D&H's DNA For Success

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When Dan and Michael Schwab were growing up, their father, Izzy, taught them the importance of doing the right thing for employees, vendors and reseller customers and always, always planning for the future. Izzy, who recently celebrated his 60th year at the company, says the two "boys" -- like he and his dad before him -- inherently understand the D&H look-to-the-future ethos of knowing the value of a dollar, reinvesting in the business, and always planning for the future. That means building the business not for the next quarter or the next year, but with a steady eye on always changing to deliver a better partner experience.

"There is a rock folk song from the '60s that says, 'The times they are a changin'," said Izzy. "We are all about change. The boys understand that. Keep the same philosophy but change with the times."

It's a lesson the two brothers as co-presidents and third-generation stewards of D&H Distributing of Harrisburg, Pa. -- which is celebrating its centennial this year -- have taken to heart. In fact, since Dan and Michael took over day-to-day operations in 2008, they have made big investments in technical talent, new hires from outside the company, and new breakthrough programs that moved the company deeper into advanced technology solutions for the small- and midsize-business market.

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The big bet to go deeper into complex technology solutions has paid off for the company -- one of the less than 1 percent of employee-owned businesses in the U.S. -- as well as its 1,250 co-owners and its partners.

In the past decade, D&H has grown from a $1.45 billion company with 850 employees into a $4 billion company with 1,250 employees. At the same time, the value of the Employee Stock Ownership Plan (ESOP) has grown by a mind-boggling 300 percent.

Under Dan and Michael's leadership, D&H has taken the number of engineers and technical talent building solutions hand in hand with partners from just two to 26 and significantly increased VAR enablement activities across the board. That includes a stepped-up K-12 education sales division and, most recently, 17 sales reps to support emerging value-added resellers. The company also has put its money where its mouth is in the all-critical SMB VAR credit market, taking the distributor's monthly open net credit from $65 million to $350 million.

The results on partner sales and market reach have been remarkable. D&H has helped 500 VARs grow their business by 20 percent over the last three years, totaling $100 million in growth. In addition, more D&H partners are moving upmarket. Five years ago, 80 percent of D&H partners were providing solutions for businesses with 25 seats or fewer. Today, 60 percent of D&H partners are selling solutions in the 25- to 250-seat market.

Don't look for D&H to stop the big investments aimed at propelling partners into advanced technology solutions areas. In fact, the two brothers say the D&H DNA ensures the company will always be forging ahead with partners' needs in mind.

Dan Schwab, who has been instrumental in leading the charge into new emerging technologies, said the cultural characteristics that have powered the company since its founding in 1918 are driving it into the future into new areas like artificial intelligence and the Internet of Things.

"For D&H the common denominator that has made us successful in the past and will also make us successful going forward is our cultural rudder that is leading us into the future," said Dan. "At D&H we have a culture, our own DNA. It is about collaboration, being driven and looking around the corner for the next opportunity."

That ability to look around the corner has taken D&H from selling retread tires to the first RCA Victor Gramophone and RCA radios and TVs to the PC computing explosion in the '80s and finally to current cutting-edge products like Hewlett Packard Enterprise's Gen10 servers and Cisco Systems' Meraki cloud-managed wireless platform.

"When you think of the dynamics of our industry, we have to be very nimble," said Dan. "We want to continue to evolve every month, every week, every day. We are big believers in challenging the status quo and looking to the future."

Even as the two co-presidents chart the course for future growth with department heads and co-owners, they are forever focused on making sure that what they call the 100-year-old "Rock of Gibraltar" foundation of doing the right thing for employees, vendors and customers does not change.

"The people at D&H are our No. 1 asset and always will be," said Michael Schwab, who started working for the company as a sales rep 29 years ago. "I describe them as 'engaged problem-solvers.' They are engaged with customers, but they are also empowered to solve their problems. People sometimes forget that business is people-to-people. It is relationship-driven. That is how business gets done."

Getting business done means investments in technology solutions for SMB-focused solution providers. Those include a rep for every single D&H customer, free pre- and post-sales engineering support for complex solutions deals, and even deal registration input for partners.

D&H has filled a growing gap in the market, said Dan, taking its SMB partners into complex solutions as competitors grappling with market consolidation have become more focused on the enterprise. While rivals would rather sell 1,000 products to five solution providers, D&H would rather sell five products to 1,000 solution providers, he said.

"We are filling a void on behalf of our vendors to educate, train and empower our resellers to sell more advanced technologies," Dan said. "Our resellers look at us more as their trusted advisers than as just a source of technology products. We are training them in the latest technologies from HPE, Cisco and others. We are giving them technical training and even helping educate their customers on these solutions. It really is a cradle-to-grave mentality to help them deliver these more advanced solutions."

That mentality means listening closely to partners, vendors, customers and employees. Some of the best ideas powering the company into new opportunities have come from employees in the sales, support and warehouse trenches. The co-presidents meet regularly with the company's co-owners to ensure they aren't encountering roadblocks. There are "Pizza with the Presidents" lunch sessions and breakfast meetings aimed at getting candid feedback on what changes co-workers would like to see. And every Friday morning, Dan and Michael, along with Izzy, preside over a two-hour session with the top 12 department heads to get the "good, the bad and the ugly" on what's working, what's not and what new opportunities are on the horizon.

"The best practices for us are coming from ideas that every customer-facing employee shares with us so we can move forward into the future," said Michael. "What we see is a lot of defining moments where a customer has a need and we are able to solve it because we have pushed that responsibility down into the organization."

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