Young Leaders Share Secrets to Success
When it comes to bringing a fresh perspective to the supply chain, age is just a number.
The supply chain sector is facing an age problem. By an informal count, the majority of logistics company CEOs are 50 years old, or older, and the pipeline of up-and-coming talent to replace them is running thin. The same trend holds true for the supply of prospective chief supply chain officers within global manufacturers and retailers.
Four Key Skills of a Logistics CEO
More formal research bears out these assertions. According to a 2015 Deloitte study, 75 percent of current supply chain executives report having difficulty recruiting senior-level leadership. An additional two-thirds of those polled find it difficult to recruit individuals for director-level jobs.
This “graying” of supply chain leadership poses a growing problem for an industry that faces a shortage of talent at nearly every level.
While much of the industry is grappling with this succession plan, there are exceptions—companies in which younger CEOs are thriving. These include start-up third-party logistics firms, emerging technology companies, family-owned logistics businesses, and, less frequently, joint ventures. The younger CEOs in these businesses, like their older counterparts, are passionate about what they do.
As Inbound Logistics discovered by interviewing five CEOs in their late 30s or early 40s, the younger generation brings its own brand of management style to running their companies. We asked for their perspective on what it’s like to be a young CEO, and how they approach leadership:
All five CEOs run their companies based on a firm set of core values. “CEOs must be very clear about the company’s values right from the beginning, and balance these principles to enable growth,” says John Golob of Lanetix.
“Right from the beginning, we mapped out our beliefs and behaviors that we use for hiring, customer agreements and relationships, performance parameters, and every other area of our business,” Golob says. “These core tenets form the foundation of the company.”
From the interviews, six such tenets emerged. The CEOs discuss them in the context of their own experiences.
Obsess over your customers.
Golob’s first tenet for success is simple: Focus everything you do on your customers, obsessively. He constantly asks: What is the customer’s experience? How can we make it better?
“Our mission is not predicting where the supply chain industry is going, but aligning our interests with our customers’ interests 100 percent,” he explains. “Jeff Bezos of Amazon is religiously focused on the customer’s experience. That’s how we want to operate.
“Located in the Silicon Valley area, we see a lot of start-up CEOs who have a vision for the industry and spend an enormous amount of time telling people why their vision is right,” Golob continues. “We don’t do that. We solve our customers’ pain and help them succeed. We focus all of our energy on that goal.”
Because Lanetix provides Software-as-a-Service solutions, it must constantly earn its customers’ business by delivering more in services, technology, and innovation. To do this, the company brings clients into the product development process. Its engineers frequently sit down with customers, go through the application’s features and functions, and brainstorm improvements.
Lanetix also uses its advisory board, comprised of industry experts, to shape the company’s strategy and tactics. “You’ll find our customers’ and advisory board’s signatures across our solutions, company roadmap, and vision,” Golob notes.
Todd Berger, CEO of Redwood Logistics, also views customers as a source of innovation. “We are a mid-market company, so we have the ability to go deeper into our customer relationships than some of our bigger competitors can,” he explains. “This means we can be close partners, working together to constantly improve. Everyone wins when we do this.”
Be resourceful and imaginative.
In a start-up or smaller company, resources usually are constrained. This forces CEOs to find ways of doing more with less. “We have to be resourceful and creatively frugal,” Golob says.
To illustrate, he tells the story of attending a conference, where the newly retired CEO of a major corporation was asked to reveal the most valuable lesson he’d learned during his career. The CEO recalled leading an Outward Bound trip during his early twenties, where he divided the group into two teams, and charged them with solving a problem using alpine cord. He gave one group three yards of cord; the other group got an unlimited amount. The group with the three yards came up with the most creative solution. The constraint of having less cord forced them to innovate.
“In a start-up,” Golob observes, “we have to be like the group with three yards of cord. We have a finite amount of resources, so we have to be more imaginative in how we use them.”
Build a “full-stack” founding team.
In the technology sector, a highly sought-after prospective employee is the “full-stack” developer. This person is comfortable working with all the technologies required to develop an idea and carry it through to a finished product.
That’s what the logistics founding leadership team needs to be, from the CEO to head of engineering and leader of customer success.
The chief executive must have the right skills to run the company based on its life-cycle stage,whether it’s a start-up or maturing business. “Together with our two co-founders in engineering and customer success, we take an end-to-end view of the business and our roles in running it,” says Golob. “This means each of us needs to be good at running the company through every phase of its life cycle. Each phase carries a different set of challenges and requirements.”
Succeeding at being an end-to-end CEO is not easy. “Some CEOs are good at running a start-up but not as good at managing a maturing company,” Golob notes. “Others are good at the reverse. They require a different set of skills, which makes it challenging.”
Nick Pedneault, CEO of Canadian-based cold storage provider Congebec, agrees. “Companies at different stages need different things,” he says. “I don’t think I have what it takes to start a company. My father did that. But I have what it takes to take the company further, and that’s what we need right now.”
Think like a start-up.
Stick to the basics and manage your company like a start-up. That’s how Pedneault expects to grow his business. He uses aggressive expansionist strategies normally found in start-ups, but draws on the benefits of having the increased revenue stream of an already established company to fund expansion.
“This means we can afford to take risks that a true start-up may not be able to take,” Pedneault says.
Pedneault understands that not every new venture or risk will succeed. “We accept that we will make mistakes,” he notes. “But we must be willing to take risks in order to grow our client base and drive innovation.”
Thinking and operating like a start-up has another characteristic that works out to be an advantage: simplicity. “One of our strengths, and core values, is being easy to do business with from the customer’s perspective,” says SnoTemp CEO Jason Lafferty. “We find ways to say yes, no matter what the question.”
Blow up cultural traditions.
One benefit of being a young CEO in a smaller company is being able to create your own culture. “I don’t have the patience for hierarchy and unnecessary bureaucracy,” Berger says. “We have an open floor plan and an open office policy. I often find meetings going on in my office without me, because employees needed the space. We don’t stand on ceremony here.”
David Bang, CEO of LifeConEx, believes in being transparent and encouraging employees to take an active role in guiding the company’s direction.
“We have a clear and simple shared vision,” he explains. “Together, we create that vision and plan how to execute it. We use town halls and other one-on-one meetings to do this. By planning together, everyone buys into the strategy. And then we have fun making it happen.”
Creating an environment where people have fun at work is important to all five CEOs. “Our people share a level of personal connectedness,” Berger says. “This is not just a place to work. It’s not just a job. It’s a family. People are driven to do better if the stakes are personal.”
As is the case with any business leader, younger CEOs must earn the respect of their employees. “You don’t earn the trust of your employees—especially the younger generations—by having a big title,” says Bang. “You need to earn their trust and respect by setting an example. If you ask everyone to cut costs, for example, you don’t fly first class.”
Outside the organization, chief executives also have to earn the respect of their customers and business partners. This is sometimes more difficult for a young CEO. “If you don’t have gray hair, people think you’re too young,” notes Berger. “Some people presume that I’ve been in logistics for about five years. But I’ve been doing this for 20 years. Once I prove myself, they forget about my age.”
Bang reports similar experiences. When he visits a prospective customer with his team, people often assume he is the assistant. “That works to my advantage,” he explains. “Suddenly they hear a younger person talking about a vision that matches theirs, and they’re pleasantly surprised. Any bias goes out the window.”
“Knowing your industry and your ‘craft,’ executing well, and producing results are what’s important to customers,” Berger summarizes. “If you do these things, customers forget that you’re young. The fruits of your labor speak for themselves.”
Success comes from high-performing people, and people perform well when they are empowered. “I believe in empowering everyone,” Lafferty says. “I set clear expectations and then get out of the way.”
To enable people to perform as his company has grown, Lafferty had to change the organization structure and communications processes, from those of a small, family business to a larger company.
“We used to be a small, flat organization that was easy to manage,” he recalls. “So our structure could be informal. But as we grew, we had to build formal management teams, establish good communication pathways, and then let our leaders lead.”
This strategy has produced results. SnoTemp has grown from a small family company of 10 employees one decade ago to more than 100 employees today.
Like Lafferty, Pedneault adheres to a personal, hands-on management style. “The first two days of each week, I do one-on-ones with each member of my management and supervisory team,” he says. “They tell me what’s keeping them up at night, their biggest challenges, how their projects are going. We work together to come up with solutions.”
Congebec’s locations are spread out across Canada, from Quebec to Calgary. This makes staying in close touch a challenge. “That’s why I spend so much time on meetings and communication,” Pedneault says. The constant contact pays off, though. “It’s what makes our growth possible,” he adds.
Younger CEOs like David Bang, Todd Berger, John Golob, Jason Lafferty, and Nick Pedneault provide a glimpse into the future of logistics leadership. As supply chain strategy continues to rise in the global business sphere, the need for their fresh perspectives will only escalate.
The CEOs agree that chief executives must set an example and demonstrate knowledge and competency to gain the respect and trust of their employees. This is particularly important for younger leaders who don’t have the benefit of age to make them appear to have experience.
No matter how innovative or approachable younger CEOs are, they still must make tough decisions that won’t sit well with everyone. “CEOs are hired to deliver long-term positive results for shareholders, employees, and customers,” Bang notes. “That makes you serious. So I may look casual, but I always have to remember what I was hired for.”
If the supply chain sector is going to keep evolving, maturing, and growing, it needs a steady source of fresh talent, particularly in the executive ranks. “We need more younger executives in this industry,” Bang insists. “Whenever I give a speech to a non-logistics group, I advocate for the entire industry. I want people to understand what a great opportunity it offers.
“I recently spoke at an IT conference where there were a lot of millennials and younger people attending,” Bang continues. “These were very intelligent professional people. I gave an overview of this industry, and I was pleasantly surprised that they were fascinated at the international nature of it, and how logistics touches everyone’s life. You could see the sparkle of interest in their eyes. We need to do a better job of bringing these kinds of people into our business.”
Four Key Skills of a Logistics CEO
What does it take to be a supply chain CEO? According to Don Jacobson, president of Optimum Supply Chain Recruiters, high-potential CEO candidates must be strong in four key areas:
Soft skills. Logistics CEOs must be agile and resilient, able to change and adapt when business changes. This means staying out in front of market and customer trends, and responding with innovative strategies and solutions.
Ability to foster talent. Successful CEOs surround themselves with the best and brightest. This means not only finding the right talent, but also being able to mentor and cultivate that talent in every area of the business.
David Bang of LifeConEx credits his success, in large part, to mentoring. “I couldn’t have gotten where I am today without good mentoring,” he says. “All it takes is one manager to notice you, take you under their wing, and give you the opportunity to learn and be guided by them.”
Knowledge. Supply chain CEOs must have a working knowledge in many disciplines, both internal and external to the company. This means understanding finance, sales, IT, and other internal functional areas, as well as understanding the customer’s business and industry. “The CEO can’t be just a supply chain professional,” Jacobson says. “That’s far too limited a focus.”
Technology expertise. Supply chain CEOs and potential CEOs must stay abreast of the newest technological innovations that drive the industry. Knowledgeable CEOs “can differentiate between what is useful to the continued growth and efficiency of the company, and what is not,” Jacobson notes. “This knowledge can save their company millions of dollars.”