Driving Change: The Ups Approach to Business [Hardcover]

Everything about the book, Driving Change, is meticulously done. Would you expect anything less from UPS? The jacket cover-brown and white with the UPS logo-is perfect. Then if you take away jacket, the hard back cover is also brown! Nicely done!

The book begins with an overview of the history of UPS. It explains how Jim Casey, an enterprising teenager, saw a market need in 1907 for delivering messages in his native Seattle, Washington. Casey then branded his service as cost competitive with any service in town, and his agents as dependable and hard workers. These traits would follow him as American Messenger Service turned into Merchants Parcel Service. That in turn morphed into United Parcel Service in 1919.

Beyond just history, the reader is informed how this company with the ubiquitous brown trucks is very innovative in providing better service at a more reasonable price. Before reading this book I would not have used the word "innovative" in the same sentence as UPS, yet UPS has been an industry leader in the package delivery business worldwide! My perception of UPS was challenged as the authors delved into how such a large corporation could embrace change. UPS could even miss the signals that the market was changing, as they did in the overnight delivery business and global expansion movement, but in an effort to "catch-up" could even surpass the competition.

What is the competitive edge that UPS has that other companies lack? Loyal employees who believe and enjoy the work that they do are that "secret ingredient." UPS is a company with a corporate culture like no other, although they have not been perfect. The book has done a beautiful job in explaining those lessons learned.

This book is well written, well researched, and surprisingly engaging. At the end of each chapter is a quick summary that synthesizes the major points of the chapter. I found this very helpful.

Armchair Interviews says: For anyone with an interest in organizational change, this book is a must read.

If you work for eg. FedEx (I do) and are looking for strategic secrets - this is not the book. However, it still provides an excellent history and overview of an impressive company.

Readers begin by learning that UPS handles some 15 million packages/day, using 8,000 hubs, distribution centers, and package sorting facilities. Of this, about 900,000 go by air. Its founder early on decided to distinguish the firm through high standards (trucks are cleaned every night; drivers cannot smoke, are paid considerably better than average and encouraged to buy stock at a discount, and are inspected for neatness each day). Retention is further encouraged through promotion from within, and a ban on favoritism. Excellence is pushed through extensive industrial engineering and standards, benchmarking (Sears and Marshall Fields were early contributors), and a climate of continuous improvement.

An early strategic decision was to shift from providing messenger service to delivering packages from local Seattle department stores to their customers. This differentiated UPS from its competitors.

UPS tried air service early on - however, its timing was poor (just as the stock market crashed in 1929) and the venture soon folded.

UPS lost over half its volume during and shortly after WWII as an initial combination of conservation, followed by increasing auto ownership led to most department store customers taking home their own packages. UPS then strategically redirected itself to wholesale deliveries INTO the stores, using the increasing volume of highways and trucks, and taking advantage of the decline of railroad service. The "bad" news associated with this was it created considerable resistance from trucking and bus companies, as well as innumerable ICC hurdles. Thus, its 1954 goal of providing wholesale deliveries nationwide within 10 years actually took almost 30.

UPS now operates the world's 8th largest airline. This effort was restarted in 1953 via leasing space on commercial airplanes; however, it was of limited value until the operation was revamped after FedEx's 1973 entry, and combined with a hub and spoke system and increased advertising.

UPS continued to innovate by going international. Again, the expansion was not easy, impeded by cultural and regulatory problems, and inconsistent IT and culture in overseas acquired companies.

IT has been another major area of UPS innovation - again, thanks to prodding by FedEx. UPS now has the largest IBM relational database, and is the biggest user of cell phone minutes in the world. Not content with current abilities, it invests about $1 billion/year in this area, and employs 4,000 some software engineers.

Clearly its employees find much to like. Turnover among managers runs 8% (INCLUDING retirements), and 5% among drivers (again, INCLUDING retirement). The 1997 strike is largely blamed by the authors on a renegade Teamster leader whose election was since overturned and he has been banned for life from the Teamsters.

A 1999 IPO raised $5.5 billion (a record up until then).

UPS' latest initiatives focus on providing warehouse and other services - ideally, in a manner that reduces total shipping costs. Example: A typical truckload consists of 52 pallets with about 100 cases/pallet. At LTL rates, those sending 15 or more pallets pay the costs of an entire truckload. Thus, UPS can consolidate shipments and achieve shipping savings. "Martrac" is another initiative - refrigerated UPS feeder trucks carrying California fruits and vegetables move East after bringing small packages to the West Coast. "End of runway" storage at Louisville is another initiative, allowing last minute shipment to customers each evening, as well as expedited repairs, and even modification of eg. Hitachi hard drives prior to shipment.

Bottom Line: A great story about a great company!

We've all seen the UPS commercials that ask, "what can Brown do for you?" That's a question that gets answered in Mike Brewster's book titled Driving Change, which takes us inside "Big Brown" to provide us with intriguing insights into operations management, logistics and its unique human element. Soundview recommends this book for any process-oriented business that wants to optimize its operation for the good of its customers, because Driving Change shows us how Brown does that every day. According to the author the secret revolves around UPS' people and it starts with every driver - that's the critical customer interface or "the heart and hands" of the UPS process. However, the technological "brains" for the company's global, package-shepherding service hums along as it processes data for more than 15 million packages every day in a Jersey suburb. But beyond these seemingly disparate yet vital UPS components lies a systemic ingenuity focused on delivering the goods - both figuratively and literally. For example, in Egypt UPS packages are delivered by mule while in Zambia, UPS relies on canoes to traverse the Zambezi River for its customers. Ultimately this book helps convey a sense of passion that the vast majority of UPS employees exhibit on the job - who knew passion preferred to wear brown!