Dell Case Study Harvard Business Review

Working Paper | HBS Working Paper Series | 2018

Zig-Zagging Your Way to Transformative Impact

V. Kasturi Rangan and Tricia Gregg

Achieving transformative impact has been much discussed by social entrepreneurs, funders, and consultants. These discussions have focused on issues of increasing impact and scale, but often with no clear distinction between the two terms. In order to provide clarity, we offer a framework that distinguishes between the two and use that distinction to illustrate the decision dilemmas faced by social entrepreneurs as they pursue impact or scale, or both. In our framework, scale can be interpreted at two levels: either as operational efficiency, which is achieved by minimizing unit costs, or expanding reach to cover a large proportion of the target group. In parallel, impact refers to either the outcomes of an organization’s immediate interventions or the ability to affect system-wide change. By graphing the two levels of scale against the two levels of impact, we have constructed a four-quadrant framework. Quadrant #1 focuses on the activities of a single organization where efficiency and efficacy would lead to organizational impact. Moving vertically, quadrant #2 refers to organizations that have reached deeper into the target population by scaling their activities, reaching transformative scale. Moving horizontally to quadrant #3, means extending the intervention to “solve” the problem at the circumscribed scale, achieving transformative impact. Lastly, quadrant #4, refers to organizations that have both expanded reach and created comprehensive change in the ecosystem to achieve systemic impact. We illustrate our framework with case studies of five social enterprises that have all chosen to pursue scale or impact or both: Akshaya Patra, Magic Bus, Health Leads, Year Up (YU), and KaBoom! Both Akshaya Patra and Magic Bus committed to transformative scale by remaining focused on their core mission and gaining operational efficiencies, what we call “zigging.” In contrast, Health Leads chose to pursue transformative impact, abandoning its original core model to focus on new system-wide collaborations, a process which we call “zagging.” Combining these strategies, YU and KaBoom! have zig-zagged by alternately seeking scale and impact. YU first scaled by delivering its program through partner institutions, then chose to also pursue field building roles. KaBoom! reached scale by “giving away” its model online, before shifting its focus to working with municipal governments to expand capacity. Generalizing from these cases, we conclude that achieving economies of scale with a demonstrably successful model enhances the ability to zig. However, pursuing transformative scale requires a deep understanding of the operational model and its underlying costs. Second, an organization’s ability to zag depends on obtaining the support of funding partners who understand the need for stretching the organization’s mission. While some may be able to deepen their existing funder relationships, others may need to find new funders to match. Third, the decision to zig or zag may create gaps in organizational capabilities that will need to be addressed as the organization continues to evolve. We believe that achieving systemic impact is a dynamic process requiring continuous adjustments in strategy.

Keywords: Social Entrepreneurship; Performance Efficiency; Growth and Development; Outcome or Result; Strategy;

Dell Case Study As Presented By The Harvard Business Review

Dell was the first mover with its business-to-customer model and internet sales and services since Dell reinvented the value chain for PC industry. Although China would become the second largest PC market after US, Dell's decision of positioning in this market was very crucial. Direct selling of business-to-customer model through the Internet! Does this create competitive advantage in China like it did in USA and Europe? If not what should Dell do to expand Chinese operations? If so what should Dell do to remain this strategy?The key for success in direct selling model is able to establish strong and consistent relationships with suppliers and customers. At this point, Dell would need information and knowledge about the suppliers and customers at China. There are two ways to create this information and knowledge: one is by joint ventures or alliances, the other is to employ knowledgeable Chinese management team to provide this. Also customer trust is very important. This could be achieved by creating brand awareness.

While computers and the Internet became commodity in developed countries such as USA, and UK, there were countries that were lacking of state-of-art information technology structures which enabled the wider usage of computers and the Internet. But globalization of business forces increased usage of computers and the Internet even in these countries which enabled them to develop their information technology structures. Since Dell was planning to enter developing countries with the same direct strategy via internet, they need to be careful about this totally new concept for China. Because Chinese people are not familiar with computers and the internet very much, the only mistake or unsatisfied sale to a customer would create a bad reputation among Chinese people. Dell should try to postpone its internet sales for a while for China until they start to widely use computers. Therefore, Dell should need to redefine its customer base for China from Home and small businesses to large corporate accounts.

Case Notes:1.Exhibit 1: Dell is not doing well at worldwide PC sales. Because while Dell's market share is very close to Compaq's market share in the US, it is 5% below of Compaq's market share worldwide. This could be because of Dell's fears when exploiting its direct sales strategy to global markets. Also since customer and supplier relations are very crucial for being successful in direct selling, Dell should have used joint ventures and alliances to...

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