Yang Gu's Blog

It’s not too long ago that we learned about Michael Dell’s success by applying the direct business model to selling computers.  Dell’s direct business model, among other traits, characterizes it as an entrepreneurial company.

image source: www.dell.ca

Dell qualifies as an entrepreneurial company in the speed and amount of wealth creation, as well as the risk of this venture. Dell generated wealth at an amazing pace; it grew to $12 billion in just 13 years (1), far outstripping a typical small business. Technological products depreciate quickly. Selling computers can be a risky as it is profitable.

However, the most recognized characteristic of an entrepreneurship, as emphasized in Schumpeter’s definition, is innovation (2). According to Michael Dell himself, the key to his company’s success was its direct business model (3) — new method production and operation management. Its allowance for customization also opened up the market to consumers who were not satisfied existing products. Dell also took advantage of the new ways to reach its consumers, such as launching Dell.com back when the internet was young. Like its new business model, adapting to this new technology made Dell a technological giant.

References:

(1) “The power
of virtual integration: an interview with Dell computer’s Michael Dell.” Harvard Business Review. March/April
1998, Vol.76 Issue 2, p.72.

(2) “A Definition of Entrepreneurship.” QuickMBA. 2010. <http://www.quickmba.com/entre/definition/>.

(3) “The power
of virtual integration: an interview with Dell computer’s Michael Dell.” Harvard Business Review. March/April
1998, Vol.76 Issue 2, p.72.