Kevin B. Rollins had been at the company for seven years. Then the senior vice president for strategy, he had come to Dell on a consulting assignment in the midst of another crisis, in October 1993, when the company recalled an entire line of new notebook computers because of design flaws.
As he observed the reactions of employees lamenting as their stock options and dreams went underwater, Mr. Rollins recognized that the new problem was worse.
“I realized that we had created a culture of stock price, a culture of financial performance, and a culture of ‘what’s in it for me?’ throughout our employee base,” says Mr. Rollins, who this year became Dell’s chief executive officer. “There had to be something more in this institution that we loved and enjoyed than just making money or just having a stock price that went up.”
Today, by nearly any measure — market share, return on invested capital, or simple revenue growth — Dell is among the most successful companies created in the last 50 years. This year, its 20th anniversary, the company expects to reach nearly $50 billion in revenues, and to grow more, in dollar terms if not by percentage, than in any previous year in its history.
It’s easy to forget that Dell’s success was not foreordained. Indeed, the company’s resurgence and sustained growth during the past several years owes much to its leaders’ insight that something fundamental — at least as essential as its supply chain, and perhaps even more so — needed to be reformed: Dell’s soul.
As he and other senior managers led the company through two painful rounds of layoffs, which further damaged morale, Mr. Rollins began to examine seriously Dell’s corporate culture — the institutional values and belief systems that influence Dell’s behavior as an organization and the behaviors of each employee. He wondered if these not-easily-understood facets of corporate culture were adversely affecting near-term financial performance, as well as Dell’s long-term health and strength.
Mr. Rollins had been thinking about the role of culture in civil societies and organizations for some time. But the confluence of the market downturn of 2000 and the terrorist attacks of September 11, 2001, prompted him to reflect more intensely about what Dell stood for, and why he was there. He concluded that underpinning traditional business performance benchmarks are new measures for how to succeed in business: Speed, integrity, adaptability, and resilience are becoming the true tests of whether a company is built to last.
How Mr. Rollins, together with company founder Michael S. Dell and other leaders, put Dell back on track makes a powerful case for the role corporate culture plays in enduring business performance. Their story also strongly suggests that, over the long run, the healthiest and wealthiest companies are those that define their strategies and management systems with a purpose beyond merely increasing returns to shareholders.
“What great companies have always done is to find ways to appeal to another side of human nature, wanting to be associated with something that’s great,” says John P. Kotter, an expert in leadership and culture and a retired Harvard Business School professor. “You want to find the nature of what you’re making exciting and believe that this product or service does something useful for humanity. Great companies institutionalize that, and you can’t fake it.