As my continuing effort to learn and share about Organizational and Operating Models, this week I pulled information about the Dell Operating Model. The content posted here is from the Dell Operating Model thesis that was submitted to the Sloan School of Management by Blaine Paxton in 2004. In 2008, Dell drove actions to enhance Competitiveness, and Optimize Operations to improve profitability and cash flow. Like every company that went through growth and revenue adjustments, and organizational realignments because of 2008 financial crisis, the changed conditions may have influenced the current Dell’s operating model as well. However, if we assume that the Operating Model is the foundation for execution of Strategies, the fundamentals of the Core Operating Model should sustain up and down of the market place. To that end, I believe the premise of the thesis around People, and Practices at Dell should still be relevant now in understanding the subject of Operating Models.
Dell’s operating model consists of four assumptions about how people should work:
- Being obsessed with producing results,
- Being flexible in the way work is done,
- Leveraging the value of personal relationships, and
- Encouraging leadership at all levels in the organizations
If Vertical integration is about owning and operating multiple steps in the value chain, then Virtual integration is about owning one step, but coordinating the actions of many steps. Dell and its supplier’s area uniquely configured network of alliances and partnerships i.e. Virtual Integration. One of the core competencies is strategic outsourcing.
Some general management practices at Dell:
- Expecting a high level of personal accountability
- Minimizing celebration / maintaining sense of urgency
- Management teamwork, especially “two-in-the-box” management
- Tightly managing the balance of revenue and growth
- Being able to kill losing projects quickly
One of the interesting methods I noted out of thesis is “Time pacing” which is creating new products or services, launching new businesses, or entering new markets according to the calendar. Time pacing according to Blaine Paxton’s thesis “can counteract the natural tendency for managers to wait too long, move too slowly, and lose momentum”. It also “create a relentless sense of urgency around meeting deadlines” while at the same time creating predictability by giving “people a sense of control in otherwise chaotic markets”.
Is your Operating Model still relevant? If not, what is driving those changes?
