Arrow Electronics is one of those companies that are the backbone of economies, a huge manufacturer with great depth of expertise and industry knowledge and a global reach – but because it is a b-2-b player has a brand that few outside the sector know of. An electronic component manufacturer with a global turnover of over $20billion Arrow is a Fortune 200 company with over 470 worldwide locations and 16,500 employees. The data point that stands out on this b-2-b company’s fact sheet though is that it has over 100,000 customers.
Approximately 30% of its business comes from the EMEA region, through its Arrow ECS subsidiary which had grown rapidly through many mergers and acquisitions in 2008 leaving it working across 20 countries, with 16 brands and 15 legal entities. By 2010 the brands and legal structure has been unified but the company culture was still fragmented, leading its HR Director to note that they needed to “change ourselves from local business to cross-border business…to transform our people to think out of their own countries…I need to identify the potential future leaders…”.
Michael Brandenburg is Director of Business Development at IESE business school and explains that when Arrow ECS came to them in early 2011 looking for a leadership program to develop their country manager succession pipeline the school recognised the problem the company was facing. “It was a classic ‘sandwich situation’ where Arrow was servicing the very largest OEM’s such as Oracle and IBM but also an ocean of SME’s. Traditionally this is a very hard place to flourish in.”
Arrow’s main objective was to improve the country manager succession pipeline and create a cohort of future managers who were inherently less risk averse and willing to innovate more but not at any cost. There was a culture where achievement was measured more in delivering spreadsheet numbers than from experimentation or invention.
The IESE team were therefore tasked with bringing a cohort of 30-40 future country managers to a new level of business acumen and delivering a change in the organization’s culture at the same time. Having met with the potential participants Brandenburg and his team quickly realized that this was not going to be possible in a single five-day residential program as had originally been requested. So he visited the EMEA HR head in Paris to discuss the issue and soon found himself in conversation with Arrow’s regional CEO who fully supported a much bigger program to effect the changes. The main challenge was initially to prepare the cohort, a diverse group in terms of both experience and geographies, for readiness to engage in the residential program. A half-year pre-program process was then developed to bring the group up to a consistent level to be ready for the five days in Barcelona.
Prof Pablo Cardona commented that the company needed to “centralize decision-making and unite the company because the industry has become more concentrated and clients have got bigger. The LDP was a great opportunity to accelerate this process…”
However, behaviour cannot be changed in five days and so Arrow and the school designed a post-program project schedule that would allow the participants to practice their new learning in a safe environment, where the risk of failure was more acceptable – and so the appetite to innovate was greater. This was a critical element of the new behaviour types that had identified as being required in the diagnostic current ‘As-Is’ and desired ‘To-Be’ analyses of current managerial and organizational behaviour that IESE conducted in collaboration with senior executives.
A program steering committee of Michael Brandenburg and Pablo Cardona as program and academic directors from IESE and the Arrow ECS HR Director on the client side, who liaised with the EMEA CEO and regional VPs who were the main stakeholders in the program. This team identified five key deliverables to ensure greatest impact for the program:
- Individual Leadership Development – aimed at the new ‘To-Be’ competencies
- Business Impact – measurable benefits from specific business projects
- Environmental Influence – increase in company loyalty
- Management Mobility – participants to become more able to transfer cross-borders to new company roles
- Participant Coaching – VPs were keen to ensure participants had the support to deliver these results so coaching was to be offered individually before the program and then to teams during and after the residential session.
The steering committee also ensured that the wider stakeholder group remained engaged with the program. The CEO regularly discussed progress at Board Meetings and a 1-day workshop was held at IESE’s Munich campus to familiarize country managing directors and HRDs with, and get feedback on the program – and gain as broad a support as possible across the organization. This led to the LDP costs being shared from central and country budgets, gaining further commitment.
The participants selected were those that would lead the company in the future, so were generally the number two or three manager in each country. These people were thought to have longer term aspirations for the business, whereas the current country managers were more immersed in their immediate opportunities, and importantly the need for these future managers to meet and know each other early was seen as a powerful benefit for integrating the company culture.
The one-week residential program at IESE’s Barcelona campus was built around the ‘Learn-Reflect-Apply’ structure, to ensure learnings were swiftly translated into real-life action and business plans. Teams were made up from different countries to encourage integration of thinking, and each day a new business dimension was focused on. In the evenings ‘Red Thread’ reviews were conducted with faculty, to get participants to solidify their knowledge within the Arrow ECS context.
The projects were evolved to build organizational capability as well as create commercial impact across international boundaries. Each of the five teams elected a leader in the Barcelona week and were sponsored by a regional VP; they also had a coach and IESE project management consultant attached to each team. IESE supported the work through their online project platform initially and then Arrows own newly created collaboration platform. All the projects were approved by the executive board in June 2012 to be assessed by the investment committee.