Case Study: Today, Anyone Can Harness the Sources of Dell’s Success

In a 1998 interview in the Harvard Business Review, Dell Chairman and CEO Michael Dell described in detail what he viewed as the sources of his company’s success—his ability to “create a business that was focused and efficient.” He also described his company’s philosophy of outsourcing: “As a small start-up, Dell couldn’t afford to create every piece of the value chain. But more to the point, why should we want to? We concluded we’d be better off leveraging the investments others have made and focusing on delivering solutions and systems to customers.”

Dell also stressed three other key points, the first being that technology, at the time of the interview, allowed for relationships and information sharing with “supplier partners in ways that just weren’t possible five to ten years ago.” As detailed in the outsourcing discussion in this chapter and the next one, technology has advanced since that 1998 interview according to the Rule of Decreasing Support Costs. It is now possible, through low-cost, easy-to-use plug-and-play services, for any business to effectively interact with suppliers, partners, and customers across the globe.

Dell’s second point was that “it’s fair to think of our companies as being virtually integrated. That allows us to focus on where we add value and to build a much larger firm much more quickly. Virtual integration means you’re basically stitching together a business with partners.” The value of these partners is twofold: “There are fewer things to manage, fewer things to go wrong,” as Dell said, and if you set up your relationships right, you are not beholden to any single partner. This gives you

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