Welcome to what promises to be an incredible half an hour for everyone aspiring to up their leadership game. Today, you're joining us for a very special conversation as part of our learning series exploring the life cycle and the evolution of leadership. Leadership isn't static. It evolves, it adapts, it transforms every day. And the challenges that leaders are facing today are very different than the challenges that leaders faced in the past. Nor are they any similar with what leaders will be facing tomorrow. That's why we're bringing together this incredible group of insightful speakers, leaders, people that have been in the seat, people have studied it, observed it to share their observations, what it takes for leadership to evolve, to mature, and to grow. And I'm incredibly honored today to welcome Carol to our learning series to share her perspective on her leadership. Carol, thank you for joining us.
Well, Claudius, it's my honor. Thank you for inviting me on.
Carol, it's truly unique. Out of the 2,000 CEOs, more than 2,000 CEOs that we covered, you bring a unique perspective to this topic. You had been the CFO at Home Depot for 18 years. You sat on the board at UPS for 17 years, and yet you still discovered things about this role that you felt you hadn't prepared for. And the gap between what you think you know about the job and what the job actually requires is really what this learning series is about. And I'm so glad that we found half an hour to learn from you firsthand. Tell us a little bit about what were the perspectives that you had gathered before you stepped into the role and what was it that you expected and what was it that you found?
Well, I onboarded in March of 2020 just as the world was getting ready to shut down due to the global COVID-19 pandemic. And as chair of the audit committee of UPS for a number of years, we reviewed our enterprise risk management framework every year and I thought I had a pretty good handle of the risks facing UPS, but we had never talked about a global pandemic, right? So when I walked in, it was pandemonium because we were essential workers. We knew we couldn't shut down, shelter in place. We had to continue to work and to move commerce and serve the people who were doing just that, shutting down and sheltering in place. So it was a bit of pandemonium. We weren't prepared, but the culture of UPS, it stood tall during that time. We were able to gather together the protective gear we needed to keep our people safe. We changed our operating plans. We ended up hiring 40,000 people into the company to get us in a position where we could serve our customers. And so I wasn't ready for it. I certainly wasn't ready for it. But the culture of UPS stood tall during that time. But what I also learned, Claudius, about culture is this. It can kind of be a curse, too. You know, UPSers, they deal with anything that comes their way. It's amazing just the ability to come together and to deliver. But the culture was really command and control. I didn't understand that as a board member. It was really command and control. And so when we started to actually talk to people about how happy they were and whether or not they would recommend us as a place to work, it was kind of like not so much. And when you asked why, it's like well there's not innovation here. There's no empowerment here. And I'm like really, as a board member, I thought of UPS as an innovative company, but actually because it was such a command and control environment, our people didn't really think of us as innovative or empowering. And furthermore, we really didn't let people bring their real, genuine, authentic self to work. Our policies were so restrictive. If you were African-American, you couldn't have natural hair. If you were a male, you couldn't have facial hair. And our tattoo policy was more restrictive than the US Army.
None of these things I knew. None of these things I knew. And I'm like, I know that culture and happy employees are so important to productivity and customer experience and all good things. So, we really leaned into sort of changing the culture, holding on to what's the best of UPS, but changing the culture. And I think that's worked out pretty well. Now, when we measure employee satisfaction and we look at how they rate us on areas of empowerment or innovation, we rate in the high 80s, if not over 90%.
Wow. Wow. It's so striking because many of the leaders that I'll be working with who are knocking at the door, they know that they're likely to transition into the role in a matter of month, maybe a year, right? They feel this sense of impatience of just let me run with it. I've been preparing for this all my life. I've been in the boardroom. I've done this. I've done that. I've seen the company. There's been incredible preparation work that went into it. Yet, the surprise that hits you when you actually take the baton is just something that seems to overwhelm many, right? And I'm wondering how did you adapt in the moment, right? What were some of those detection mechanisms that helped you to pivot from oh as a board member I'd never seen about this culture piece about the command and control and I need to pivot here because there's a hundred other things that you could potentially be drawn to.
Well, the first thing I did, it was COVID, but I went out into the business. I spent time out in the field. I was in our operations. I was with our drivers. I was with people and heard from them firsthand what mattered to them and really tried to lean into what mattered to them. You know, as a board member, I would go into the buildings that the company wanted me to see, the bright, shiny new, highly automated buildings that were super impressive. I hadn't gone into most of the buildings that were not maintained, candidly. And so, I walked them and I'm like, 'Okay, we've got to move to programmatic maintenance here.' Our bathrooms hadn't been remodeled. Our break rooms hadn't been remodeled. So just by observing I was able to put together a program to basically up the maintenance in our buildings which helps with employee satisfaction. So I think that's super important for anybody who's onboarding is you got to get into the business. You can't run it from your office. Just can't do it. You got to get out. You got to see it firsthand. And for me, Claudius, the first time I went out, it was so interesting. They had built a stage. There were flowers. There was like the band. There were gifts. I'm like, 'What's all this?' I mean, incognito mode, like this is not good. This is not good. And so, yeah, from then on, I just went out unannounced because I'm like, we're not, I'm going to talk to people and rather than going out, oftentimes people go out with a list of things people need to do. I don't do that either. I bring back a list of things that I can do to make it better for them.
Right. Yeah. And wow. By the way, it's wonderful to have this conversation, but I don't want to monopolize it. Anyone who's watching and listening right now, please put questions into the chat. We'll see if we can get there today. If not, we'll be answering them following our session here. But please, please come in. This is a community. Carrie, you had something beautiful to say about the book that really made Bob and me so proud after all these years of work collecting and researching the different trends and patterns that we're seeing, which was you said, well, I wish I had had this book in 2020 when I started and now that I'm 5 years into the role, I'm beginning to take my lessons from it. Tell us a little bit more what was it that you wish that you had that the book was able to teach you?
Well, there are stages in a life cycle that CEOs go through and that's what your research shows and for me really helpful to think about the reinvention stage and I would have liked to have thought about the reinvention stage when I started rather than what I'm doing now. But in some ways, Claudius, I also think that our situation over the past six years has been a little bit different because you do put the life cycle into stages, but for me, I can put the past six years into thirds. The first two years were all about COVID, candidly. So launch was actually COVID. The second two years, which maybe should be calibration, was actually for us dealing with the largest labor negotiation that had ever happened in the history of the United States. So calibrating in the face of a labor contract is sort of interesting. But it all did lead to reinvention. And now we're deep into the reinvention phase, which is the best part of the phases if you ask me. It really is the best part. There's a lot of excitement at the beginning, but reinvention is the best.
Yes, it is. It's difficult, but when you figured out the direction that you want to reinvent into, it's exciting, right? It breathes new life into everybody. That's it.
It's so exciting. You know, the way I share it with our team is I said the best way to protect your future is to create it. Create your future. And that's what we're doing.
Yeah. Yet on the path to get there. And you know, I fully acknowledge what you're saying, right? Like we saw this in the study of every individual leader, right? Every journey is unique. Everyone's battling their own context, right? We had Nitin Nohria on this series a few weeks ago where we talked about the importance of contextual intelligence, contextual leadership and how important it is to adapt and evolve and think about these stages, thinking about your own stages and how you grow. But on this path towards reinvention, right, there is this moment where I'm sure doubt creeps in, right? So for you, your first year was an incredible year. You doubled the stock, right? Yet you've only been in the role for a year. It's COVID, everything is going on. And then in the second year the labor negotiations, the stock's not performing quite the same as in the first year. It grew by about 2%. Now you see the bigger picture. You know where you're going. You see what's coming. But how do you manage your own psychology through periods like that where doubt may creep in?
Well, when I joined the company, I said, 'We're going to double the market cap in three years.' It happened in year one. Candidly, the stock got ahead of itself. And it got ahead of itself because COVID. And so, you know, there's no one more disappointed than me on our stock price performance. No one more disappointed. But I believe in my heart I know how to create value. And I know what we're doing now from a reinvention perspective is that we deliver against our strategic plan and we're going to create a whole lot of value for our shareholders. So this is a journey. It's a journey and if you don't lose sight of the prize and if you play the long game, if you live in the short game, you're not going to be very happy and you might have a lot of doubt on yourself. But if you play the long game and you know where you're going and you know the levers that you need to turn to create value and we do, we're going to do just that.
Yeah. Tell us more about the reinvention of UPS, the reinvention of yourself because this is really the moment where leadership bifurcates, right? It's the double down or reinvent, right? Like you said, you die by the quarter. You win when you take the long horizon and in those years three, four, five that's where we see the biggest drops and CEOs opting out. This is a moment where you reinvent and set a new tone for the direction. What does that look like for you? Where do you take UPS going forward?
Well, it started with a deep understanding of what's happening within our industry and the logistics industry, particularly small package is going through rapid fire change. And we could have ignored it but that would have been foolhardy because there's changes in package characteristics, there's change in the competitive landscape, there's change in the drivers of demand. We had to understand actually what's happening to our industry to determine where we needed to go. And as we really had an honest, candid look at what was happening, we said, 'Okay, we're going to have to make some change.' Because you see, we had driven a lot of our growth on the backs of one customer. But that customer had a large penetration in our business. Over 10% of our business with one customer. And it wasn't just our largest customer. It was actually not a profitable customer. We were losing money on that. So if you in the face of dynamic industry change to have handcuffs on you because you're not making money on your largest customer, well it inhibits your ability to actually grow in the areas where you want to grow. So we made a big bold call about a year, a little over a year ago to glide that volume down with our largest customer and we're on path to take it down by 50% by June of 2026. And what that allows us to do a few things. Reconfigure our network so that we optimize the network to grow in the areas of the market where we want to grow. And one of those areas is really leaning into complex healthcare logistics. Complex healthcare logistics is just that, complex. It requires cold chain. You imagine we're delivering life-saving medication. If there is an excursion, in other words, there's a temperature problem or it doesn't get delivered on time. It's not a package anymore. It's a patient. And that requires investing. And so, we're freeing up dollars so we can invest in cold chain logistics. Last year, our healthcare logistics business grew 6%. This year, it's going to grow 12%. So, and it's a real opportunity with the explosion of bio-pharmaceuticals. It's just a real opportunity for us. So, I'm super excited about that. So, we're leaning into healthcare logistics. We're leaning into small and medium size. We see opportunities in the face of global change because a lot of global change going on right now. There's an opportunity to invest in trade lanes to enhance our time in transit. So, we're opening up a brand new air hub in the Philippines and expanding our air hub in Hong Kong and we've opened up a gateway in Malaysia, a gateway in Vietnam. So, we're taking advantage actually of changes in trade lanes because you see we play end to end. We serve every step of a company's supply chain from procurement to final mile. So it's a real opportunity for us to do just that and to do it in a way that's more productive and efficient than we have before by reconfiguring our network and leveraging technology in new and different ways.
Yeah. And yet I cannot overlook the as difficult and as challenging COVID was for all of us and as much of a challenge it must have presented to you stepping into the role. I'm sure there's important lessons that you were learning during that time how to think about complex healthcare delivery in different ways, right? But what we also see in our work is the team that helps a CEO step into the role navigate those first couple of years often is not the same team that helps a CEO lead through that reinvention phase. Right? And those are difficult decisions to be made, right? So how do you orient the team? How do you bring new capabilities in? How do you help your leaders evolve faster than the world is changing? How do you shift that collective mindset, right? How do you orient into a different business line altogether? Tell us a little bit about how you thought about evolving the people around you and what's the hardest part of that?
