Since 1996 joined Dell, Mr. Kevin Rollins and Mr. michael dell, the founder of the company, have jointly managed Dell with a unique "dual-president" structure, and have re-improved and expanded the well-known direct marketing model. During his tenure as a consultant in Bain Consulting, Mr. Rollins formulated a successful development strategy for Dell around the direct mode of computer systems, thus promoting Dell to become the leading manufacturer in the world at present. I think Mr. Rollins is also the "soul figure" of Dell, who led the company to create and improve the "winning culture" of the company. On the other hand, Mr. Rollins is a role model for our MBA students. He owns Birmingham? Master of Business Administration (MBA) and Bachelor's degree from Brigham Young University, from MBA to CEO.
As the world's number one computer manufacturer for several years in a row, Dell ranks first in Fortune magazine's list of "America's most admired companies" and third in the list of "the world's most admired companies". Although it has only been seven years since entering the China market, Dell's share in China has already entered the top three. Although Mr. Rollins often visits China, we are particularly honored that this trip to Peking University is the first time he has given a public speech at a university in China. Personally, I feel very honored to talk to Mr. Rawlings. Let's warmly welcome Mr. Rollins to share with us his views on the whole industry and Dell, and his growth from an MBA genius to CEO of Dell.
Mr. Rollins, can you say something to our students?
Rawlings: OK. Thank you, Dr. Yang Zhuang, for your introduction, and thank you all here. Frankly speaking, I think I am still a student. I come from a scholarly family, my father is a professor, and my brother is also a professor. I want to tell you that this never-ending learning attitude will benefit you a lot in your career after leaving campus and run through your life. For any successful professional, especially those who surpass others and are different, the most important thing is to keep learning, improving and adapting to the new environment.
About Dell, I want to talk about the following points today. Being able to occupy a place in China, one of the most exciting and fastest growing markets, is a great pride of Dell. We devote ourselves to the business in China market with great enthusiasm. Today, when it comes to Dell, people's topic is always inseparable from the direct sales model. We believe that the direct marketing model is still full of vitality and has great room for growth. When I first joined Dell, our annual income was about $2.5 billion. But last year, our development momentum was very gratifying, and the company's annual income reached 56 billion US dollars. From 2.5 billion to 56 billion, we can see that the company has developed rapidly, from children to teenagers to youth, and gradually matured. Dell's corporate culture has also experienced the same development process. In the next link, we will discuss it in more depth. Thank Dr. Yang Zhuang for inviting me to introduce Dell, the most exciting company in the world.
Yang Zhuang: First of all, you personally worked out the direct marketing model with michael dell. This model makes Dell the most efficient PC manufacturer in the world, with annual revenue exceeding $50 billion. What does direct mode mean? What are the core characteristics and important conditions for the direct selling model to ensure Dell's continuous success?
Rawlings: Thank you for giving me the opportunity to explain the meaning of direct mode. The direct mode is much deeper than what outsiders see on the surface. The direct marketing model is based on our unique business philosophy, that is, to ensure close contact with customers and suppliers, so as to eliminate all redundant, inefficient and easily transmitted wrong information. Direct mode saves intermediate links, so I believe it is the most efficient mode in theory. However, the direct mode is also divided into two different forms. One is the familiar trading mode, which is suitable for individual consumers, small businesses and institutional or corporate customers who occasionally buy one, two or several computer systems. They make a new decision every time they buy a product. Another form of direct selling model is Dell's relational customer model, which contributes as much as 70% to Dell's turnover, which is completely different from the above model. At present, this group of customers is our largest customer group in various countries around the world, including China. It is based on the one-to-one relationship between Dell and customers such as institutions, governments, enterprises and education. For many large enterprises, the choice of IT infrastructure is not overnight, and it takes a lot of time to maintain the relationship with these customers, screen products and provide services. We have set up on-site account managers and on-site technical engineers for this purpose. To sum up, the biggest part of the direct marketing model is the relationship model we have established with the world's largest enterprises and government customers, which you may not be familiar with. We have also invested a lot of money and time in this respect. Perhaps, you are most familiar with our trading model, because it often appears in advertisements in newspapers and magazines. Most people know that Dell computers can be purchased through the Internet and telephone.
Yang Zhuang: At present, the fierce competition environment in the global PC market has made the living conditions of many companies more and more difficult. How will Dell respond to the decline of Dell's share price in the new york Stock Exchange in the past three months and the just-made downward adjustment of revenue expectations?
Rawlings: Frankly speaking, we don't want to see such a situation either. However, please note the following data. Even though our share price is similar to that of two or three years ago, our earnings per share are twice as high today. It's just that people's standards are a little strange now. However, the business model we adopted has historical significance in the industry, but it has been enduring in the sound of integration in the industry. If you have a certain understanding of the industry, you will find that every industry goes round and round according to a certain cycle, and the computer industry has experienced 7 years of integration. The software field is being integrated, so is the hardware field-first, the merger of HP and Compaq, and the recent merger of IBM and Lenovo led to IBM's withdrawal from the PC industry. However, Dell continues our own model. I think whether Lenovo can successfully set foot on the global stage is a major test for Lenovo and IBM. We will pay close attention to how global IT vendors meet the coming of industrial globalization. In the next few years, you will see more examples of integration. Some manufacturers will have to withdraw from certain fields.
Yang Zhuang: What do you want to say to the China university students here? What skills do they need to get a job in a company like Dell?
Rawlings: First of all, cleverness is the premise. I think everyone here is very smart, otherwise you wouldn't be sitting here. At the same time, we also need to have noble moral sentiments. If we lose our morality and strive for success at all costs, we will eventually fail. In addition, the spirit of being brave in exploration is also essential. We should be good at thinking about whether there is a better way, what are the ways to achieve our goals and how to find such a way. We are eager for talents with these qualities. I don't think I need to say much about honesty. Whether a person is honest or not can often be fully reflected in his work. .
Yang Zhuang: Dell has made great achievements in China, ranking third in market share. Are you satisfied with your current performance? Do you think Dell's direct marketing model is not as smooth in China as in the United States? Or do you think this is not the deficiency of the model itself, but other reasons?
Rawlings: First of all, I think our business in China is doing very well. But because we didn't do much publicity, people may not know about it, including some media. Next week, we will release the performance report for this fiscal quarter. To be sure, our shipments in China increased by nearly 50% this quarter, ranking among the best in Dell's global business. Our profit margin in China is two to three times that of our biggest competitor. Some business journals mentioned that our personal and small businesses and growth in third-and fourth-tier cities have encountered challenges, but the fact is just the opposite. Our growth rate in these areas is even higher than 50%. As you can see, our business in China is progressing very smoothly. Because of their preference for performance, quality and function, a large number of customers in China choose Dell products. In China, not only individual consumers, but also corporate customers who use servers, storage devices, mobile systems and corresponding services to run large databases are growing rapidly. This is an important source of our profits. Frankly speaking, although China is a very challenging market, it is not more challenging than other markets. We are glad to see that our direct selling model is being accepted by the China market, and we have achieved a good profit margin in this challenging market.
Yang Zhuang: Back to the merger of Lenovo and IBM. Lenovo recently announced that the company has achieved higher-than-expected results after the merger. I want to know how you make a strategy to deal with the competition from Lenovo, a strong competitor in the China market.
Rollins: Lenovo and IBM are very great companies, and we respect them very much. We will compete with them with firm courage and conviction. Our model, employees and customers are closely linked, which constitutes the core driving force for our success. Lenovo's market share in China is higher than ours, which means we need to redouble our efforts to catch up. When I read the work report of the Asia-Pacific region this week, I felt full of confidence. I firmly believe that we can bring excellent quality, technology and best value to our customers in China, just like in French, Brazilian, American and Japanese markets. In the China market, we will continue to maintain the growth trend and further consolidate our market position as a major manufacturer. Therefore, in the face of Lenovo's excellent competitors and customers, we are based on creating value and customers bring us income. We like competition.
Yang Zhuang: Dell won the United States for several years in a row.
Best employer title. Like Dell, some companies that do well in the United States find it difficult to retain talents in China. It is reported that Dell China has a high employee turnover rate. What do you think of this? Do you think what is suitable for the United States is also applicable to China in terms of personnel retention, or do you think that China and the United States have slightly different understandings of employees?
Rawlings: The competition for talents has been going on. Not only in China, but also in India, Brazil and the United States. For Dell, our approach is to provide employees with excellent value proposition, so that they are willing to stay in the company and become a part of the company. But the problem often lies in not choosing the right employees, not integrating them into our corporate culture, not guiding them to the right career, and not letting them understand the value of learning. I remember when I was working in a consulting company, our vice president asked how long employees would stay in the company, and every time the result was that everyone planned to stay in the company for only two years. However, many people do it for longer. Obviously, what employees tell you is quite different from what they actually do. Therefore, we must build a rich corporate culture so that employees can learn more at Dell than anywhere else. In the first two years, employees will find this a good place to study. After two years, the staff found that I still had a lot to learn. I want to do better. I can do better in this great company. From then on, these ideas will always accompany employees. Therefore, if we want to build a great corporate culture, we must devote ourselves to research. The same is true for profits. You study hard and create a unique model, and you will make money. At present, more and more employees are eager to stay in Dell, and senior employees are more eager to stay in Dell than junior employees, because most junior jobs require employees to work for several years before they can be promoted. But the cohesion of our middle and senior managers is very high, and it is getting stronger and stronger.
Yang Zhuang: In recent years, the competition between companies has become more and more fierce, and employees have to bear tremendous pressure in order to achieve performance indicators. However, the case of China shows that if enterprises put too much pressure on their employees in terms of task indicators, you will eventually find that it is difficult to achieve the established performance goals because of deviating from the human environment in China. Especially now, everyone has their own wishes and ideals, and they are more eager to achieve self-development while completing the company's goals. So how to balance this contradiction in management? From your experience, how to create an enterprise environment so that employees can achieve both performance indicators and self-development?
Rollins: My philosophy is to provide appropriate tools to support the self-development of employees, so we need to create such an environment. However, no one cares and is responsible for their career development more than employees themselves. So we try to establish a corporate culture that advocates responsibility. As a leader, my duty is to let employees share the value and our tools; The responsibility of employees is to ensure the continuous growth of the company. Everyone is responsible and everyone participates. At Dell, we often say that we can fail once, but we can't fail continuously. You can make mistakes or you don't know how to do it, but you can't tell your boss or colleagues that you don't know how to do it. We believe that with our talented employees working together, we can tolerate making mistakes and not finding the right answer. However, what we can't tolerate is that any one of us achieves the performance index by cheating or dishonest means. We will never allow this. We don't want such employees to stay in the company at all, because the message they bring to everyone is that accomplishing the goal is more important than how to accomplish it. Therefore, we must educate our employees. What I often tell employees is not performance data, but whether they understand Dell's soul and winning culture, and whether they are honest and ethical. Imagine if you implement this concept among 70,000 employees around the world and make 70,000 employees closely connected with it, everyone will share the happiness of work because of mutual trust. But if there is no trust within a company, it will become a terrible place. Therefore, we should be honest, sincere and frank in everything we do.