Can Dell Turn “Private” into “Leader?”

No less investment maven than Carl Icahn believes that Michael Dell’s successful campaign to stave off his takeover and take Dell private was “just one recent example of a ridiculously dysfunctional system.  Lacking strategic foresight, the Dell board for years presided over the loss of tens of billions of dollars in market value at the hands of CEO Michael Dell. Instead of deposing him, the Dell board froze out shareholders and voted to allow the CEO to buy the company at a bargain price using shareholders’ own cash.”

I agree that the stock system is “ridiculously dysfunctional” but I think Icahn may be more of a contributor to dysfunction than an impartial arbiter of functional-ness.  What Icahn didn’t do, arguably the bubble and SOX did, and it’s just possible that Michael Dell is on the track to salvation of the system and not its destruction.

The biggest problem with innovation in tech today, IMHO, is the fact that since the excesses of the NASDAQ bubble in the late ‘90s and the Sarbanes-Oxley Act (SOX) designed to curb them, companies have been shortening their sights to the point where executives can’t see beyond the next quarterly numbers.  That’s equivalent to wanting to trek like Lewis and Clark without being able to see beyond your feet.  Nobody wants to bet on the future because they can’t be rewarded for doing that.  You deliver your numbers, which are at least a small improvement over the old, by cost reduction if you can’t manage revenue gains.  And if you’re into network equipment or server sales you likely can’t manage revenue gains because all your buyers are staring at their feet too.

So do we fix SOX?  Heck, we can’t even fund a government or pass a debt ceiling extension, or approve nominees for key positions, or much of anything else.  Imagine trying to do something substantive in Congress these days.  So what’s the answer?  Well, it just might be to take your marbles and go home.  Leave the public company rat race and go private, where you can build for the future without having your hands slapped for not making the numbers in the next quarter.

I’m not Michael Dell’s confident, so I can’t say if this is what he has in mind, but the opportunity to leverage the “special benefit” of being “private” rather than “public” will be there whether that was Dell’s intentions or not.  Cloaked in the righteous anonymity of private-ness, Dell could quietly foment the revolution of networking and IT, emerge when they’re done like an erupting volcano, and totally transform the industry and confound competitors of all types.  Pull it off and Dell would be in a position to be what Chambers wants Cisco to be, the “number one IT company”.

Of course, it’s the pulling it off part that’s the trick here.  To revolutionize the industry like this, Dell would have to know what revolution they wanted to back and how to back it.  While I’m sure that some in Dell understand the benefit that being a private company could bring them, I’m less sure they know what they want to do next.

I think Dell and I agree on something, which is that “the cloud is the future”, but that’s too vague a notion to build a revolution on (anyway, everyone’s been saying that so the slogan has been used up).  The thing that’s the revolutionary part is the creation of an agile experience framework in the cloud, something that vendors and standards groups have sort-of-begun by looking at how things like IMS/EPC and CDN could be cloud-hosted.  Cloud-hosting isn’t the whole answer, though.  You have to add in a lot of flexibility and agility, the notion of not only highly dynamic resource-as-a-service frameworks but also a more dynamic way of building software to support experiences (something I blogged about just last week).

The most complicated parts of our revolution may not be defining slogans or pieces of doctrine, but simply finding a place where it can start.  A good revolution has to balance the realities of the present with the value of the future it promises; it has to build on the current system so that there’s not widespread problems associated with adoption.  But it can’t get bogged down by supporting the present.  I contend that our SDN, cloud, and NFV revolutions are too tied to current paradigms.  They’re all cost-based.

You don’t take up the barricades to save 8% or 12% on your phone bill.  The promise of the future that a revolution must convey—that Dell must embrace—has to talk about the wonderful things the future will bring.  Bringing slightly cheaper forms of the present won’t cut it.  All of our technology revolutions are just that, revolutions on the technology side that will impact how you do something and perhaps how much it would cost to do it, but they won’t deliver things different than we already have.  Those who are promising otherwise are just making empty promises, lacking convincing detail because they have no detail to offer.

I don’t have it either.  I believe the future is a fusion of our current revolutions with mobility to create a kind of gratification framework that grows around everyone and links them to the stresses and opportunities of the world they face.  I think a good tech company could build that framework, if they were unfettered by SOX.  You, Dell, are about to be cut free.  Can you take up the challenge?

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