Q&A: Dell’s Rollins unfazed by new title

Kevin Rollins is taking his elevation to chief executive officer at Dell Inc. in stride. On Friday, company founder Michael Dell will relinquish the CEO role to Rollins at Dell’s annual shareholder meeting, but little is expected to change at the top of the world’s leading PC vendor following the move.

Dell, who will remain heavily involved in the business as chairman of the board, has run the business with Rollins for several years in a unique arrangement the company calls “two in a box.” Dell and Rollins work extremely closely together, even finishing each other’s sentences like a long-married couple.

The new title is sure to bring more attention to Rollins’ role at Dell, over the past few years and into the future. But he seems unfazed by the new responsibilities, poking fun at himself in an internal company video that shows him taking over duties such as unlocking the office doors in the morning, signing payroll checks and even flipping burgers in the cafeteria on his first day as CEO.

Rollins sat down with IDG News Service the afternoon before the shareholder meeting — where his ascendency to CEO is expected to pass unchallenged — to discuss his new title, his views on the competition and his ideas about emerging technologies.

What’s going to change with Dell as of Friday when you take over as CEO? What is going to be the main difference?

Kevin Rollins: Well, I’ll have a different business card, and he’ll (Michael Dell) have a different business card. In actuality, not all that much. From the standpoint of how we run the company, he and I do it very collaboratively, have done it for many years. It’s going to be much more of a name change really than an actual operating change.

So what changes for you then?It’s a new role, so there must be new things that you’re going to do that you didn’t do before.

KR: In fact there is not. Because Michael and I have run it as co-CEOs for a long time. It’s hard for people to understand, it’s just the way we’ve run the company. So we’ve collaborated, our offices are one big room, we talk 15 times a day, we stay very closely aligned, we discuss issues, we’re marching together. So it’s a unique management model. Most companies don’t have anything like it.

Was the whole co-CEO idea something you brought into Dell from your consulting background? How did you two decide it would work here?

KR: Well, if you go back through the history, Michael has always had someone he considered to be either a partner or a mentor working with him, but we haven’t ever formalized that. We’ve taken it now over the last couple of years to a new level of collaboration, where we talk about everything. It really has not been a demarcation between who is the boss, what do I do, what do you do. We don’t spend a lot of time thinking about that.

Is the “two in the box” management philosophy something that evolved organically?

KR: It happened because when Mort (Topfer) came in (in 1994), Mort, Michael and I worked together as a triumvirate to run the thing. (Morton Topfer retired from Dell in 2002, he now sits on the company’s board of directors and the main Austin manufacturing facility bears his name.) But then what we realized was that we had a lot of really big jobs. The company was growing at tremendous rates, and we found that we were burning people up. So we said, it’s good for the three of us, or two of us, why is it not good in other parts of the organization where we have a lot to do?

And so we have a two-in-the-box that runs (Dell) Americas, we have a two-in-the-box that runs our product group, we have two-in-the-box that runs our global procurement activities. We’ve sort of migrated it everywhere, but we don’t think it’s necessarily good to pop it any place you go. You need some place with a lot to do, with a lot of travel, a lot of responsibility, and where one person either gets burned out or they have to delegate so much they lose (control.)

We were speaking to one of your executives earlier today who compared it to a marriage. And then in the car on the way over here, we were talking about it, and we remembered that half of all marriages end in divorce.

KR: I would assume that half of these or more, because you don’t see very many of them, do end in divorce. You have to have a unique group of people. And we have a culture here that we don’t put up with the ego issues. It’s about customers, shareholders and doing what’s right. And so we’ve kind of forced everybody into that mode where you don’t get divorced, and you make it work, and that’s all there is.

If you talk to any of our folks who are two in the box, they’ve come to that realization that, hey, this is actually quite nice. I can go on vacation and know that the business is taken care of. Or if I can’t travel my partner can, or vice versa.

Have you had unsuccessful marriages at Dell?

KR: We haven’t had too many, because if it’s unsuccessful we’ll fire them both.

Has that happened?

KR: It’s happened in mini-versions of that, but not in an official version of that. I was being a little harsh there. We say either you get along, because there’s more than enough to do, or if you can’t get along effectively you can’t work as a team. And that work as a team is part of what we do.

Is this something that can only work in a unique culture?

KR: I think so. I think it’s unique here because Michael is very confident; he’s not worried about somebody taking over his company, he’s not worried about losing respect or some people might think less of him. He’s able to say, “What’s right? How do we get the job done? What works best?”

In the wake of a lot of the financial scandals of the past few years, one of the things that people have called for is a separation of the chief executive role and the chairman role. How much did all of that play into the decision to separate these two?

KR: Absolutely none. We were discussing this about the time when (Michael) Eisner (CEO of The Walt Disney Co.) was going through his problems and so people thought, well you you’ve done that because (of the Disney situation.) This had nothing to do with that whatsoever.

I was not pushing for it, I was not uncomfortable that we didn’t have a separation. Michael just did it because (he said,) “I’d like to give this acknowledgement for the job you’re been doing.” And I said you don’t have to, and he said, well, I’d like to do this. And so we did.

If you look at companies like Worldcom Inc. (now MCI Inc.) and Enron Corp., they already had a separation between the chairman and CEO. So that didn’t seem to save the issue. But now that people think that’s going to somehow give more objectivity, so be it.

What differences would you say there are in your management styles? It sounds like you’re saying, “We’re basically the same person.”

KR: Well, to some extent we are. I mean, we’re very different people. But when I first came here in 1993, I was 40 and he was 29. He was young, and I hadn’t run anything. So in the next 11 years, we both kind of grew up together figuring how do we run it, what do we think about business, and what are our philosophies. So we kind of came together in those ways through that 11-year period to the point where we kind of know what each other thinks and feels about stuff.

What product areas do you think are the most interesting over the next year?

KR: Well, there are technologies that are kind of new and out there, that’s one set. But then there’s the technology and the product areas that we’re focusing on that are unique to us. And we’re very focused on leading edge technologies, but we’re also focused on making a profit for our shareholders.

There’s a lot of companies out there developing new technologies that never even make any money. And they’re being touted for that.

Any examples?

KR: Sun (Microsystems Inc.) They’ve been developing technology supposedly, and then can’t make any money. Apple (Computer Inc.), until recently, couldn’t make any money, and even now they’re still fairly small. I don’t need to go through them all. IBM (Corp.)’s not making money in their PC business. Hewlett-Packard (Co.)’s had a hard time making money in their PC business. There’s plenty of people out there who develop stuff they can’t ever make a profit on.

Or (companies that) tout themselves as a great R&D (research and development) house. You’re a joke, it’s a joke. You develop what?

Do you see the Linux desktop as basically a dead option for now?

KR: For now. It could be better, but right now you can’t build any apps on it. You’ve just got too ubiquitous a use of Microsoft (Corp. software). When you go to a corporation, how do they start running it? Where and how?

We wouldn’t mind if it was (a viable product.) If you had interoperability, maybe you could do that. But right now you can’t, so we don’t get into it.

What’s your thinking on AMD’s (Advanced Micro Devices Inc.’s) Opteron processor?

KR: We’ve looked at it, we like their technology and think it’s good. As soon as we think there’s volume and profit there, we could jump into it fairly quickly. We look at AMD’s products all the time, and we continue to test and work with them.

But our relationship would get strained with Intel (Corp.) That’s a good relationship, and it makes us a lot of money. You’ve got to say, what do I lose, and what do I get, and that’s got to be better than the alternative, the status quo. Which up until now, it has not been.

We hear lots of yapping about it (64-bit extensions technology), but we don’t hear any customer saying, “If you don’t have it, I am switching out of Intel.”

Now, with all that said, we’re not an Intel division. So we’ll look at these products, and as soon as customers like them and the market grows, and there’s a clear trend, the technology is stable, the volume is there, yeah, we’d switch, or we’d add them. We don’t have any objection against it.

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