If there’s one thing that keeps Tech Data Corp. CEO Rich Hume up at night, it’s making sure the Clearwater-based IT distributor’s strategy is on the right track.
Tech Data (Nasdaq: TECD) is the largest company headquartered in Tampa Bay, with nearly $38 billion in annual revenue, 15,000 employees in offices in more than 40 countries, and 125,000 customers. On a day to day basis, the company runs itself and executes well, Hume told Moez Limayem, dean of the University of South Florida Muma College of Business, at the college’s Conversation with a CEO program. But Hume and his leadership team remind themselves often that they set the direction of the company and are responsible for the livelihood and prosperity of the 15,000 workers. “Then it gets real personal,” Hume said.
“The thing that keeps me up at night is if we make a bad call as it relates to our strategic direction. Then we fall behind. Then it’s extraordinarily difficult to recover,” he said. “If you were to miss a trend around where the growth area is in the market now — cloud, security, IoT [Internet of Things], analytics — and you weren’t prepared or aligned to take advantage of that growth, you find yourself then participating in a declining market because the rest of IT is declining. If that occurs, then life gets really hard.”
It would be difficult to meet financial objectives if the company could not be in growth sectors, so Hume has adopted some practices to keep ahead of the IT curve.
“We’ve got a lot of listening posts, internal to our organization. We’ve got a really good market intelligence listening post,” he said. “In addition to that, we have the privilege of having a seat at the table with our vendors at the CEO level. I myself participate in their council meetings so there’s a lot of insight that comes from that.”
While Tech Data serves many big-name vendors, including HP, IBM, Cisco and Microsoft, those vendors generally are in pursuit of the same technologies: digital transformation, hybrid cloud computing, security, IoT and analytics, Hume said.
That strategy played a key role in the 2017 acquisition of the technology solutions business of Avnet Inc. (NYSE: AVT), he said. That $2.6 billion purchase not only added significant revenue and workforce to Tech Data, but also kept the company on a growth path.
“There was some strategy work done by our team years ago that said, ‘Here’s where the market growth will be.’ It is in the categories I talked about earlier. We concluded that we didn’t have enough capability with our core business to be able to serve those categories the way that we knew the market would want them to be served,” Hume said. “It was an acquisition almost out of necessity, to be honest.”
Here are some additional insights from the Thursday morning conversation, held at the USF Center for Advanced Medical Simulation and Learning in downtown Tampa.
Talent. Limayem asked Hume what he looks for when he hires an employee. Attitude trumps everything, Hume said. He also wants good team players and people who can make the complex simple.
Tariffs. “Within the technology market a lot of the offerings of our vendors are sourced out of China, so there is an exposure to tariffs. We are not responsible for landing the product in the U.S. The vendors do that and we take it from the vendor. So usually if there is a tariff involved, they’ll raise their prices and we’ll pass that price through. So for Tech Data, tariffs don’t impact the fundamentals of our P&L [profit and loss],” Hume said. “The way we ultimately are impacted, like everyone else, is the macro impact of the economy slowing down and then perhaps less growth in the market because of the slower economy. ”
Technology to invest in now. “Digital transformation is the wave driving the market now,” Hume said, citing two examples.
He recently bought a Jeep Wrangler, then got an email from Jeep that had the results of a 12-point inspection on his vehicle conducted through sensors on the vehicle, as well as button to push if he wanted to schedule an appointment for maintenance. “It will make me a more satisfied customer and drive a better revenue top line for Jeep,” he said.
He also said he uses Waze, a GPS navigation software app. Waze combines all of the new technologies – mobile, social, cloud, analytics and security.
“There are literally millions of opportunities out there in all parts of every business and consumer life to start having a more productive influence and outcome,” he said. “For anything around digital transformation and the Internet of Things, I think we’re in the very early innings — to use a baseball term, the second or third inning — and it will run for more than a decade.”
Tips for success. Success lies in having a strong leadership team, Hume said.
“I’ve been asked about my work-life balance … and the reality is there’s a direct correlation between the quality of your leadership team and your work-life balance. When the quality of the leadership team is really good, then you have very good work-life balance because you have capable people that run the show.”
He said the Tech Data leadership team has adopted a servant-leadership style, which is new to the company.
“We always have to adapt to the realities that we face and the velocity of the market and the change of what our colleagues at Tech Data are expecting in their experiences. As generations go by, colleagues have different expectations. Simply put, a servant-leader model for management is to make sure that you are meeting the needs of your team before you are concerned about the needs for yourself. What that means is that you are totally focused on their development and helping them to be successful,” Hume said. “The leadership style of many organizations has been very hierarchical. Hierarchical does not work in the modern day. Decisions need to be made by the folks paid to make those decisions, and the organization decision-making needs to be flattened.”
Tech Data is in the middle of its transformation and “management and colleagues absolutely embrace the direction,” Hume said.