Dell's Transformation

Fascinating article in News.com details Dell's transformation from a second tier PC maker into the dominant force in the industry [via TechDirt]. What struck me as most interesting (and most relevent to the start-up environment) is that Dell's superiority was developed incrementally with one small change after another finally resulting in an incredibly successful model:

The new Dell business model developed over a period of time. The first set of objectives focused on lowering inventory by 50 percent, improving lead time by 50 percent, reducing assembly costs by 30 percent, and reducing obsolete inventory by 75 percent.

The new system was phased in, with component inventory dropping from 70 days to 30 to 40 days, then to 20 days, then to nearly zero. At the same time, the sales force was trained to "sell what you have." As the new profitability management system emerged and proved viable, Dell moved aggressively to refine it and to bring the other functional activities into tight alignment.

Start-ups often search for the "silver bullet" that will radically change their prospects and unfortunately there rarely is such a solution. Much like Microsoft, who proverbally can't get it right until version 3.0, start-ups need to constantly refine, learn from mistakes and embark on a relentless path of improvement. That's how you build a Dell.