A Startup Mentality For A 20+ Year Old Solutions Provider?

By Abby Sorensen, Editor

I recently spoke to Darek Hahn, president and CEO of Dynamic Strategies Inc. (DSI), about how the solutions provider is undergoing a major shift in its target customer focus, sales strategy, and corporate culture. DSI was founded in 1997, and, like many VARs and MSPs, is rebuilding its identity to adapt to changing channel dynamics. Hahn was happy to share his insights on the challenges this MSP is facing, because they are challenges many IT service providers can relate to.

DSI was co-founded by three engineers who won the business of a large, multi-million dollar client that helped sustain the company as a lifestyle business for nearly two decades. The MSP would occasionally lose small parts of that large contract and fill those holes with small new business accounts. But, it never needed an aggressive sales strategy. DSI had the technical expertise necessary to keep its clients happy, but the company’s sales were stagnant, and its overall historic growth was still in the single digit range. When a strategic investment group bought the company in 2016, Hahn was elevated to his current leadership role and was faced with instilling a startup mentality within a 20 year old company.

There are some good lessons VARs and MSPs can glean from Hahn. First, it’s important to have a diverse portfolio of clients. When the time came for DSI’s original owners to sell the company, the risk of having business tied up in one large client cost them more than one million dollars in terms of valuation. Relying on a small handful of large clients to keep the lights on can also make your team complacent and growth-averse. Second, change doesn’t happen overnight. Deciding to rebuild your solutions provider with a new business model doesn’t mean customers will automatically flock to you, and it doesn’t mean your culture will improve automatically.

Hahn inherited a good team of people, but almost no processes. For example, the company didn’t have a template for proposals, had only one sales rep (who had never been given any real direction), and had been through several cycles with different MSP marketing firms without making any tangible progress to boost its pipeline. Here are a few examples Hahn shared that are helping the company jumpstart its next phase of growth:

• With the change of ownership and new focus on a sales-first strategy, DSI reevaluated its target customer. Hahn explained DSI used to think that target was a 100-seat contract, but the team realized it was more important to choose customers that were the right fit rather than the right size. What he means is that DSI is now focused on customers who have a proactive mentality when it comes to IT, rather than getting in to bidding wars with customers who see IT as an inconvenience. That said, DSI knows it doesn’t want to compete to win the business of 1,000 seat clients. The company has learned from its last large client that it’s too easy to be commoditized when working with those size contracts.
   
• In order to help change employees’ mentality about the shift in focus, DSI holds monthly town hall meetings to educate staff members about what it’s like to be in a client’s shoes. For example, one client’s CEO walked them through the decision-making process at his company, and another explained why he doesn’t care what type of hardware they use as long as it works.
   
• Hahn says the company is focused on adding more staff members who have experience working in a corporate environment. Only three current employees have worked for a company other than an MSP, so it’s hard for the team to relate to their customers’ challenges and processes.
   
• DSI also built relationships with VAR referral partnerships. VARs who aren’t fully ready to take the managed services plunge can at least partner with MSPs like DSI and earn a kickback on referrals. Plus those VARs are then viewed as trusted advisors in the eyes of clients.

Today, DSI has 27 employees and is hoping to grow its headcount about 25% by closing a handful of lingering contracts. According to Hahn, about half of the company’s short-term growth strategy is directly related to sales, and the other half will come from acquisitions. Right now DSI is focused on building out its marketing strategy and streamlining its onboarding process. Hahn knows cultural improvements will be gradual.