UPS’s CFO Shares Insights with School’s Alumni and Students
April 28, 2014
The art and science of logistics and supply chains is constantly reinventing itself, and UPS is in the middle of a period of rapid transformation and “creative destruction,” the company’s chief financial officer, Kurt Kuehn (MBA ’85), told School of Business students, faculty and staff during an Executive in Residence presentation in March. “The relative competitive advantage of areas of the world changes, technologies change, customers’ strategies change – and you have to be ready to reinvent yourself,” said Kuehn, who has been the company’s CFO since 2008.
Kuehn began his tenure at UPS as a driver and has served the company in a variety of positions through the decades. The company funded his executive MBA at the School of Business, and he has helped see company through its transition from a private, U.S.-focused small-package delivery company to a publicly traded, global logistics firm. As CFO, he is a member of the UPS Management Committee – the most-senior executives, who are responsible for day-to-day management.
Looking ahead, Kuehn believes that successful management at any global corporation will depend on a balancing act between rapid innovation and solid processes, with some parts of the business frozen and consistent and others fluid and adaptable. Eventually, innovations become incorporated into the way business is done – frozen – and new innovations must keep rising up. “Finding that ability to constantly have this virtuous cycle of innovation that leads to rigid processes that then leads to innovation, I think, will be one of the bigger indicators of success,” he said.
|Kuehn says he expects most of the world's economic growth to come from emerging markets in the coming decades.|
Creating such a virtuous cycle requires employee buy-in, and a mindset that is prepared for transformation. Kuehn noted that one of the many challenges UPS faces is to give its more than 35,000 managers – who have, on average, been with the company for more than 15 years – a sense of what he calls “constructive dissatisfaction.” That means making sure they understand that the UPS that they knew isn’t the one that will prosper in the future. But, while every manager must be prepared for change, not everyone is suited for a rapidly changing environment.
“Figure out which group of your people will prosper from rapid change and which group need stability and will be incrementally improving,” Kuehn suggested, noting that a company needs both types of employees.
UPS also uses another strategy to keep innovation flowing without losing the skills and history of longtime managers: brining in new blood via mergers and acquisitions. “When you have one part entrepreneur and one part corporate loyalist, you get an incredible, powerful combination.”
Kuehn also spoke about what he sees as one of the most powerful transformative forces in business right now: “In the coming decades, more and more of the world’s economic growth will be coming from emerging economies,” he said, noting that the path may be more volatile than established economies’’ steady growth, but the momentum is there. One of the biggest risks for companies in the U.S., he added, is that few have global savvy. He pointed to the Miami area, which is UPS’s hub for South America and Latin America, as a model for the nation’s business communities going forward.
“This is an incredible gateway, and the confluence of cultures certainly makes this a great place to be. [It shows] how a multicultural community works together,” he said.
Finally, Kuehn advised not to become bogged down in seeing nothing but risk in today’s business world. “The unimaginable opportunities – and that’s where the students bring it – are tremendous,” he said.