Many global companies struggle with telling a consistent story across business units and muliple countries. But when you’re a highly acquisitive corporation that’s trying to assimilate multiple brands and diverse cultures, the task is even harder. That was the challenge that Rich Kylberg faced three years ago when he joined Arrow, the $21 billion distributor of electronic components, as vice president of corporate communications. Kylberg, a former broadcast executive, realized he needed a new approach for gathering and telling the company’s transformation story. He recently shared the strategic evolution of the enterprise and how he is turning 10,000 Arrow employees into content contributors.
Ellett: It seems like the distribution category is going through lots of changes and Arrow seems to be going through those changes as well. How has the company been evolving?
Kylberg: One of the main drivers that we have here is how highly acquisitive the company’s been: over 100 acquisitions in the past 20 years. But about a third of those took place in the last three years. All of those came with their own sense of the strength of their brands and their marketing. Trying to integrate them all into a single company while not losing the magic and entrepreneurial spirit of the acquired entities has been quite a challenge. And frankly, over that period, Arrow had drifted toward decentralization so much that we were having difficulty getting traction in the marketplace. There were just too many brands, too many different ideas being articulated.
So I was brought in because there was frustration around this issue: “Arrow’s doing great. Arrow’s on fire. But it’s not getting the credit in the marketplace that it deserves.”
Ellett: Arrow has gone through lots of changes, lots of acquisitions, trying to pull together a common story. Can you expand on the strategy that is unifying those changes?
Kylberg: Not too far in the past, a microchip sold for around $4.50 each. And today they sell for something like 49 cents, meaning you can buy a piece of technology to power your iPhone for a lot less than you pay for a cup of coffee.
So what’s happened is you get this industry where cost continues to be driven out of it, the technology continues to become more sophisticated and things get commoditized. You’re in a world of slow growth, low margin and your business takes on those characteristics. And the stock market looks at you that way.
If you want to try to improve, you can buy more low-margin businesses, but you will see the trend continue in that direction. Or you get into something that’s higher growth and higher margin. By and large, higher growth and higher margin are characterized as services. So what Arrow has done in the last three years is to transform the company in the way that it thinks of itself and, hopefully, in the way that the market thinks of it: not being exclusively a low-margin, slow-growth distributor of components business, but a smart company. A smart company of technologists and engineers who are partnering with the greatest innovators you’ve ever heard of to make this world a better place. And we’re doing it through our service offerings and our product life cycle offerings that go from the design of an electronic component, the build out of it, the distribution of it, the manufacture of it and, ultimately, the recycling of it. So from the birth of an idea in electronics to the time that it needs to be recycled — rather than thrown into the Yangtze River — Arrow’s there working on it. I think it’s a much more complex story, a more compelling story than just that we sell microchips and semiconductors.
Ellett: What are the major 2014 initiatives that you’re trying to launch as part of this transformation effort?
Kylberg: Well there are two initiatives that are critical to us and they’re backed by technology. The first is the activation of the enterprise social network using Yammer. That is about being able to communicate to and hear back from all the individual employees in the company. The folks at Yammer have reported to me they’ve been stunned by Arrow’s adoption of [the platform]. We had something like 10,000 or 11,000 people who were eligible to sign up, and today we’re right under 8,000 who have signed up. Part of that is the pent up demand within this company for a voice and for being part of something unified.
We’ve talked to partners who have said, “You need to build content, you’ve got to build a newsroom for your company,” and so on. I can build all that, but it isn’t going to do anywhere near the good that we’ll get from having 10,000 Arrow employees talking about whatever’s going on out there.
We need people who are experiencing those stories. They may not be the best at telling them but the only way we’re ever going to find out about them is if we read about them somewhere: the central repository for finding out what’s going on all around the world.
We’ve got hundreds and hundreds of posts by people saying, “This is what we did here.” Then all I have to do is build up a team that’s able to contact those folks and write up their stories. And we can then use them through our platform for sales materials, for going out to the Web, for social media, for everything else. So for me that enterprise social network is absolutely critical.
We also needed a tool that could deliver high-end, highly branded, elegant messages for everyone to use out in the marketplace. And I mean everyone, not just the sales team. What we did to that end was built something that we call the ARC. It’s basically an app that any Arrow employee can put on an iPad or a laptop, and it gives them access to all of the company’s collateral — whether that’s lower-level communications like line art, or videos that were done by Ogilvy and shot by Joe Pytka that are really elegant, beautiful work; and everything in between.
We have a relationship with IDC, for example, that gives us access to all of the market research in our industry. Any employee can find out what the thinking is around “Internet of things” or “cloud” — it’s available on their iPads. Every time we change something — there’s a change to our line card, there’s a change to one of our business units, we’ve added another company — we can make those changes on a centralized basis, push a button and everybody’s iPad says, “New!”
So for the first time we’re able to deliver a consistent message that everyone can count on as current. You don’t hand someone some information and say, “Well this is a little bit old, but you’ll get the idea.” No. It’s always current. It’s always accurate. So the cost efficiencies are there. The consistency is there. And the quality of a central group delivering those messages is way higher than any one of our single business units could develop.
This year I’m really excited that every single Arrow employee can go out into the world and sit with someone and have a conversation. And if you had a question like, “What is Arrow’s thinking in the M2M space?” or “Business intelligence, what’s Arrow doing?” they could just pull up answers on the ARC app and share interactive digital brochures. They can say, “I’m emailing it to you as we speak. Take a look at that. We can talk about it. We can work our way through it. I can show you videos on these subjects.”
What we’re trying to do is disrupt the way that this industry goes to market, because if we can change the way the industry goes to market, and we’re the only ones doing it that way, all of our competitors are playing catch up.
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