Phil Gallagher of Avnet: The stalwart CEO
In 1982, Phil Gallagher was attending Drexel University in Philadelphia, near where he grew up in South Jersey. Cash-strapped and tapped out on loans while in a co-op program with classes half the year and full-time employment with a business the other half, he was worried he wouldn’t be able to finish his degree. Then a manager at a company where Gallagher had worked set up a lunch for him with a man named Jack Green, an employee of Hamilton Avnet, to talk about a sales job, paid on a 100% commission scale.
“I said, ‘OK, well, what do they do?’ He said, ‘Don’t worry about that, they’re looking for a sales guy.’ I meet Jack for lunch, and some other folks, and Hamilton Avnet offered me the job,” Gallagher recalls. “I didn’t know anything about electronics … and I’m still learning after 40 years.”
After driving — better say coaxing — a beat-up 1970 Chevrolet Vega around town for years, having a brand-new 1982 Chevy Malibu company car parked outside his frat house in Philly certainly impressed his buddies. Getting to drive that car was a big incentive to take the job, he says.
Gallagher, who became interim CEO of Avnet Inc. in August 2020 and the permanent CEO in November that year, continues to turn heads within the corporate world and among community leaders in the Valley, not for any flashy style, but for more substantive reasons.
He’s never forgotten how hard he had to work in order to advance his career. As the leader of Avnet Inc., a publicly traded company with its roots dating back to 1921 that now has annual revenue of $25 billion, he’s still humble, quick to drop a self-effacing comment and praise others who work for him. He’s driven to impart the same types of leadership lessons on others that he absorbed from senior executives during the past four decades.
While some people might work for five, six or even more companies across a span of 40 years, Gallagher’s resume has a much lower number: one.
During the Phoenix Business Journal’s final Meet the C-suite event of 2022 at Phoenix Theater Company, when he was interviewed by Editor-in-Chief Greg Barr, Gallagher spoke about the value of hard work, how his career path was shaped at Avnet over the decades and why he thinks Arizona’s economy is poised for even greater growth.
Gallagher’s comments have been edited for lengthy and clarity.
Describe a bit about what Avnet was like in the 1980s, compared to what it’s like now. Trying to explain in 1982, what semiconductors were, computer chips, capacitors, connectors and just explaining what you did was hard. Now everybody knows what a semiconductor is, and electronics are in every product in your home. But now we do a lot more than just buy, sell and ship; 80% of what we do has some kind of value add. We do supply chain management, which has been a silver lining in the last two years. But it’s always about our suppliers. I call that upstream.
Roy Vallee, who’s still my mentor, and was [Avnet] CEO for 13 years, he always said, “Hey Gallagher, it’s the heart and brain. What’s more important, your suppliers or the customers? You can’t live without either one.” And what I quickly found out is you’ve got to have the supplier relationships, because without them, we have nothing to sell to customers. If Home Depot loses Black+Decker or Amana, that’s a real problem. Their suppliers are their lifeblood. So suppliers, customers don’t ever forget. Relationships matter, trust matters. What has changed over the years is the proliferation of electronics; it’s been amazing. What hasn’t changed is it’s still people and it’s still relationships, and people do business with people they like and trust over long periods of time.
Talk a little about your management style. Inclusiveness might be a good word. Teamwork. Relationships … I just believe in people. But I think that the further up you go on any level of management, some leaders forget. It’s the little things that make the big difference. I have a model of, walk into my office with good news; run in with bad news and that’s OK. We’ve all been around a long time, we’re going to make mistakes. It’s OK to make mistakes and OK to say, ‘I messed this up.’ Now if you come in and tell me that every day, then we might have another issue.
As a leader, it’s important to say, ‘Hey, what do you think?’ And actually listen to the answers. The further up you go, you tend to think you know everything and you don’t, you really know a lot less so you really need to trust your team. I know what I’m good at, and more importantly, I know what I’m not good at. A positive attitude with hard work and good intent, boy that really goes a long way. I’ll take a person trying hard with a good attitude and a team player over the smartest guy or girl in the room, all day long.
How early do you start your work day and what’s your routine? I typically get up every day around 4:50 in the morning and work out, use the elliptical, a little bit of weights. I get home around 6, get a shower and check some emails, because it’s never done when you’re in a global role like this. You get home at 5 p.m. and Asia’s waking up. Thanksgiving used to be and still is my favorite holiday, but Europe and Asia don’t really care. I do pretty much go into the office every day, and I like driving in to be honest, I enjoy that little 30 minutes. I may do a call or two but a lot of times I just listen to radio. I’m not a big music guy but I do country now because I can understand the words, they’re talking about drinking and they’re just funny. I listen to KNIX and it just cracks me up, just lightens the load a bit. I think we don’t do that enough. We’re wired constantly so it’s OK to take a 20 minute break and just listen to something. But usually I’m on the road 50% of the time or more depending. I usually grab a glass of wine with my wife and I’m in bed pretty early. Football season’s great [for TV] but after that, “Yellowstone” is cool.
After Covid, we know that being back to work has changed. You have a lot of assembly facilities, moving and distributing products and the corporate side of Avnet. What kind of structure do you have? For the return to office, we let our [global] regional leaders handle it. I wanted Phoenix to stop making calls for the rest of the world; we can overdo that in corporate and that’s not our job. We ended up not putting a firm policy in place because every company that did that [back to] five days a week be it Chase or Goldman or Apple, they rescinded it a week later. So we decided to just dust off the flex work program we already had. We already had flex work, so why are we getting so emotional about this? Our [headquarters] building probably holds about 550, and we get about 350 on Tuesdays, Wednesdays and Thursdays and Mondays and Fridays are really light. I think we’ve been pretty fair, but my bias is I think you need to see people and I don’t believe in working from home five days a week. We’re a sales and marketing organization, and those hallway conversations matter; the ingenuity, the spontaneity. So I think we’re going to be in that permanent hybrid, which I think is fine.
What do you think about the big shift in Arizona’s economy with semiconductors, electric vehicles and all of the other new manufacturing companies here. And what are your ideas on where Arizona’s economy is headed? I think it’s amazing what’s going on in Arizona. We’ve [lived] here 26 years. Now a lot of people, if they’re from here from that period of time say, “Oh, we’re growing too fast.” But there’s pros and cons to all that, right? But if you look at the economy today in Arizona and the diversity of it versus years ago it was so heavy resorts, home building. It wasn’t nearly as industrialized as it’s coming in now. Yet our tourism’s as good as it’s ever been and all those things are still there. We’re just adding onto it.
I’m going to a conference with Sandra Watson [CEO of Arizona Commerce Authority]. I think her and [Chris] Camacho and GPEC, they’ve been doing a great job bringing in some huge wins. This TSMC is a monster, and with it comes a whole ecosystem around it that’s going to get built out. Pat Gelsinger [the CEO] at Intel just dumped another $20 billion in fabs in Chandler as well as expanded in Ohio. I think Arizona’s future is really, really bright. Believe me, TSMC and Intel would not be expanding fabs if they had a concern over water because they use billions of water a day and they recycle most of that. So I’m very bullish on Arizona.
Next year is a big one for Arizona with the Super Bowl in Glendale. Avnet is actually a corporate sponsor connected through the host committee. What kind of ROI does your type of business get with that, considering you’re not consumer facing? The hard ROI is hard to come up with because we’re not B2C, we’re not selling potato chips or beer, where you get easier returns. But we want to get Avnet’s brand out there more. We went quiet for a few years, so I’m working on that with the team and the support from our board. So the real return is giving back to the community, and we have a big program around STEM and our Avnet Cares program, and the Super Bowl fits right in. There are a lot of volunteer opportunities and we’ll be downtown with the Avnet booth and part of the block party. We also have the Waste Management Phoenix Open right into the Super Bowl. And with the ACA and GPEC involved, there is a lot of [corporate] recruiting that goes on at that time, with a lot of executives here who are thinking of expanding into Arizona, so we will be meeting with them, enticing them as far as why we like it here. And we get customers and suppliers in here too, so we can entertain them and it’s a big deal for them.
The Phil Gallagher file
Company: Avnet Inc.
Title: CEO
Education: Bachelor’s degree in business marketing, Drexel University.
Before you were thinking about university, did any early jobs shape your work ethic? Well, when I was really younger, we just worked. Back then, because we didn’t have a lot of money, so you didn’t even think twice about where you just worked. And it’s the old story about I did a paper route, as the kids roll their eyes today and don’t know what that is. But then I quickly got into real career, pumping gas.
I worked for a Hess gas station on the East Coast, which was great. The white uniforms with the American flag. If it paid enough, I’d still be doing it. And they still pump gas. You can’t pump your own gas in Jersey still by the way. That’s when I made my first resume, I didn’t have a lot to talk about. So I called it a petroleum transferring agent. Then I worked as a retail clerk, a checker, and then I drove a school bus for summer camp kids.
You played football in high school and in college before transferring to Drexel. What do you recall from that experience? I love football. I love all sports. I think it’s just great because it teaches you teamwork and humbleness and how to win, and more importantly, how to lose. I was a nose guard back then. I was the guy that lined up over the center, and it taught me a lot. I think it all ties into business and leadership and getting knocked down and getting back up and how you motivate people. The coach told me, “Gallagher, you’ll never make the varsity team, you’re too small.” And I wasn’t a great athlete frankly, but boy, did that motivate me. I was the first in the weight room, last one to leave. We won the championship our junior and varsity year. And you just don’t forget that. I was captain of the team and we won two championships. It was just awesome.