Managing in a High Peformance Organisation: Dell Computers

At Dell Computers, the General Manager (GM) of a business unit lives his/herworking life surrounded by some of the most sophisticated business processes and levers of influence available in any modern business.

At the end of a financial year the executive begins their process for putting in place a business plan for the following year.The process begins with the reception of the key macro variables handed down by the SVP of the business area, variables that will have come from the strategy developed at the office of the CEO. The usual key macro variablesare:

1) Planned growth inmarket share
2) Planned product mix
3) Planned revenue and margin growth mix
4) Planned P&L efficiencies.

With these macro variables established, the GM will begin to draft and shape their business plan by developing their forecasted end of year Profit and Loss (P&L) statement.

From there the GM works backwards developing individual quarterly P&L plans for the four quarters before finallybreaking the plan down into individual daily plans for each of the 63 working days in the first quarter, with allowances made for holidays and seasonality.

The GM works with his marketing and sales teams to develop these plans. Dells direct sales model requires developing sufficient customer traffic to its two main sales gateways, its website and its contact centers where their direct sales teams convert the incoming calls into sales.

This is necessary in order to determine the sales and order entry staffing levels required at the contact centers. A major effort is made to drive as much traffic to the web as possible, given the huge efficiencies that arise in using this channel.

The second step is to determine the number of website hits and inbound calls re-quired given the expected sales closure rates of the channels.

From here a daily marketing plan and budget is developed that will generate the number and mix of calls & hits requiredto achieve the necessary levels of sales volumes, sales mix, sales margin and product mix targets.

Together these combine to create the daily P&L against which the teams daily results will be compared. As each day goes by the GM and his team receive daily feedback on any variances from plan on the P&L.

Each Wednesday the GM meets with his fellow businessunit GMs, the SVP and the CFO of the business area. Each GM presents their resultsto date for the week explaining any discrepancies to the team and the plans they have to bridge any shortfalls that have occurred.

Where the GM is ahead oftarget, pressure is exerted to commit to maintaining the improved level of activity, particularly if one or more of the other business areas are lagging behind.

Dells Industrialised Sales Processes

The daily routine for a General Manager (GM) of a Dell business unit goes as follows:

08.00am

Arrive at work to see the closing sales figures for the previous day, available in real time from the managers dashboard on the intranet.

If all is well, go have breakfast, if not begin the process to identify where the numbers went wrong.The first thing to check is whether the deficit is on the web channel or the direct sales (contact centre) channel.From here the GM checks if the expected traffic (hits or calls ) were met on whichever(or possibly both) of the delinquent channels.

If the number of hits or phone calls is down he calls his marketing manager to check what happened and what the recovery plan for today is.If the hits and calls are on or above target then the next variable checked is the sales closure rates x product x channel.If the discrepancy is here then he calls the sales manager to check what the reasons were and what the recovery plan for the day is.

09.00am

Receive in his inbox the P&L for the previous day with variances highlighted in green(good) and red (bad). A quick management team meeting is held to discuss the variances and what the planned recovery actions are in the event of there being any “reds” on the P&L.

10.00am

First “daily pulse” arrives in his inbox showing the profile of the traffic that has arrived today indicating, volumes,conversion rates, average selling price by product line,the product mix achieved, the operating margin and any relevant variances.

11.00am

Second “daily pulse” received and first management“huddle” of the day to look at the Key Performance Indicators(KPI) and agree what if any actions it might be necessary to take today.These actions are not confined to addressing problems only. Situations may arise whereby volumes are up so much that there may be an opportunity to raise selling prices or drop incentives(free memory upgrades or home delivery) to improve the margin at the expense of additional volume growth.

12.00am — 4.00pm

The day continues much the same until the final pulse is received at 4pm by which decisions must be made as to what if any changes need to be made to any of the promotional or advertising material.Daily newspaper advertisements for the following day or any other advertising deadlines that close today will be reassessed in this light.Advertisements that are not meeting their hit or call rates,their close rates, or their target margins need to be pulled,increased, incentivized or generally adjusted.6.00pmBy now the daily figures are pretty well known and decisions are made on whether the following day starts with breakfast or phone calls.