Arrow Electronics, an 80-year old, Fortune 150 corporation with offices in 58 countries and revenue of $23 billion. On this show, we explore the marketing behind this large company with Chief Marketing Officer, Rich Kylberg.
Rich Kylberg serves as the senior executive overseeing corporate marketing and communication at Arrow. In five years he developed a stunning brand message and architecture, uniting this highly fragmented company around the world. Today, Arrow is Fortune’s “Most Admired Company” in its industry.
Prior to joining Arrow, Rich spent twenty entrepreneurial years owning radio stations. He is a five-time Ironman finisher, and was a qualifying member of Team USA for long course triathlon. Rich holds a Bachelor of Arts degree from Stanford University, and a Master of Business Administration from Harvard Business School.
Video Transcript: Marketing Leadership at $23B Arrow Electronics, with Rich Kylberg, CMO
(00:13) Welcome to episode number 154 of CXOTalk. I’m Michel Krigsman and my guest today is Rich Kylberg who is a Chief Marketing Officer of a huge company, Arrow Electronics, Rick how are you.
(00:35) I’m really just great today, thank you for including me again on your excellent program.
(00:43) Well it’s just awesome to have you back and to join us, and before we start I want to give a shout out and say thank you to Livestream for being just a tremendous partner for CXOTalk with the streaming and I know you’re a customer of theirs as well so thank you to Livestream.
(01:03) We are, they do a tremendous job for even a big company like ours. Apparently they can run the gamut; we really are keen on Livestream.
(01:14) So Rich let’s begin, give us a background about Arrow Electronics, the size of the company, when it was founded, what the company does things like that.
(01:25) Well thanks Michael I will and I’d like to just say one thing before I do, which is the last time we spoke and I know you’ll kill me for this we lost our connection but I looked like a skeleton. Because the last time you said you were willing to talk to me was Halloween. And you know I think I terrified you so much and said oh, and maybe you disconnected it and I can’t listen to this skeleton anymore.
(01:57) That was pretty amazing.
(01:58) And you picked Super bowl Friday around here in Denver Colorado, our corporate office. So it’s orange Friday and I’ve got my little go Bronco’s jersey on and all that. It’s not like every day at Arrow Electronics is dress up day, or I’m just the circus clown every day that you catch me, it’s just that you schedule us on special days I guess.
(02:22) Well you know there’s nothing better than color when it comes to enterprise software and to enterprise marketing and so today, at orange Friday, we have color.
(02:36) Yeah there you go and I think my colleagues at Arrow would say, well color would be a nice word to describe what Rich brings to our organization. Arrow was founded you know in the 1930s or something and Radio Row, which in New York coincidently was right at the intersection of Cortland Street and down by where the World Trade Center was historically. And Arrow sold radios and back then we just didn’t buy an iPhone and where you buy the next iPhone. When your radio broke we fixed it or whatever, when your car broke you fixed it.
(03:14) So people would come back into Arrow Radio and say hey our radio is not working and the people there knew which tubes, which components would be the best value to repair these radios. And they found that it was an equally good business if not a better business to be selling the parts that went into these devices than the devices themselves.
(03:37) And rather than staying committed to a technology or an industry like radio for example, Arrow evolved with technology. So some radio companies, Philco, they’ve gone out of business because they said, well who would ever buy a television because there’s no television stations but Arrow invested in television. And when that exploded there was more parts, more complexity, more components and so that component business grew and when black and white television gave way to color television more electronics.
(04:06) In the 60s and 70s with the electronics explosion where electronics became a way of life like lava lamps or eight track cassette players and to have the right quadraphonic sound in your home was the lifestyle thing that said, hey I’m really sharp I’m with it, more electronics, more components. And Arrow grew bigger and bigger, and of course with the explosion of computers now the electronics industry is enormous around the world.
(04:32) We’re in 53 countries with around 15,000 employees and a revenue of $23 billion a year and actually grew a lot through acquisitions. Over 100 acquisitions in the history of the company, a third of those in the last five years, so this is a rocket ship that I am attached to in my little orange Broncos jersey.
(04:56) So you are $23 billion in revenue, you’ve been around for 80 some years, what does that mean for marketing. So obviously the profile of the company has changed and to be around for so long the company has to transform and adapt many times, so how do you manage, how do you think about marketing, how do you think about the Arrow brand in the context of an organization that is so well established?
(05:31) Yeah, you know I think that is actually a really really incredible question because there’s good and bad about it. When a company has been around 80 years, and in those 80 years gets to $23 billion in revenue, it’s doing a lot of things right, right.
(05:47) I mean not that many companies get that big, and to get that big you’ve got to be doing something right, doing a lot of things right okay. And when you’re doing a lot of things right the question is why do anything different? Because different doesn’t always mean different better, different could easily mean it’s not going to work, and we’ve done perfectly well by staying on this track for 80 some years.
(06:12) So you get the benefit of really smart people and really great infrastructure and operations and so on, but you also have this legacy issue to contend with about when is the proper time to try something new, when is the right time to innovate.
(06:31) And as we all know in today’s business environment, if you’re not really trying to innovate daily or I mean at least being aware of the issues that are coming at you from competitive pressures, from industry, from the marketplace the market environment that we work with, customer needs, changes in distribution platforms, here comes the internet all of a sudden and search engine advertising. You know, if you’re not paying attention to that you can pretty quickly get blown out, and when you’re at a company with a long long history it’s very easy to rest on your laurels. In fact rely on your laurels to somehow propel you into the future. So at Arrow I’ve got to fight that thing a lot.
(07:20) And how do you fight it? So essentially the fight then is the established corpus of the business, the legacy which is obviously great. It brings stability, brings the history, brings the customers with the fact that the world is changing around that business. And we all know that corporations are designed for stability rather than for rapid change, so how do you manage that when it comes to marketing.
(07:48) Yeah it’s great, so here’s how you fight it. You use the word fight. The way you fight it is that you embrace it, and you respect it, and you love it. And you say, I’m blown away that the people who had my job before me, and the company and the people who work in this thing in the time it was selling radios in New York, it’s such an amazing job that I’ll be lucky if I add any value to that at all.
(08:21) I’m going to start from the premise that everything this company’s done to this point is absolutely right and it’s imperative for me not to mess that up. And the only thing we try to do is look for areas where we think we might be able to improve things, not disregard the passé, you know, that’s for fax machines or something like that right.
(08:46) It’s to say the people who came here before us were smart and we respect them and we’re going to stay with those systems and stay with those concepts, but look at them independently and say, could we possibly improve upon this?
(09:01) And when we make improvements and we make recommendations at least out of my department they’re not corporate mandates coming out of our department. They’re efforts to improve systems, improve processes, improve ways of thinking about marketing and thinking about our business, that we bring out into the organization as opportunities or suggestions and we say, hey if you like this run with it. If you don’t and you think it will disrupt your business then don’t mess with it.
(09:36) It’s quite strange, but in order for us to have any marketing program that gets adoption it has to be accepted by the other executives in the organization and other business units around the world and then put into action.
(09:52) So respect tradition and embrace change, so for you then ensuring adoption across the company and acceptance of the marketing programs and the change that your trying to introduce is a key part of your thinking that underlies your thinking.
(10:11) That’s right and the only way to get the adoption is by insisting on quality of work. Not some corporate mandate because you know, I report to the CEO, or I’m in the corporate headquarters, none of that. just by saying if our team can produce work that for people who we respect, who have been so successful over the years that they look at it and say you know what, that is new, that is different and it’s great, or at least I don’t think it’s going to destroy our business so let me take it out in the market. Let me try it. Let me try it on this customer, supplier, or potential employee and let me see how they react to that work. And if I see a positive reaction then I’ll prosecute more of it and I’ll do more with you guys.
(11:02) So for me the key to adoption, which I know that a lot of marketing folks struggle with is not so much worrying about adoption, it’s worrying about the quality of production and the quality of the distribution of those messages, because if we do that right there’s not really – you know, it’s not an adoption question, it’s like, ‘Can we have that. Give that to us. That’s great. Oh we didn’t have access to something like that before’.
(11:30) So tell us about some of the programs that you’re working on. I know you’re doing branding activities and I know that you’re doing a lot with digital so tell us about that. Obviously these are things that existed – I was going to say existed 80 years ago, well branding did but certainly digital didn’t. But these are transformational activities, so give us some examples of the thing that you’ve been discussing.
(11:58) Well I would consider the work at Arrow around branding to be transformative because Arrow is in an industry that is traditionally characterized as often times as a distributorship or B2B, and frankly if I were to give you a list of Arrows competitors, it would be highly unlikely that you would recognise any of these names. And it’s not because they are not great companies, they’re all great companies, but none of them have invested in branding so that there’s any kind of name recognition to them.
(12:34) They’ve invested marketing dollars, but primarily in product marketing. So they’re investing in ways that are driving incremental sales, but nobody until Arrow has stepped into this space has really invested in corporate brand for a B2B oftentimes thought as distributor. I’ve heard a lot of criticism of that, like that’s crazy, why would you do that. That’s a waste of shareholder resources, or how do you prove the ROI on that, and what is that and nobody has done that before.
(13:10) Than conversation to me is really intriguing because that is kind of the point is that if you are in an environment with say seven great competitors, and you are looking for something that you can do differently from the other seven, and one of them is like identify our brand, which really for most companies means when we talk about the name of our company, let’s talk about it in a positive light, and nobody do is branding like ‘we’re horrible’. You know, so you’re talking about yourself positively in the marketplace and you’re the only one doing it, well you’re going to be differentiated by virtue of the activity itself, even if you don’t do it right. You’re going to be differentiated, and then when you do it right you’re the only one doing it right, and that’s the space we find ourselves in. And I think we’ve seen really really positive results from this activity.
(14:01) You have a site called fiveyearsout dot com which I just tweeted, and it’s an interesting site because it’s a summery in a sense of this very large, and broad, and complex company. So maybe tell us what you were trying to do with that site and why did you build it.
(14:24) We built fiveyearsout dot com some years ago as a place where once we started advertising into a general market environment. And actually this Sunday, Arrow Electronics and some select markets where we’ve actually got a preponderance of either employees, or customers or shareholders, places like New York City, places like San Francisco we’re going to be running a Super Bowl ad. We’re going to run the third quarter, and it’s not lost on me that nobody watching this ad is going to say, that was a great ad, I’ve got to get me some microchips. They might want to get some chips, but they are going to be chips with dip and not chips with you know electricity coming through them.
(15:11) So we’re not going to sell anything but we are going to do is say something about this company, and I think these ads are you know, people that have seen them say, these are great. And they will attract people to come and see what is this company, and we need to be able to come to a place that expresses the company in its entirety, without being so detailed and so specific and so complex that it just leaves people cold. I think companies as complex as like you know General Electric. I can’t begin to comprehend everything that GE does, but I’ve got a positive feeling about them in general in what we are doing. We’ve set up this site for people to visit, and if someone looks at fiveyearsout dot com, our hope is they’ll walk away from that experience saying one, I think I know what Arrow does sort of, and two, that looks kind of a cool company. Okay, that’s it.
(16:05) If they go to the company website of Arrow dot com, they’ll see an opportunity to transact with Arrow and to talk to engineers or purchase whatever the need for whatever it is that they’re working on. It’s transactional. But if you are running an ad in the Super Bowl, sending a lot of people who aren’t going to transact in electronics to a transactional website is to my way of thinking you know, it’s problematic at best.
(16:38) How do you think about the ROI of your marketing efforts? These days everybody is very very closely trying to associate ROI with their marketing. How do you think about that?
(16:51) Thank you for asking the question. I have a bit of a rebellious I think is the best way to describe an attitude towards that because I believe that the ROI question is a false one to begin with. I believe it’s false because I do not believe anywhere in the world there is a system to accurately measure ROI on brand marketing. Because I think if it actually did exist and someone had it, well they would use it and they would be the greatest brand on the planet, and they would be the only great brand on the planet because they would have measured everything to the point where they optimized everything and it just works.
(17:31) But branding also changes. Once you optimized something you’ve got to change constantly. So the idea of measuring ROI to me is a question of how much money are you going to spend on measuring something, where I’ve got a budget and I try to divide my budget into two categories. Two categories really, one is content creation and one is content distribution. And I believe that’s all there is that in marketing anyway is your message and how you distribute it, and I believe marketing works, if marketing works than the average message, with average distribution works.
(18:12) Now, I can’t tell you from an ROI perspective whether it returned the average campaign return of 1.6% or 3.5% or 7.8, or 1600%. But I believe that the average marketing campaign probably cleared the average company’s capital hurdle rate, capital cost rate, well they wouldn’t do it. They would stop all marketing; every company on the earth would have stopped it. Nobody is stopping it why? Because the average one works.
(18:41) So from my perspective if I’ve got an average message with average distribution, it’s going to have a positive ROI. Now, the question is was that positive ROI 2%, 2.6%, 3.8%, and how much money do you want to spend dancing on the head of a pin like that. And I’m not saying we don’t measure things, and I’ve got some studies here that can indicate, for example we worked with a firm on Arrows reputation that indicates that you know, in their way of looking at and analyzing things one could argue that over $1 billion of Arrow market cap is attached to reputation.
(19:18) That takes me back to something where there is a Professor at the Harvard business school, professor Deshpandé, and I saw this slide and I thought it was brilliant. He said your brand is not your trademark. Brand is a trust mark, and a trust mark to me leads into reputation, and reputation I think can be measured and monetized. Because I think if not then you know why would any of us disagree that if we had a chance to open up a soda company and they would say, yeah you can use the name Coca-Cola we’d probably want to use that name because it has value right. I mean I feel that I’m arguing with something that is so obvious that it is just silly right, but at Arrow Electronics one can argue that a substantial amount of value is attached to that brand. And it’s our job to see if we can improve on that value, and maybe we can see it through those studies or whatever. But at the end of the day you know one of three things is going to happen.
(20:23) We are either going to do nothing, and the brand is just going to be the same and we’ve spent all this money and nothing is going to come of it. Or we are going to spend this money and actually going to hurt the company somehow. Well I’d be allowed to do that for about a week and I would be fired. Or, we’re going to improve the position of this company in the marketplace.
(20:42) Now specifically how much? Good luck measuring that, but as long as we continue this work, and as long as the feedback loops in terms of the number of people applying for jobs here, the quality of people applying for jobs here, the customers and suppliers telling us ‘I really loved your message, I like their vision of your company’. As long as our employees are saying, ‘I’m proud to work here, and I’m proud of these messages, and I’m proud to be sitting here watching the Super Bowl this week and there is an ad from my company. I’m proud of this company’. As long as we get that feedback, the precise ROI I don’t know what it is, but I think I’ll keep my job for a while.
(21:20) So essentially what you’re saying is in the broad mix looking generally at the marketing activities and looking at the marketing results, and measuring where you can measure, at the end of the day there are essentially judgement calls that have to take place because you can’t measure it all precisely and you can spend your entire budget trying to measure it all precisely.
(21:45) That’s exactly right. I believe that in every marketing decision ends with a judgement at some point. Now the question is how much data do you amass, how much money do you spend, how many cycles do you spin, how much time do you let pass before you get to that marker and you meet your professional decision, and you live with the consequences of it.
(22:08) Okay, I tend to believe that you’re going to get a higher rate of return if you’re able to accelerate that decision point okay, to where you are comfortable enough in your background, in your training, and your team, and your partners to say we are professional. This is good work, test it, and do whatever you have got to do to get comfortable, and then you make that decision and you move. I think that the faster you can do that the more competitive you can be in the marketplace, and the less resources you’re going to spin up trying to measure. Like you know, if I’ve got to spend a lot of money checking what I’m doing around here, then I would make the argument that the CEO ought to find somebody else for my job who doesn’t have to check all that stuff to be able to move the company forward and make decisions.
(22:57) We have a question from Arsalan Khan who’s asking about the relationship between marketing and IT, and of course everybody is wondering about that because marketing relies on technology and there’s got to be some relationship between marketing technology, IT, so what’s your view on that connection, on that relationship.
(23:21) Yeah I’ve recently come to the idea, that I was in a conference somewhere that a number of really incredibly talented CMO’s sitting around a table, and the moderator asked everyone to go around the table and define yourself as you more of an artist or more of a scientist. Well, that’s an interesting question, and it was interesting to me that people in the room could answer that question because because they actually kind of knew what that meant. And for me in reflection I believe that when you are working on the content and the message side you’re really kind of relying on the artist side of your brain. And when you’re working on the distribution side, you’re kind of working on the scientist side of your brain.
(24:04) And I believe that IT primarily today and probably at least from my lifetime, IT is a really great tool primarily along the distribution side of the message, okay. I can use different platforms, I can measure things a heck of a lot better and get immediate feedback and so on and so forth. IT doesn’t really help with defining you know how should we shoot this advertisement, which director should be bringing, what does the script like and the storyboards, okay, that’s more on the content. But the distribution and with strong IT partners, people who really know that game and know how it works, and customer journey mapping and all the software that’s available to marketers today. If you’ve got great partners in that you’ve got a heck of advantage across that distribution continuum.
(24:59) You know if I give my IT partners a really kind of a bad message and it’s not going to work, and I can blame them and they are going to go, what are you talking about, you’re incredible, you just got a bad message Rich, or I have an incredible great message and I turn it over to my IT partners and say help me distribute this guys. And if they don’t get it distributed out there right in the digital world it won’t work. So the way I see things with IT, they’re the science part of the thing, they’re the people who can really help with thinking about how do we get this message out to people primarily and without them I’m dead.
(25:42) Well you’ve spoken a few times now about this distinction between content creation and content distribution. In terms of how you organize marketing at Arrow, can you maybe describe how each of these sides works and the connection between them?
(26:01) Yeah Arrow is really interesting because of its history of acquisitions and because the CEO who I report to grew up through the company, I mean he’s had every job here and what I find to be interesting and you know, I’m going to get myself in trouble for this is his background, working up through the organization, you know he’s run a huge part of the company and somebody from corporate said, ‘Mike you’ve got to do this, you’ve got to do this and he’s like what, you’re not in the field, he’s corporate. You people are crazy, I’m not listening to you’, and like there is this tension between the field guys and corporate. Now he is corporate, but he respects the autonomy and the independent decision making of all these business units, all these acquisitions and clearly respects that they have got P and L responsibility. So he’ll tell me, you know Rich, leave the business units along. You can’t make them do anything. They’ve got P and L responsibility for that activity and not you. So you’re just here to help them. You’re not here to order them and tell them what to do, because you know that’s their decision.
(27:09) So at Arrow Electronics, there’s going to be 30 or 40 worldwide – I can’t even tell you how many you know, I can’t even name them all different marketing units that’ll have different practices, different partners okay. Theoretically, they’ll all fall under our 350 pages of brand guidelines and brand standards that we publish and release throughout the company. But if somebody followed those guidelines and they found that they weren’t moving sales or it wasn’t working for them, we’re not going to live or die based on that. You know, some of these companies I think about you know, it has to be hard for a company like – I don’t even know anything about McDonald’s, but let’s just say that McDonald’s and a restaurant wanted to actually innovate something, how hard it would be for one stand-alone McDonald’s to innovate a sandwich or something and then that spreads throughout their system.
(28:05) I think innovation from there has to come from - and I imagine McDonald’s corporate is spread out, while at Arrow we’ve got so much autonomy from our business units that it allows us with an overabundance of opportunities and different ideas to be quite frank, many of which you know are bad. A lot of my ideas I’m sure are horrible, but they at least get tried. They get their day in court, and if they work we press on the accelerator and if we don’t, you know we’ll learn from it and move on. Nobody in this company is an arsonist and not going to burn down a $23 billion corporation because you made a decision because you tried to sell a cheese sandwich at a MacDonald’s somewhere.
(28:47) So what happens here is all this stuff is just decentralized and I have to do work that is of a high enough quality, and I have got to be a standard-bearer for all these other marketing units to say look you know, okay we’re marketing these computers, or what we’re marketing the e-waste recycling, or we’re marketing these components, we’re coming under the overarching Arrow brand that that guy is doing. And if he does a bad job with, branding, it’s going to make our job really hard here selling our components because he is making us look silly.
(29:23) So I have to maintain a really high standard, and my hope is that if our marketing, our messages, and our distribution are world-class, just great everybody would be proud of it, then all these other great talented marketing business leaders from all these business units would say that’s the standard, that’s the bar let’s rise up to that. Let’s do quality work at that level or above, and then we all learn from each other and we talk about it, and we talk about things that don’t work, try to make this company better. You know, fortunately we are not in a space where Coke and Pepsi also used to beating each other up in this area and they have gotten to be real refined about it. In our industry like I said, say seven competitors, we’re the only one doing it. I mean right now I hate to say it but I kind of have to beat myself because we don’t have anybody else doing this. And maybe they just think what I’m doing is silly, I don’t know but it looks to me like it’s working.
(30:27) Well tell us about the top two or three elements of your special sauce. You’ve been kind of talking around a bunch of different things. When you boil it down, what are the top two, three, four things that Rich Kylberg uses as the basic premise for marketing for at $23 billion revenue at Arrow Electronics. What are those three or four things?
(30:59) You know that’s great and it might not be a satisfying answer, but first believe in myself. As marketing professionals, you know what we do is different from what finance does, and frankly if you’ve got marketing professionals in finance you got n-rod, make up numbers, that’s not good. And if you’ve just got finance people doing marketing it’s like well, how do we cut more costs out of whatever.
(31:29) So you know you deal with people that come from a different perspective and don’t necessarily understand marketing any more than I understand debit and credits or HR or whatever else. You have to have belief in yourself, so that when someone says, that’s the dumbest message I’ve ever seen, a lot of marketing gets subjective. You know you can actually stand up to your work and believe in it and say, you know really at the end of the day if you don’t like what I’m doing you know just get rid of me.
(32:01) And the second thing is believe in your partners and really believe in your partners to where it’s like just do great work and primarily when it comes to the content creation side of the equation. We work with a lot of agencies and a lot and I can tell you know when I meet with agencies and people say okay what’s the scope, what do you want? And I basically say I want the best work you’ve ever done in your life. And they look at me like what on earth is that supposed to mean? I’m not even sure what it means, but I’m looking for the greatest 30 seconds you can ever imagine.
(32:36) Now it’s got to fit within our brand standers. We don’t do potty humor or something like that. We don’t have a little green lizard that tells jokes. It’s got to fit within the basic parameters of our character and of our brand, but what’s the best thing you can possibly do and then we sit back and let them do it. And don’t correct them and don’t course-correct because I’ve found that our partners are always inside of themselves. If they’ve been around for a little while and you’ve seen some work that they’ve done, and this is important. Every time you interview an agency and you talk to somebody, and you say let me see an example of your work they show you the best work they’ve ever done. They don’t show you the worst thing they ever did, they show you the best thing they ever did and I just think I love that. Can we do something better than that, and I’ve had some people say well that’ll be hard, so I say, okay, if you’re done doing better things. And if you’ve peaked all ready and won something like your Olympic gold medal then okay, I don’t know if I want to work with you.
(33:32) But if you’ve got something else in there, you got one more better than this, that’s the one we want. Let’s do that one together, and what ends up happening is that they dedicate themselves to it and think oftentimes they’ve already got the idea inside themselves and other clients have stifled it and say that’s a bad idea. You know throwing Rolling Stones instead of Beatles or blues instead of red. Well let them go and you end up with incredible creative. Sometimes you don’t have to run and you just work with these people and bring out the best in them, and there you go.
(34:05) So guess they’re my things is believe in your partners, believe in yourself, and believe in this profession and fight for it.
(34:15) So you are managing for greatness and you have very very very high expectations of the people that are doing the work. You’re willing to experiment, you’re willing to try things out, but at the end of the day you have very high expectations sounds like.
(34:28) I have to because I have no ability to drive mediocrity through this corporation. All I can do is put up in front of people what we produce and hope they will take it out of our hands. And the only way that I know that will happen is if the work is extraordinary and that’s why I’m tell you, you know for a company like Arrow Electronics, any company out there, you produce an ad and if you can find a way to put it on national television. The first ads we ran were on CBS4 and then we were on Sunday Night Football and now we are going to be on these big markets on the Super Bowl.
(35:04) When you can put your creative and it’s in that context and it’s sitting there next to Nike and it’s next to auto manufacturers, it’s next to the most amazing beautiful content ever produced by man, and if your work can stand up next to it and not look like, what was that, like a used car dealership a horrible thing right, it elevates the company and everyone working there feels like, that’s the kind of company I work for. I may not work for Coke-Cola or for Nike. I work for a company like that. I work for a company that can stand up next to those things and that messaging and it can do that and it generates an incredible pride.
(35:47) So the high standards thing, I mean I know it sounds like just talk – who wouldn’t say that right, that’s obvious. But for us it’s like a condition of my continued employment here. I’ll also tell you that what we do is marketing professional right, is an incredible gift because we change people lives for the better okay. We send out messages that make people feel great about themselves and solve problems you know and there’s not that many people in the world today to get to actually work on a commercial that’ll be shown in the Super Bowl and I get to do it. I take that as such an incredible honor and opportunity that any one in marketing ought to feel that same way. And it doesn’t have to be super bowl. It can be the local newspaper. You get to make that decision. You get to change lives for the better. I mean oh wow, this is a great profession!
(36:47) Wow! Well we have a question from Shelley Lucas on Twitter who asks a really good question, how do you balance the goal of extraordinary content quality with the expectations associated with volume production.
(37:06) I don’t, yeah thanks. I don’t actually face demands of quantity of production. We recently did at Arrow Electronics, at fiveyearsout there really 10 categories, we called them ‘vs’ that we operate whether it’s lighting, aerospace and defense, cloud, IOT and we set out to do 10 little short videos describing these things. And we got nine of them and one of them was really bad, one of the 10 was bad. Two or three were kind of okay, but they were passible and the rest ranged to extraordinary. We just aren’t going to run the one that’s bad, still going to pay them for it. I asked them for their best work and they’re not happy with it. They’re going back and they’ll keep working on it and when they get it right we’ll distribute it.
(38:10) What ends up happening I think for Arrow if you look at the body of work we’ve done like at some of the video stuff is on YouTube at I think called Arrow the fiveyearsout channel. And the volume of work is actually kind of remarkably high in terms of you know, a lot of companies would get a campaign like that every year or two. We can put out four or five a year just by virtue of working with multiple agencies and multiple areas.
(38:40) And I don’t really have a big budget here. I know it kind of sounds like I do. But my experience working with agencies if you talk to them and say would you like to partner with us and do the greatest work of your life, and they believe you and you live up to that. They’ll do it for like a 50% off coupon of you know a 75% off coupon or they’ll keep on working on stuff because they believe in it and won’t even bill you for it. Even with a giant corporation like Arrow it’s because it transcends the financial aspects of the relationship.
(39:16) And so I believe that we end up with – we actually end up with a lot of quantity of work right, but it’s all high quality. When it comes to quantity like people in getting onto social networks and creating content at that level, we have a communications hierarchy, where we get the brand message at the top, guiding information forward, fiveyearsout at the top, and we do national television commercials. Then under that we do commercials around things like lighting, aerospace and defense. And under that we start doing solution sale sets, we do running cards, we do you know our price sheets all the way down to a business card.
(39:59) When you work your way down from a national commercial, a national commercial will do half a dozen of those a year, and when it comes down to a line card will do thousands of those a year okay, but there’s different levels of production. And so in-house, we’ve got a lot of people who can do that lower level production. The quality of it isn’t that high, but you know where you don’t want to have a really poor quality national commercial, you also kind of don’t want to have a really high quality little brochure, where you hire Ogilvy and Mather to do a brochure about some semi-conductor part, you know it really looks great but you sell 200 of them it’s all a matter of proper scale.
(40:48) You know we just have a few minutes left, and so one of the challenges that many marketers face is getting the organization to see them strategically. I think a lot of the IT people face the same thing, but from a marketing standpoint, what advice do you have for marketers who want to have a stronger strategic relationship with other parts of the company. How’s that for just as we’re ending right, I mean we can talk for an hour about that.
(41:24) You might want to think twice about that and wanting to be strategically involved with the business units right, because yeah I get that temptation and I’ve been involved in that. you know, oftentimes what happens is in my experience when you’re working really closely with business units strategically – I don’t mean to be a jerk but if things go wrong then it’s kind of easy then to blame the marketing guys right just because you’re involved in it.
(41:53) I prefer to play a supporting role, where if a business unit is working on strategy and so on and so forth I try to conduct myself and our team in a way that our opinion and advice is valued but that’s all it is. You know because we’re never going to know as much about the markets they serve as they do. All we’ve got is information we can gleam from them, and we gleam from the marketplace and then we go with it. They know it better than we do and if not we’ve got a real problem. If we know what the business unit strategy should be better than they do that’s a real problem.
(42:31) So you know I try to stay in an advisory capacity on as a call basis, and we’re working very closely now with our Internet of Things teams around here because they like the way we think about things and the way we like the messaging. At the end of the day we just make some recommendations based on our professional experience. Whether they take that advice or not you know it doesn’t matter to me. Oftentimes I get excited that I know everything and I’m so smart and I’m really not and sometimes I’m right and sometimes I’m wrong, but I’m part of a team here. I’m trying to help.
(43:09) At the end of the day kind of like I’ve got to make the decision, okay we’re going with that ad, okay we’re buying in the Super Bowl, I’ve got to make that decision. They’ve got to make the decision, okay here’s the marketing sector we’re going to target, here’s our pricing, here’s how we’re going to go to market with this stuff. So that link I think is one to be very careful about, and I’ve also found that as I’ve disconnected from business unit decisions it’s freed me up to focus on more visionary aspects of the company and the brand okay, but really what does Arrow stand for in this world. And if I’m not working on that, then kind of nobody is working on that, and there’s a lot of people working on this.
(43:56) So as much as I get tempted to be drawn into these conversations about how can I help drive the business forward and so on, it’s probably in the best interest of the corporation for me to be a little bit separate and be trying to think at the 50,000 foot level about how we drive this company relative to competitors and the macro world.
(44:17) Wow, well this has been a fascinating conversation. We’ve been talking with Rich Kylberg who is the Chief Marketing Officer for Arrow Electronics, a $23 billion in revenue company and Rich you’ve really pulled back the curtain on how marketing functions, so thank you so much for taking the time and doing that today.
(44.41) Yeah thanks a lot for including me and I hope I wasn’t too remote or too challenging for folks. But I’ve enjoyed the opportunity to share some of my experience here and cheer my colleagues on man.
(44:55) Well it’s been a lot of fun and I hope you will come back and do this again another time.
(45:01) Anytime thank you.
Everybody, thank you so much for watching and we will be back actually on Tuesday, there is a special edition of CXOTalk and I’ll be doing this live at the Saaster conference in San Francisco in front of 5000 people and that will be at 4 o’clock Eastern time on Tuesday. And then next week we have another show on Friday, so everybody thank you so much for joining and we will see you soon. Bye bye.
Companies mentioned on today’s show:
Arrow Electronics www.arrow.com
Ogilvy & Mather www.ogilvy.com
Fiveyearsout YouTube Channel: www.youtube.com/user/ArrowFiveYearsOut