The right stuff for distribution: Most leaders are industry homegrowns - Distribution

Electronic News, Feb 4, 2002 by Rob Spiegel

What background best prepares an executive to run a distribution corporation?

The majority of senior executives in electronics distribution have spent their entire careers in the industry.

Some say this is because the industry is a crossroads of two disciplines, distribution and electronics, which means it can be difficult for an executive to grasp the intricacies of the industry coming from either an electronics OEM or a distribution company in another industry.

Others contend good things happen to the industry when outsiders take over, as was the case with Stephen Kaufman, who led Arrow Electronics Inc. of Melville, N.Y., during its years of strong growth.

"A lot of the leadership in distribution doesn't have enough exposure from other corporations and financial endeavors," said Bruce Goldberg, CEO and president of Miami-based All American Semiconductor Inc. Goldberg is an attorney by training. "I have respect for Steve Kaufman's ability to view the industry from a financial perspective."

Joel Girsky, president and CEO of Jaco Electronics Inc. of Hauppauge, N.Y., also sang praises for the work Kaufman did to bring an outsider's view to distribution, especially Kaufman's ability to make a case for distribution to Wall Street.

Prior to joining Arrow, Kaufman worked as a management consultant. "He was trained to run a business. He could have run a steel business, a dairy farm, a manufacturing concern. An outsider came into our industry and he revolutionized it. He brought us to a different level," Girsky said.

That new level, according to Girsky, involved Kaufman's understanding of the need for distributors to seek financing beyond what banks could or would provide in loans. Girsky said Kaufman was able to convince Wall Street that electronics distribution was a worthy investment, thus creating a new source of capital for the industry as a whole.

"The entire industry benefited from Kaufman's work," Girsky said.

Arrow hired another outsider five years ago when it brought Francis Scricco in to take the reins from Kaufman. Scricco, too, was a management consultant prior to taking charge of Arrow.

Girsky himself benefited from work outside electronics distribution. His early experience was in a butcher business he owned with his brother.

"The foundation of our income was the butcher business. We knew service. And good service has been our creed for 40 some years now -- service the customer," Girsky said.

Over at Newark Electronics, the Chicago-based subsidiary of London's Premier Farnell plc, it seeks executives with a varied backgrounds.

"We want to see success in more than one discipline. Maybe logistics, finance, sales," said Jim Nichols, senior VP of sales. "You have to put the best players on the field. We want to see a really good athlete."

With the various disciplines that make up electronics distribution, many long-term executives have broad experience, even if they spend most of their careers within the industry.

"The majority of executives have been in distribution or the electronics industry for more than 20 years. I think almost 90 percent have 20 years of experience," said Wally York, VP of marketing for Cleveland-based Pioneer-Standard Electronics Inc. "It might be sales, IT, management or finance. We all have a diverse background."

The pattern that has emerged among distribution executives is that the younger managers typically have more education than the senior executives. Roy Vallee, chairman and CEO of Phoenix-based Avnet Inc., has a two-year technical degree.

"After 20 years in the business, it's experience that matters, not education. What matters is P&L experience -- people who have run a business profitably," said Robert Kierk, VP of human resources at Avnet. However, he did note that for up-and-coming executives a greater degree of education is expected. The younger managers tend to hold a technical undergraduate degree as well as an advanced tech degree or an MBA.

All American's Goldberg said his training in law has been as much a hindrance as a help.

"The approach of an attorney is different than the approach of a businessperson," Goldberg said. "Attorneys look to avoid problems, while business people seek opportunity. For me personally, it was a change to view business as an opportunity." The advantage to a law background, according to Goldberg, is his familiarity with the world of CEOs. "As an attorney, I spent time advising CEOs, which gave me a head start on how to handle the responsibility."

One very common background among distribution leaders is a very strong familiarity with the parts and products themselves. More than a third of the current senior distribution executives began their careers stocking shelves. "I literally started in the distribution business picking and packing parts at Hamilton Avnet in a small warehouse in Indianapolis," York said. "As a result, I went into customer service and outside sales."

RELATED ARTICLE: Identifying Distributors

Education background of distribution leaders

* Industry veterans, 20-plus years: Undergraduate degrees in business, engineering or liberal arts