunately this statement doesn’t say howDell should achieve this “best customer experience”. The mission statement then goes on to list “highest quality” and “best- in-class service and support”, as if the Dell organisation itself is not a human-oriented organisation but is a kind of hardware tool that has technical features described in technical language. The recent privatisation exercise of Dell would be a good opportunity to revisit the mission statement “To simplify IT for end users” would cut through the complexity and jargon and be a more humanistic approach. to-be analysis of Dell Source: Strategic Management Insight (2013) and Frick, W. (2013) strategy Dell should re-engineer its Mission statement to align along design-lead thinking
  10. 10. 10 Dell needs to place the customer experience at the very front and engineer the organisation around that Design thinking is core to Dell’s success Dell’s business is not just about selling hardware and software. The trend of the serviceisationof IT has meant that Dell’s customers are increasingly demanding high quality services. IT-as-a-Service is a new trend with new business models being created to deliver what was previously delivered through traditional products and services. Because design thinking is now so core to Dell’s success as a service-driven company, Dell needs to place the customer experience at the very front of the organisation. Dell should not outsource to outside design agencies. The need to design tightly integrated products means that having outsourced designers introduces a greater distance between the teams that need to collaborate in order to develop truly integrated products and services. to-be analysis of Dell strategy Dell should concentrate on building an internal Design competence, focusing on understanding customer journeys and the whole customer experience across all touch points. External designers can be brought in for smaller, bespoke projects.
  11. 11. Perfection is achieved, not when there is nothing more to add, but when there is nothing left to take away. Antoine de Saint-Exupéry Writer and poet
  12. 12. 12 Dell needs to start with a strong core design team and build out from there Core design team A strong core of dedicated design professionals should be tasked with bringing design-lead thinking acrossthe organisation. Customer segment specialists The core team should also be supplemented by subject matter experts who specialise in understanding the needs of particular customer segments. This would include customer journey mapping, conducting ethnographic studies on customer interactions. Manufacturing contractors Contractors will also need to be “trained” in how to interact with the new organisational design. a design led business model Source: Dell (2013) fit The managerial challenge for Dell will therefore be in managing the interactions between internal Designers and external Manufacturing contractors
  13. 13. 13 This will result in a hybrid network organisation and would be a subtle shift in the business model Core design team Specialists Contractors Dell corporate Core design team is the nexus This would give contractors a single point of contact with in the Dell organisation for design-led issues. This also concentrates the learning and codification of knowledge within the core design team. Separating out the specialists would mean that we could then spread out the specialists across different parts of the world to address different customer needs. a network of designers fit
  14. 14. Enlightened trial and error outperforms the planning of flawless intellects. IDEO Global design firm
  15. 15. 15 There are three key areas that need close attention: culture, processes and structure of design teams. three key implementation areas three key implementation areas implementation Culture •Senior management involvement •Shaping the culture through a three-tier lens Processes •Using rigorous design methodologies Structure of design teams •Flat structures •Teaming
  16. 16. 16 Key to success is senior leadership support of a shift to a design-led organisation. We would address the three different levels of culture Artifacts Values Assumptions Artifacts–the visible elements Key here would be senior leadership’s support of the new design-led culture at Dell. For example, we could introduce some recognition awards for the best design-lead projects on a company-wide basis. Values –espoused values This could include a renewed Vision/Mission statement Assumptions –behaviours of the company The hardest to change, this would evolve over time but could be shaped through common training and cultural change programs. culture Source: Schein, E. H. (2010). implementation
  17. 17. 17 Key would be introducing the core methodologies of design-lead thinking Importance of process Processes are created to help the organisation routinely deliver on new ideas and to weed out good ideas from the bad ideas. Opposite to what some observers might expect, excellence in design lead thinking comes from a robust and rigorous methodology and process. process implementation Examples of key methodologies: 1. Double diamond approach2. Ethnographic research3. Customer experience journey maps
  18. 18. 18 Best practice is for design teams to be cross-disciplinary and have flat structures Design is a cross-discipline team sport Because good design has to take various view points into account, the best teams are the ones with multiple disciplines represented on the team with skilled team players from different backgrounds. This is sometimes referred to as a “Broad T”. structure of design teams implementation Some key features of successful design teams: 1. Cross-disciplinary teams2. Flat structures3. No hierarchy4. No fixed roles5. Autonomy as a motivator
  19. 19. Don’t make the process harder than it is. Jack Welch Retired CEO/Chairman of General Electric, 1981-2001
  20. 20. 20 Dell’s current brand stands for value based and effective products Dell’s current business model Dell’s evolving biz model is to use the PC as a launchpadto get involved with business customers and to sell add-on servers, storage and networking gear. In China –people tend to buy what their friends are buying. And hence the importance of targeting the consumer market at the same time as enterprise –because of the integrated nature of work these days. repositioning the Dell brand Sources: Einhorn, B. (2013), Einhorn, B. et. al. (2013) and Kapferer, J. N. (2012) repositioning I recommend that Dell continues this double focus –to cover the consumer end with high-design products to entice consumers and competitively address the Apple threat. At the same time, a design lead approach to enterprise products is key.
  21. 21. The busier life gets, the more value there is in simplicity as a point of competitive differentiation. ArkadiKuhlmann CEO of ING Direct USA
  22. 22. 22 In summary –there are three key shifts in applying a design-lead approach to Dell Human- centric design Cultural shift Process and organisational design This approach is also largely recommended by industry observers. In a recent 2014 article, Independent strategist Markowitz E also suggests similar strategies of focusing on design management and reinventing the customer experience. strategy at a glance Markowitz, E. (2014) conclusion
  23. 23. 23 Dell has already started implementing parts of these recommendations Room for improvement Dell are rationalising some of their complicated portfolio and bringing products from different brands that solve the same client need into a single brand Dell are focusing on the data centre –but they still need to reconcile their dual nature of enterprise-consumer focus They seem to be focusing on acquisition to build a new portfolio –but actually design thinking would say that we should rationalise and simplify not complicate and expand. Going private may help LBOs of tech companies tend to result in companies innovating more in areas of the company’s core competencies. I’m confident that under its new private ownership, Dell will focus on the right areas of investment and reinvent the brand. next steps Source: Lerner, J. et. al. (2008), Preimesberger, C. (2014A) Preimesberger, C. (2014B), Warner, D. (2013) and Zilman, C. (2014) conclusion
  24. 24. Genius is 1% inspiration, 99% perspiration. Thomas Alva Edison Inventor and Businessman
  25. 25. 25 Key resources Design-led thinking Siegel, A., & Etzkorn, I. (2013). Simple. Random House. Strategy Lafley, A. G., & Martin, R. L. (2013). Playing to win: How strategy really works. Harvard Business Press. McGrath, R. G. (2013). The end of competitive advantage: How to keep your strategy moving as fast as your business. Harvard Business Review Press. Culture Schein, E. H. (2010). Organizational culture and leadership. John Wiley & Sons. Brand management Kapferer, J. N. (2012). The new strategic brand management: Advanced insights and strategic thinking. KoganPage Publishers. bibliography appendix
  26. 26. 26 Case research Abay, M. (2014) How Dell delivers great customer experience with purpose. Available from: http://ashtonmedia.com.au/dell-delivers-great-customer- experience/[Accessed: 26 July 2014] Dell (2013) 10-K FY2013 filing with SEC. Available from: http://www.sec.gov/Archives/edgar/data/ 826083/000082608313000005/ dellfy1310k.htm# s5C68EFBBB12F950D6213B25618DA6C35[Accessed: 26 July 2014] Einhorn, B. (2013) HP and Dell Gain on Asian Rivals. Businessweek. Available from: http://www.businessweek.com/articles/2013-10-11/h-p- and-dell-gain-on-asian-rivals-dot-just-dont-call-it-a- comeback[Accessed: 26 July 2014] Einhorn, B., Larson, C., Ricadela, A. (2013) In China, Dell Clings Tightly to the Waning PC. Businessweek. Available from: http://www.businessweek.com/articles/2013-11-07/in- china-dell-adopts-retail-pc-strategy[Accessed: 26 July 2014] Engadget(2014) Engadgetlaptop buyer’s guide. Available from: http://www.engadget.com/2014/02/18/engadget- laptop-buyers-guide-winter-2014-edition/[Accessed: 26 July 2014] bibliography appendix
  27. 27. 27 Case research Frick, W. (2013). The Dell Deal Explained: What a Successful Turnaround Looks Like.Harvard Business Review Blog. Available from: http://blogs.hbr.org/2013/08/the-dell-deal-explained-what- a/[Accessed: 26 July 2014] Heracleous, L. (2012) Quantum strategy at Apple Inc.WBS Core magazine. Available from: http://www.wbs.ac.uk/wbs2012/assets/ WBS_Core_Edition_One_Quantum%20Strategy%20at%20Apple%20Inc_56-59%20%283%29.pdf[Accessed: 26 July 2014] Lerner, J., Sørensen, M., Strömberg, P. (2008) Private Equity and Long-Run Investment: The Case of Innovation. Harvard Business School Working Paper 09-075. Magretta, J. (1998) The Power of Virtual Integration: An Interview with Dell Computer’s Michael Dell.Harvard Business Review, Reprint 98208. Markowitz, E. (2014) How Michael Dell Could Reinvent His Company. Inc. Available from: http://www.inc.com/eric- markowitz/how-michael-dell-could-reinvent-his- company.html[Accessed: 26 July 2014] bibliography appendix
  28. 28. 28 Case research McCracken, H. (2013) Another Reason for Dell’s Decline: The Shrinking Importance of PC Customization. Available from: http://techland.time.com/2013/02/06/another-reason- for-dells-decline-the-shrinking-importance-of-pc- customization/[Accessed: 26 July 2014] Mellor, C. (2014) Dell planning to blend Compellentand EqualLogic arrays. The Register. Available from: http://www.theregister.co.uk/2014/06/02/ dell_planning_compellent_equallogic_unification/ [Accessed: 26 July 2014] Preimesberger, C. (2014A). Dell Turns 30, Looks to Data Centerfor Long-Term Future. Eweek, 2. Preimesberger, C. (2014B). Why Michael Dell Can Afford to Be Bolder as a Private Owner. Eweek, 10. Snyder, B. (2013) “Why Apple has thrived while Dell may die”. InfoWorld. Available from: http://www.infoworld.com/d/the-industry-standard/why- apple-has-thrived-while-dell-may-die-223402[Accessed: 26 July 2014] Superbrands(2014) Consumer Superbrands2014 and Business Superbrands2014. Available from: http://www.superbrands.uk.com/results[Accessed: 26 July 2014] bibliography appendix
  29. 29. 29 Case research Strategic Management Insight (2013) Mission statement of Dell. Available from: http://www.strategicmanagementinsight.com/mission- statements/dell-mission-statement.html[Accessed: 26 July 2014] Welch, C. (2014) Dell P discusses going private, innovation, and the Dell Dude. Available from: http://www.theverge.com/2014/1/23/5337908/dell-vp- discusses-going-private-innovation-and-the-dell-dude[Accessed: 26 July 2014] Tianyu, Y. (2010) Dell event seeks to inspire via youthful artistic talent. China Daily. Available from: http://www.chinadaily.com.cn/business/2010- 06/18/content_9987976.htm[Accessed: 26 July 2014] Warner, D. (2013). Court delays conference on Icahn lawsuit to block Dell deal.Reuters Online. Available from: http://www.reuters.com/article/2013/08/12/us-dell- delaware-idUSBRE97B0RF20130812[Accessed: 26 July 2014] Zillman, C. (2014). Michael Dell: Long live the PC. Fortune.Com bibliography appendix
  30. 30. The recommendations given in this document are specific to Dell’s situation. Care should be taken if they are applied out of context or without a professional design management consultant. thank you Imperial College LondonBUSINESS SCHOOL
  31. 31. This work is licensed under the Creative Commons Attribution-ShareAlike4.0 International License. To view a copy of this license, visit http://creativecommons.org/licenses/by-sa/4.0/or send a letter to Creative Commons, 444 Castro Street, Suite 900, Mountain View, California, 94041, USA. Licensed under Creative Commons License

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