Lindsley Ruth is recruiting at Electrocomponents Plc but only visionary executives prepared to do whatever it will take to exceed customer expectations should apply. Several months into his tenure as Group CEO of the British components distributor, Ruth is casting his eyes over the industry landscape, searching for inspired leaders who can help re-energize the company, hone its competitive edge and help achieve the goals of jacking up sales and profits.
The efforts to beef up the executive rank is only one of many actions being taken by Ruth to spark growth at Electrocomponents. Since assuming the position of Group CEO in April, Ruth has conducted a review of operations to determine where to shift resources, which businesses to focus on and how to optimize the company’s performance. These actions, in addition to others to be announced in November, will drive sales growth at the company, Ruth said during a recent interview.
“We have some amazing thoughts and ideas and programs that can be potential game changers for our organization,” Ruth said. “There are forces internally that are working against us but there’s also a wave of momentum that’s working for us to change our behaviors and focus on what’s most important, which is delivering the best customer experience possible.”
Some of the changes are already yielding results although the overall effects may not be known for months. The company last week reported results for the fiscal first quarter ended June 30, showing a 5 percent rise in “underlying sales” boosted by strong contribution from the eCommerce business, offset by continuing weakness in contributions from the U.K. operation. Electrocomponents said its latest results were also impacted by foreign exchange fluctuations as the dollar remained strong against other international currencies.
“Gross margin in the quarter was 1.7 percent points below the prior-year period,” the company said in a statement. “This reflects the negative impact of foreign exchange, price and discounting impacts, and mix impacts due to the faster growth of our lower margin products. We are currently implementing actions on pricing, purchasing and discounts which along with the easier comparatives in the second half of the year should benefit the full-year gross margin.”
Ruth addressed some of the challenges and opportunities facing Electrocomponents in a recent interview with Bolaji Ojo, editor-in-chief of Electronics Purchasing Strategies. Excerpts from the discussion follows:
EPS: You’ve spent the last several months visiting the different branches of the company. What’s your assessment of Electrocomponents and the challenges facing the company?
Ruth: You identified some of these challenges and opportunities in an article you wrote in March but there are four areas that I’m focused on right now. The first is reducing the complexity of the organization to ensure greater accountability at the local levels and make sure that we encourage a healthy check and balance between the regions and corporate.
The No. 2 goal is increasing the focus on the customer. My observation is that the company had become too internally focused and we need to put the customer back at the heart of the business. Our customer service has probably slipped a little over the past few years as we’ve become more internally focused or as competitors have gotten better.
Three, we need to focus on improving our service accuracy. Making sure the voice of the customer is at the center of everything that we do and resonates throughout the organization is absolutely critical to our success. We have a formalized voice of the customer program that was launched in the first week of April and the correlation between the markets where we’re doing well and the voice of the customer is quite striking.
Finally, we want to increase the intensity throughout the organization and reduce complacency to accelerate growth. I think this is particularly important on the sales side of the organization. We’ve got to look at how we do things to make sure they are done in the most cost effective and efficient way.
EPS: What other issues are on your mind?
Ruth: We’ve got to look at everything we do to make sure we are driving the maximum efficiency within the business. This starts with me. It means getting into the details of the business and understanding how we can drive and improve ourselves to turn up the intensity within the organization. We need to use all the levers available to get the organization motivated and inspired to deliver results based on what the customer needs. The more people understand that our number one priority is exceeding the expectations of our customers, the more people will rally around the customer experience and that will help increase the level of intensity in the business.
EPS: Have you made any changes so far?
Ruth: There’s a lot of complexity in the organization so one of the first moves I made in the first month was to put marketing and sales together so they are aligned with whatever campaigns we were going to launch. There were clearly conflicts in certain markets around the world where there were levels of complexities in the actions people were taking and the projects they had in place to deliver what they thought was right for the company.
The results have been amazing once we took away that complexity and put everybody in one room to talk about what’s right for that particular market. I think there’s also a level of complexity in systems. We’re fortunate to be on one [information] system but there’s a lot of add-ons that we’re looking to clean up to make sure that we have the right tools in place, to be able to make fast, quick decisions.
EPS: Can you share some of what you plan to discuss in November?
Ruth: I don’t want to get into the steps that we’re taking internally until we come out in November. I believe more in what we do as opposed to what we say. In the past we might have done a lot of talking and less doing. I think that in the past also we had an organization that might have tended to overcommit and under-deliver so I want us to be in a position where we over-deliver rather than talk about the things we’re going to do. I’d rather come out in November and talk more about what we have done and describe the vision of where we’re going and exactly how we’re going to get there.
What I can tell you is that we’re reviewing everything and questioning whether we need to do certain things. This process involves looking at the products and services that we offer, how we’re structured around brands, what we need to do moving forward in terms of where we invest, etc.
EPS: What do you see as the strengths of Electrocomponents?
Ruth: I’ve been pleasantly surprised with the level of talent within the organization. My role is to unleash the potential within the organization and I think that potential is phenomenal. I think we have a tremendous upside in this business. The number one strength is the potential and the power of the people. We have some amazing thoughts and ideas and programs that can be potential game changers for our organization.
EPS: What are the challenges you see to achieving the goals you outlined earlier?
Ruth: Instead of looking at challenges I’ll talk about opportunities. I see three short term opportunities. No. 1, return the UK to growth; No. 2, improve our position in specific market and; No. 3, increase the speed of execution internally. I think that we have to have a much faster pace within the organization in terms of how decisions are made and how we move within the market once we make a decision.
EPS: Where do you see growth opportunities for Electrocomponents?
Ruth: I think there are opportunities to grow in every major market. We have opportunities in the Americas, in Europe, the Middle East and Africa, as well as the UK, which we tend to treat as a separate region because it’s important to our business. There are also opportunities to grow in Asia Pacific.
What we need to be able to do is offer a consistent level of service, product range and availability to all customers around the world, creating the same level of expectation and delivering this perfect customer experience. That’s our goal. We need to be able to have the same high standards of customer experience around the world meaning we have to provide the highest level of on time, service accuracy and ease of doing business.
EPS: What would you say to customers, suppliers and shareholders of Electrocomponents if you were able to address them directly?
Ruth: To our customers and suppliers, the message is to help us help you. The message to shareholders is pretty simple: increase shareholders satisfaction and improve returns. Our investors want us to deliver an outstanding customer experience. To the supplier we’ve got to be a company that’s easy to do business with. We want to consider the customer's voice and how we do business.
At the same time we must make sure that we’re bringing the supplier new business, creating demand for their product and providing a great path to the promotions of products to customers on a worldwide basis. If we do those two things brilliantly we’ll drive the right level of return for our investors.
EPS: Do you have a specific timeline by when you expect to achieve some of these objectives?
Ruth: I wouldn’t put a date on that but I would say that the goal is to get better every year. We’ve got to do the right things and find a way to get ahead of the competition. How long will it take us to get there? In some places we’re already there and in some areas we have to catch up but I like the potential based on the talent, systems and tools that we have within the organization.
Our goal is to grow this organization profitably and as part of this, we want to be an organization that’s recognized as one of the best places to work. We’re open for opportunities to those people who are looking to join an organization that’s on the move. We’re open to receiving applications and we’re looking forward to growing on a worldwide basis. We have great leadership within the company but as we grow we’re going to require additional leaders.
EPS: Many of your competitors aren’t exactly hiring right now but your message appears different.
Ruth: Absolutely. We’re looking to add people and we’re looking for great leaders on a global basis. The leaders will get us to where we want to go.
EPS: You moved across the ocean to lead Electrocomponents. What has the experience been like so far?
Ruth: I love living in the UK. The people are phenomenal, the countryside is beautiful and I’m having a blast. Is there anything better than working with people who take great pride in what they do and spending time with customers and suppliers who care? Spending time with these individuals makes it enjoyable, highly motivating and inspirational.