Weathering the storm

I had the great opportunity to speak with one of my favorite leaders, Roy Vallee on Friday. Roy started with Avnet more than 40 years ago and retired as CEO in 2011 and Chairman in 2012. Avnet, the largest publicly traded company in the State of Arizona went through the tech-bubble bursting, 9.11, the recession of 2007-2009 as well as many other crises that the US and the global economy have seen. As an experienced leader, it was great to get his perspective and learn what he would be doing today to navigate these waters. Here are some of the things that he shared:

“First, understand that everyone’s situation and every company’s situation can be vastly different. You have hotels that are trying to cut as deep as they can while companies like Amazon cannot hire enough. There is no “one size fits all” and you shouldn’t mimic what other companies are doing – evaluating where you are and where your company is not only positioned in the market right now, but where you see it being positioned when this is over are very critical evaluations to make.

The most important thing that employees need right now is a beacon. They need something that they can grab a hold of and know that everything is going to be okay. Leaders must double-down on communication and increase their visibility dramatically. The first thing that I would do as CEO today is gather my executive team together. You should immediately go into planning mode, but with a much higher sense of urgency than an annual planning or strategy session. You need to evaluate things from a “what is important” versus a “what is urgent” perspective. What do we know to be true versus what are things that others are doing that may not be our own truth? By internally focusing on the urgent, while delaying the other decisions you will be in a much better position when the fog lifts.

As leaders, we are always faced with uncertainty, this particular moment in history is just on a different magnitude. You cannot win at this by playing speed checkers, you have to play chess. If you evaluate and truly understand your business – financials, customer retention, customer acquisition cost, competitive analysis, etc. – you will be much better equipped to make decisions for the long-term versus being shortsighted. Basing decisions on anything outside of your own data can hurt the culture and have long-lasting unintended and adverse impacts.

Now is the time to follow your core values or to create them if you don’t have any documented. It is interesting to see how many leaders and organizations are speaking about core values today – they have always mattered greatly, but especially right now.

There are big risky decisions that you have likely put off as a leader. When a crisis like this strikes you suddenly get real clarity. Now is likely a perfect time to take action on the decisions that, as a leader, you have been delaying. When business is good and profits are soaring, you can slowly step through or delay those big decisions, but as Geoffrey Moore talks about in Dealing with Darwin, disruption causes you to act. Look at this as a time to re-energize the organization.

During the tech-bubble period, 2001-2003, companies were really struggling. Avnet was certainly not sheltered in any way. Some of the most difficult decisions in my entire career were made during this period, from taking risks that were counter to what Wall Street expected us to do, to handling layoffs exactly the opposite of how people suggest you do them (all at once versus over time). They called that recovery an "L-curve" because after 3 quarters of free fall we just bottomed out for the next 5 quarters - never saw anything like it, but the good news is that we then we started to climb again. Within a few quarters, the stock had more than quadrupled.

The most important thing I believe is to focus on the right stuff and focus on what you can control. If all your energy goes into that, you have a much better shot at getting to the other side. Look, whether your head is under water by 1 inch or by 10 feet, it still feels terrible because you can't breathe. If you stay focused, prioritize and get things done you may be only 1 or 2 problems away from being in the clear.”