Marketing Transformation at Arrow Electronics with Rich Kylberg, CMO
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Global brands like Arrow Electronics have unique marketing challenges that offer important lessons to both large and small companies. In this conversation with Arrow's CMO, Rich Kylberg, we discuss marketing transformation at one of the largest companies in the world.
Rich serves as the senior executive overseeing corporate marketing and communication at Arrow Electronics, an 80-year old, Fortune 150 corporation with offices in 58 countries. 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.
Note: Due a technical error with Google, this video is no longer available. However, the transcript is accurate. Rich Kylberg will be our guest on another episode of CXOTalk.
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Michael:
(00:00) Environment is changing so rapidly and what happens if you’re an old huge, almost $30 Billion company and you have to change with the times as well just like everybody else. Today on episode number 141 of CXOTalk, I’m speaking with Rich Kylberg who is the Chief Marketing Officer of Arrow Electronics, which is a Fortune 150 company and he’s going to tell us about marketing at that global scale. Rich how are you?
Rich:
(00:44) I’m wonderful Michael it’s great to see you, how are you?
Michael:
(00:49) I’m great and I must say you are probably the most hansom guest we’ve ever had here on CXOTalk.
Rich:
(00:56) Thank you, yeah I just got on of a meeting with the CEO here talking about budgets and this is pretty much what he did to me.
Michael:
(01:04) So a few scars.
Rich:
(01:07) A few scars that’s right.
Michael:
(01:10) Well it’s Halloween here in Boston and I assume it’s Halloween in Colorado where you’re based as well.
Rich:
(01:17) No what do you mean Halloween! This is the way i…what?
Michael:
(01:21) Budget meetings are really tough.
Rich:
(01:23) Wait, I’m…are you saying something about my look? Michael!! No it is Halloween. Happy Halloween!
Michael:
(01:30) I know you had a kids party and I’m so thrilled that you’re joining us here on CXOTalk and I’m slightly embarrassed because I am not in full Halloween regalia, even though I know it looks like I am.
Rich:
(01:45) Yes and as I mentioned you look a lot like you’re wearing your Brad Pitt costume today.
Michael:
(01:50) Yes, you know it. All right, so rich, you’re Chief Marketing Officer at Arrow Electronics. To begin briefly give us a sense of your background just so we have some context.
Rich:
(02:04) Yeah, that’s a great question particularly when you’re talking to a skeleton today. I grew up in Colorado. Went school at Stanford for my undergrad, where I really concentrated on what I thought was like the greatest area of study, communications and English language because I’ve always believed that we’re put on this Earth to maybe make it a better place. And the way to do it for me is through communication.
(02:34) You know if people talk through issues I think they can resolve anything. So I focused on that, went into the radio business and owned some radio stations around the country for 20 years. So I’m really an entrepreneur Michael and was ultimately recruited to Arrow Electronics five years ago with no experience what so ever in the corporate world or in electronics.
(02:58) But just being able to craft a communications message and be able to reach out into a marketplace and maybe affect some change. To do that for this you’re right, you know this $24 billion Fortune 150 company that’s been around for 80 years, in many ways was kind of anonymous.
Michael:
(03:19) So tell us a little bit more Arrow Electronics, it’s 80 years old, over $20 billion in revenue, global company. Tell us about your business, and when you say anonymous what did you mean by that?
Rich:
(03:34) Yeah, it’s interesting. You know when I joined Arrow people would say, ‘oh Rich, you’ve gone to work at Arrow. Thank you for that lovely shirt, the shirts are fabulous’, you know, or if they were in Long Island where the company operated for 80 years before moving here to Colorado, there was actually on Long Island an exterminator who advertised more than Arrow and thanked us for getting rid of their mother’s bugs.
(03:58) Or if that wasn’t bad enough, if you worked for Arrow in China, people in china would thank you for your toilet. I mean in China there’s a toilet company called Arrow. So that you know, that’s not good because the reality is that Arrow is a Fortune 150 company, with $24 billion in revenue, with 18,000 employees in 53 countries. Serving over 100,000 customers and suppliers worldwide, all the greatest innovators you’ve ever heard of in your life okay, as well as those you’ve never heard of.
(04:34) The people who are making devices, if it takes a charge you plug it into a wall, or it’s got a battery, Arrow’s probably there. We either help to design it, build it, source it, pay for it. In fact, we’re the world’s largest recycler of e-waste. So the entire product life cycle of electronics all around the world, we’re involved in. It’s absolutely remarkable, and yet there’s no name recognition. There’s no awareness of the corporation, and that’s kind of what I mean by anonymity. And I believe the company came to a point where they thought, you know anonymity in marketing. Anonymity in a company has a price. It’s not free.
(05:20) Because what happens is as the marketplace asks, who are you or you know, what is Arrow? If you don’t go out into the marketplace and tell people who you are then someone else is going to do it for you. And if that someone else happens to be a competitor, well are they going to say nice things about you?
(05:38) You know, so you have a choice. You either tell people who you are or you don’t okay. And if you don’t then I believe that there’s a negative ramification to the corporation. And so Arrow stepped up just five years ago to say you know what? We’re operating great; we’ve got great numbers, great teams, great operations. One of the most sophisticated supply chains on Earth and yet you know, we’re not getting as much value out if the company as we could if we went out with our message and shared it with people. Rich, would you be willing to do that? So that’s kind of where we are.
Michael:
(06:16) So you say that there is a cost to anonymity, meaning that your competitors will fill that space?
Rich:
(06:26) Absolutely, there’s that cost. It’s a hidden cost to. When your sales people walk into an office to generate new business and they say, now ‘Hi, I’m with Arrow Electronics’. And the person on the other side of the table says, what is that? I don’t know what that is, there’s a cost in terms of time, in terms of building relationships.
(06:48) You walk into that office and say, ‘Hello, I’m with IBM, I’m with Apple, I’m with Nike’. Okay, people are filled with an impression of you before you’ve even gone into the sales cycle and the rhythm. And you know not having that advantage in the marketplace is part of the cost.
(07:12) Look at it from an HR perspective. You know people want to work for Google. They don’t know anything about Google but they’ve heard about it and heard they are doing all kinds of neat things. So just that name alone draws some of the smartest, brightest people all around the world to want to work at that company. And we want really great, smart people working here at Arrow. That’s our job as executives here is to attract great people who want to work here.
(07:40) In order to have any shot at that at all, we’ve got to give people the impression that you know, this is a cool company, this is a great place, I want to work there. And so all of the factors contribute I think to having a cost. Anonymity isn’t just you know okay, let’s not worry about marketing, let’s not worry about brand, let’s not worry about those issues because there expensive, there hard to track, you know what ever. Because if you don’t do that, you know you’re going to pay anyway in ways you can’t necessarily measure in.
Michael:
(08:15) Okay, Rich so tell us how did Arrow get into this situation of being such a very large company, and yet at the same time having that kind of brand anonymity that you were describing, and then we’ll talk about what you’re doing to address that.
Rich:
(08:39) Yeah, now that’s really interesting, I’ve not been asked that before but how do you get into that point. And I would say, here at Arrow Electronics there’s really two factors that contribute to it okay.
(08:53) The first factor is that the company is basically modest. It’s made up of thousands of engineers. Okay, and if you know engineers generally speaking or at least around here these are really smart, really capable people who take on some incredible challenges okay. And they work their way through these challenges and they resolve them, they come to a conclusion and build an amazing product or find a great solution and then they go onto the next one. They don’t stop and brag about it. They don’t say, ‘hey look at met, look at me. Look what I just did’ okay. And it’s not in the DNA of Arrow anyway. We’re not building the next phone, we’re not building the next tablet, we’re not building the next defense system but we are working with the people who are.
(09:36) So fundamentally this is a modest company. It’s not the kind of organization that comes out and says, ‘look at us, look at us’. I come from radio okay, where we just say look at us, look at us and we don’t actually do anything you know.
(09:53) Here, the company does things, gets jobs done, moves onto the next. So there’s’ a culture of modesty all right first, and then secondly, when a company gets as big as Arrow incredible complexity, a lot of Arrow’s growth strategy is centered around acquisition. And so we’ve had something like I think 35 acquisitions or something like that in the last five years. I’m not sure how many we’ve announced this year, it’s somewhere between five and seven. We’re a highly acquisitive company, and when you acquire all these kinds of different companies and you’re acquiring all across the ecosystem and the product life cycle of electronics, after a while the company gets really hard to explain.
(10:38) I can’t say to you Michael, we make shoes, or Michael we’ve got theme parks or Michael buy our pizza. You know, we are so big globally and now we’ve got to deal with multiple languages okay, and doing so many different things whether it’s recycling these devices or whether it’s selling the components into these devices, or whether it’s working with you know data centers of tomorrow with these DS groups. Right, there is so much going on that it’s very difficult to say what does Arrow do.
(11:09) And before we put together our brand messaging, Arrow employees around the world will be asked what does Arrow do. And when they answer the question, they’ll be forced to answer within the narrow parameters within the part of Arrow they could see that they worked in, so one employee would say, well Arrow is a recycler of e-waste, or Arrow is a distributor of components, or Arrow works with Vars in the computer systems business right. but they couldn’t say what does Arrow do holistically. And that’s how Arrow got onto that position because of modesty and because of complexity.
Michael:
(11:44) You know, when I talk with a lot of large technology companies and software companies, and in many cases the company has it’s tentacles in so many different areas but it becomes very difficult to summaries that brand message. So in Arrow’s case how have you gone about addressing that complexity/simplicity problem that you were just describing.
Rich:
(12:18) Yeah, you know you’re so right, so right, and that was the secret you had to..
Companies mention in today’s show:
Apple: www.apple.com
Arrow Electronics: www.arrow.com
Google: www.google.com
IBM: www.ibm.com
Nike: www.nike.com