Over the past few years Dell has become a poster child for using social media. Their wake up call came in 2004 when an irate customer blogged about their horrible service. This prompted Dell to take Social Media seriously.
They first discover was that there were thousands of mentions of Dell daily in the blogosphere and nearly half of them were negative. Dell gets a lot of kudos for the positive way they responded to customers via social media and over time brought the number of negative posts down to the low twenties.
Dell didn’t stop with online reputation management. They setup a site called IdeaStorm to harness the innovation of the crowd. This also seems to have been highly successful in terms of the number of participants and the number of ideas they incorporated into new laptop designs.
Next, Dell was credited with winning over $3 million in incremental sales with a novel Twitter strategy.
Dell clearly figured out how to leverage social media.
Here’s the problem. During roughly the same period of time Dell market valuation dropped from $100 billion to $30 billion. What’s up?
From a social media perspective Dell does a good job. The problem is that their business model no longer matched up with the challenges or opportunities of the marketplace. Dell’s early success came from mastering logistics and the supply chain, allowing it to sell computers directly to customers at prices no rival could match. Competitors have now caught up in the efficiency department and moved ahead in two critical areas: Customer focus and innovation. Sure Dell seems to have a customer focus in their social media initiatives but at the heart of their business they are still selling PC’s when the world is shift to the Internet. Dell is still a product-centric company.
Now, Dell is amidst an an extreme makeover. They now want to restructure their company around customers. Unfortunately, it seems like Dell isn’t really making the shift. They have restructures to focus on four customer groups: consumers, corporations, SMBs and government/education. Certainly, these groups have unique needs. But Dell now seems set on becoming a fast follower by bringing out their version of technology that is already on the market – like smartphones. These are more products, what about customers?
The real message here isn’t a bashing of Dell. Dell is not alone in having to make the transformational shift from selling “things” to becoming flexible and innovative in ways that customers find meaningful. Companies in virtually all market segments will have to wrestle with this challenge. And, in doing so, they will have to realize that customers want better outcomes and help in extracting value they find meaningful from technology. The challenge is overcoming the inertia of the status quo; the inertia based on mindset and entrenched organizational practices.
Social media and social computing may well be imperatives for companies that expect to thrive in today’s business climate. However, they cannot simply be bolted on to business models that are not truly customer-focused, adaptive and innovative.
Hi John
Thanks for sharing your thoughts and perspectives about Dell, social media and our business.
On the social media front our efforts go much further than outlined and the breadth and depth of our online social media efforts are consistent with, and complimentary to, our customer centric approach to business that you note. Indeed our social media efforts have been adopted within the company because of what has always been at the core of Dell’s business model: direct customer connections. Social media happens to be an ideal way to further realize the value of direct customer connections. And for Dell, today those direct connections also include new relationships (and benefits) for both Dell and our retail and channel partners too.
I have been at Dell 5 years and can assure you that social media is but one aspect of the significant changes at Dell that are helping us gain and apply knowledge, and connect and build sustained relationships.
The changes to Dell’s business, as the Business Week story notes, are multi-dimensional. We are part way along a path that will reinvigorate growth. We are taking action to restore our competitiveness. We are delivering and backing-up high-quality, high-performance technology that improves productivity, enhances lives and assures value for our customers (consumer and the large enterprise, government and small/medium businesses that count on tech to help make their businesses more successful).
We are offering new and distinct products and technology solutions and services that are customer-centric and go way beyond product centric smartphones. More to come too as you watch the evolution of our business
I would simply suggest that social media is but one way we are achieving the realization “that customers want better outcomes and help in extracting value they find meaningful from technology.” Dell delivers that and will deliver more of it as we forge ahead.
Again, thank you for your thoughts, indeed for the reminders that we should continue to pursue the customer-focused, adaptive and innovative ways we have on roadmap 🙂
Richard,
Thanks for commenting. I am not surprised that you pickup on this post so quickly. I do admire the work you and your team do at Dell. I also think that the more your ‘social’ approach permeates Dell, the better off it will be.
My main message is that companies need to constantly innovate, not just in products, but in how they adapt to a rapidly changing business climate. As I watch Dell from a distance, I see incremental change that is stuck around the PC and its efficient use for traditional business challenges.
Of course, the challenges of adapting business models is univeral.
Would love to learn more about where you are going and how you will make the mindset and organizational shift.
John
John I. Todor, Ph.D.
Hi John
You might find these links of interest to further understand our product and business changes and happy to discuss further if you want.