Leading for a Better Future

Thank you for allowing me to spend this time with you and to share my thoughts on what I consider one of the most important dynamics of business and for that matter, the world, leadership.

When Dean Policano called and invited me to discuss the secrets of leadership, I thought "couldn't you give me an easier topic, like cold fusion? Or the meaning of life?"

There's a hunger for real leadership in business, in politics and there's a hunger for the keys to leadership.

If you go on Amazon's book section and you search for "leadership" you discover that nearly 90,000 books have been written on leadership.

And if I'm correct, you had to buy about 30,000 of them as required texts for your classes, right?

And yet, we still have a hard time developing leaders in the business world.

Let me take a minute to recognize what you're doing here at the University to develop leaders. For the past several years The Paul Merage School of Business has been ranked amongst the top 30 by US News and World Report. In fact Forbes ranked you number four in the World for the Best Business School under 50 years old. That's an outstanding achievement.

So let's try to get our arms around the topic.

• Napoleon said: "A leader is a dealer in hope."
• General Colin Powell, who I had the fortune of speaking with last week, he was the keynote speaker at the opening of the Boys and Girls Clubs of America Annual Conference in Orlando Florida said: "Great Leaders are almost always great simplifiers."
• President Lyndon Johnson on the other hand said: "A leader is someone who, if you cross him, can do something terrible to you."

Now, there is some truth in each of those comments.

Personally, in this subject I subscribe more to the views of Napoleon and General Powell than those of President Johnson. Leading through intimidation works, but only in the short run.

To me, true leadership really requires two things: 

Building a vision and building trust.

Simple as that.

Let's start with trust.

Leadership requires trust not only from your employees and your customers but increasingly, from the communities where you operate.

Let me give a personal example where it took extraordinary patience to build trust with my employees. In the early nineties I was assigned to a business unit in the toughest labor climate in our company. In fact my boss explained that no one else in the company would take the job. During the first six months not one employee spoke to me one on one, only through the shop steward. As I dealt with the steward he would let everyone know what I said and the reasons for it. As a result I began to win him over because he trusted me, and they began to trust me. All the while corporate wanted immediate results. I had to ensure them that the check was in the mail. Long story short two years later the employees and I ran one of the best operations in the country. I was summoned to the corporate office, and asked why our revenue was growing at such a fast pace. My only answer was because the employees believed in what we were doing, and they deserved all the credit!

Earlier I alluded to a quote from Lyndon Johnson; he also said" if I walked on water, the press clippings the next day would read "President Can't Swim". You won't always get credit for what you do, just know what you're doing is right.

Building this community trust is more critical than ever given the opinion polls showing the lack of trust that the public has in business following the global crisis.

At UPS, we work hard to support the communities where we live and do business.

• Last year, our company delivered on-the-ground assistance to humanitarian efforts in 36 countries.
• We also work hard to hire Veterans returning from military service. Today, we employ 25,000 workers who are either past or present members of the military or the reserves.

Now, it would certainly be easier to take the short view. Because I can tell you, assisting the Red Cross after a natural disaster or helping returning Veterans transition back into the workforce requires time and resources.

But the companies that invest in their communities are the ones that build the kind of trust an goodwill that enables them to thrive over the long term.

Harvard professor Michael Porter calls this the practice of developing "shared values."

To me, it's leadership.

Leadership also requires vision .

Great leaders are the men and women who can see the past, the present and the future. 

For example:

Wayne Gretzsky is a hockey legend who played eight seasons for the Los Angeles Kings.

Gretzsky once said that he didn't skate to where the puck was but to where it would be.

Leaders do the same thing. 

They anticipate where their business and their industry will be in 5 or even 10 years.

And they start working now to make sure their organization is preparing for that day in the future. At UPS, that means:

• investing in the emerging markets that will generate the majority of global growth in coming decades.
• It means thinking about how to solve the global B-2-C puzzle so that any of you here could buy a single item from a small boutique in Milan or Beijing and have it shipped right to your doorstep at a reasonable cost.
• It means developing sustainable practices so that, as a transportation company, we reduce our carbon footprint and our energy costs.
• By developing our own route optimization software, we were able to drive 85 illion fewer miles in 2011. 
• And our recent announcement  that we will purchase nearly 700 more trucks fueled by Liquid Natural Gas, along with 100 all electric vehicles positioned in the Central Valley of California means that we now have more than 3,300 alternative fuel vehicles. That's one of the largest alt-fuel fleets - if not the largest.
• And it means investing in sectors like technology and the health sciences, where companies have strict requirements for how their packages are stored and shipped.

At UPS, we made a big bet on the health care market several years ago.

We bet that there was an opportunity for a logistics company that could handle these sensitive goods. We made some pretty big investments without having a single customer in hand.

In the past UPS would never have taken this kind of risk. Given our strong engineering culture, we have a lot of people who have to be 99.9 percent sure that something will work before they invest in it.

Now, taking that approach reduces a lot of the risk but you also miss a lot of the early opportunities in a new market opportunities to establish yourself as the first mover in the space.

But our CEO, Scott Davis, got it.

So we took the plunge into healthcare and made some massive investments in the special handling facilities, the special trucks and the special shipping containers that are required.

Our vision of the health care market has paid off.

We recently moved 375,000 doses of vaccine 9,000 miles for Walgreens. Walgreens had donated the vaccine to the Ministry of Health in Laos which was fighting a bad outbreak of the flu.

We were able to move a fragile shipment at a precise temperature range through five stops on two continents, battling customs, and 40 degree fluctuations in the outside temperatures.

We could do this because we had the ability to keep these deliveries within a range of 2 to 8 degrees centigrade regardless of what it was like outside.

We could do this because we had leaders with a vision .

Leadership is also about taking risks knowing that failure is an option.

Over the course of my career, I have learned that failure does not always mean defeat.  

Sometimes, failure is simply a cost of doing business. 

It's a learning experience that makes us smarter in our future endeavors.

At UPS, we recently experienced failure when the European Commission rejected our bid to acquire TNT Express, a large logistics provider in Europe.

We knew the risks.

We knew that history was littered with other companies like GE and the New York Stock Exchange that had seen their merger plans struck down by the European Commission.

So we went into it with our eyes wide open but knowing that the opportunity was great enough to justify the risk of failure.

And after a year of negotiations of preparations the European Commission rejected the deal.

You know what?

We moved on. Just like GE and the New York Stock Exchange moved on.

And the truth is, we learned a lot about the European market during that year. We learned about the other players, the customers and, of course, the regulatory environment.

So even though we couldn't acquire TNT, we feel pretty confident that we can still achieve all of our goals in the European market. We'll just take everything we learned and do it in other ways and through other acquisitions.

So the lesson here is as you set out in your careers, align yourselves with organizations that take calculated risks.

Look for leaders who will allow you to fail.

Michael Jordan, the basketball star, once said and I quote "I've missed more than 9,000 shots in my career. I've lost almost 300 games. 26 times, I've been trusted to take the game-winning shot and missed. I've failed over and over and over again in my life. And that is why I succeed."

So look for leaders who not only give you opportunity and responsibility but will let you take risks and in the right circumstances will allow you to fail.

And when you fail, fail small and fail quickly.

Cut your losses and move on, wiser for the experience.

That gets back to trust.

Good leaders create a culture of trust, a culture that provides their people with the support and the space to go do their jobs.

Successful organizations are those that can develop the systems to measure everything so they know what works, what doesn't and can identify problems quickly.

At UPS, we can measure the efficiency of our global network in real time.

We know when a single driver has fallen behind schedule and when they drive around without buckling their seatbelts.

We're big on seatbelts, because we want every driver's spouse to know that they'll be home for dinner - safely.

But while successful organizations measure the best companies do not micro-manage.  Our founder, Jim Casey, once said that the best employees are those that don't have to be managed.

That requires trust. 

But it also requires hiring the right people. 

Now, I'm not afraid to surround myself with strong talent.

So I have two rules I follow when I'm hiring a new manager:

• Will this person one day be better than me?
• And does this person have what it takes to become CEO one day?

Now, if the answer to each of these questions is no then why am I hiring them?

If I'm only hiring people with a narrow range of skills or who I don't feel threatened by then how do I expect UPS to prosper over time?

Here's another way to think about it:  

UPS delivers to roughly 220 countries today.

Now, in the smallest of those markets, we might only generate $10 million or $20 million of revenues today.

But we see the global population trends and we know that the majority of global growth in coming decades will come from what are known today as the "emerging" markets.

So what may be a $20 million market today may become a $200 million opportunity in 10 years.

So let me ask you should we hire people for that market who are quite capable of managing a $20 million market - but not much more ?

Or do we hire people who already have the skills to manage a $200 million business? 

Sure, that first group could be hired for less money. 

But can they manage a business that's 10 times larger than what they manage today?

Because if they can't … I'll let you in on a secret … your business will never be 10 times larger than it is today.

As president of U.S. operations for UPs, I oversee 300,000 drivers, loaders, supervisors and managers. 

That's a lot of people.  But not so many that I can't tell which managers are "hiring up " and which ones are "hiring down ." 

So let me ask another question. Do you want to guess which of these managers are the most likely to be promoted?

Now you might be thinking, "This is great advice for a few years from now when I'm managing more than 320,000 employees"

"But I'm an MBA student about to hit the job market for the first or maybe second time."

My advice to you is this, look for an organization that values an MBA degree.

You've probably read that some companies now feel that hiring employees with MBAs isn't important.

If you join those companies thinking you can change their minds, you may be setting yourself up for disappointment and frustration.

At UPS, we value MBAs in the right functions, such as finance and marketing.

In our operations, we might look first at engineering majors but that could change. As we evolve into more of a vertical company that specializes more in health care, technology and other niche markets, we will probably look for people with expertise in those fields.

My other piece of advice is as some of you begin your careers, be flexible .

If your employer asks you to take on an assignment that's outside your comfort zone, don't hesitate . 

Seize the opportunity. 

At UPS, we intentionally put young managers and junior executives into assignments outside their comfort zone.

This way, we not only help them see our business in a more holistic fashion but we also get a good feel for their range .

Early in my career, I had a boss who took me outside of my comfort zone.

I started out at UPS in operations. But one day I got a call from the district manager who said, "We want you to go on a corporate special assignment."

So for the next year, I worked on the Business Strategy team at headquarters.

This assignment gave me great exposure to the rest of the company.

When the year was up, I went back to my district.  And I was told, "We now want you to go spend 18 months in Human Resources."

So I did and after working in operations again, I was asked to come back to headquarters and work with the business development team.  And I had the chance to work on some neat projects that are still making money for us. Being flexible, has opened doors that otherwise may have remained closed. During my career I've relocated nine times, including an international assignment, so you might have to go to where your opportunity is available.

So those are my thoughts on leadership. 

But I have a hunch if we gathered in this room 20 years from now, I could learn a lot from some of the future CEOs in this room. 

Because I believe that your generation is going to change the paradigms for leadership even more.

Now, I've read all the stories and all the surveys that says your generation is different, that you have different ideas from my generation about the balance between work and life.

The rap sheet on you says that you've been protected from failure by your Helicopter Moms.

Sure, I see some of your generation's sense of entitlement.

But my generation, the Baby Boom generation, felt pretty entitled too.

We were the ones that were supposed to change things.

As it turned out, things changed us. Some changes were good. Others not so much.

Actually, I don't think you are all that different from me when I was your age.

When I was a manager and had an Afro, everyone looked at me like I was different, and certainly different than any manager they'd had before.

But I see a lot more that make you perfect for the kind of leadership we need.

You are self-confident.

But you aren't self-obsessed.

No generation is more comfortable than yours at working in teams and sharing the credit.

I also see a genuine belief in your generation that organizations can change that they can create big solutions to big problems.

Most important, you are culturally adaptable.

That last part is huge.

Today, leaders who can move seamlessly across borders, oceans and cultures are the new gold standard

The people we put in leadership positions at UPS are those who have a hunger to explore new cultures, new ideas and new ways of doing things.

They are comfortable with the unfamiliar and love to learn.

They have the ability and the desire to immerse themselves in new places and with different people.

And the people who demonstrate these capabilities in the future will become the most effective leaders of their era.

Thank you.