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Dell: KEVIN ROLLINS/Round Rock, Texas

3 minute read
Cathy Booth Thomas/Round Rock

It’s easy to think of Dell Computer president and COO Kevin Rollins as just a fun-loving fiddle player who sings wisecracking lyrics about rivals at company gatherings in Round Rock, Texas. But don’t be fooled. Rollins is also a polished management professional who runs the brutal day-to-day business of the world’s No. 1 PC manufacturer. Thanks to Rollins, Dell has not only survived the tech downturn but also thrived, capturing 17% of the worldwide market in the first quarter, up from 14% in the same period last year. He doesn’t have time to sit around and fiddle these days, what with Dell shipping 25% more units in the first quarter over the same period last year. “We’ve got a tough-minded corporate ethic. We expect our leaders to deliver,” says Rollins matter-of-factly.

No, Michael Dell has not stepped aside. The 38-year-old whiz kid is still very much at the helm as chairman and CEO, but he and Rollins, 50, are “two in a box”–Rollins’ term for an operating system that has proved hard to beat. Just ask the merged Hewlett-Packard/Compaq, whose share of worldwide computer sales dropped to 15.8% in the first quarter, from 17% in the same period last year, and which is now eating byte dust as No. 2. “Most companies became nervous and conservative during the downturn, but Dell used it to step on the gas,” says Roger Kay, vice president of the research company IDC. During the five years of Rollins’ leadership, revenues have quadrupled, to nearly $37 billion.

How does Dell do it? Direct sales. Back in 1994, largely at the behest of Rollins, then a consultant at Bain & Co., Dell jettisoned sales through retailers. In 2001, when much of the tech world was still in denial, Rollins slashed 5,700 jobs while stepping into his current role as COO. “We saw the downturn coming,” says Rollins. “Because of our direct-sales model, we were talking to suppliers and customers daily.” Next step: Dell got aggressive on the supply chain, cutting inventory from seven days to three and building to order only. The company slashed prices at home, then turned abroad. Competitors scoffed at the idea of selling direct overseas, but unit shipments to China, Japan, France and Germany were up 39% in the first quarter over the same period last year. The product mix expanded too. Dell took on HP and IBM in servers and services, and teamed up with EMC on storage.

Oddly enough, Rollins wasn’t happy. A Mormon with a deep philosophical streak, he saw Dell’s morale suffering. “The company was in a bit of a slump, the stock was down, sales on a plateau, so I began looking at ways to improve the culture to weather the down currents,” Rollins says. Two years ago he launched the Soul of Dell initiative, setting out company ethics and ideals as a way of improving morale. “We got wealthy. That was our culture,” he says bluntly. “But we didn’t want just that.” Dell had to be an inspiration too. “To be a great company,” he adds, “we’ve got a long way to go.” Which may be why it’s No. 1 after all. –By Cathy Booth Thomas/Round Rock

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