Week 2 Post by Will

Dell: Organizational Design Adapted for Change

Interview with Dennis M. Brass, Project Manager, Dell Shared Service Operations

Dennis Brass has been a project manager for more than 10 years, first with IBM and for the past two years with Dell in its Shared Service Operations division.  His department is one of several that provide reports on the status of computer information systems that are outsourced to Dell by large corporations.  In our one-hour interview we talked about Dell’s organizational design, how that design responds to quick changes in the technology market and how Dell creates an environment amenable to independent creative output.

1. Organizational Design – Dell has a “flat” design structure as opposed to a strongly hierarchical system. Brass agrees with Worley and Lawler’s assessment (2006) that a wide surface area tends to encourage greater contact among employees with the external environment, placing them in greater contact with clients’ needs. This flat structure necessitates the need for lateral interaction among project managers, with less of an emphasis on responding to direct commands from above. This increases the span of control. Brass notes that only four steps separate him from Dell’s CEO and founder, Michael Dell. “Of course there is a hierarchy between the project managers and ‘the king,’ but power is fairly evenly spread. You don’t see a lot of empire building, people trying to feather their nests. Dell has found that by flushing out the middle managers more work gets done. You see a matrix of people from different departments getting together to solve problems.”
2. Reconfigurability –  Dell is a working example of Galbraith’s reconfigurable organization that can adapt quickly to environmental changes. Galbraith cites the importance of an organization’s ability to form internal teams and networks (1995) in response to sudden external changes, and Brass notes that Dell has refined this to a science. Departments can be quickly reconfigured to respond to the need for price adjustments or new product innovation. He cites a recent effort to bring a number of parallel reporting departments under one umbrella to streamline operations and create greater uniformity of output. The effort was later abandoned, but he recalls how the exercise brought out the core traits of flexibility and teambuilding in his colleagues, qualities actively sought out by Dell in its hiring practices. “People like to control their empires, but at Dell you have to be ready to move around and embrace change. You can’t always stay in one place. They do this by design, to keep people on their toes.”
3. Environmental adaptability – Brass notes the importance of Dell’s ability to react quickly to changes in the technology marketplace (i.e. its external environment). The growing popularity of tablets and personal data assistants (PDAs) has caused Dell to shift its thinking away from its trademark laptops and desktops, and this has led to commensurate changes in organizational structure. Design teams have been mobilized and project managers shuffled in an effort to stay ahead of the technology curve.  “When Western Union figured out it wasn’t going to make money selling telegrams, it shifted to money transfer, and now you see Western Unions everywhere. It’s no different here. Technology-based companies like Dell must be able to continually evolve.”
4. Getting the job done – Brass feels that Dell embodies the concept of fit, which, per Lorsch’s description (1975), is the ideal melding of an individual’s psychological makeup, the nature of the task at hand and the organizational design structure. Team members are hired more on the basis of creativity and adaptability than pure technical know-how. This enables the constant shuffling and reshuffling of teams as changing circumstances warrant. Team members are encouraged to contribute ideas for product innovation and are duly rewarded through generous bonus packages pegged on merit more than seniority. And the flat organizational design provides freedom for self-motivated creative action. “Everyone brings something to the table.  That’s what helps Dell continually diversify.”

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References

Galbraith, J. (1995). Designing Organizations. San Francisco: Jossey-Bass Publishers.

Lorsch, W. (1975). Note on Organizational Design. Harvard Educational Review, pp. 1-21.

Worley, C. & Lawler, E. (2006). Designing Organizations that are Built for Change, MIT Sloan Management Review, 48, pp. 18-23.