Transformation is never easy in a large company. Things get exponentially harder when you’ve got hundreds of thousands of employees, a heritage that stretches back more than a century, layer upon layer of technologies and systems — and you’re a newcomer in a culture that cherishes longevity.
That was the situation that Scott Price faced in 2017, when he joined Atlanta-based UPS from Walmart. Price’s initial role was Chief Transformation Officer, but he soon had corporate strategy added to his responsibilities as well. Price got the company focused on looking for opportunities to cut costs and streamline its operations, as well as driving growth with four strategic imperatives, including better-serving small- and medium-sized businesses, and expanding in international markets.
Our interview with Price covered some of the ways that $74 billion UPS — and other large organizations — should be approaching forecasting and strategic planning amidst the coronavirus pandemic. “No one is credibly doing long-term planning right now,” Price said. “They’ll be wrong the minute you write them. For us, we’re focused on the short- and mid-term.”
We spoke with Price as a part of InnoLead’s research project, “CxOs & Innovation.” For more data and interviews on the C-suite’s relationship with innovation, visit the main report page. Shortly before our August 2020 interview, Price was named President of UPS’ international business.
Taking on the Role
I joined UPS as Chief Transformation Officer in 2017. … UPS had very traditionally promoted from within. Not only was I the first Chief Transformation Officer, but I was the first hire into the executive committee from the outside in 110 years at the time. I was a fresh set of eyes. We’re an incredibly diverse company — across backgrounds and gender and ethnicity — but when you promote from within, there’s a diversity-of-experience gap.
[It was an opportunity for us to] say, “Okay, how are we going to re-set, how are we going to grow and get the cost structure reduced to create the funding — through technology — to build that new growth.” When you reduce your cost, you can invest that in new growth avenues, and grow differently.
I started as a direct report to the CEO. Then, strategy was added to my portfolio. Transformation in itself is not a strategy; it funds and facilitates your strategy. Our strategy needed a refresh, too. We identified four new growth imperatives, including things like continued expansion in high-growth international markets, healthcare logistics, etc.
The Bulletproof Vest You Never Want to Use
[When you come in to a role like this,] you have to ascertain three things: who has influence; how does conflict get resolved within the company culture; and who seems to be able to make change, and how. You have to be very thoughtful around the first 30 to 60 days to figure things out. The CEO [of UPS] said he gave me a bulletproof vest, but that’s the last stage. You don’t want people shooting at you. I never wanted to leverage that.
You have to ascertain three things: who has influence; how does conflict get resolved within the company culture; and who seems to be able to make change, and how.
There were some hard changes that had to be made that challenged the traditional way of doing business. One example was our HR systems. We had a traditional approach — we cut our own code, created our own systems, took an on-premise technology approach. We knew we’d have to modernize. Everyone had an HR human concierge — if they needed to get an employee’s pay changed, needed to hire someone, or change an address. We said, “We need to show them we’re serious about this transformation.” Half our HR people needed to go, in order to justify our investments in the technology. And when you say you’re eliminating folks [in a company with] a familial culture, it’s hard.
And you’ve got a lot of senior leaders who have 30 or 35 years or tenure. They don’t have TikTok accounts. They asked, “What do you mean I need to go to an app to hire somebody?” We’re not completely through the process, but it’s an example of tackling the need for change, and executing it well with external partners.
Communication is important. Given the unique culture of UPS, you need to realize, it’s not about me — it’s about my colleagues who have been here for 30 years, or the CEO who retired after 46 years. They are the most powerful communicators on the need for disruptive change. I’m the outsider. If I’m running around saying it, it has much less impact than folks who [have been] known for a long time. I hope that I have some level of credibility after three years here, but in those initial days, it was my colleagues. They all stood up and helped in the process.
Three Kinds of People…
There are always three groups [of people in any large organization]. We had large group of people who got it. They see how we’re being disrupted. They know our systems are bit dated. They’re waiting for change and they will embrace it.
The opposite of that are individuals attracted by stability and slow, methodical thinking. They can get into their stress behavior because of all the change going on. You need to identify that group.
In the middle are the people who can get it, but need some help. They may need some retraining to develop new skills. They can be part of the future, but they need a road map and a helping hand.
We ran a couple of voluntary retirement and separate packages to get rid of people in that second bucket. You may need to say, “Here’s the skill set of the future.” You may need to tap people on the shoulder. You have to do that in a respectful way. Sometimes, you’re asking a dog to meow.
… And Three Ways to Tackle Transformation
There are many options [of how you can tackle transformation]. One is the activist, mercenary option – you bring in a Chief Transformation Officer knowing they have an expiration date. They know they’re going to have no friends, but they get the deal done. That’s not how UPS operates. The second is how I was brought in. I was interested in a career at UPS. You have to collaborate and you have to use persuasion. The third option is less effective. You let each one of the functions do it themselves. In my experience, that’s non-transformational. It generally doesn’t get you to top quartile performance, which was one of our objectives, in terms of the cost and efficiency of our back office functions.
Left to their own devices, people operate in their comfort zone. By definition, that’s not transformation. If you tell your kids, “Do your homework,” but there’s no reward or consequences, how does that work for you?
At UPS, transformation was made part of the executive team. It can’t be ignored. Frankly, I’ve seen transformation programs where the Chief Transformation Officer reports to Finance, or is a click below. I think those are more challenging. If it’s in a department like Finance, it is not seen as impartial — it’s seen as being part of Finance.
[Those approaches can make sense, given the company’s context.] The first is that a company is in really good shape, and has good profit margins, [and] is in a stable industry. Maybe growth broadly is moderate, with moderate inflation. You may have some tech debt. They may prefer the third model — “We’ll transform ourselves.”
The opposite extreme is when your hair is on fire. You have a tanking stock price. You’re losing money. The CEO has been exited. That’s when you may need the mercenary, the activist Transformation Officer. The middle was where UPS was. The company was in relatively healthy shape — we were ahead of the curve, but we weren’t too ahead of the curve.
The word ‘transformation,’ by definition, should strike concern in the hearts of people involved because it’s disruptive.
The word “transformation,” by definition, should strike concern in the hearts of people involved because it’s disruptive. If you’re going to adapt to agile platforms, it will be disruptive.
‘No One is Credibly Doing Long-Term Planning’
I didn’t live through the Spanish flu; 1918 was the last time the global economy was disrupted to this level. And it has disrupted everyone. We got two weeks to prepare for Christmas-time volume [of package deliveries,] when everyone was sheltering in place. It caused havoc, but we recovered. Still, this is not like anything we’ve ever seen before. There have been short bursts that were disruptive and horrible, like 9/11. But we’ve never had this, where the workforce is disrupted, and cities are being shut down. 1918 was the last time we’ve seen that.
No one is credibly doing long-term planning right now. They’ll be wrong the minute you write them. For us, we’re focused on the short- and mid-term. We’re very clear on how we’re going to invest in the next couple years because we have demand… But every company has to face liquidity issues. We say that “cash is queen.” You need to be sure you have the right liquidity to survive this process. You [also] have to be far more oriented toward your customers’ needs, and be clear on what your value proposition is. Third, in this environment, you have to think about employees’ safety first.
What Happens Next?
I think the role will remain at UPS [after my move to President of International]. It will be part of the CEO’s office, and we will continue forever to transform.
We’re coming to the third year of the program. It has been very successful. There will be a Phase 2 and a Phase 3. Transformation never ends. Technology is always developing. New entrants are disrupting. Every company needs to stay on its toes.