Inside Small Business | Small Business & Home Business Marketing

Stick with Your Vision

COMPANIES THAT BECOME slaves to the short term are the ones most likely to fail in this age of globalization, just-intime outsourcing, rapid technological change, and empowered consumers. You cannot simply create solutions for your customers week by week. You have to prepare for what they will need in fi ve or ten years from now, too, and that takes research, effort, and scenario planning.

You also must have the mettle to stick with your vision. United Parcel Service's expansion beyond North America is a case in point. In the mid-1970s, we saw the world was slowly growing more interconnected and interdependent and concluded that we had to get a foothold in the international marketplace. Today, our fastest-growing and most profi table business is international small packages. But it took more than 20 years for those international operations to produce consistent profi ts, partly because of our heavy investments in the expansion during that period. Another reason, frankly, The executive committee is not always the best place to smell the future, and we should accept that. Stick with Your Vision hbr.org | July-August 2007 | Harvard Business Review 57 was the need to experiment and learn from our mistakes. I know because I was on the team in 1976 that started our operation in Germany, which was our fi rst outside North America. We rushed in with a kick-the-door-in strategy that depended on a U.S.-centric platform and then learned the hard way that we couldn't impose expatriate managers and U.S. procedures on a foreign operation - that we needed to adapt our way of doing things to the local culture and practices. But we did learn. Rather than abandon our vision in the face of losses, we persisted. We applied those same lessons when we started expanding around the world in the early 1980s.

It's true that we were a private company then - UPS went public in 1999. But being a public company has not fundamentally changed our willingness or our ability to invest for the long term. We have found that by communicating and executing our long-term strategy effectively, we can attract investors who will stick with us for the long haul.

Over the past five years, we have invested $26 billion in capital expenditures, acquisitions, dividends, and share repurchases - all to enhance the longterm value for share owners. Today, we are well on our way to transforming UPS from a company that satisfi es customers? small-package-delivery needs to one that enables global commerce by providing logistics and distribution solutions to customers ranging from individuals to multinational corporations. The unmatched global infrastructure that those investments created gives UPS a distinct competitive advantage. Our high-tech, integrated network allows us to offer industry-leading products - like our Delivery Intercept service to stop and reroute packages already in our system - and new tracking and alerting systems to deal more easily with cross-border moves through customs. Our infrastructure and business model have produced consistent and superior returns.

That said, a long-term vision and strategy cannot be an excuse for compromising on how you serve customers in the here and now. You also must execute well every day. This takes ambidextrous leadership. It involves making sure all of our 427,700 employees understand where we're going and what each needs to do today and tomorrow to get us there. That, of course, is one of those things that sounds easy but is a huge challenge. It requires relentless communication, which is a big part of my job. Perhaps more important, it requires a culture based on an authentic respect for employees and customers. We have such a culture. It's one of our greatest competitive advantages, and I consider the job of nurturing that culture one of my key responsibilities.

Three pillars of our culture are training, employee stock ownership, and promotion from within. We're famous for the extreme care we take in designing job processes and measuring performance (if it moves, we measure it).

But this approach works only if people know how to do their jobs, which is why we spend more than $400 million every year on training. Our highly trained workforce is a crucial element of our business model, which helps explain why we want people to spend their careers at UPS. We encourage them to stay by promoting from within whenever possible. (Ten of the 12 members of our Management Committee began their UPS careers in entry-level positions.) Encouraging employees to own UPS stock is a philosophy that dates back to 1927, when our founder, Jim Casey, instituted a policy that UPS should be "owned by its managers and managed by its owners." Today, all of our U.S. employees - including hourly workers - and many of our international employees can purchase stock at a discounted price, and at least half of every manager's bonus is paid in UPS shares.

These policies have empowered employees, produced a management turnover rate in the low single digits, and provided us with a cadre of superb frontline managers. The loyalty and expertise of our employees in general and our frontline managers in particular allow us to adapt on a daily basis to most situations and to consistently excel in serving customers.

There are plenty of managers who profess a belief in serving customers, innovating, empowering employees, and making all employees feel like owners. These are more than words for us: They represent our way of life. We sincerely believe these attitudes and approaches are good for business. They're why UPS, which turns 100 in August, is still growing.