In the 90s, Dell was a darling that could do no wrong, with its revenues and valuation soaring. It was faster and cheaper than everyone else. Now, Dell is in declining products, with an outdated strategy chasing a larger competitor (Hewlett Packard) as margins continue being squeezed. Dell’s problems aren’t the result of bad management. It made no serious mistakes in its strategy or tactics. Its fall from grace was first due to competitors figuring out how to do what Dell did and then, more importantly, to the market shifting away from Dell’s primary products.
What’s the Big Idea?
Keep your eyes and mind open. All companies risk marginalization. Focusing on core products, core technology vendors and core customers can lead to blindness when the market shifts. “You can be focused and diligent, and remain dedicated to constant improvement—even excellence! But when markets shift it’s easy to become obsolete, and fall into margin killing price wars as growth stagnates. …Just look at Dell. From darling to dog in just 10 years.”