David Dicker, Chair and CEO of Dicker Data, is reticent to spill all the details on the hardware, software and cloud distributor’s strategy. In the old days he would have, he says, but with the locally founded and owned company fighting against big international corporations today, he’s careful to avoid giving them ammunition.
It’s an understandable position; competitors are always on the lookout for the next big strategy, and everyone wants to maintain their unique selling points.
But the IT entrepreneur is still willing to outline his business philosophy, and it’s demonstrably different to the way the big guys do it. “We don’t try to make as much money as we can,” David explains.
“We have targets in terms of the margins, and we operate in that way. So we don’t operate in that sort of pure capitalism mode, which gets a lot of bad press, where we’re trying to squeeze every dollar.
“What we do is project a year ahead on a month-by-month basis, as to where we want the sales and profit to be for each month. And we make sure we get that number. That’s all we try to do. The whole business is built around that strategy, so there’s never any of this, ‘Oh, we’ve got to get more, let’s get more’. We don’t operate that way. We operate on specific goals for what we want to get and once we’ve got it, we’re happy.”
It’s a lesson he learned as far back as 1976, while he was working in a plant that manufactured timber roof trusses (where, coincidentally, he also realised that personal computers would come to dominate the future).
The bosses tried everything to maximise productivity, and what they eventually settled on may seem counterintuitive, but David realised it worked.
The plant’s managers set a daily production target – an achievable one – and when they hit it, the team finished up for the day, even if it was before the established closing time.
“The idea that you’d send guys home at two or three in the afternoon, when the knock-off time was four – a lot of guys just can’t accept that.
They couldn’t accept the concept that you’ve got to treat the employees right, because otherwise you’re just not going to get an outcome. “You’ve got to understand the mechanics of the whole situation.
You’ve got to understand human nature, and how all these things work. And if you don’t have a clear understanding of that, you’re just not going to succeed.” One example of David’s unusual approach to management is his aversion to performance reviews.
While there are reviews undertaken throughout the company, David himself refuses to do them with any of his executive managers, believing it to be unhelpful in nurturing a professional relationship.
What it boils down to, he says, is that an employee is either doing their job well, in which case they stay, or they’re not, in which case they part ways. It’s evidence of a somewhat non-interventionist approach to management.
“I set the goals, and I let people do it however they like,” David explains. “They can use pretty much any method they like. But I tell people what I want to do, not how to do it. I don’t like to micromanage them at all.
Everyone’s got to operate in the way that they’re most comfortable operating, and then they’ll be the most effective. “You’ve got to give people responsibility and a free hand so they can use their brain and their initiative and get the right outcome.
Then you’ve got to try to find a group of people who will respond to that, and if you can find that group of people, you’re going to beat the other guys because they don’t operate that way. It’s pretty much laissez-faire, laidback.
To be honest, sometimes it’s probably a bit too laid-back, and a bit more management here and there might have helped. But that’s my basic approach.”
The relaxed approach is by necessity – Dicker Data has some 400 employees, so David focuses on setting the strategy, avoiding the day-to-day minutiae.
It’s the inverse of his management style when it comes to Rodin Cars, his New Zealand-based car project. There, he spends “far more time designing stuff than I should”, which is possible since it’s a relatively small company.
But at an organisation as large as Dicker Data, David is well aware of the reality that he simply can’t do it all. “You hire people because you feel that they can add value to what you want to do, and you want to let them do it,” he asserts.
“You don’t want to go in there thinking you’re the only person who can do anything, which is something that a lot of guys do, especially those who have started a business from scratch. They can’t let go, particularly on the technical-operational side.
You’re going to get people working for you that can do things you can’t do, and you’ve got to be comfortable with that. “I understand how every aspect of the business works in principle, but I don’t think I could execute it as well as some of the guys I’ve got working for me.
But then on the other side, when it comes to strategies and thinking outside the box, I think I’m better at doing that, so that’s what I focus on.” For David, the main requirement for a good employee is simply that they perform.
But the way to achieve this, he says, is to ensure they enjoy the job. “For most people, it’s a job,” he acknowledges.
“They’re only going there because they have to pay the mortgage. They’re not going there because it’s something they want to do.So you’ve got to try to make it as interesting as you can, as often people will get pretty interested in what they do, but you’ve got to move away from that drudgery scenario. You do that by giving people freedom to be themselves and use their own initiative, then get satisfaction from the result. It’s the small wins that you always want to focus on.”
We operate on specific goals for what we want to get and once we’ve got it, we’re happy.
David’s approach also involves paying the highest wages in order to attract the best possible team. It may just be common sense, but David says not many business leaders follow that idea.
It’s unsurprising that he’s implemented such policies; after all, he does consider his team to be integral to Dicker Data’s success. That high-quality workforce may not necessarily be a secret weapon, but it has certainly given the company an edge.
“There’ll be a million guys telling you how to be better than your competitors but, in reality, no-one really knows how to do that. You just do the best you can and hope it works out.
And I’ve been fortunate to be able to get a core of really good guys, a lot of them who’ve been working for me for 20 years or more. And that’s really what gives you the edge, when you distil it right down.”
It might be a simple idea – just do the best you can to be better than the others – but it’s clearly worked. Dicker Data has now been around for more than 40 years, and not even David expected the business to thrive for so long.
You’ve got to give people responsibility and a free hand so they can use their brain and their initiative, and get the right outcome.
The profound transformation of the computer industry being what it was, he didn’t think they’d last 20, or even 10 years.
But even though anyone could see how popular computers would be, says David, even he didn’t realise the extent to which the technology would be revolutionised.
“When I started, we went from hardly anyone having a computer – for most of the guys who had one, it was in a gigantic room that had to have a false floor, air conditioning, and a whole pile of technicians to operate it – to a situation where people have their own personal computer, and that was really the revolution. Everything we’ve had since then has augmented it, but that was the real revolution.”
Even so, Dicker Data has survived through these turbulent times, with several notable milestones marking its journey to success. David considers the first of these to be simply getting the business started in 1978.
More recent milestones include going public in 2011; with 125 million shares at 20 cents apiece, Dicker Data has now sold 160 million shares, and the value has skyrocketed to about A$7 each.
Locally Owned
David does have strong opinions on the necessity of a locally owned industry. For example, the collapse of the Australian automotive industry was because it wasn’t Australian, he says. The fact that it was foreign owned meant that companies like GM were able to just pull out of the country as soon as it became an unappealing market option. David saw a similar situation in the 80s, when the government opted to allow multinationals to run the computer industry rather than foster local manufacturing. By contrast, the US Department of Defense only buys US-made, and the US economy is the strongest in the world.
In 2014, the business acquired Express Data for A$65.5 million, expanding its reach in the physical distribution market and bringing technology giant Cisco on board.
Dicker Data has continued to nurture that relationship to the extent that it was last year named Cisco’s Global Distributor of the Year.
This came despite losing Cisco as a client in New Zealand a few years before, simply because the numbers weren’t right and Cisco decided to take on a different strategy.
David is pragmatic in this regard – as important as it is to maintain strong relationships with vendors, the real key to holding them is ensuring you’ve got the right numbers. That’s not to say the company puts any less effort into partnerships.
For some of its biggest partners (including industry heavyweights Citrix, Dell Technologies, Hewlett Packard Enterprise, HP, Lenovo and Microsoft), Dicker Data’s support goes back 20 or 30 years.
You hire people because you feel that they can add value to what you want to do, and you want to let them do it.
David believes in the effort to build better relationships, because despite talk about the convenience of online retail, face-to-face contact remains essential to a strong relationship.
“People like to have a personal relationship,” he says. “Otherwise they’d live in a box with a computer, and they wouldn’t see anyone and they’re not going to do that.” Dicker Data’s most recent milestone came in 2015, when the company hit A$1 billion in revenue.
An impressive feat for a homegrown success story, but David already plans to achieve twice that this year. Notably, he’s done it without fanfare, and without anything “tricky or sneaky”, like cornering the market with government protection, he says.
It’s all down to that strategy of simply doing the best they can. Expansion continues apace today; last year Dicker Data started work on a new distribution centre in south Sydney. Ground was broken by one of the distributor’s oldest employees, with a tenure of 28 years.
The new development will increase warehouse space by half, and more than double office space. Growth won’t be driven purely internally either; David’s strategy can be explained pretty simply as getting into offshore markets.
He acknowledges it’s not easy, but he’s still making the effort. “It revolves more around vendor access than the actual markets, because as you know, the computer industry is a mature industry, and all the markets that are worth being in are already covered,” he explains.
“It’s difficult to get access into those markets with a vendor. That’s where you have to do the work. You just try to put your ear to the ground as to where the opportunities are, and just see what’s possible.
That’s how it was done when we bought Express Data. I’d been looking at doing a deal like that for years before that one came up.
“You can’t make these things happen. It’s no good saying, ‘Well, we’re planning to do X, and we’re just going to do it’, because that’s almost certain to end up in a bad result. You’ve got a basic strategy and then you’ve got to look for the opportunities – and you’ve got to be a little patient. The worst thing you can possibly do is force things. I think a lot of people have expanded into China and regretted it, because they were hell-bent on going to China, but I’m not sure if they thought it all through.”
At present, David’s casting his eye further afield, not because the market’s “tapped out”, he says, but simply because there’s much more potential outside the country.
As Dicker Data expands, however, he’s careful to avoid moving into new products.
Dicker Data has its specialties and expertise, and David’s seen too many distributors try to branch out and subsequently go broke – he calls it a “kiss of death”.
After all, one of Dicker Data’s strengths is that it’s a uniquely Australian company.
“The biggest difference between us and our competitors, the big guys, is that they are all subsidiaries of foreign multinationals, and their operating parameters and their basic structures are to a greater or lesser extent controlled offshore. So they’re not in a position to adapt to a local market, even if they do actually know what they ought to do, because the orders come down from China, or San Jose, or wherever they come down from, and they just do what they’re told.”
Even though Australia is not culturally dissimilar to, say, the US or the UK, it’s not an identical environment; some approaches that would work in Australia wouldn’t work in other countries.
Dicker Data, being proudly Australian, knows exactly how to thrive in this market and is capable of being flexible and responsive to subtle changes in the market; David says there’s no secret formula to succeeding in Australia – it’s simply a matter of understanding the local culture.
But the core of Dicker Data’s approach remains single-minded in its determination – if something’s broken, fix it. “If there’s something in the business that isn’t right, we’re going to fix it,” says David.
“That’s probably the biggest difference between us and the other guys. Even if they know something’s not right, their ability to get change is limited, whereas our ability is not limited at all, because we can do whatever we have to do.”
David believes in a philosophy of doing whatever needs to be done to finish the job, which has no doubt gone a long way towards cementing the company’s reputation among its high-profile vendors and its network of more than 5,500 resellers.
Dicker Data’s responsibilities as the midpoint between these two groups largely involves doing the marketing between customers and vendors. But even that’s a complex task, as David notes, “No-one markets the idea of a car anymore.”
And it’s much the same when it comes to IT, since it’s such an integral part of day-to-day life. This, therefore, involves selling technology without selling the technological specifications.
“There’s no real technical development. And the vendors don’t really focus on the product anymore, in any real sense of the word. It’s really just a business thing, and it just happens to be computers. But we don’t talk about computers anymore. If I go to a vendor, the last thing they’re going to do is pull out some hardware and talk about the detailed operational specs of the hardware because 99% of the people in the room won’t even understand what they’re talking about, so they won’t talk about it. It’s a black box and it just becomes a business situation.”
David’s Side Project
Born from David’s personal interest in cars and his experience with the Ferrari Challenge, Rodin Cars is a new venture into the realm of motorsport. It draws its name from Auguste Rodin, the French sculptor most famous for his work ‘The Thinker’. Indeed, the automotive maker claims that its design philosophy draws from the ethos of that work. David started the business 15 years ago, but he’s been running it full-time for the past four years, with a sophisticated facility rolling out maximum high-performance cars. They’re designed for the track and the road, with the latter being ready for release next year. It comes in two models – the FZED and the FZERO. Given recent misfortunes within Australia’s car industry (or lack thereof), David’s based the business out of New Zealand. Despite Dicker Data being Australian-based, Rodin Cars’ location is also motivated by David’s belief that Australia isn’t a conducive environment to a healthy car culture. In fact, he sees Australia as one of the most authoritarian countries in the West, in part because he believes law enforcement would do anything in its power to suppress youth car culture. It’s a different environment to Dicker Data. There are only 20 employees as opposed to 400, and David takes a much more hands-on approach, in contrast to his laissez-faire approach to management of the IT provider. He works as the technical director, contributing a lot of the designs, and he now oversees the engineering and manufacturing. While he’s interested in taking it up to a higher level, he also acknowledges it’ll be a while before they get there.
When David casts an eye back over the milestones Dicker Data has reached and surpassed over the decades, he describes himself as “pretty satisfied”.
To hear him speak about the future of Dicker Data, and even Rodin Cars, it seems like he’s anything but; he’s undertaking ambitious projects in exciting new areas.
Even as he moves forward with these plans, his determination to be the best in the industry remains consistent. “Success in businesses is only about one thing, and that’s getting an edge over the other guys, being better than your competitors,” he says.
“That’s all that matters. Nothing else really matters. It’s not about how you’re doing in absolute terms. When you’re a technical business, and 10 or 20 years go by, you can see how much the products change. The product is almost irrelevant in that sense, but the operations, the strategies and the execution against your competitors is what’s going to make or break the whole thing.”
