The UPS Approach to Business
Mike Brewster and Frederick Dalzell
Hyperion, 2007, 289 pp., ISBN 978-1-4013-288-7
Brewster is an author and consultant with The Winthrop Group. Dalzell is a historian with The Winthrop Group. The book is a very positive and enthusiastic "biography" of UPS. The history of one of the world's leading companies in innovative practices reads like a story. It's a story of how a company adapted to keep what is best and still stayed relevant to its customer. UPS moved from "serving customers' small package needs" by delivering retail packages in Seattle, to "enabling global commerce." What can Brown do for you?
UPS is broadly acknowledged as the corporate king of execution. While the book is full of accolades about how it values and invests in employees and promotes from within, it seems clear that the company expects a very high level of allegiance and commitment from its managers. As my UPS friend says, "What UPS achieves in business is incredible and they are masters at PR, but they own you."
Jim Casey, the founder, established many of the business philosophies and the culture that continues today. It all starts with the drivers, the public face of UPS. Giving great service, putting the customer first, and being on time were early important values. (33)
During the night at "Worldport" in Louisville, UPS unloads, sorts, and reloads 800,000 plus packages. By dawn the fleet of "browntails" is in the air with world trade. (36)
They have to be on-time. Delays typical of other businesses are unacceptable to UPS. Every plan has a back-up plan. (39-40)
"Constructive dissatisfaction" is Jim Casey's term for the compulsive habit of tinkering with the status quo. (45) UPS doesn't invent much, but it continually reengineers itself. The little things matter. (48-9)
UPS continued to expand into new areas and incorporate large-scale, corporate-wide change by working slowly and methodically from the inside out. UPS works hard to help employees understand the company's "narrative." (70)
UPS runs the world's eighth-largest airline serving more than 800 airports in more than 200 countries. (73) In building an airline, a totally new business for them they relied on team building for its success. (85)
UPS's successful recipe for international growth includes a healthy dose of letting locals run the business. (96) One motto is to think global, act local. (117)
The COO has a world map on his office wall that is upside down from most maps. This presents the large countries of the U.S. and China as unrecognizable land masses stripped of their dominance and centrality. It reminds Abney that it's a big world and assumptions of the future are only guesses. (120)
"The geographical center of Asia is not China, Singapore, or Japan, but the Philippines. Most Asian countries are within a two- or three-hour flight of the Philippines, four at the most." (140)
In creating a global business, UPS learned to export expertise and culture very carefully, to stick to their rules - except when they don't work, and to absorb long-term losses to stay in for the long haul. (144)
UPS installs software that allows their customers to see, via a secure web site, an up-to-the minute account of what it has shipped, who received it, the address at which it was received, and exactly when it was received. This is part of UPS's ground-breaking package tracking technology. (146)
"For companies, in-bound visibility is critical because it helps them balance inventory, plan customer promotions and incentives, and even schedule workers based on the workload." (147)
In their massive computer base in Mahwah, NJ, Jim Medeiros says: "The sole reason for my existence is to make sure our systems never go down. All of our Internet systems, all of our package systems, all of our airline systems, can never go down." (148)
UPS philosophy of hanging back and hanging back until the very last moment and then going full tilt is represented by its technology transformation. (154) In transforming to a "technology company that delivers packages," UPS formed a task force of #2 men vs. CEO's, recognized new technology as the key to growth, and made it a key component of serving customers better. (177)
"The UPS emphasis on teamwork, a willingness to readily switch jobs or even career goals, an acceptance that being in management means picking up and moving every few years, the taboo against openly politicking to get one's way, the ability to think long-term and not be consumed by immediate needs--these core values didn't blossom by accident, and are likely quite foreign to the cultural norms in many Asian countries." (182)
"It's the singular UPS cultural brew of stick-to-it-iveness, self-interest, and shared identity that leads such an incredibly diverse group of individuals to seek common cause. The company has built an incredibly positive culture by emphasizing a highly democratic human resources recipe…." (186) "From the very birth of the company, Casey nurtured an expansive, inclusive sense of ownership." (188)
Every UPS CEO has started in the trenches. (190) CEOs place near the bottom in the annual rankings of CEO pay of the 100 biggest companies. (208)
Between 1985 and 1990 UPS created an airline from scratch, expanded from 3 countries to 100 and began automating its ground delivery methods. "Changing the behavior of even one person in a corporate environment can be a challenge. Persuading hundreds or thousands of employees to adopt new behaviors, ideas, and attitudes is something else altogether. UPS believes they are able to do it because of the long-term investment of the employees in the company. (216) They do it by emphasizing training, giving managers responsibilities up to their chins, investing in and supporting employees, and promoting from within. (219)
"Commerce used to be three distinct movements, three separate flows. The first was the flow of information--the order-entry process. The second movement was the flow of goods. And the third was the money. Those movements are no longer distinguishable." (222)
Because UPS had developed a complex supply chain network, it moved into the supply chain outsourcing market. (235) "Macroeconomic forces are creating complex supply chains that snake through all kinds of new markets--and companies need help managing them." (240) UPS acts as a warehouse, supplier, deliverer, and sometimes repair shop for a number of businesses like IBM, Honeywell, and Toshiba. "Toshiba laptop owners calling in a technical problem reach a UPS call center and are directed to drop off their computer at the nearest UPS Store. The UPS Store ships the machine Next Day air to a UPS facility in Louisville, and by 5:00 A.M. the laptop is inline to be repaired. If the customer is lucky, the problem can be fixed and sent back that very day for next day arrival." (245-46)
Endo Pharmaceuticals doesn't own a distribution center, but with UPS they have become a world-class distribution company. (251)
"Part of meeting customers' high expectations is anticipating their needs, What [CEO] Eskew calls, 'Being ahead of the customer.'" (265-66)
A company should "Think Local and Act Global." "In other words, even as UPS strives to be considered 'of' the countries in which it operates and stay relevant from a local service standpoint…its ultimate goal is to help companies in these countries connect to a market that is nothing less than global." (269)
When asked when UPS was going to operate in Africa like it does elsewhere, one executive responded that they are not a 'leading indicator.' "Our network has to reflect the global economy. If we get too far ahead of the market in any one country, our business will become unsustainable." (273)
The success of UPS is built on several factors. The culture is the glue and UPS has used it as a competitive advantage. The ability to execute comes largely from their habit of constructive dissatisfaction, compulsive measurement of everything, and intensive training. Their knack for transformation in spite of a long successful history may be the most surprising part of the company's DNA. (285-289)
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