When Bob Dutkowsky arrived at Tech Data Corp. as CEO in October 2006, he was joining a company that lost $97 million in fiscal 2007.
But he didn’t see a company that was in shambles. Instead, he saw an organization with plenty of potential.
“The fundamentals of the company were very strong,” Dutkowsky says of the technology products distributor. “The core capacities of the company were very strong, but I think the company we just kind of lost our way in some regards.”
His solution wasn’t a new vision for the $24 billion company; it was a new game plan.
“I’m not a big fan of a vision,” he says. “I’m much more of a fan of a game plan or a strategy. I think visions are nice, but people can’t necessarily see how they can contribute to the success of a vision. It’s too nebulous versus the game plan.”
The game plan centered around three things: to acutely focus on execution, to figure out how to diversify the business into other areas where the company could add value and to use innovation as a way to differentiate themselves in the market.
“We have to sell and deliver $70 million of products every day as a company,” he says. “Our average order size is under $1,000 so you can see how crucial execution is. We have to bite that $70 million apple in little small chunks repeatedly over and over and over again to be successful as a company.”
To get the game plan to work, Dutkowsky didn’t have to change what the company did. He had to identify the people in management that could help him implement it and empower employees to execute it.
Identify the best managers
Because Tech Data was the fourth company that Dutkowsky joined as CEO, one of his talents is to be able to come into a company and relatively quickly size up the capacity of the business and the management team.
“You really look very carefully at the domain knowledge that people have,” he says. “Do they really understand the business; do they bring expertise to the business? You look carefully at their leadership capabilities and you’re really interested in, ‘Do they match up with what your leadership philosophy is?’”
You then have to look at their pure leadership skills.
“Have they been able to scale up to that capacity and that requirement of the job?” he says. “When I joined Tech Data, what I found was the vast majority of the people on the leadership roles where very capable and had all of those skills and requisite skills that I was in. So the vast majority of them stayed in their jobs.”
To find out if you and another executive are on the same wavelength, you can’t just speak with them a few times and then make your decision.
“Really, what you do is you watch them in action,” he says. “You sit in staff meetings or team meetings and you try not to say anything. You try to just watch how the process unfolds and watch their leadership skills, competencies and core beliefs in action. You don’t see that the first day. You see that through a period of observation, and then you make a determination.”
You can’t always expect a perfect fit, which was the case with Dutkowsky when he was evaluating executives.
“But, I believed that if I could work with them, I could help them see my way that the company should be operated,” he says. “They were flexible and smart enough and skilled enough to migrate their mode of operation to more of the way I would like to see the company run.”
Getting them to migrate to your mode of operation may seem like a huge challenge, but Dutkowsky says it’s much more difficult when you join a company that is reveling in its success. When you take over a company that isn’t doing well, you need to jump on the opportunity and take advantage of managers who are looking at things with more of an open mind.
“In Tech Data’s case, where we lost money, people were very interested in finding a different way,” he says. “So, there wasn’t a lot of resistance to thinking about the business opportunity differently.”
Once you have chosen the people you want on your management team, you still have to watch their actions to monitor if they have bought in to your philosophy.
“It’s really easy to have people tell you what they think you want to hear, especially in the beginning,” he says. “When the new guy comes in, it’s really easy for the existing team to kind of mimic back the ideas and direction that the new executive is articulating. But, what you really watch for is the actions.”
For example, if you want to find out if the sales executives have bought in to your philosophy, go and make a couple of sales calls with the salespeople and see how they deal with the customer.
“It’s very simple to see what people really believe in the end,” he says. “It takes a little time sometimes to see it. But you can pretty quickly figure out what other people have the moral and ethical backbone that you demand that they have.”
Turn employees into believers
Dutkowsky knew the company had a lot of potential, but he had to get employees to see what he saw to make the game plan work.
“That’s a process that never ends,” he says. “It’s not like you call everybody in a room and say, ‘OK, today we’re here and tomorrow we’re going to be there.’ It doesn’t work that way.”
You have to do that in much smaller baby steps and avoid using brute force to get buy-in
“There are a lot of executives that come in and join companies and make changes with brute force,” he says. “I’m not a big fan of that. You need to get buy-in from the organization as opposed to telling them what to do.”
A better method is to use communication to empower employees and establish buy-in.
“If there’s one place where I tried to go overboard, it would be on the idea of communicating,” he says. “Because, once you communicate to people what you think is important and where you think the company needs to go and where our strengths and weaknesses are, then they begin to see where the out-of-bounds lines and where the goal line are.”
Dutkowsky has an all-employee quarterly meeting where everyone on campus comes in a room and talks about the company’s performance, reviews initiatives and recognizes the best employees of the quarter.
“You figure there are 1,000 people in a room and then at the end of that you say, ‘Now are there any questions?’ and no one is going to ask a question in that an environment,” he says. “But, you reinforce behavior with the way you recognize the employees of the quarter, and you reinforce the importance of execution and diversification in the way you talk about the performance of the company. But then you’ve got to give people the opportunity to talk about it in smaller groups.”
That smaller group meeting doesn’t have to be a formal get-together. Dutkowsky has monthly birthday parties for employees with birthdays in that particular month.
“Now, as opposed to having a meeting of 1,000 people, we have a meeting of maybe 50 or 60,” he says. “In that meeting, there are no flip charts, there are no Power Points. It’s just dialogue, and you try to get people to … ask questions and probe into what they want to know about the way the company is going to work. And again, it’s a great opportunity to reinforce what’s important in the company, what the strategy is, what the game plan is and where the company is performing well.
“I talk pointedly about our competition and where I think they are outperforming us. I talk about what our customers are saying about us when I talk to our customers in the marketplace, because the vast majority of our employees never talk to a customer. You don’t know what the customer thinks of Tech Data; our salespeople do. But, the average employee doesn’t hear that stuff. So, in small groups, you communicate again about what’s good and bad about the company, you get their feedback and you answer their questions.”
Creating that relaxing environment will allow employees to let their guard down, and ask some questions they wouldn’t in a group of 1,000.
“When you come to a birthday party, we have cake and ice cream, and we sit around and we chit-chat about things a little bit before we get into the business,” he says. “I think the idea is people get more relaxed than if you say, ‘You’re going to have a meeting with the CEO. You better dress right and think of the right questions,’ versus, you come to a birthday party, and it’s much more casual.”
Reiterating your game plan numerous times using different avenues, such as small and large group meetings, is an effective way to get your point across.
“You lay out for the organization what needs to happen for it to be successful, and you try to articulate that in as many different ways as you can think of so it connects with people,” he says. “There’s theory written that a person has to hear something seven times before they comprehend it.”
The same thing happens when it comes to leadership.
“People don’t meet the leader and say, ‘Hey, I buy in to everything that guy says, and for my 40 or 50 hours a week that I’m at Tech Data, I’m just going to put all my energy to what that guy just told me is going to happen.’ It doesn’t work that way,” he says.
“It happens over many touch points. Again, that’s why my belief on communication with the all-hands meetings, the smaller meetings, with video. Every quarter, we record a video that I try to talk in three minutes or less about what went on in the company the last 90 days and what do we need to be focused on as we go forward. You can’t communicate enough as a leader to get people to buy in to where you think the company needs to go.”
Dutkowsky’s game plan took the company from losing $97 million to generating $123.6 million in net income for fiscal 2009.
“I didn’t join the company and say, ‘Hey, you know what, tomorrow, we are going to stop distributing technology and start distributing Wrangler jeans or something,” he says. “It was, ‘We have a set of core competencies, and let’s just make sure those competencies are as effective and efficient as they can be and that the right people were driving the right initiatives around those core competencies.’”
Overall, Dutkowsky says to understand instantly that you are only as good as your team of people.
“Implied in leadership is that there are other people, other individuals, other personalities, other backgrounds that need to be led or asking to be led,” he says. “I think the problem that most senior executives face is they think they are going to do everything on their own and the idea that I’m going to join the company and I’m going to change the company is a fallacy.
“It’s not just one person, even though at the end of the day someone sits at the top of the pyramid. That’s just the way it works. But, the reality of it is a company is only as good as the team of people that comprise the company. The leadership team is only as good as the team of people that comprise that group of leaders. As lame as it sounds, there is no ‘I’ in team. That is my fundamental business belief.”
How to reach: Tech Data Corp., (727) 539-7429 or www.techdata.com