It’s fun to write about organizations that use strong customer experience to win a financial payoff (Starbucks, Southwest Airlines, Zappos), yet there are lessons to be learned by taking a look at those who are struggling.

In this case I’m looking at Dell. The company was a pioneer in online customer experience, allowing customers to configure their own computers. In a past life I was a small business customer of Dell’s myself, and I felt we were able to equip our business with computers that were exactly and uniquely us. They had this great great follow-up & maintenance service. I even use them as an example in my book Domino.

On the surface it seems as though Dell is continuing to thrive. In June, Forrester Research awarded them a Voice of the Customer award and they recently reported second quarter earnings that topped analysts’ estimates. So why are we looking at Dell as a company struggling with the link between customer experience and performance?

Photo by: Nina Matthews Photography

This post from Knowledge@Wharton summarizes nicely what I’ve been thinking about. The authors outline a few recent missteps – including the abysmal launch of their smartphone – and wonder with us what was really driving Dell’s strange bidding war with HP for a data storage company. Both their performance as company and the performance of Michael Dell as CEO, it seems, are under scrutiny and clouded by uncertainty.

It seems Dell has lost the tip of its razor focus about what it solves for its target customers. And since it can’t answer that, it can’t create clarity about what to do for its daily decision making. You just look at these decisions and can’t help but wonder, is Dell in the corporate services business or consumer computers business?

From the Knowledge@Wharton post:

“Like other successful companies, Dell began to think, ‘We know this market better than anyone else…so the focus shifted from the ‘outside in’ [approach of] looking at its position in the market to thinking, ‘How can we maximize earnings out of our existing resources and capabilities’ at the expense of, rather than in addition to, thinking about what its customers need.”

I concur wholeheartedly. Right now they’re fighting to stay in second behind HP on computers, and trying out a role in cloud computing, internet serves, smartphones.  If this sounds confusing, it’s because it is. There’s no clarity about what they’re trying to be.

Dell looks to be trying to be everything to everybody. Imagine instead that leaders from Michael Dell to the front line shared a common view of the need they solve for their customers, and then designed an operating model that fit.  Daily decisions would be laser-focused on delivering a customer experience that’s both unique and essential for Dell.

You might be thinking that needs to be solved – and the target experiences that solve them – can be defined at the product line or business unit levels too. That’s true. But top performing organizations have a unifying purpose – a need they solve – for a clearly defined set of target customers. Simply, Dell needs to determine this for Dell as an organization. If it can answer that question, I see sustainable financial payoff in its future (and no more questions from me or the folks at Wharton).

What do you think?