Humble beginnings

Just 100 days after taking over at one of the largest and fastest-growing global distributors, Rick Hamada is relishing his role as CEO. Sara Yirrell catches up with him during a recent UK visit

Heading up a $26bn-turnover (£16bn) company is not a role for the feint hearted, but new (ish) head honcho Rick Hamada has nearly three decades of experience at Avnet, and is clear where he wants to steer his charge.

He has stepped into the chief executive role after a record run of results for predecessor Roy Vallee, so the pressure to succeed is definitely on. But Hamada is relaxed about the challenge.

"Many people say that Roy had perfect timing - leaving in a record year/quarter, but cycles will come and go, and there is a lot more going right than wrong at Avnet," he said. "The first quarter since I took over as CEO has seen a lot of firsts - the first conference call over earnings with investors and first meetings with various teams, but all the firsts are out of the way now. I have been CEO for 100 days, but will celebrate 28 years with Avnet in November."

Before taking on the role of chief executive, Hamada was chief operating officer (COO) at the distribution giant, and he has noticed a certain crossover between the roles.

"My role as COO was very much around the here and now of Avnet - keeping customers and suppliers happy and keeping them well informed. And as CEO I still have to keep an eye on that, but will be spending more time focusing on future plans and strategy for Avnet going forward."

Gunning for growth

There is still opportunity for growth, even at a giant company such as Avnet, he said.

"Geographically there are different growth rates in different areas of the world. We are clearly experiencing a stronger organisation in Asia and the Americas than in Europe, but that is to be expected," he said.

Avnet has seen growth in a range of areas including storage and industry-standard servers, software such as virtualisation and security, along with storage and networking, Hamada said.

And Avnet is a cloud believer, he stressed.

"Avnet has its own datacentre and we are enabling applications onto the datacentre," he said. "But some applications are going to remain on-premise. The issue for us is that it creates new partnerships and opportunities for us to help enable those providers to the mid-market and SMB IT users.

"We have to equip our VARs to take those offerings to market and ensure they are properly designed and evaluated. Even if we are as virtual as possible in the datacentre - such as a client having their HR and ERP in the cloud - the data still has to be taken across the enterprise, and that is where the VAR opportunity comes in," he said. "We are believers in the cloud - both as an opportunity for the business and as users ourselves."

Merging the question

Eighteen months ago, Avnet acquired Bell Micro for $252m in what has been the largest distribution M&A deal in the channel's history. Combining the two companies has been a mammoth feat of which all involved are proud.

There has been pain, as duplicated roles and crossover had to be sorted out, resulting in inevitable redundancies, but the new Avnet has a strong mix of Bell and original Avnet staff, with Hamada determined to allow each region to make its own decisions.

"M&A remains a solid part of our overall growth strategy," he said. "The specifics around each country are left to the teams I have in each territory to make the decisions. Avnet has a great, stable financial parent that has access to capital, and as far as EMEA is concerned I count on Graeme [Watt] and John [Toal] to identify the opportunities. I ask them to come to me with their ideas, rather than take a top-down approach."

He added: "The Bell acquisition was the biggest one we had done - and it involved bringing together three regions: EMEA, North America and Latin America. Avnet has been on the acquisition path for the past 20 years and every time we do another one, we learn a little bit more.

"M&A is not strictly about the spreadsheet - it is also about assessing the cultural impact as well as the strategic impact."

Hamada said Avnet takes a "three-filter" approach to M&A - taking into account economic, strategic and cultural conditions - to see if a firm will fit.

"With the Bell acquisition we really did combine a couple of top-talented leadership teams. That helps to carry some credibility of the overall team, and shows consistency and commitment to our partners and suppliers."

John Toal, Avnet's UK and Ireland vice president, added: "[With the Bell integration] we did not apply the same model to every territory - we adapted the right model for the right territory. We spent a lot of time making sure people were comfortable with the move and Avnet's culture. Coming from Bell, it has been a pleasant surprise about the quality of the team I have picked up - they all have intellect and dedication to customer care, and as a result I think we have a more intimate relationship with customers and it is one of our differentiators."

Looking ahead

Hamada said the value-added channel is about helping customers make the right decisions for their IT needs.

"If a customer wants a new phone, or if they are running a datacentre and making CapEx investments on which they want a return, they need someone they can consult with to talk about the solution to their business problems. We need resellers to represent our set of suppliers and partners in the marketplace," he said. "We are running on high levels of efficiency - running business with distribution as the engine at the core, with ROI mentality at the top."

Despite the threats to the economy, Hamada is convinced distribution is vital to the channel's future.

"One of the silver linings in distribution is the counter-cyclical balance of the business in a downturn. We generate cash. We loan money or cash in receivables and inventory and hoard cash for a rainy day. We are watching the signals like everyone else. But we have to come up with a strategy for growth and deal with the macroeconomics," he said.

"Avnet has made a big bet on the UK. We have a great team and have made a big investment. We know what we need to be doing to stay relevant and accelerate success."

"Cycles will come and go and economic changes will come and go," he added. "The environment feels different to a year ago, particularly with what is going on with global economic growth. I am concerned with what is happening from a global economic point of view and the opportunities that creates for Avnet. What we have seen so far this year is still year-on-year growth, but that growth has been slowing.

"If you look at Avnet's overall results, the peak quarter was June 2010 - but through FY2011 year-on-year growth each quarter has been lower," he said. "But it is still growth."

Hamada has a simple recipe for success.

"The key is remaining humble and staying nimble," he said. "We need to maintain humility and understand that if we do not deliver to our partners and suppliers, we are not relevant and not needed.

"Although I sleep very well at night, I ask myself as we get bigger, will we get slower? I really want to work hard not to let that happen," he said. "And to do that I have to let go. I have to empower my teams to react to their particular marketplace. As we grow, we cannot get slower."