UPS CEO David Abney details his big data vision.
Lloyd Shefsky’s book, Visionarie$ Are Made Not Born, lays out the five elements of vision needed to become a business visionary. Shefsky taps into the stories of business visionaries, as well as his expert insight, to demonstrate the successful utilization of such qualities.
Shefsky, who recently retired as Clinical Professor of Entrepreneurship at Northwestern University’s Kellogg School of Management, interviewed UPS CEO David Abney to explore how the company has tapped into these qualities as an engine for growth throughout its 110-year history.
The following is an excerpt from Shefsky’s book.
UPS can’t turn back time
When David Abney became UPS’s CEO, he inherited a decision to automate drivers’ routes. This decision was made after their average delivery cycle was complicated by a blizzard of new elements.
Result: Deliveries were to be made within hours not within the old five or six days.
The era brought packages from disparate clients, some arriving by air, some by rail. UPS needed vexing algorithms to puzzle out the variables. CEOs habitually drop old boss visions, especially ones that no one believes in. But Abney stayed the course, modifying the old vision and hoping to make it work.
But could all the team’s horsepower and its engineering smarts resolve the enigma?
Brown trucks in a kaleidoscope world
Everyone has seen the brown UPS trucks piloted by deliverers clad in brown. That part of the company hasn’t changed much in a hundred years. However, almost everything else about the company has changed.
Early on, UPS operations – all ground delivery, usually for department stores to their customers, with all deliveries being treated equally and without special timing or handling – were dominated by Frederick-Taylor-like efficiencies. Delivery and pick-up routes were based on geography loops – starting in one place, following the loop of best fit and winding up back at the starting point.
Along the way, the driver made an average of 125 stops. Any college graduate was smart enough to use the best fit-loop model and plot his or her route for the day.
Customers rarely questioned delivery and pick-up timing.
But as time passed, the business changed – becoming a business with mixed air and ground operations, new services and delivery windows, even set delivery times and new customer categories.
It became a business with exacting needs and with substantially increasing volume, making “simple” delivery routes far more complex. The only thing that stayed the same: 125 stops on the average driver’s daily route.
Those of us who rely on an iPhone to keep us on track aren’t as demanding as UPS drivers. If a stop on our route takes two minutes longer, so be it. If you’re a UPS driver making 125 stops, two minutes more a stop is 250 additional minutes. Your seven-hour day just became 50 percent longer. Actually, far more complex doesn’t begin to explain it.
David Abney had been one of those UPS drivers.
In 1974, two years before he graduated from Delta State University, located in Cleveland, Mississippi, where David was born, Abney went to work for UPS: not as an executive or salesman but in the warehouse. Then, sheepskin in hand, he was promoted to driver in a brown uniform in one of those boxy brown UPS vans.
UPS was then a 69-year-old company with approximately 17,000 employees.
By 2014, 38 years after David’s graduation, the company had more than 400,000 employees, and David had ascended from COO, responsible for leading changes in day-to-day operations and global expansion, to CEO.
David explained the extent of the new complexities: “In what we would call a simple 125-stop route in any given day, there are more decisions (by outside forces that confronted their vans) than there are milliseconds in the history of mankind.”
David says UPS has the actual number: Trillions upon trillions of decisions, in fact. One can’t fathom such numbers. They overwhelm. UPS hoped that computer algorithms could solve this dilemma.
The program the former managers devised was known as ORION. Research on ORION began in 2003. It took five years to get the algorithm to produce acceptable results and another four years to determine how to properly use and deploy the new tool. This included testing methods and procedures, new metrics and learning how to educate the UPS people.
By the time David became COO, development of ORION was “right in my area of responsibility, and there was total darkness at the end of the tunnel.
“Top-level management had serious doubts that they would succeed. Few believed current technology was up to the challenge.”
“In a daily route, there are more decisions than there are milliseconds in the history of mankind.”
Those doubts were the immovable object to the irresistible force of David’s vision of a new and better UPS and the engineering prowess of his team.
When UPS went public, a Wall Street analyst said: “One of UPS’s competitors is a marketing company that happened to be in transportation. But UPS is an engineering company that happened to be in transportation.”
David Abney has been the CEO of UPS since 2014. Still, I asked him what advice he would give his successor. He said: “In your previous job, you may have been focused on what’s working today and in the immediate future and realize how successful you’ve been.
“But [as UPS’s CEO] your job is about seeing what’s going on to happen in the future and getting ready for [where] UPS is going to be five, 10 or more years away. So you’ve got to have much more forward vision.”
He had great confidence in UPS people – drivers and engineers.
Abney had a forest and trees vision, where the forest consisted of customers’ needs and the trees consisted of UPS’s skills.
David saw that a UPS solution would solve customers’ problems. So what did Abney do? He doubled down and pushed ORION forward.
Abney saw ORION as feeding an important, indeed a critical need.
“It just seems like we didn’t have much of a choice, that the complexity was getting greater and greater, so we had to find a way to do this.”
Abney also had trend pattern vision. David believed that the complicating factors impacting delivery routes would only get worse, and he saw trends in technology’s ability to deal with big data.
The vision thing: David’s vision led to an unexpected outcome
So, is belief the essence of vision? To be a visionary, must one be a believer or have followers who are believers? Actually, belief may have driven persistence. However, the vision resulted from something else.
Instead of viewing the outcome as binary – success or failure – David urged the team to dig deeper: Learn what worked and what didn’t. It turns out that what wasn’t working reflected inadequate mapping.
But when things have been going well, why would you change what you are doing?
Fortunately, the need for change was apparent to the drivers, and that was reinforced by another standard UPS procedure: listening.
Abney is a big believer in listening. During his first year as CEO, he visited UPS customers and employees worldwide, without preconceived notions, he listened to their needs and wants. He views listening as a building block to constructing his vision.
David trusted his team’s engineering expertise. Their products reflected the fact that “they measure everything in tenths of seconds.”
He had to work across internal disciplines, such as sales and R&D and, if necessary, expand his focus to other companies and industries.
He learned better ways to develop new solutions and new products and services to sell to the UPS customers.
Now he had to get his team to listen to customers and the drivers. And he had to get everyone to believe. He had to teach them to expand their vision beyond their current capabilities, to focus on the goal, to do their homework and then to use expertise to solve the problem.
“Some of the brightest people I’ve ever met are so bright that they sometimes forget to listen.”
David’s secret solution wasn’t to get UPS employees to listen to him but to get them to listen to their customers, each other and even other businesses and industries.
“Some of the brightest people I’ve ever met … are so bright that they sometimes forget to listen. And you can learn so much more if you’re willing to do that,” David said to me.
But the ORION project hadn’t been just a failure to listen. Everybody understood that they needed to improve logistics and dispatching processes and that eventually technology would provide a solution.
“[We] had made earlier attempts to get our arms around this. We weren’t able to do it because technology wasn’t developed yet to the extent we needed it,” David said.
So what made David confident that it was the right time to push ahead after seven years of effort without successfully attaining the objective? It comes back to good homework. They determined that the technology had evolved enough to do the job with suitable data. The problem was they needed more data.
The data, equal to many trillions of choices – truly “big data” – was available, but first this big data had to be gathered. The rest of the story was one of good engineering, all brilliantly executed. None of that would have been possible without the unique combination of visions employed by David Abney.
CEO David Abney modified an old vision, an improved form of retro vision. He avoided an all too common new CEO gambit of trashing the prior CEO’s plans.
Instead, he identified new progress patterns and trends in big data processing. He felt company advances would solve the problem.
He surprised drivers and some managers by squiring the risk-laden plan to fruition and large UPS success.
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Every morning, wake up to the blog that gives you the latest trends shaping tomorrow.
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