Dell to Retake Helm, Employees Ecstatic!

We received this memo from Michael Dell to Dell employees about the sudden departure of Kevin Rollins and how Michael is going to re-take the helm. A current employee was so kind as to provide commentary on just how many of the rank and file, peons if you will, feel about this new great opportunity.

We did do a fairly stringent redaction for even potentially sensitive material, as, A) it's the ethical thing to do, and B) we'd hate to be accused of giving away trade secrets.

-Staff

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Subject: Greetings
Date: February 2, 2007
From: Michael Dell, CEO
To: Dell Employees

We held a meeting this morning with our Vice Presidents and Directors. I'd like to share the highlights of this meeting with all of you.

And how many of those guys or gals where your choice for the board?

I told our team that I remember the great times and many successes with Kevin Rollins, but now it's time for a change. We are not doing a COO or CEO search. I plan to be CEO for the next several years.

Like Steve Jobs? He came back for a short time too. Wait, he's still there...

I remember what it's like to start a company. We're moving fast. There is no luxury of time. The competitors are fierce. The difference is this time we have many new assets and some hidden ones that can be brought out.

It's always been fierce. It's called capitalism. But it may be that Dell's model has lost its effectiveness as other's having learned how to complete with Dell. Or figured out how to use ever cheaper labor.

We have great people... but we also have a new enemy: bureaucracy, which costs us money and slows us down. We created it, we subjected our people to it and we have to fix it! The #1 Tell Dell issue is bureaucracy and getting cooperation from other organizations. I am asking each of you to look across your organizations and eliminate redundancies, think about what is best for Dell, and provide the clarity and focus of leadership that we need.

Reduce processes, priorities and especially head count?

Last year, we worked really hard and there were many sacrifices. Thanks!

No. Thank You! I've really gotten use to the 80+ hours a week.

We had great efforts, but not great results. This is disappointing and it is unacceptable. The result is that there will be no bonus this year. [emphasis added] I know this is a big deal for you and your teams. We're going to fix that so that our efforts translate into great results and success for our teams.

Does that include your bonus too? And those of your directors and other senior management? And does this include the stock options?

But we still have great people who made great efforts. It's important to recognize your hard work, though our results fell short. Limited discretionary awards will be available to all, but the most senior people. We can't cover everyone, but it will be a tool you can use.

Great! I worked my ass off and didn't get a raise for the last 3 years... I guess the kid's braces can wait. Is senior management working for a $1 year until this thing turns around? Like Chrysler? Or Ford? In those cases very senior management didn't get a salary until they turned a profit.

And we are also budgeting for above market raises this year.

For who exactly? Senior management? Someone getting the money but not apparently the rank and file.

For stock awards, we will shorten the vesting period from five to three years for future grants and move to restricted stock units.

That's great. Except they don't give those out much anymore thanks to IRS rules. And certainly not much to the rank and file of the company. So, who's getting those? And will that include revising the price of the existing options well above $30 a share to something more realistic? It might help.

And we're going to set the annual bonus plan against realistic targets.

We have a tough couple of quarters ahead. We didn't get here overnight and we won't fix things overnight either.

But we're gonna try, right? We keep trying to operate at the "speed" of Dell. Even if we are a 60+ billion dollar company. Have you thought about operating like GE? They seem to grow at 8-9 percent a year for 100 years. What are they doing that Dell needs to do too?

OPEX (operating expense) grew too fast. We need to grow into what we have, hold cost and eliminate marginal activities. If you have some, please stop them now and if you're not sure, bring them forward. We must focus and wring out savings.

Marginal activities? Is that another term for a layoff?

Long-term, we will be the technology leader known for strong operating performance, a great experience for our customers and a great place to work!

So we're going to be on the Fortune 100 best places to work? Like Starbucks, National Instruments and Whole Foods? Not just one of the most admired companies, right?

We will have clear priorities and a focused strategy. We will grow Small and Medium Business (both with business and public customers) and expand Services.

We will continue to build the enterprise Server/Storage business. In Services, we will build, partner and buy.

And all to be implemented in one to two quarters? Hold onto your hats, folks.

Product Group will shorten design cycles, increase speed and innovation/design that create real differentiated value for our customers. We will transition to a light touch ODM (original design manufacturer) model. We're going to introduce new brands and products with a focus on [redacted]. We will ensure quality, stability and predictability for our larger customers.

We will complete our [redacted] strategy.

We'll restore loyalty and continue CE improvement focusing on the activities with the best ROI. We will bring excitement and pride back to our brand.

In emerging markets, we'll take new approaches and introduce new products.

In Consumer, I believe the dramatic de-scaling is a mistake. We will focus on return on invested capital (ROIC), cash flow and variable costs. We will have a new product cycle, we'll fix CE and we will not run away from a cost fight!

When I started in 1984, it was just me. But now we are blessed to have an awesome team, many great assets and $11 billion or so. It won't be easy, we'll have to make some tough decisions and we won't be shy about those. Our focus will be on building Dell into the company we all know it can be for our customers, our people and our shareholders.

To summarize, we will differentiate with CE; deliver value, but go beyond this with our unique understanding of customers; move to [redacted]; use database marketing and targeting for smaller customers; leverage our unique supply chain; regain our cost position; and build some new sources of sustainable profit including using intellectual property to differentiate.

Lots of work for the lawyers. They'll be suing everyone over intellectual property.

It's all part of Dell 2.0.

We will unify our leadership structure, from well more than [redacted] direct reports to [redacted]. I'll be decisive, but also push many decisions to our leaders. We will speed decision-making and make decisions closer to our customers and have clear responsibility and accountability.

Speed is fine, but speed w/o a plan is far worse. And you want this done in how many quarters?

I have asked [redacted] to return to Austin and lead the new Americas organization, which will include [redacted]. We expect to name the replacement for [redacted] to lead [redacted] from a choice of internal candidates in the next few weeks.

How about [redacted] too? He knows something about delivering financial performance quarter by quarter?

Asia Pacific/Japan will [redacted].

We are creating a new organization called [redacted], which has responsibility for all [redacted] worldwide. We're conducting a search for this position and hope to complete it soon.

[redacted].

[redacted].

[redacted].

[redacted].

[redacted]. We will be bold in our thinking and swift in our action.

And I'll be updating my resume, just in case.

I ask you to commit with me to the future of Dell. Show confidence with your teams and our customers. We will fix this business and take it to new heights!

Or just be committed.

All the Best,

Michael [Dell]

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Endnote:
I must admit that after reading this, that if I were a current employee of Dell, I wouldn't just be updating my resume, I'd be jumping ship as soon as possible.
-Staff

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