IT powerhouse makes a change at the top
Bob Dutkowsky’s 12-year tenure as CEO of Tech Data saw the company become a global powerhouse in the IT distribution industry, with 2017 revenue topping $36 billion.
The growth has done nothing but continue apace. The Clearwater-based firm became Florida’s largest public company this year. It operates in 40 countries, sells into more than 100 and has 14,000 employees.
While all this growth was happening, Dutkowsky, 63, also orchestrated a significant move to find a new CEO: Rich Hume, a fellow IBM alumnus who joined Tech Data in 2016 as COO. But the Tech Data board didn’t send Dutkowsky off with a gold watch and hearty pat on the back for a job well done.
Dutkowsky says the board tasked him, personally, with the responsibility of finding his successor, a process that spanned several years. He’s quick to point out, however, that he’s not technically leaving Tech Data — he’ll be staying on as executive chairman and handling strategic projects.
“In the past, I worked 80 hours a week,” he says. “Now I might work eight hours a week. That was always the design of stepping away.”
Family was a big factor in Dutkowsky’s decision to leave his post.
“My family was really encouraging me to step back from the rigors of the day-to-day,” he says. “I'm lucky in that both my kids live in Tampa Bay and my grandkids live in Tampa Bay, and so there's lots of opportunities for me to spend time [with them], but you don't have that when you're running a big public company. I had my family whispering in my ear, saying it's time to step away.”
Dutkowsky’s exit was also motivated by business reasons — specifically, a feeling that the company could use a fresh perspective on the challenges posed by its rapid growth.
“I’ve been a CEO of a public company for almost 20 years in a row,” he says. “As a data point, the average tenure of a public company CEO is four and a half years. At some point, it’s a job that wears you down. I’ll look at a set of issues and I won’t necessarily see a way to improve them because I was involved in the creation of what it is we do today, whereas a fresh set of eyes will look at the exact same problem and see multiple different alternatives and options. I just started to have the feeling that freshness would be important for Tech Data to reach the next levels of its potential.”
“Everyone thinks CEOs kind of do everything, while the reality of it is they're good at a few things, they're not good at a few things and they’re really average at a whole bunch of stuff.” Bob Dutkowsky, former CEO of Tech Data
The succession planning process kicked off in earnest three or four years ago. “We had the luxury of time. I was not in a hurry,” Dutkowsky recalls. At the time, “I didn’t need to leave. It’s just that I wanted to begin the planning, and the board said to me, ‘Go out and find five people that you think could take your role.’”
Dutkowsy found six — five who he says were “exceptional” and “one who was a perfect match.”
The latter was Hume, 58. He agreed to come aboard as COO with the understanding that he would likely eventually transition into the CEO role — but this wasn't a coronation.“He had to come in and earn it,” says Dutkowsky.
So, over a two-year period, Dutkowsky and the board shifted more and more duties to Hume to test his mettle while keeping the succession plan secret.
“I had responsibility for our regions and the execution of our business within each region — all of our sales organizations, if you will,” Hume says. “And then I took on the responsibility for running and managing the acquisition of Avnet’s business.”
Announced in February 2017, the $2.6 billion merger with Avnet Technology Solutions added 20,000 customers across 80 countries to Tech Data’s already robust portfolio. In return, Avnet acquired a 7% ownership stake in Tech Data.
Hume was able to navigate the Avnet deal thanks, in part, to his decades of familiarity with Tech Data. Like Dutkowsky, he spent a good chunk of his pre-Tech Data career at IBM, joining the iconic company in 1984. “I’d had a relationship with Tech Data for probably 20 of the 30-plus years I was at IBM,” he says, “so I was keenly aware of what distribution does within the IT value chain, overall.”
But though they share common roots in the tried-and-true IBM way of doing business, the two executives display foliage of slightly different hues in the ways their leadership styles have evolved. Dutkowsky, an intuitive risk-taker, got his start in sales and marketing, while the more analytically minded Hume worked in finance and accounting.
“It’s clear to me that we come from the same fundamental thread,” says Dutkowsky. “But from there, through our experiences, the jobs we had and the roles we played in the organizations that we belonged to, we became radically different.”
Citing the influence of IBM’s longstanding open-door policy for managers, Dutkowsky says he and Hume share a passion for being caring, respectful, communicative leaders and, most importantly, being keenly aware — and accepting — of their weaknesses and shortcomings.
“Everyone thinks CEOs kind of do everything,” Dutkowsky says, “while the reality of it is they're good at a few things, they're not good at a few things and they’re really average at a whole bunch of stuff. And by the way, that profile matches virtually every human being on the planet. What you do is you surround yourself with people who bolster up your weaknesses. I didn't ever perceive that I wasn't good at certain things until I got inside Tech Data and they shined a spotlight on it.”
Dutkowsky is confident that in Hume, Tech Data has the right man for the job. He praises Hume’s analytical mindset, saying, “Whereas I might measure twice and cut once, he’ll measure three or four times. I’m much more of a ‘ready, aim, fire’ kind of leader. He is far more measured in terms of thoughtful planning and process, and that’s why he's perfect for Tech Data right now.”
The reason being, he explains, is “because Tech data has become a very big company. When I joined it, it was big but not that big."
More perspective: When Dutkowsky joined Tech Data it was around $19 billion in sales, while IBM’s revenues are $100 billion. "So Tech Data is big but not really big," Dutkowsky says. And as the company zeroes in on $40 billon in sales, "the disciplined approach Rich will bring is absolutely necessary for Tech Data to go forward.”
NO LAME DUCKS
Dutkowsky disputes the notion that Hume’s extended run-up to becoming CEO made him a lame duck, of sorts. “When Rich came in, if he wasn't as good as we thought he was, he wasn't going to get the job,” he says. “It wasn't in a contract. Until he earned it, it was mine — my responsibility.”
And that meant the majority of people within Tech Data’s vast organization weren’t privy to the specifics of the succession plan.
Tech Data hired an outside company to help with the transition, and one of its recommendations was to announce Hume’s ascension at a strategic time — not too far out from the official handover, but not the day before, either. “If it dragged on too long, I clearly would have been a lame duck,” Dutkowsky says, “and it wouldn’t have been in the best interest of the company to have two quasi-bosses. But what you don't want to do is announce it and have it happen the next day, because then it looks like it was not planned. It looks like something [negative] happened.”
A perception that the company is rudderless can also spook shareholders, Dutkowsky adds. “But that’s not at all what happened in our case. It was well conceived and well planned. We announced it April 19 and it occurred June 6, five or six weeks out, and the magic of June 6 was that that was the date of our annual meeting of the shareholders. So, it was a logical time to tell the shareholders that we have a new CEO.”
Now that the transition is complete, Dutkowsky has high hopes for Tech Data under Hume’s leadership.
“Part of the reason Rich is the perfect next CEO is that he has an understanding of the next generations of technology and he can help the company maneuver to the right places,” he says. “In my time, we helped the company maneuver into the mobile world. But the realities are very different now, with artificial intelligence, data security, social media, big data and analytics … those are all big breakthrough areas in tech that Tech Data will adjust to. Also, Rich is a really good judge of talent, and he'll add the right kind of talent to the Tech Data roster to be able to help the company grow.”
Hume, meanwhile, knows he has lofty expectations to meet.
“The board had their eyes wide open with this transition and it’s been managed in a very thoughtful and disciplined way,” Hume says. “Bob has been an excellent leader and mentor, and I’m absolutely humbled and honored by the opportunity to move into the CEO role. I recognized that I have a great example as to what success looks like, in looking at what Bob has accomplished. Frankly, if I could accomplish half of what Bob has over the past 12 years, I would consider that to be a great success.”