RADICAL SIMPLICITY

How Ken Allen turned DHL from a failing company into a global success story

Logistics giant DHL was haemorrhaging hundreds of millions annually before Ken Allen became its global CEO. He turned the company around, making it a success and a place where people love to work. In this book, Allen explains how he did it, and shares useful thoughts on running a business.

In September 2007, Allen gained command of DHL in the United States. He fired thousands of people and redefined the American arm of the business, setting the goal of making DHL “the leader in international express.” He realised that – since the business had been going badly for a long time – he had to start over and make decisions that he could base on facts. For that, he needed help from people who knew the industry. Allen focused on the front lines by believing in the people who did the actual work, and helping them reach their targets so the company could reach its goals.

He became DHL’s global CEO in 2009. DHL, like every other company, was fighting a massive financial crisis. Allen developed a methodical five-year plan. This vision gave employees confidence, motivation and a way to measure their achievements. Allen sought to move all of DHL to commit to “a common cause.” When he had taken over the United States, Allen used the phrase “As One” as a “rallying cry” for the company. He again used that concept to inspire employees worldwide. Allen took advantage of local expertise, putting people from specific areas in charge of those areas. He gave people role models to follow.

So – what does he teach us?

Allen transformed DHL by putting theory aside to focus on simplicity and execution. He repeatedly asked the core questions that business management expert Jim Collins cited in Good to Great:

  • What’s the company passionate about and good at
  • What drives its “economic engine”?

DHL’s answer was one phrase, “international express.” Allen emphasised this vision, and drove everyone to become their best in serving it. He cut the board in half, retaining only members who were experts and committed to his strategy.

“‘S’ is for simplicity, which is the overriding principle behind my approach to work – it’s the framework that provides the architecture of what you want to build.”

He developed a strategy, “Focus 2010,” describing the core “four pillars” that would support DHL’s reinvention: “motivated people,” “great service quality,” “loyal customers” and a “profitable network.”

Simplicity is one of four “lenses,” or approaches, companies can use to guide their actions. The lenses are represented by the acronym “SELF Reflection”:

  • S stands for simplicity
  • E for execution
  • L for leadership
  • F for focus.

“Execution isn’t just about doing the right things – it’s about doing them better, faster, more productively and more often than your competitors.”

Did it work for DHL?

By 2018, DHL was more profitable than any other express company. It encourages its operators to “apply for external rewards” as a way of verifying their performance quality. DHL manages performance according to four bottom lines: financial, customer, employer and social.

  • Are the company and its profits growing?
  • Are customers increasingly satisfied?
  • Do employees want to work at DHL and stay with the firm?
  • What is DHL doing for society?

Key takeaways

As well as the SELF Reflection model, the book extols the value of:

  • Leaders must make their organisations – and the world – better.
  • Leaders need to be role models for new behaviours.
  • Great execution is a strategy all by itself.
  • Helping (not stifling) innovators and start-ups.

Summary

This is a good read if you enjoy seeing how one man turned a company’s fortunes around. His recipe for success is generic and easily applied to other companies – and is not particularly innovative (but is no less effective for that).