ANALYSIS: Client Profile - The Dell PR machine: direct and to the point - Everything at Dell - from its consumer-direct approach to its nonhierarchical internal organization - reflects the company's charismatic founder, Michael Dell

The folks at Dell Computer don't want anything to come between them and their customers.

The folks at Dell Computer don't want anything to come between them and their customers.

The folks at Dell Computer don't want anything to come between them and their customers.

Practically everything at Dell - from assembly lines to PR activities - reflects the company's direct business model. As the world's second largest computer manufacturer, Dell gets lots of good press. But depending on the media to reach customers would be like, well, selling retail.

Take, for example, Dell's recent DirectConnect conference in Austin.

About 1,400 key customers were invited. They listened to testimonials, previewed products and rubbed elbows with founder Michael Dell. The 20 or so reporters who attended the conference peppered the press with stories about new products and jibes poked at competitors by the quotable Mr. Dell. Publicity, however, was just an added benefit to the company's primary goal: reaching customers directly.

The Dell philosophy

Dell's knack for efficiency surfaced in the third grade, when he answered an ad promising a high-school diploma for passing a test, according to his 1999 book, Direct from Dell. His parents didn't go for that plan, but by the time he got to high school, he was making more money than some of his teachers by selling newspaper subscriptions. He dropped out of the University of Texas his freshman year to start his computer empire.

The enterprising young Dell began by buying overstocked IBM PCs, upgrading them in his dorm room and selling them directly to customers with no retail markup. Within four years, the company opened its first international subsidiary.

The company struggled through growing pains in the early 1990s, learning hard lessons about inventory and product development. The company even strayed from direct selling by putting some units in stores. Dell posted its only quarterly loss in 1993 after pulling out of retail stores and, temporarily, out of the notebook computer market. The company's three golden rules became 'Disdain inventory, always listen to the customer, and never sell indirect.'

By 1993, Dell downshifted its rocket-powered growth to regroup. The company reorganized around customers instead of product lines and PR operations fell in line.

Dell now uses a dual-reporting system. Workers report to an operational supervisor and to the business unit within which they work. For example, corporate communications VP Elizabeth Allen gives her Singapore PR operative guidance, but the employee also answers to a local business director, whose goal is 'to have people in Asia forget that she works for me,' Allen says.

Segmentation is another pervasive Dell philosophy. A new product, for example, might be incubated under an existing business unit and then carved out as a stand-alone operation.

However, some reporters say that segmentation occasionally fosters confusion.

'When I first started dealing with Dell you only had to go one place,' says Jeff Franks, who covers Dell for Reuters in Texas. 'Now, you have to go to a lot of different places.' Overall, however, journalists give Dell high marks for responding attentively to inquiries on both positive and negative stories.

Names have been changing lately in Dell's communication operation. Michele Moore took the PR helm a year after Dell went public and grew the corporate communications department from two employees to more than 100. She switched gears temporarily in late 1998 to promote Michael Dell's book, speaking engagements and other activities. 'Michael Dell is a part of that brand,' Allen says. 'You can't separate the company from the person.'

Sprawling PR practice

Roy Clason came from MasterCard to run Dell's PR operations for about a year before moving into public affairs and then leaving Dell to lead Burson-Marsteller's East Coast technology practice. During his tenure, Clason says the PR team expanded globally and worked closely with the advertising staff on Dell's first corporate branding effort.

Allen left Staples earlier this year to run Dell's corporate communication department. Since arriving, she has promoted managers from within and recruited heavily from outside the hi-tech realm, seeking a mix of people with 'old economy' and 'new economy' backgrounds. Bureaucracy is a bad word at Dell, so Allen also has shuffled nearly half of the corporate communications staffers to different positions to keep them interested and prevent parochialism.

Moore describes the organizational structure at Dell as nonhierarchical.

Allen reports to vice chairman Kevin Rollins and works in a cubicle.

Communication staffers have equal access to Dell, Rollins and vice chairman Mort Topfer, she says. 'The flat internal organization really makes it possible for communication people to seize opportunities,' says Moore, adding that press releases sometimes are written, approved and distributed in less than two hours.

From an employee-relations perspective, the company faces challenges in reaching factory workers who don't have access to the Internet. It uses parties, newsletters and other tools to reach them. The plant in Limerick, Ireland installed a giant video screen in the lunch room that shows news feeds interspersed with video of headquarters events and messages from Austin, Allen says.

Externally, Fleishman-Hillard continues an eight-year relationship as Dell's agency of record, but the company works with 32 other local and niche agencies as well. Fleishman sometimes competes for international contracts, says the agency's Texas president, Janise Murphy. 'We always look at the Fleishman capabilities in any market,' says Allen, praising the firm's home- and small-business expertise. However, Allen examines international markets individually. 'We need arms and legs with local contacts, local language and local knowledge,' she says.

From an IR perspective, Dell struggles to manage expectation, and IR VP Lynn Tyson works closely with corporate communications. 'They are kind of a victim of their own success,' explains Barry Jaruzelski, a partner with New York's Booz Allen & Hamilton consulting firm. For a dollars 2 billion company to grow 50% in a year is one thing, but for a dollars 28-billion company with 37,000 employees to grow that much is another. A 25% growth rate would be phenomenal for most companies, but analysts are jittery about whether Dell will make this year's 30% projection.

Dell's faith in the PC market isn't shared by everyone on Wall Street, and the company is expanding into unfamiliar areas to maintain growth, Jaruzelski notes. In the last 18 months, Dell has started selling other companies' products online through its Gigabuys consumer Web site and its Dell Marketplace b-to-b site. Servers and storage devices also are becoming a larger manufacturing component.


PR chief: Elizabeth Allen, VP corporate communications

PR leaders: David Frink, relationship group; Dwayne Cox, home and small business; Barry French, public communications; Jim Mazzola, enterprise systems group; Jerele Neeld, Europe, Middle East and Africa; Doris Lau, Asia Pacific; Noriko Iijima, Japan; Marci Grossman, employee communications; T.R. Reid, corporate PR; Cathie Hargett, public affairs; Michele Moore, VP, chairman's communications; Lynn Tyson, VP of IR (reports to CFO).

PR staff: About 120 worldwide

Outside agencies: Fleishman-Hillard (agency of record), and 32 other local and specialized agencies, including Alexander Ogilvy and Lois Paul.

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