Chief executive officer and chairman, Avnet
Born: 1953, in Southbridge, Massachusetts.
Education: Don Bosco Technical Institute, AS, 1971.
Family: Married Cindy (maiden name unknown); children: two.
Career: Radio Products, 1971–1972, sales; Cramer, 1972–1977, field salesman, inside sales manager, operations manager, branch manager; Hamilton/Avnet, 1977, field sales representative; 1977–1989, systems manager, systems business manager, general sales manager, general manager of the San Diego branch, regional director of Southwest; 1989–1990, vice president; Hamilton/Avnet Computer, 1990–1991, president; Avnet, Inc., 1991–1992, senior vice president, director worldwide electronics operations; 1992–1998, president, chief operating officer, vice chairman; 1998–, chairman, chief executive officer.
Awards: Named in 1997, 1999, and 2000 to Electronic Buyers' News list of Hot 25 Executives, in recognition of his industry leadership; honored as Executive of the Year in 2000 by Arizona State University's College of Business, Dean's Council of 100.
Address: Avnet, Inc., 2211 South 47th Street, Phoenix, Arizona 85034-6403; http://www.avnet.com.
■ Electronics distribution executive Roy A. Vallee was the CEO and chairman of the Phoenix, Arizona-based Avnet, a Fortune 500 company. When Vallee became CEO, his predecessor, Leon Machiz, described Vallee's leadership quality as one that clearly used critical management strategies in a way that inspired confidence, which Machiz insisted was essential for a successful leader.
Avnet, which Vallee described as a technology marketing and services company, was one of the world's largest distributors of computer products and electronic components; it was an authorized business distributor for the goods of more than 250 of the world's top technology and systems manufacturers. Some of the products that Avnet provided were semiconductors; interconnect, passive, and electromechanical components; enterprise network and computer equipment; and embedded subsystems. In the early 21st century Avnet distributed these suppliers' products to about 100,000 other manufacturers and served customers in 68 countries. Its primary and longtime rival was Arrow Electronics. (For many decades, the two companies had been aggressive competitors in their battle for market share.)
In the early 2000s Avnet had two operating groups: Avnet Electronics Marketing and Avnet Technology Solutions. Avnet Electronics Marketing was a global distributor of electronic components such as semiconductors; interconnect, passive, and electromechanical components; radio frequency and microwave devices; and other products. Avnet Technology Solutions emerged from the combination of two previous organizations: the Computer Marketing Group (which dealt in computer products and services for resellers and large end users) and the Applied Computing Group (which operated with system-level components such as motherboards). This combination was formed in order to institute additional efficiencies of operations. Together the new group was composed of a distribution unit and an information-technology architect unit, which concentrated on enterprise computing systems and products.
Vallee grew up selling, organizing, and leading. At age 12 he sold cosmetics and household products door-to-door in his Los Angeles neighborhood. He also organized his friends into groups for jobs such as mowing lawns and washing cars. During his high school years Vallee was the lead singer in a rock band called "Betsy Ross." While attending the Don Bosco Technical Institute in San Gabriel, California, he spent a semester away from school in a work-study program at the small Los Angeles electronics distributor, Radio Products.
Vallee began his career in electronics distribution in 1971, when he joined Radio Products. He worked his way up from stocking shelves to the shipping dock and eventually established a sales office for the company in San Diego, California. However, Vallee realized that Radio Products was a small, un-important company in a new, exciting industry called "electronics" that was quickly developing into something very special. After discovering Cramer, a new San Diego distributor that appeared to have a bright future, Vallee began working for that company in 1972. He started as a field salesman and was later promoted, successively, to positions as an inside sales manager, operations manager, and finally a branch manager. However, he realized the company had financial problems and began looking elsewhere.
Vallee wanted to open his own business, but he lacked the capital to do so. He had been recruited for several years by a successful company called Hamilton, and he finally decided to join them. In February 1977 he started as a field sales representative for Hamilton/Avnet with the goal of starting his own business in five years. Within six months he was promoted to systems manager. The semiconductor-maker Intel, which was supplying the company with systems that needed qualified specialists to maintain and operate them, trained Vallee because he had some technical education as well as experience working as a computer operator. Vallee soon became a systems business manager, and through subsequent promotions (going through 1989), he became general sales manager, general manager of the San Diego branch, regional director of the Southwest, and finally vice president. During this period Vallee was honored as Hamilton/Avnet's General Manager of the Year and on two occasions was named Regional Director of the Year.
One of the most important tasks that Vallee accomplished during this time was to organize and plan the implementation of a successful sales force as well as develop the management structure of the team's territory. Vallee liked to help people establish career paths while providing more value to customers and gaining additional market share. All of these learned tasks became useful for Vallee as he climbed the corporate ladder.
In February 1989 (about one year after the company separated the computer and components businesses), Vallee was appointed president of the computer division, which was called Hamilton/Avnet Computer. In 1990 he was named senior vice president and director of worldwide electronics operations for Avnet, where he was responsible for all worldwide marketing. At this time he realized that the culture at Avnet was what is commonly called a "meat grinder" or "pressure cooker," where employees were not stimulated to perform well but were simply told to do their jobs as fast as possible. Instead of promoting an atmosphere where employees wanted to stay onboard and build a career, the company forced staff simply to produce more and more without providing incentives for the additional demands. Vallee decided to focus on changing this culture.
Thanks to Vallee's initiatives, Avnet in the early 21st century was a place where talented people wanted to work and create a career in a stimulating environment. Vallee accomplished this turnaround by recognizing and communicating that people are important. He also worked very hard to develop and invest in sophisticated technology tools like automated warehouses; however, he realized that these tools only worked when a company understood that its employees are its most important assets.
Vallee was appointed to Avnet's board of directors in November 1991 and, in March 1992, was selected president and COO. In November of that year he was appointed vice chairman. In July 1998 Vallee was named chairman and CEO, taking over from an industry pioneer, Leon Machiz. Vallee, a distant relative of Rudy Vallee, a singer and matinee idol from the 1920s, was characterized as having smooth good looks that went along with his elegant dark suits, starched shirts, cufflinks, and silk ties. Despite looking like a movie star, he easily interacted with people in a low-profile, sincere, and easygoing manner.
Soon after taking the helm at Avnet, Vallee orchestrated a complete corporate restructuring plan, which was initially delayed by the beginning of a downturn in the electronics industry. This effort—to strengthen its market share, streamline all the businesses, and carry out additional coordinated projects to improve its capital-to-debt ratio—centered around two structural and organizational changes: the merger of the Avnet Computer Marketing and Avnet Applied Computing operating groups and the centralization of the company's information technology resources. In addition, Vallee aggressively acquired several smaller distributors to expand its operations and to eventually become one of the leading electronics distributors in the world. Vallee felt that making Avnet into a global company would contribute the most to the company's growth in the future.
Vallee took advantage of his leadership position to make sweeping changes that he believed were necessary to take Avnet into the 21st century. First, he moved the company's head-quarters from Great Neck, New York, to Phoenix, Arizona, where its main U.S. warehouse and other operations were already located. Next he combined the company's three main components and distribution businesses—Hamilton Hallmark, Penstock, and Time Electronics—in order to eliminate duplication and establish a single global brand. He doubled the size of the Phoenix warehouse and consolidated European and Asian warehouses into new, centralized facilities in Belgium and Singapore.
In April 1999 Vallee organized a joint venture that included Avnet's old nemesis, Arrow Electronics, and two other companies, Aspect Development and CMP Media. This union was designed to compete in the e-commerce world of the Internet. Named ChipCenter LLC, customers could come directly to the Web site to purchase components. As a result of this innovation, Vallee realized that the company no longer needed a catalog, so he eliminated that part of the business.
Now positioned to move aggressively into the international market, Vallee replaced the entire board of directors, excepting himself, and hired independent outsiders, some of whom had global business exposure and experience. In June 1999 he announced the $830 million purchase of Marshall Industries, which combined one of the largest distributors of North American semiconductor supplies (Avnet) and the leading distributor of Asian semiconductor lines (Marshall). In September he announced his intent to purchase the remaining shares of the European distributor Sonepar Electronique Internationale, or SEI, and the SEI Macro Group. He also formed a third operating arm within Avnet, the Applied Computing Group.
Finally, he initiated a company-wide migration to a common enterprise-software system from Germany's SAP AG, which was an international developer and supplier of integrated business application software designed to provide comprehensive and cost-effective business solutions for internal applications like human resources, payroll, purchasing, and related functions.
The acquisition of Marshall saved the company between $40 million and $60 million (as reported in 2000), with total acquisitions saving between $80 million and $90 million. Along with these initiatives, Vallee expanded in 2000 into China and laid plans to enter the markets of Korea and Japan. Vallee emphasized that his company must strive to become as strong as possible globally in order to be most efficient. His goal was to ship a package anywhere around the world within 48 hours.
By 2000 Vallee had grown Avnet to sales of $8.4 billion, making the company the leading North American distributor of technology components. Starting in 2000 and through the next couple of years, Vallee instituted acquisitions of Kent Electronics (announced March 2001), Veba's European operations EBV (announced August 2000), and Sunrise (announced May 2001). The $1 billion Kent Electronics acquisition in late 2001 strengthened Avnet's financial position after the two businesses were fully integrated, generating savings of $60 million in 2002. Vallee liked Kent because it was a well-managed, profitable distributor that dealt with interconnect, passive, and electromechanical components. Kent also had a reputation for good customer service. On the other hand, the Kent acquisition complicated Avnet's market position as Vallee had to immediately start cost-cutting measures to counterbalance the downward sales expectations due to the slow economic market.
Vallee also invested heavily in Avnet's Integrated Materials Services division, which by 1999 had grown at a compound annual rate of 40 percent, and the newly formed (1999) Avnet Design Services, which provided Vallee with early research and development of products. At the end of fiscal year 2003, Vallee reported revenues of $9.05 billion. With a solid senior management team and a carefully planned organizational strategy, Vallee was leading Avnet into a strong future.
See also entry on Avnet Inc. in International Directory of Company Histories .
Yaverbaum, Eric, Leadership Secrets of the World's Most Successful CEOs: 100 Top Executives Reveal the Management Strategies That Made Their Companies Great , Chicago, Ill.: Dearborn Trade Publishing, 2004.
—William Arthur Atkins