How did a global electronics company leader stay focused on the customer during a time when the world was in flux? Alpesh Patel OBE, in conversation with Lindsley Ruth, CEO of FTSE 100 Group, Electrocomponents plc (ECM), discuss how he found success through adaptability, listening, and putting people first.
Alpesh Patel: I’ve got a very special treat today; we’ve got the CEO of an FTSE 100 company. Before I introduce him, let me give you some of the top numbers relating to the company.
The company is Electrocomponents PLC. They stock more than 650,000 industrial and electronic products sourced from over 2,500 leading suppliers, provide service solutions to 1.2 million industrial customers, operate in 32 countries, and ship around 60,000 parcels a day with revenues of 2 billion pounds and a market cap just shy of 5 billion pounds. At the start of 2022, their stock price was near all-time highs, and they employ some 6,800 employees.
The CEO I’m going to introduce is Lindsley Ruth. He has kindly agreed to be interviewed on some aspects of the numbers, how you build a great company and getting into such a great company.
Doing Business in the UK
Alpesh Patel: Lindsley, tell me, first of all, by way of introducing yourself, how did an American, educated in Texas, end up heading up one of the UK’s largest companies?
Lindsley Ruth: Thank you very much, Alpesh. I’ve been in this industry for a long time. First of all, I learned about this company many, many years ago. This company has had an excellent reputation for many decades, not just in the UK but worldwide. So I was familiar with the company, and when I was recruited to come here, I knew a bit about the company. But once I met the board and once I met some of the people within the company, I knew it was the right home for me, and I saw the opportunity that existed. And I like to say I’m more of an international American, I suppose. I’ve traveled worldwide, and I like living in Europe and London. There’s tremendous opportunity here, great innovation, and it’s a great place to be headquartered.
Alpesh Patel: Let me touch upon some of those points, Lindsley. Now the Chairwoman of your company is Baroness Fairhead, somebody I’m very familiar with, with my Department For International Trade hat. You’ve touched upon the UK being a great place to have headquarters and innovation. Speaking about the United Kingdom and your business and exports, I mentioned 32 countries you trade and deal with.
What are your plans for the future? How do you go about expanding? How do you get that reach? What advice would you give to other businesses that are several clicks under your business? Your company was a company of the year, and that’s ranked amongst all the FTSE 100 companies. How’d you become a company of the year on top of all of that?
Secrets To Success
Lindsley Ruth: I appreciate the recognition and for you mentioning that. The first thing you have to do is not pay a lot of attention to being the company of the year. If you do, you become complacent, and complacency leads to irrelevancy, which we want to avoid.
So for us, it’s a nice signal of the direction we’ve been going in. It’s a nice confirmation and affirmation from the investment community that we have the right strategy, we have the right people, and we’re on this journey of greatness to go from good to great.
So to get to where we are, we went from being an average company. At one point, we were really good, and we lost our way. There are various reasons for that, but we’ve become a good company again. I wouldn’t say we’re a great company, but that’s where we want to be. So it’s having that burning ambition.
I think for startups or new companies, if you want to make it to the FTSE 100, if you’re going to be in the FTSE 350, it starts with a dream. It starts with a goal. It begins with that aspiration, that inspiration to be great, good, and eventually great.
And I think to me, the biggest difference is, and most people fail to realize this. They talk a lot about it, but you’ve got to step back. You got to say, “What are you willing to sacrifice to achieve your goals?” So you got to think about your time commitments, what you’re willing to put into your company to lead the company, what are you willing to commit in terms of your efforts around the world, and your travel time. And I think those are all important things as a leader, in the beginning, to establish the right culture, because it all starts with culture.
So I often say, you’ve got to be fast to fire, slow to hire. Make sure you really know what you’re willing to sacrifice, what you’re getting into, set the goals, and then execute those goals. Make sure you get the right people. If they’re not the right people, you need to move forward. But I think it takes the right people, the right culture, and the right level of ambition.
Importance of Humility
Alpesh Patel: That’s fantastic advice. I particularly like the slow to hire and the fast to fire part. Any other tips like that or insights critical to making your company great?
Lindsley Ruth: First of all, there’s an element of humility that always has to be there. So we’re never as good as we think we are. We’re never as bad as we think we might be at times. Right? And so I find that often in the UK, people can get down on the UK, but let’s look at the positives of the UK. I often hear people talking about, “Well, the train was late today.” “Well, how late?” “Eight minutes.” That’s not bad; at least there’s a train. Because in the US, there aren’t a lot of trains. Public transit, I find very good in the UK.
As a matter of perspective, I think digital innovation here in the UK is second to none worldwide. I think there’s great digital talent. Here, where we’re headquartered in Kings Cross, an amazing amount of digital talent exists that we could apply worldwide. So I’m very optimistic about the future as it relates to that talent that exists here.
I would say humility is essential. Identifying talent is important. I would say just some other nuggets of wisdom that I’ve learned over the years is one; we’ve got to be focused on; many people like to say the customer comes first, right? And I get it, and the customer is important, but your employees have to come first. Because if you want to offer a world-class customer experience to your customers, it starts by providing a world-class customer experience to your employees. If you do that, then you can offer that experience externally.
So it begins internally. It starts with making sure that you offer a world-class experience at home, within your company, and focus on the right things. And I’m not saying a country club environment, but having an environment with high morale, high performance, people are very clear on the roles and responsibilities, they know the direction you’re going in.
And to me, it’s about the triple bottom line. So people, profit, and the planet. It takes great people to drive profit. The more profit you can make, the greater the difference you can make for the planet. That’s the triple bottom line, people, profit, and planet. And if you have that in your mind, you can make a tremendous difference and give people a purpose for why they come to work every day.
Purpose Of Making A Difference
Alpesh Patel: That’s absolutely fantastic. And you mentioned right at the end that purpose, and we’re seeing that more with Millennials and Generation X or whatever generation we’re on at the moment, this notion of purpose. And I want to touch upon that. When I looked at the investor relations deck, one of the slides mentioned five reasons to invest in the company. And one of those five reasons was the 62% reduction in tons of CO2 since 2014, the ESG part. Now that was listed as one of the five things. Of course, from my years of interviewing CEOs, that wouldn’t have been up there 20 years ago. It probably wouldn’t have been up there ten years ago. How important are you finding that both for hiring the right people and your investors and potential shareholders in your company, what they’re asking for in terms of what they want to see the company do?
Lindsley Ruth: First of all, let me say that the letters ESG may be relatively new, but our purpose of making a difference and making amazing things happen for a better world is not new. We’ve been focused on it for many years, and we do want to make a difference and believe it’s just doing what is right as a business. In years past, many people relied on the governments, I should say, to make a difference in society, to make a difference for the environment, and they had to take the lead.
I see no reason today why businesses cannot take that lead and work with the government to define what the objectives should be going forward.
Working closely with governments worldwide to make that difference and make a difference in terms of the workforce, make a difference in terms of education, and make a difference in terms of the environment. Those things are all critical to us because they’re the right things to do.
So I think, if we look at scope 1, 2, 3 emissions, and you mentioned in terms of the 62% reduction over five years. We started that not because it was a metric externally or because investors were asking about it, but because we felt it was the right thing to do, and that’s why we did it. So for us, that is our purpose. It’s to make amazing happen for a better world. Those aren’t just words; we believe in them.
What’s really important, I think, today is if you look at students coming out of university and look at people who are new to the workforce, especially those emerging from the pandemic. Of course, the pandemic’s not over; we might be saying that in a year or two years. But as people are coming out of this work from home or the virtual environment and the new ways of working moving forward are coming into play, I think it’s more important than ever for a company to have a purpose.
So it’s where an individual’s purpose intersects with the company’s purpose that drives the engagement to a higher level. And if we can put those two together, I think, Alpesh, we have something remarkable and special.
Driving Our Purpose
Alpesh Patel: We know it’s incredibly important for companies to do this, whether it’s the environment or broader social issues. But let me connect that up with another great figure that you’ve got on your investor relations documents, which is a 24.7% return on capital employed. Now the number crunches, the accountants, the finance department will love that.
How have you managed to achieve the broader purpose? I’ll have to tell you, I mean, I come from the hedge fund industry, we often worry that “Listen. What’s this going to cost?” Because we’re worried about the ROIs and the ROEs and all the rest. So how have you managed to keep the purpose and get such a high return on capital employed simultaneously?
Lindsley Ruth: Right. I think they go hand in hand. So it’s not one exclusive to the other. The greater we drive the purpose, and here’s an interesting fact for us internally. The greater we drive the purpose throughout the organization, the greater the level of collaboration, the better the results. The more profit we make and our return on capital employed is better.
As I say, and you mention your prior experience as a hedge fund, I would talk to you as if I was talking to an investor today to say that you have not missed the boat in our company. The opportunity still exists for us to accelerate our growth and perform better, and we see an immense amount of opportunity and a sea of uncertainty today. So there’s just a great opportunity around the world. We’ve got less than 1% market share in our market. Together, with a common purpose that pulls us with a vision of becoming the first choice to our stakeholders that drives us, we can accomplish amazing things on our journey.
Ability To Adapt
Alpesh Patel: I’m lucky enough to have hundreds of thousands of followers who are largely private investors. What excites you the most about your company and the future when you wake up in the morning? You’ve touched upon a bit of it there. Are there certain parts of the world? Are there certain divisions? Are there certain products, or services, which are up and coming? What makes you think, “You know what? I’m sitting on something phenomenal, and I want to get this message out about this part of it.” What is it that’s the most exciting?
Lindsley Ruth: I think what’s the most exciting for me is when I first started here in 2015, our greatest weakness was our ability to adapt. Our ability to adapt to changing markets and adapt to volatility, uncertainty, complexity, ambiguity, and polarization. Today I would tell you that those are our greatest strengths.
And so I wake up every day, today I’m excited. Seven years ago, I was excited, but I was excited about going to fix things. Now I’m excited about building things. And so when I wake up, I think, “Oh, this is going to be a fun day. Because I’m with amazing people and have nothing but opportunity, the key is how we execute and exploit that opportunity.” So, for me, it’s precisely that.
I was at a session yesterday where we talked about opportunities around connectivity and opportunities around the smart world and smart buildings, and smart education. Just the amount of opportunity out there, Alpesh, is just so exciting, and we want to make it for a better world. And you wonder, with all the advancements in technology over the last 50 years, all the technological breakthroughs, why is the world not a better place? And what can we do to leverage everything that exists to make a greater difference around sustainability and education to ensure that students today have the skills required for the future? They have the digital skills, the technology, and the equipment around the world, and we give them the experience both online, virtually, and offline in classrooms. As we move forward, I think those are all very important. So that’s what excites me.
Advice To Students
Alpesh Patel: Now you mentioned students there. And again, another part of my audience is people who are new to the workforce or people moving up the career ladder through LinkedIn. What advice would you give them, specifically when looking at a company like yours, one of the 100 largest listed companies in the UK and a great brand name, to just generally entering the workforce? What are the gaps they need to fill in themselves, would you say? Or any other advice you might have for them?
Lindsley Ruth: The first thing for students coming out today, I’d say number one, is to go into the workforce with an open mind. Make sure you’re taking notes; make sure you’re learning. And to take from Stephen Covey, “Seek first to understand, then to be understood.” Right? So I think way too often, I’ve noticed.
I have two kids who are graduating from college now, and they’ll sit in meetings and won’t take notes. It shocks me. I know we’re now in this virtual world, and they’ll say, “We’re taking notes on the phone.” But you never know if they’re taking notes on the phone or texting or doing something else. But I think there’s an art to taking notes, and I still love to do it, and I would encourage people to make sure they’re learning.
Second, I would make sure are not to make. I think putting money as a priority is a danger. Students come out today; they might have student debt, college debt, university debt, and credit card debt. You can get a credit card quite easily at that age, and I think it’s dangerous to put money as a priority for many people. I think putting the opportunity as a priority and learning and engaging. Every student who comes out today, regardless of where they are in the world, has the gift of opportunity. But not every student is prepared to open that gift. Right? Some of them just stare at it, leave it, and walk away, and others will rip into it and open it up. Every student has an opportunity. It’s what they do with that opportunity, I think, that makes the difference in their success long term.
Don’t Be Afraid Of Failure
Alpesh Patel: Lindsley, I think what’s critical in terms of what you said is not just the message but the messenger. When it comes from the CEO of a major firm, I think it will resonate well with the audience.
In closing, another part of my audience, which I alluded to earlier, are entrepreneurs, as I mentioned. And within the devout for international trade, I’m part of something called The Global Entrepreneur Program; we get the most outstanding technology entrepreneurs from around the world and get them to set up their global headquarters here in the UK. What’s your message to those companies around the world? The scale-ups so those who aspire to be in your company’s position in a decade.
Those scale-ups around the world, which we’re trying to get to the UK, what would be your message to those tech companies worldwide to get them to get set up here in the UK?
Lindsley Ruth: The first thing I’d say is nobody ever missed the opportunity they did not take. So I think you cannot be so afraid of failure that you do not try. I believe that too many companies abandon their priorities and allow other people to influence their direction. Entrepreneurs should stay true to their priorities and be willing to adapt. But if they’ve got a conviction in what they’re doing and know it’s what the market wants or what the market will want and need, they should stay focused on it. I know it’s a lot of hard work for a lot of entrepreneurs, we deal with over 100,000 startups globally in our business, and I believe it’s imperative to make sure that we help encourage them to stay the course and support them in any way we can.
But to set up business here in the UK, I think we’re not competing anymore as individual companies. I believe we’re competing on ecosystems. So for companies setting up in the UK, I believe so many different organizations can help.
Whether it’s Innovate UK, other organizations, the Department of Trade, the Department of International Trade, or so many different organizations can help companies get set up. But there are also willing business partners, through the CBI, that can come in, and that can help companies build out that ecosystem. So I would say, don’t think you have to do it yourself. There are partners here that are willing to help and assist on your journey to greatness like us.
Alpesh Patel: That is absolutely fantastic advice. I could talk to you for hours. But as I said, it might impact your share price if we continue talking too long. The CEO is away from the desk. Lindsley Ruth, thank you so much, CEO of Electrocomponents PLC. Thank you so much for an enlightening discussion with us today. We’ve got more FTSE CEOs coming up. And I think when they’re sharing their wisdom, both to a global audience as you did and to entrepreneurs, to people entering the workforce, and such a diverse audience, I think it’s absolutely invaluable. So thank you very much for sparing the time and doing that. Thank you.
Lindsley Ruth: Thank you very much, Alpesh, and I’ll just leave you with one thought. I love talking to investors, so buy shares that I’ll talk to you every day.
Alpesh Patel: Well, that’s pretty good advice. And I know a lot of my audience will be taking that on board. From everything from TikTok to LinkedIn, I know I’ve got it covered with investors and investor questions every day. They’ve got a fair bit of firepower as well. So I’ll make sure they get that message. Thank you.
Lindsley Ruth: Thank you, Alpesh.
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Alpesh Patel OBE