Located in a quaint town in northwestern Minnesota, one of the nation’s largest electronic components distributors is quietly transforming an industry. Leading the charge is Digi-Key’s President and COO, Dave Doherty. We caught up with him to hear how he connects the dots between business and technology to keep the business thriving.
Where did you grow up?
I grew up in a suburb of Boston, but my mom was from a small town in Wisconsin, which gave me a great appreciation of the Midwest.
What was your very first job?
After graduating from mowing lawns and shoveling snow in my neighborhood, my first job was cleaning the bleachers of a racetrack. That track was subsequently torn down and is on the current site of Gillette Stadium, home of the New England Patriots.
What did you study in college?
I always enjoyed math and science, leading me to a BSEE degree at Worcester Polytech in Worcester, MA. A few years into my career, I went back to school in an evening program to earn an MBA at Babson College in Wellesley, MA.
What was your career path like after graduating?
My first position was as a manufacturing engineer with Digital Equipment Corp (DEC) in Marlboro, MA. I realized that I enjoyed work at the component level and became a component engineer, assisting internal programs with component selection and performing vendor qualifications on devices selected. I left DEC to become a field application engineer with Toshiba and later went into sales management, supporting DEC as one of Toshiba’s four global accounts. I ultimately relocated to Long Island, NY to join Arrow Electronics where over a 13-year period I held various positions ranging from leading their North American application engineering team to becoming Vice President of semiconductor products.
How did you get your start at Digi-Key?
I was always fascinated with Digi-Key and the reputation they held of having outstanding customer service and being easy to do business with for both suppliers and customers. I met Mark Larson at an industry function, and we spent an evening getting to know each other personally; exchanging philosophies and life stories. When the opportunity to join the company arose in late 2007, I discussed it with my wife and oldest child at the time (a son who was entering his junior year in high school) and we made a family decision to leave Denver and relocate north.
What lessons have you learned in your current role?
Virtually every company will tell you that people make the difference; yet their policies express everything but that sentiment. Being headquartered in a small community, we try to continue to feel small, even as we grow bigger. This intimacy has created a culture for ‘having each other’s back’. Building a culture on a foundation of trust, open communication and honesty is powerful. We learned that asking for help goes a lot further than trying to mandate it. Hire great people, let them delight customers, and customers will fuel the growth that allows this cycle to be repeated. Don’t measure financial metrics such as return on working capital (ROWC) or inventory turns as much as you measure customer-facing service metrics such as in-stock rate and same-day ship. If you take care of the customer, the financials will follow.
What are your priorities over the next 1 – 3 years?
We have three main priorities over the next few years:
1) Continue our mission of One Digi-Key, globally, where we maintain and export the powerful values that formed the company while we learn and adapt from the experiences of new team members around the world.
2) Digital acceleration: Leveraging our roots of being a digital innovator and evolving at the pace required by our customers.
3) Create a passion for continuous improvement; what was a differentiator yesterday will be simply the cost of entry tomorrow. All of these things must happen as we embrace an outside perspective, in line with understanding our customers emerging needs.
THE RELATIONSHIP BETWEEN BUSINESS & TECHNOLOGY
Across your career, how have you seen the relationship between business & technology progress?
To me it’s really two-fold. Technology is most powerful when it’s solving a business need or opportunity. Sometimes it’s the business need that spawns a new technology and sometimes it’s a technology that spawns new business opportunities. Regardless of which comes first, the environment is created by listening to customers. Strong analytics allow that listening to happen, even if it’s in absence of traditional direct to customer contact.
You can’t be afraid to reinvent what you do. Holding a competitive advantage in a process or model that is not where your customers are headed is useless.
How would you describe the relationship between the business and IT at Digi-Key?
As a digital company, IT is as key an element of our business as any other functional area. We migrated to an agile methodology a number of years ago which has driven an even tighter coupling between IT and our Sales, Marketing, and Operations areas.
Are there any factors that helped make the communication between the two groups successful?
Agile teams with frequent communication at many levels; including open town hall meetings between the team.
What advice would you share with companies who struggle in getting the business and IT to properly communicate?
The old adage: walk a mile in my shoes. Move high-potential IT leaders to serve in business roles for specific assignments and conversely, have business folks assume product leader roles on the agile teams. Ask the teams to tackle situations together and jointly report back recommendations, with associated risks and alternatives.
GUIDANCE & THE TIMES AHEAD
Where do you see the distribution industry moving in the next several years?
While some segments of our industry continue to consolidate to leverage scale, particularly in technologies that are becoming commoditized, many others will remain fragmented to keep up with the opportunities presented in the face of acceleration technology enablement.
Distribution continues to be that needed bridge between customer needs and supplier technology solutions. As distributors become larger, they can also serve as that financial buffer, buying in economic order quantities to facilitate the needs of manufacturers while offering flexible ordering, payment terms and supply chain solutions. However, all of that will need to migrate to state-of-the-art digital platforms and mediums to deliver these solutions. Speed is still king and the speed of digital is daunting for most.
What advice would you give to someone managing through times of change?
In times of uncertainty or change, turn to your values and lean into them even more. As a senior leader, avoid the mistake of thinking you are an island and that you must come up with solutions on your own. Leverage your team; outline the realities (and identify both the risks and opportunities that change inevitably creates), commit to a path, and be vigilant in your execution, with appropriate feedback mechanisms that validate the appropriateness of your assumptions and effectiveness of your execution.
Where do you typically turn for advice on professional matters?
My direct and extended reports, interfacing with folks on the floor (closest to the action), active participation with our industry association, professional coaching sessions from an external resource and lastly, some quiet time to reflect on the feedback from all of these sources.
What is the number one takeaway from your career thus far?
Discerning how to be an effective team member, by recognizing that sometimes the team needs you as a leader, and sometimes it’s best to defer to someone else to lead. More is accomplished by effective, high performing teams rather than groups of individuals.
Also, have a passion for whatever you are doing, keep a learner’s mindset and have fun! I guess that’s 4?!
About Digi-Key Electronics
Headquartered in Thief River Falls, Minnesota, Digi-Key is one of the fastest growing distributors of electronic components in the world. Founded in 1972, Digi-Key was a pioneer in the mail-order catalog business and a key resource for design engineers. Today Digi-Key offers the world’s largest selection of electronic components in stock and available for immediate shipment. From prototype to production, they fuel innovation all over the world.
