UPS CEO: ‘Stay Grounded in Core Values, But Focus on the Future’

August 26, 2017

David Abney started working for UPS as a part-time package loader in 1974 while earning his bachelor’s degree from Delta State University; he became CEO 40 years later. UPS’s 96,000 vehicles and 500 aircraft serve more than 220 countries and territories. Last year’s revenues were $61 billion—a record.

This interview is from our CEOs on Innovation report, in the Fall 2017 issue of InnoLead magazine.

How would you say you divide your time between working on short-term, medium-term, and long-term business issues—what McKinsey calls Horizon 1, Horizon 2, and Horizon 3?

My job involves balancing priorities and dividing my time between all three horizons. I am particularly focused on our long-term strategies. We have a long history of optimizing for maximum efficiency. In the end, one person can’t generate the best solution alone. The trick is to surround yourself with smart partners you can trust to help you prioritize the short-, medium-, and long-term strategies and related investments. That’s how I do it, or I should say, that’s how we do it.

What new positions or structures have you created since becoming CEO in 2014 to help UPS be more aggressive about innovation, entering new markets, or finding new sources of growth?

One of the most important changes we’ve made to our company structure to support innovation occurred just this year, when we realigned our IT and engineering functions under a single UPS leader who reports directly to me. Our intention was to align all of our efforts into one cohesive, fast-moving and powerful technology organization. Our Chief Information and Engineering Officer, Juan Perez, is a proven change agent at UPS. Juan created the Advanced Technology Group, which helps UPS develop new technology solutions faster. We are creating a smart logistics network that uses data analytics, automation, and technology to generate the next generation of UPS customer capabilities and operations cost reductions. We fully expect it to spur innovation that will propel us forward…fast.

Are there elements of the UPS culture that you’ve been working to change since you became CEO?

UPS is a unique company. We have our own way of doing things: Deliberately. Precisely. Efficiently. We have a strong and a distinctive culture that’s made us very successful. I couldn’t be more proud of it. But we have to be careful that we aren’t so loyal to our culture that it limits our creativity. That happens when culture itself forms a barrier to innovation and change. But I advocate building a culture grounded in our core values with a focus on the future.

UPS CEO David Abney

We are accelerating at the pace of business and moving forward fast. We have a willingness to take on more risks and learn from our mistakes and continuously transform our business to exceed our customers’ expectations.

How do you as the CEO keep tabs on emerging technologies or startups that might be relevant to UPS’ business—whether something like drone delivery, Uber, Shyp, etc.?

One way we keep tabs on new and emerging technologies is through the Strategic Enterprise Fund, our corporate venture capital group that invests in startups that will help us better understand emerging technologies and business models. And just this year, we announced the creation of the Advanced Technology Group, which helps UPS develop new solutions faster for customers and UPS operations. The group is also responsible for evaluating technologies and technology partners, and for creating alliances with leading business and non-business technology organizations. Technologies that are of particular interest to us revolve around big data, AI, machine learning, and the industrial internet of things.

Are there new types of talent you’re trying to bring into the company? I know UPS is a company where many people have grown up in the business, but curious if there’s a concerted effort to attract people with different kinds of skill sets or backgrounds. What are you doing differently to attract these folks?

We have a very effective IT internship program. The program is so important to us that the CIO personally holds final project reviews with several of the interns who produce some of the best deliverables. The program provides a steady flow of qualified graduates for our entry-level positions. From a career advancement standpoint, we leverage a strong “promotion from within” approach that provides our technologists and IT professionals with continuous opportunities for advancement. Our value proposition is simple but strong: work for a great organization focused on solving some of the most complex logistics problems for our customers using new and exciting technologies.

The stock market tends to focus on a certain set of financial metrics. Are there other metrics or indicators you use as CEO to tell whether UPS is being innovative enough — whether it is the speed of developing new services, employees submitting ideas, pilot programs you run with customers, etc.?

We use a balanced scorecard that measures, among other things, the value we create for our customers. We are convinced that if we demonstrate value, then we win their trust, and their business.

This enables UPS to move in the right direction on all other categories of metrics important to shareowners, employees, and partners.

I notice that UPS does a TED@UPS event series. Have you been to those? What’s the objective? What impact has it had?

I would not think of missing one. I’ve attended all of them. These are wonderful events. We have several reasons for participating. UPS wants to influence and enhance impressions of the company among evolving audiences around the world.

We want to spotlight our people, their big ideas, and their ability to solve all kinds of complex problems. TED is a great platform to showcase the ideas, creativity, and problem-solving capability of our people for hard-to-reach C-suite audiences. TED’s platform reaches executive-level audiences in the US and internationally.

Our goal is to spur open conversations between UPS and this important audience. Every time I attend one of these events, I become even more proud to be a UPSer. Our people have amazing stories. I have yet to attend one of these events where I did not laugh and cry—sometimes at the same time.