Market history is on Dell's side
First Dell (DELL) CFO Jim Schneider makes a quick exit, then CEO Kevin Rollins steps aside yesterday, paving the way for Michael Dell to return, Steve Jobs-style, in glory to lead his namesake company. There isn't much I can add to this, as Browser contributor David Kirkpatrick had the world's first post-succession interview with Michael Dell.
But the news reminded me of a great piece by Jon Birger in last year's FORTUNE 500 issue highlighting some research showing that founders might be better leaders for their companies than anyone else.
The stocks of these 27 companies [run by founders] returned an average of 18.5% annually from year-end 1995 through 2005, which is seven percentage points better than the FORTUNE 500's average return over the same period. Their profit growth has been superior, too, increasing at an average rate of 19.6% a year from 1995 to 2005, vs. 11.7% for the FORTUNE 500. ...
I guess we'll find out if there's some real truth here, or just a sample bias.
"Fahlenbrach has a few theories on why founder-CEOs seem to be better corporate stewards. One is that they simply care more. Their companies are their life's work, so they're more likely to embrace long-term strategies. Supporting the theory is Fahlenbrach's finding that founder-run companies have bigger capital budgets and invest considerably more in research and development than nonfounder-run firms."
Interesting theory, and we shall see. It appears in Dell's case that the company was an asset transfer machine which resulted in a much higher asset accumulation for Dell the founder than for Dell the company. Also, under the founder's previous reign, the company invested in no R&D using only industry standard technology. The performance was from the then unique distribution chain and the production delivery process.
Time will tell. This is going to be a fun one to watch.
Well, I don't know if the changing of the guard, again, will help them.
I think Dell needs to remember that customers are not a disposable commodity.
Customers will not tolerate being put on hold, being disconnect and not called back, and definitely not taking months to fix a problem with their Dell PC.
My family experienced this issue with trying to get a laptop fixed, for my niece, who was in college. She eventually had to use someone else's computer to finish out the year, since her $2400 laptop(with full replacement warranty) was not working correctly.
Having paid 2/3 of the cost for that PC, I ended up taking over the task(though I a few states away), because I am both PC savvy and know how to deal with tech support double talk.
Again, this was on a PC that had the full replacement warranty. It seemed like a good idea at the time, since the PC was for a college student; the hope was to minimize downtime in the case of a major problem.
Eventually, after a lot of phone calls, frustration, and, yes, patience, the problem was finally fixed. This happened right after I mentioned something about filing a complaint with my state's attorney general.
Unfortunately for Dell, I often help friends and family make PC buying decisions. Since then, no one that has asked my advice has bought a Dell PC.
Reputation is also not a disposable commodity.
As a founder of a company I can not possibly imaging having the same passion working for someone else. I would also suggest that a founder would have a more indepth understanding from a ground up level of what it took to create a successful company.
Founder Web and Flo
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