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Thursday, February 01, 2007

Dell & Jobs Prove Caretakers Can't Manage

Well, now you've seen it two times. Two technology companies, each inspired by the vision of their founders, growing at spectacular rates and changing the nature of their markets. The first time, it was Steve Jobs (and Steve Wozniak) with Apple Computer. The second time, it was Michael Dell with Dell Computer.

In both cases, these visionaries imagined a different, better way of doing things. With its ease of use and simple interface, Apple was the "computer for the rest of us." With its direct marketing and customer service, Dell revolutionized the PC space. Jobs saw things differently. So did Dell.

The markets rewarded each handsomely. Both became zillionaires and the darlings of their respective operating systems. Magazines featured them in cover stories and investors cheered them for growing their portfolios.

And then, the inevitable happened: Both Dell and Jobs left their companies for others to manage. In Jobs' case, the parting wasn't all that friendly. A long line of Caretaker Managers - people who have no clue as to what brand value or strategy truly is - attempted to drive the company forward. They almost drove it into its grave.

Caretaker Managers, for those of you unfamiliar with the term, are CEO's with three year contracts who stay on the job just long enough to collect their bonuses at the expense of the companies that hire them. They typically have no brand sense or vision. They usually "restore the company to profitability" by cutting costs, rather than increasing revenue. After the first year of cost cuts, profitability does reappear, but revenues drop, as well. By the second year, the cuts dramatically affect the company's ability to perform, which is no longer of any consequence to the Caretaker Manager, because his contract is about to end and his executive recruiter already has another corporate victim lined up.

John Sculley, Michael Spindler, Gil Amelio and the rest of their crew who knew nothing about Apple's true core brand ethic, strove to drive their traditional, square-peg strategies into Apple's round holes. With each offensive, each Caretaker Manager's tactics only made things worse. Pundits predicted the imminent demise of Apple on a weekly basis. It only got better when Apple finally woke up, kicked out the Caretakers and brought Jobs back in.

Now the same thing is happening to Dell. Once the pride of the direct marketing model, Dell's famous, fabulous customer service - the very quality that distinguished it from the rest of the pack - had fallen victim to the same kind of cost-cutting insanity that plagues most Caretaker Managers. Dell became a shadow of its former self, prompting the board to dump its current Caretaker CEO, Kevin Rollins, whose accomplishments, according to the AFP, included the following:

"In the nearly three years that Rollins headed the Texas-based firm, it lost its dominant position in computer sales to California-based rival Hewlett-Packard and came under scrutiny for questionable accounting practices."

Three years. That's how long it took Rollins to undo 20 years of Michael Dell's success. Which is the reason why the Board decided to call Michael Dell back into resume his post as CEO.

Seeing a pattern here? Look around the place, and you'll see a disturbingly similar trend of high-paid mediocrity running rampant throughout American industry, the only country in the world where a failure the likes of Robert Nardelli can take home $250 million bucks for actually failing to do his job.

Throughout Washington D.C., we hear about how illegal immigration and terrorism will destroy our economy and our way of life. We hear about how sex and drugs and rock and roll are eating away at our national morals. Hardly. If you really want to see how the country is rotting from the inside out, you have to start at the top. The Caretaker Managers are running amok.

And their Threat Level to the country is a bright neon red.

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