Revamping the culture to embrace information technology is often the hardest part of business change, one CEO says.
To keep Yellow Corp. in the black, CEO Bill Zollars is using information technology as the impetus for change. CIO Insight asked Zollars recently to reflect on his six-year struggle to align IT with the business.
CIOI: What four or five key steps did you take to change the culture?
Zollars: I think that one of the first things we had to do to get alignment is give people a common target in terms of where we were trying to take the company, kind of a light-on-the-hill concept. We began talking to employees about what we wanted to become, which was a global transportation services company as opposed to an LTL [less-than-truckload] trucking company. I think that was the first thing that started to get us focused on having a common objective and a common vision of the future.
How did you get that message across?
Repetition, face-to-face, one-by-one, as I went around the company and talked-both in the field and here in Kansas City-about the need to become a global transportation company, and why it was important. I went on a kind of Bataan death march across the country where I took a small group of executives who made up my leadership team, and we went basically from location to location, starting early in the morning with the drivers and the salesforce and then went to the dock and talked to everybody there in small groups, then to the office staff, and at night had a customer meeting. We basically gave the same speech 15 times a day in that location. We told them, "Here's where we're going as a company, here's why we need to go in this direction, and here's what you can do to help us get there."
What were the common questions posed during those initial speeches?
"Can we really do that? Aren't we just an LTL trucking company? Can we become a transportation services company and global? What are you talking about there, why is that important and can we really do that?" Those were most of the questions. Early on, there was a lot of skepticism, I think, on the part of many of the employees. They wondered about whether that was the right goal or whether we ought to just admit that we were a company that had a very limited capability.
How much was technology a part of that discussion?
It was a key part of the discussion, from the start. I think the people who actually got it better were some of those who were on the front lines of our business, because they were seeing the customer demands as well as the demands we were putting on efficiency and effectiveness at the field level. And so I think in many ways they got it about the need for technology better than, maybe, some of the people who weren't out there with the customers every day.
So even in those early loading-dock speeches, you were able to win over some of the unionized workers?
I think the way I put it is that part of what we were going to have to do to get from where we are to where we want to be is to use technology as one of the key drivers of that, and then we gave them some examples of where we already had some good technology. As we went forward, one of the big assets we had was our Yellow Technologies company, which nobody else had in terms of the ability to provide some of that technology.
So the first thing we did was communicate the vision, by marching across the country and talking about that same vision of the future with everybody in the company that we could get our hands on. And then we repeated that over and over again. We probably went to the top 100 locations in the first three months, and then we came back about three months later and talked to them again and basically gave the same speech. Then we went back again. The people traveling with me during this time were really sick of this speech by the time they got to the end of the first day, much less the end of the first week. But it was that constant repetition of the vision and the "water drop treatment" of the message that I think began to drive some engagement of employees. They began to believe that this was something we were really serious about and something that, after the third or fourth time hearing it, they begin to really understand and internalize. Over time, we built up enough critical mass that all of the other people on the leadership team started to go out and give the same speech, and after almost a year of that, we began to get enough critical mass so the thing started to take on momentum of its own.
The really important part of all of this was the second and third time we went back to the same location. We didn't change our story and we had some evidence that what we were doing was working. I probably spent about 80 percent of my time on the road in the first year, probably the first 18 months just doing nothing but that.
And was there, in at least some of those speeches, a reassurance that technology would not necessarily lead to layoffs?
Yes. In fact, it was just the opposite. We were able to demonstrate that the business was growing and there were more Teamsters in Kansas City or Chicago than there were on my last visit, and there were more Teamsters this most recent visit than there were at the last. So they looked around and they knew that. The numbers spoke for themselves. That's one piece of the alignment. The second piece has to do with including the technology organization in the strategy development process and the decision-making process, from the start. We had a leadership team that included the technology leader as part of the leadership team right from the beginning. That was new.
When you arrived at Yellow, you started holding weekly meetings between the business people and the IT people. Lynn Caddell, the CIO, usually sits to your immediate right. You used a lot of visual symbolism to convey your new vision, as well.
Exactly. And there's a third part of the alignment effort, which was also something I did when I was in a position to do it. The previous leadership here, at one point, had decided that there would be a shared-services group, and it would put technology, purchasing, facilities management, real estate and all this other stuff into one organization. I thought that was absolutely the wrong thing to do because it homogenized the expertise out of the organization. What we really needed was a clear mission for the technology group as part of the overall strategy of the company. So I dismantled that group and returned to having a group called Yellow Technologies that focused only on technology and not something in which you'd also have to deal with purchasing and other functions in the same boat, which I thought were de-focusing people's attention around technology.
Did your changes require enforcement via compensation?
Sure. We reinforced the strategy with greed, which is always a good motivator. The compensation systems that we put in place were designed to reward us for progress on the strategy. So we put in place in the first year something we called Pay for Performance, which basically went to everybody in the company, and was based on how well we did as a company. Eighty percent of that bonus payment would come from company performance and 20 percent would be based on individual performance. And that did align us around the common goal.
Talk a little bit about Yellow's recent acquisition of Roadway. You built this new culture at Yellow and it's working great. Now you're going to have to absorb a new one. How do you do that? Is it a bit like having to start over with the stuff you did before, or does it require a different kind of ball game to achieve IT-business alignment in a merger?
I think there's a lot of similarity, and there are some differences. The differences I don't think are necessarily bad things. For example, we've been historically the kind of company that insourced everything. Roadway has taken a much more aggressive outsourcing approach to technology. So I think there's room for some middle ground there, and we can look at best practices on both sides. My guess is we'll come up somewhere in between those two approaches.
I think part of it also is the opportunity to look at a different way to approach some of these issues and, in some cases, use best practices from Roadway. But Roadway also has had a very large significance in the technology area, and a really good focus on technology from their perspective. That is very similar to what we've been trying to do here at Yellow. Even though Roadway didn't have a separate technology company the way we do, it's been really focused on IT as a key competitive advantage.
So in a sense there will be a lot of similarity, and in other ways there'll be differences. But I think the way we get alignment is very similar to the way we've gotten alignment in the past-which is to include their technology people in strategy development, focus on common objectives and make sure the compensation systems are in alignment. Over time, I think we will obviously end up with one technology resource, one technology focus, one technology company.
Right, and those folks will be going to your weekly meetings as well?
Right, we'll integrate that part of the business.
Say somebody inside the organization has decided they want to take some leadership to increase the visibility of IT as a contributor to business gains. Can it be done from the grassroots, or do you really have to have somebody new come in and use that window of opportunity to change things? Or, as in your case, do you really need to be the CEO to get started?
I think the old comment about birth being easier than resurrection is a good comment and fairly appropriate here. It is harder I think when you don't have some sort of triggering event to drive change. But I think it can be done. The first thing is that you've got to really believe that change makes sense and that it's valuable. It can't just be lip service. But then I think it all begins at the strategy end and at the leadership end. This is not the kind of change that can be driven from the middle of the organization; it has to be driven from the top. It has to be very visible to the organization that there is a change. So it's very important to create opportunities to bring the technology people into the leadership team and into the strategy development process in a very visible way and to give them an equal voice at the table. And you have to do that in a way where the whole organization can see it and can understand what's going on there.
Managing this way is a lot harder, isn't it, than the rubber stamp approach?
Yeah, I think whether you want to call it inclusive management or team management, it's also harder than an autocratic, manic control kind of management because you have to listen to other people, which is always a pain and can be time-consuming. Team management is really all about creating a situation of controlled chaos, and you have very messy meetings, you know, not very neat and tidy meetings, because you've got everybody in there with a different perspective-and if you do it right, they're all articulating their perspective on issues and on strategies. It creates a very dynamic kind of management process, but it also creates one that is kind of messy. So if you're not comfortable with a lot of creative tension and a lot of different points of view and untidy meetings, then you're going to struggle with this, because we try to create an environment where everybody speaks up and everybody has an opinion and everybody's vote counts. And when you do that, democracy can become pretty messy.
I think if you're the kind of person who isn't comfortable with that environment, you might not want to go in that direction, but it can work if you've got an organization that you feel is made up of strong people who. are mature enough to be able to handle that kind of an environment and who are secure enough to be able to know that their opinion isn't necessarily the only one.
On changing the culture this way, looking back, what do you think you did right, what do you think you did wrong and what were some of the key lessons learned that you can share with other CIOs?
Well, I think one of the things we did right was to do this person by person and not create a video or an e-mail or a memo and just send it out, say, hey, here's what we're going to do. It's really more of a face-to-face approach that's required to get the kind of change that we were talking about and to get buy-in from some of the functions that were not as well resourced and as treated as importantly as they should have been like, you know, IT and HR and marketing, the three that come to mind. To understand that those were under-appreciated functions and under-resourced functions, you needed to do face-to-face and you needed to be able to talk about this vision face-to-face with some passion so that people would actually believe it. So I think that's one of the things we did right.
In terms of what did wrong, let me simply say that I don't think we went fast enough, and people here at the time would probably challenge that. It seemed to many people here that we were moving at light speed. But I think that change is hard, and when you're moving toward the kind of significant change that we needed, you really have to go as fast as you possibly can and probably faster than you think you can. And so speed in terms of implementing change, I think, is kind of like pulling off a Band-Aid, you know. You're better off doing it all at once than you are incrementally.