A strong corporate culture is one of the most important assets of any company. But businesses also run the risk of limiting innovation, diversity of thought and growth if they allow culture to drive too many decisions. Myron Gray, president of U.S. operations for UPS, spoke about the role of leadership in establishing the delicate balance between culture and growth at the Rotary Club of Seattle.
One hundred and eight years ago, almost to the day, a few young men gathered in a basement storefront at Second and Main in downtown Seattle, about 20 blocks south of here.
Inside the small office were two telephone lines – one for each of Seattle’s telephone companies. It was August 28, 1907, the first day of business for the American Messenger Company, the company that would later become United Parcel Service.
In the middle of the commotion, was a 19-year-old named Jim Casey and his partner, 18-year-old Claude Ryan. Along with the other young men, they were about to change the course of commerce.
They also were beginning a culture that has endured and strengthened across two centuries. It’s a culture that is one of our greatest strengths and now one of our most significant challenges.
Our culture has cemented what we value and how we work. It is the beating heart of who and what we are. But it’s also a challenge.
It’s a challenge because culture can become so ingrained that – in a different era with far different forces at work – it can become a barrier to innovation and change.
Today, I want to share some thoughts on how we leverage the best of that culture without allowing it to stand in the way of our future. To do that, I’ll take you back to those early days in Seattle.
Our early business model was pretty simple: At a time when most people didn’t have a telephone, we delivered messages. Here’s how it worked: Let’s say Nancy wanted to get a message to me, and I lived across town. Since she didn’t have a telephone at her house, she would find a public telephone and call the American Messenger Company.
Then one of the clean-cut young men in the office would jump onto a streetcar or a bicycle and deliver the message. Quaint, wasn’t it?
Last Friday, on what we call Founders’ Day, in Atlanta and at UPS locations around the world, we celebrated the foresight and dedication of those pioneers.
The company they started – which was renamed United Parcel Service in 1919 – last year earned more than $58 billion in revenue and ranked 168th on Fortune’s list of the world’s largest companies.
Every day, approximately 2 percent of the world’s GDP and 6 percent of U.S. GDP flows through the UPS network. And it all started right here. In a part of Seattle’s commercial district appropriately known as Pioneer Square.
We employ more than 5,000 women and men in Seattle out of a worldwide workforce of some 435,000. Our business is good here, and for that we thank your robust economy and our loyal customers.
In fact, based on a balanced scorecard, Seattle is UPS’s No. 1 district in the U.S. So the folks delivering your packages and syncing up your supply chains are the best in the business.
Seattle is a unique city. I don’t know of a city that combines immense physical beauty with such an eclectic mix of music, food and business. And let’s not forget, you’ve got the Seahawks.
We like to think that UPS is a unique company. We have our own way of doing things. Deliberately. Precisely. Efficiently. We have strong opinions about the way a company should be run. Reliably. Profitably. And with integrity.
We also think brown is beautiful.
If you want a sense of the role that our past and our culture play at UPS, consider that our meetings often start with a reading from our Policy Book. It contains the fundamental values and principles that have shaped our company for more than a century.
It’s a distinctive culture and one that’s undoubtedly helped make us successful. But, if we’re not careful, that culture and our love of history could also limit our future. And we’re not the only ones who face that threat. Maybe you do, too.
So today I’d like to talk to you about the value of a strong culture, as well as its inherent risks. I’ll finish up with a few words on how leaders can help their companies avoid those risks.
Let’s start with the research. Last month Fortune magazine released a study that said business decision makers today place greater significance on a business partner’s culture than ever before.
60 percent of the global executives surveyed said that when choosing a business partner, it’s more important to know what a company stands for than whether it’s innovative or dominates its market.
68 percent said that it’s even worth making short-term financial sacrifices to cultivate long-term relationships.
80 percent agreed that a successful company’s biggest idea is often the one on which it was built.
Culture gets everyone rowing in the same direction, toward the same goals. It builds esprit de corps, around a set of shared values. It makes the whole stronger than the sum of its parts.
That’s all very good. However, let me give you an example of the risks.
For years and years our drivers mapped their daily routes with push pins and clipboards. They loved their clipboards. They were part of our history and culture.
About 10 years ago, one of our engineers – his name is Jack Levis – started work on a project to make those clipboards obsolete.
Jack’s goal was to use operational technology to identify the most efficient routes a driver could take while making their daily stops. Some considered his quest blasphemy. After all, for nearly a century we had done pretty well with our push pins and clipboards.
The project eventually consumed eight years of Jack’s life. The first seven of those yielded little tangible progress. People were telling him that he was putting an otherwise fabulous career in jeopardy.
The easy thing would have been for us to stay the course with our push pins and clipboard approach and for Jack to go back to his day job.
But he didn’t. And, finally, he and his team found the algorithm – and the solution – they were looking for.
The system they came up with – which we call ORION – considers all of the potential routes a driver might take to make an average of 120 stops per day. That’s the number on the screen. I’ll save you the eye strain. That’s 199 digits.
ORION has saved our company 10 million gallons of fuel … $300 million dollars … and reduced 100,000 tons of carbon emissions. That’s like taking 21,000 passenger cars off the road.
It’s a good thing a stubborn engineer didn’t allow culture and history to block a more efficient path to the future.
Today, our company delivers more than 4.6 billion packages a year – about 18 million a day – in more than 220 countries and territories. It’s an achievement that’s only possible because our employees rally each day behind the principles Jim Casey and the founders promoted – respect, honesty, hard work, humility and a commitment to the communities we serve.
But it’s like fingernails on a blackboard when I hear an employee say, “That’s not how we’ve always done it.” Or ask, “What would Jim do?”
Jim Casey built a company on timeless values, and there’s no doubt his presence is still felt at UPS. But I want to say, “Folks, Jim isn’t here. We’re on our own.”
But I don’t. Instead, I remind them that Jim was smart enough not to become too sentimental nor too attached to the old ways of doing things. He promoted the concept of “constructive dissatisfaction,” knowing that the only way to survive in business is by never getting too comfortable.
Others wish they had heeded the same lesson. Plenty of companies were so intent on staying on the path of least resistance that they didn’t see the threat coming up behind them.
Film didn’t see digital – and the company that saw it first discounted its disruptive power. Newspaper classifieds didn’t see Craigslist. Video stores didn’t see Netflix. Travel agents didn’t see Expedia. And the process continues.
Jack Welch, GE’s longtime CEO, could have warned them all. “If the rate of change on the outside exceeds the rate of change on the inside,” Welch said, “the end is near.”
Certainly the technology-led and consumer-empowered ambush is far from over. Look what streaming is doing to networks and cable. Look what Uber is doing to cabs and limos. Look what Airbnb is doing to hotels.
Let’s throw in shopping malls, maybe financial advisors, libraries and the family farm. When technology offers a better way, the better way wins.
Too many businesses resemble Army ants. Army ants are blind – to survive they follow each other over a pheromone trail. Sometimes an ant will lose the trail’s scent and wander away from the group. The ants behind follow. Eventually they end up going in circles, marching without stopping, even to their own death.
But on occasion, an ant manages to break away from the death march, sometimes by accident. When it steps off course, the renegade creates a new path for the ants to follow. Its radical departure ends up saving the entire group.
Winners become losers because it’s easier to keep doing the things that made them winners. Easier than challenging whether what built success will be enough to sustain it. Fortunately, UPS never followed a pheromone trail.
Clearly, Jim Casey saw the need for non-linear shifts in our business. On multiple occasions he had the vision and the fortitude to veer away from the established model.
The first time was when he saw that the telephone was going to eventually put his and other messenger companies out of business. He did it again when automobiles with plenty of room for packages and groceries threatened the package delivery service.
In more recent times, starting about 20 years ago, data and operational technology fueled a new era of expansion. We’ve since built the largest and most sophisticated technology infrastructure in the transportation industry.
Our mainframes operate around the clock, processing 27 million instructions every second and tracking 18 million packages every day. They collect and distribute information from drivers’ hand-held computers. Then they use that information to coordinate the operations of our global fleet of vehicles, as well as an entire airline.
We’re using all that information to bring customers deeper into our network and help solve their problems in new and innovative ways.
So, the question becomes: “How do you manage for growth while respecting your past?” My answer, is that the job falls to leaders. And it’s a job in three critical parts.
First, leaders must be confident enough to hire people smarter than they are and ones who don’t fit the traditional mold.
I learned that lesson early on. I was a senior manager of UPS’s Rocky Mountain District, which wasn’t very profitable when I got there. I decided we needed a real sales pro – someone with a long sales resume. My boss sent me a candidate who had none of that. He said: “Just talk to him.”
So I meet this young guy at the airport, and the first thing he wants to do is pick up his luggage. I said: “Let’s talk first.” I’m thinking that once I describe how tough the job is, he’ll want to get back on a plane to go home.
I talked about all the problems we had, and the special skills it would take to solve them.
Finally he looked at me, and said: “I know what you’re doing. You’re painting the worst picture you can paint because you don’t think I’m the right guy for this job. This is my job. I want to help you do what you want to do, and I’m not getting on that plane.”
So I said, “OK, let’s get your bag.”
It’s probably the best hire I ever made. And a great lesson came along with it. Get outside your comfort zone. There’s a whole new world out there.
That young man totally changed our ability to pursue customers outside our areas of expertise. Would we have made that same breakthrough if I had hired someone who did things the way we had always done them?
I think about that every time I talk to somebody who – in my opinion – is not quite right for the job.
The second thing leaders must do is recognize the power of the individual. Especially those who don’t look, act and think exactly like they do.
For example, we all know the book on Millennials. Thin-skinned, shielded from failure by their parents, entitled, picky, inflated sense of importance. I see some of that. But what I see more is confidence and teamwork.
I see people motivated not by office size and title, but by the meaning they find in their work. People don’t see themselves as human resources. They see themselves as human beings. And they want tangible and consistent proof that we see them that way, too. Let me give you an example.
My first assignment as district manager was in Houston. I’d been there about a year and a half when UPS drivers went on a nationwide strike.
The next day, I rolled up my sleeves and walked onto the picket line. “Why are you out here?” I asked. “Have I given you respect? Have I made sure you got the pay you were due? Have I given you personal time when you needed it?”
They nodded and mumbled a yes. So I asked them again: “Why are you out here?” When they couldn’t tell me, I said, “Let’s get back to work.” And they followed me back inside. Giving them respect got me respect.
Finally, leaders who want to respect culture while managing for the future must be inquisitive enough to ask the right questions. The most important is: “Is there a better way?”
And here’s where we run into that big, honkin Catch-22 of a strong culture. Why look for a better way when our old way has done so well by us?
The answer is simple: If you’re not curious about what might be … and if you’re not – as Jim Casey would say, “constructively dissatisfied” – you’re going to leave potential on the table every day.
Great companies seem to have compelling backstories that foretold a distinctive culture. You’re blessed with several here in Seattle.
In Boeing’s Museum of Flight, you can see the famous mail bag that William Boeing and Eddie Hubbard carried in 1919 on the first international U.S. Air Mail flight.
Two Harvard students – a couple local guys who did pretty well for themselves – convince a computer manufacturer that their software will run its new computer – even though they had yet to write the software.
The world’s largest online retailer started selling books out of its founder’s garage.
Of course, I’m a little partial to our story – the one about those young men on bicycles.
If you ask executives of these companies today why they’ve been successful, they’ll probably start with those stories. Historical touchstones for generations of employees, those stories have become emotional and romantic backdrops to distinctive cultures.
But if we’re not careful, we can let stories of our glorious past get in the way of our promising future.
As leaders, we have a responsibility to understand a changing world and the consumers and businesses we serve. We have a mandate not only to manage the present, but also to imagine the future.
Those of us in leadership positions – especially those of us who have been around for a while – must ask ourselves important questions: “Are we standing in the way of truly new ways of thinking and doing?” “Are we obstructing a view of the future?”
Of course, many argue that there’s no substitute for wisdom gained through experience. And I agree.
This is my 37th year at UPS. I like to think that I’ve gotten smarter with age, even if my hairline hasn’t kept up. But I also know that culture and dominant logic cut both ways. They can provide the discipline that companies need to perform consistently over the long haul. They also can act as blinders to fresh, new perspectives.
Leaders need to make sure that neither they nor an allegiance to company culture distorts a clean line of sight to imagination and opportunity.
If Jim Casey were to visit the modern-day version of the company he started, I think he would see clear signs of the culture he helped establish. But his amazement at most everything else would underline the common trait of any great business today – a willingness to change.
Every business needs a great story to tell. Every business also needs new stories, ones that tie the narrative of the past to the vision of the future.
It’s leaders who strike the balance.
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