CEO Michael Dell’s Management Advice


Source of book image:

I have had Direct from Dell on my ‘to-read’ list for years, and it finally made it to the top. The book has some interesting anecdotes, and some useful generalizations, but not as many as I had hoped.
In fairness, if I had read the book closer to its publication year, in 1999, maybe some of the observations would have seemed fresher, that today seem like stale clichés.
For example, it is clever to quote (p. 209) the hockey player Wayne Gretzky as saying that he doesn’t skate to where the puck is; he skates to where it will be. And then apply the saying to business by advising that managers skate, not to where the profits currently are, but to where the profits will be in the future. Reading this in Dell’s book did not excite me, because I had already read it in Christensen and Raynor. But Dell’s book came out before Christensen and Raynor, and it’s not a failing of the Dell book that I had read the Christensen and Raynor book first.
But some of what Dell writes, was a cliché even back in 1999. For example, it is a cliché that customers should matter; but simply saying ‘listen to your customers’ is not very useful. Sometimes customers are not very articulate about what they would value, and sometimes they need to be educated, and sometimes your current customers might not buy an innovation that other potential customers might love.
Christensen and Raynor in The Innovator’s Solution, have emphasized the desirability of thinking about what job customers need to have done.
One useful bit of advice in Direct from Dell is that companies should segment themselves into different units to serve different kinds of customers. This might be a useful stratagem to make it easier to execute Christensen and Raynor’s advice. (But it goes against another common dictum in management books: achieve economies by cutting out duplication and by achieving economies of scale.)
The book has some interesting examples and observations, but the signal to noise ratio is not as high as in the very best management books by former CEOs, such as in Andy Groves’ Only the Paranoid Survive and in Jack Welch’s Jack: Straight from the Gut.

Christensen, Clayton M., and Michael E. Raynor. The Innovator’s Solution: Creating and Sustaining Successful Growth. Boston, MA: Harvard Business School Press, 2003.
Dell, Michael. Direct from Dell: Strategies That Revolutionized an Industry. New York: HarperCollins Publishers, Inc., 1999.
Grove, Andrew S. Only the Paranoid Survive: How to Exploit the Crisis Points That Challenge Every Company. New York: Bantam Books, 1999.
Welch, Jack. Jack: Straight from the Gut. New York: Warner Business Books, 2001.

Global Warming Would Result in FEWER Hurricanes

The NYT ran an article on Knutson’s 2004 study that claimed that global warming would result in more hurricanes. But a search (on 6/19/08) of the online NYT database reveals no 2008 articles that include both “Knutson” and “global” in their content.
So apparently the NYT does not consider it newsworthy that Knutson’s most recent research (see below) finds that global warming would result in fewer hurricanes.

WASHINGTON (AP) – Global warming isn’t to blame for the recent jump in hurricanes in the Atlantic, concludes a study by a prominent federal scientist whose position has shifted on the subject.
Not only that, warmer temperatures will actually reduce the number of hurricanes in the Atlantic and those making landfall, research meteorologist Tom Knutson reported in a study released Sunday.
In the past, Knutson has raised concerns about the effects of climate change on storms. His new paper has the potential to heat up a simmering debate among meteorologists about current and future effects of global warming in the Atlantic.

For the full story, see:
“Study: Global warming not worsening hurricanes.” MSN onllne Posted May 19, 2008 11:37 AM ET. Downloaded on 6/19/08 from:

(Note: the AP article appeared in many outlets, including “Warming Absolved in Scientist’s Altered View of Hurricane Frequency.” Omaha World-Herald (Mon, May 19, 2008): 4A.)
The reference to the Knutson article is:
Knutson, Thomas, Joseph Sirutis, Stephen Garner, Gabriel Vecchi, and Isaac Held. “Simulated Reduction in Atlantic Hurricane Frequency under Twenty-First-Century Warming Conditions.” Nature Geoscience 1 (2008): 359-64.

Business Model More Effective than Charity at Helping Poor


Nobel-Peace-Prize-winning economist Muhammad Yunus. Source of image: online version of the WSJ article quoted and cited below.

(p. A9) In his new book, “Creating a World Without Poverty,” Mr. Yunus . . . defines social business as “cause-driven” rather than profit-driven. And yet, it is not a charity: Its owners are entitled to recoup their investments, and the social business must recover its full costs, or more, even as it concentrates on creating products or services that provide a social good. It does this by charging a fee for its products and services. (One example: a business that manufactures and sells low-priced, nutritious food products to underfed children. Grameen America is also a social business.)
Mr. Yunus freely acknowledges that the free market has done a great deal for the poor. “I didn’t say that what is there is wrong. I said the structure was not complete. One piece was missing. We couldn’t express within the business world all the things we want to do for others.”
He argues that in today’s world, people whose main ambition is to help those in need tend to be pushed into philanthropy, which isn’t always the most efficient way to bring about change. In philanthropy, he says, the “dollar has only one life, you can use it once . . . social business dollar has endless life, it recycles. And you build institutions.” He continues, “when it’s an institution you bring creativity into it. You bring innovations into it. You bring continuity into it.”
Mr. Yunus argues that it’s extremely difficult to bring efficiency to charity. But “the moment you bring in a business model, immediately you become concerned about the cost, about the revenue, the sustainability, the surplus generation, how to bring more efficiency, how to bring new technology, how to redesign, each year you review the whole thing . . . charity doesn’t have that package.”

For the full article, see:
EMILY PARKER. “THE WEEKEND INTERVIEW with Muhammad Yunus; Subprime Lender.” The Wall Street Journal (Sat., March 1, 2008): A9.
(Note: first ellipsis added; other ellipses in original.)

Free Trade Defended By Democratic Leadership Council Founder

(p. A15) Where are the pro-trade Democrats? America won’t increase middle-class incomes and create jobs without them.
. . .
History proves that expanding trade and productivity help create growth. We learned that the hard way when the Smoot-Hawley tariff helped crush trade and exacerbate the Great Depression. Conversely, we have seen trade drive the economy during the great expansions of the 1960s and 1990s.
. . .
Trade gives poor people around the globe the opportunity to build a brighter future. During the Clinton administration, new trade programs like the African Growth and Opportunity Act helped key regions in the world succeed, while American workers stood to gain.
I helped found the Democratic Leadership Council in the wake of Walter Mondale’s 49-state defeat in 1984, and we have always supported expanded trade. We still have a ways to go to win that argument in the Democratic Party. But the record is clear. Over the past 20 years, our party has grown stronger when we’ve been willing to do the right thing on the toughest issues, from putting the nation’s fiscal house in order to overhauling a broken welfare system that trapped millions in poverty.

For the full commentary, see:
AL FROM. “Confessions of a Pro-Trade Democrat.” The Wall Street Journal
(Mon., June 9, 2008): A15.

(Note: ellipses added.)

More Europeans Leading Stagnant, Stunted Lives

RomeFamilyAngst.jpg “Gianluca Pompei, Francesca Di Pietro and son, Mario, 2, shopping in Rome. They have cut spending on entertainment.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. C1) LES ULIS, France — When their local bakery in this town south of Paris raised the price of a baguette for the third time in six months, Anne-Laure Renard and Guy Talpot bought a bread maker. When gasoline became their biggest single expense, they sold one of their two cars.
Their combined annual income of 40,000 euros, about $62,500, lands Ms. Renard, a teacher, and Mr. Talpot, a postal worker, smack in the middle of France’s middle class. And over the last year, prices in France have risen four times as fast as their salaries.
At the end of every month, they blow past their bank account’s $900 overdraft limit, plunging themselves deeper into a spiral of greater resourcefulness and regret.
“In France, when you can’t afford a baguette anymore, you know you’re in trouble,” Ms. Renard said one recent evening in her kitchen, as her partner measured powdered milk for their 13-month-old son, Vincent. “The French Revolution started with bread riots.”
The European dream is under assault, as the wave of inflation sweeping the globe mixes with this continent’s long-stagnant wages. Families that once enjoyed Europe’s vaunted quality of life are pinching pennies to buy necessities, and cutting back on extras like movies and vacations abroad.
Potentially more disturbing — especially to the political and social order — are the millions across the continent grappling with the realization that they may have lives worse, not better, than their parents.

For the full story, see:
CARTER DOUGHERTY and KATRIN BENNHOLD. “Squeezed in Europe; For Middle-Class, Stagnant Wages and a Stunted Lifestyle.” The New York Times (Thurs., May 1, 2008): C1 & C8.
(Note: the online version of the title is “For Europe’s Middle-Class, Stagnant Wages Stunt Lifestyle.” )


“Anne-Laure Renard, a teacher, and Guy Talpot, a postal worker, sold one car and bought a bread maker to cut expenses. Prices have risen four times as fast as salaries in France in the last year.” Source of caption and photo: online version of the NYT article quoted and cited above.

Chavez Nationalizes Cement in Venezuela

(p. A13) Venezuela said it will take majority stakes in the local units of Cemex SAB, Lafarge SA and Holcim Ltd. as it divulges the first details of a nationalization plan that will affect the world’s biggest cement producers.
The nationalization, announced last week, is designed to deflect criticism that the socialist government of Hugo Chávez isn’t delivering on its promises of new housing and other infrastructure projects, experts said.
“The Venezuelan state will take control of these companies. We told them all three will be subject to this [nationalization] measure,” Oil Minister Rafael Ramirez said on state television.
. . .
Mr. Chávez’s nationalizations have resulted in efficiency declines in the past. For instance, Venezuelan oil production has fallen since major foreign oil-field operators were nationalized.

For the full story, see:
JOEL MILLMAN, RAUL GALLEGOS and DARCY CROWE. “Venezuela Will Take Control of Top Cement Producers.” The Wall Street Journal (Tues., April 8, 2008): A13.
(Note: ellipsis added.)
(Note: the title of the online version is “Venezuela Will Take Control of Top Cement Producers.”)

Global Warming Alarmists “Want Us to Sacrifice Liberty”


President of the Czech Republic, Vaclav Klaus. Source of photo: online version of the WSJ article quoted and cited below.

In addition to his insights into global warming, Vaclav Klaus is an advocate of the work of Joseph Schumpeter.

(p. A9) Mr. Klaus is . . . interested in the politics of global warming. He has written a book, tentatively titled “Blue, Not Green Planet,” published in Czech last year and due out in English translation in the U.S. this May. The main question of the book is in its subtitle: “What is in danger: climate or freedom?”
He likens global-warming alarmism to communism, which he experienced first-hand in Cold War Czechoslovakia, then a Soviet satellite. While the communists argued that we must all sacrifice some freedom in pursuit of “equality,” the “warmists,” as Mr. Klaus calls them, want us to sacrifice liberty — especially economic liberty — to prevent a change in climate. In both cases, in Mr. Klaus’s view, the costs of achieving the goal, and the impossibility of truly doing so, argue strongly against paying a price of freedom.
. . .
In Europe, Mr. Klaus has the reputation of a firebrand, if not a loose cannon. This is a president, after all, who calls global warming “alarmism” a “radical political project” based in a form of “Malthusianism” that is itself grounded on a “cynical approach [by] those who themselves are sufficiently well-off.”
“It is not about climatology,” he insists. “It is about freedom.”

For the full article, see:
BRIAN M. CARNEY. “The Weekend Interview with Vaclav Klaus; The Contrarian of Prague.” The Wall Street Journal (Sat., March 8, 2008): A9.
(Note: ellipsis added.)