Strategic Planning at United Parcel Service

Strategic Planning at United Parcel Service
We fully recognize that it is not possible to develop a true strategic plan more than a few years out and that
business plans should have an even shorter horizon. But we are convinced that it is possible and wise, indeed
necessary, to develop a set of very long-range scenarios that can form the foundation for our future strategic
plans.
— Michael (Mike) J. Eskew, Chairman and
Chief Executive Officer, United Parcel Service (UPS)
As Mike Eskew walked through the long, open atrium of UPS’s corporate headquarters late in
March 2005, he thought about his upcoming lunch meeting with Vice President of Corporate Strategy
Vern Higberg. Higberg was preparing a presentation for the senior management strategy committee,
the Strategy Advisory Group, on improvements to the strategic-planning process. While the company
had made major progress in planning for the future over the past 10 years, Eskew had charged
Higberg and his colleagues with developing recommendations for moving forward, citing one of his
predecessors, who had said, “The future of our company will be no better or worse than the quality
of planning we do to prepare for it.”
Company Background
History
In 1907, 19-year-old Jim Casey borrowed $100 from friends to start the small company that
eventually became UPS. From its humble origins delivering messages for the city of Seattle,
Washington, UPS had grown into a $37 billion corporation (see Exhibit 1 for financial performance).
Over the 98 years since its founding, it had transformed itself several times, first into a packagedelivery
company, then into an international air transportation company, and finally, in the late
1990s, into a logistics company. In November 1999, after 92 years as a private company, UPS went
public in the largest corporate initial public offering (IPO) to date.
By 2005, UPS was the world’s largest package-delivery company, as well as a leading global
provider of specialized transportation and logistics services. It served more than 200 countries and
territories worldwide. UPS Airlines, as of 2005, was one of the 10 largest airlines in the United States.
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The acquisition of Mail Boxes Etc.® had provided the company with over 3,500 retail locations in the
United States. With a workforce of 384,000, only Wal-Mart and McDonald’s had more employees.
Organization
In 2002, when Mike Eskew, an industrial engineer and 30-year veteran at UPS, became the
company’s ninth CEO, he found a highly centralized, hierarchical organization with a traditional
structure at the top. A Management Committee met weekly, with a full-day meeting once a month, to
provide the day-to-day management of the company. Various other committees and staff groups
assisted the CEO and Management Committee, including a Strategy Advisory Group—a subgroup of
the Management Committee—that met monthly to address more strategic issues (see Exhibit 2 for an
organization chart).
Within this structure, the responsibilities of corporate staff and field operations in the regions
were clearly delineated. Senior management and staff, working in a collegial, consensus-building
culture at corporate headquarters, set direction, determined priorities and budgets, and defined
initiatives and rollout plans. The more hierarchically run field was responsible for execution and
meeting revenue and cost goals. The Corporate Strategy Group’s (CSG’s) strategic-planning manager,
Ed Rogers, explained: “All strategic decisions are made by the corporate office. UPS does tactical,
rather than strategic, planning at the regional level. There is a clear line between strategy and
execution, since the regions focus on delivering on the next quarter’s business. They also have rollout
responsibility.” Said one observer, “One side of me says it would be nice to have more autonomy in
the regions, but we’re in a network business, and what’s best for one region could easily foul things
up for other regions or the overall network.”
Culture
Over the years, the company had acquired a reputation for being relentlessly focused on efficiency
and execution. Founder Casey instilled a desire to run the company “like a military operation,
ordering recruits to be polite at all times and to place speed above all other virtues.”۱ Carefully
researched work methods, developed by industrial engineers and rooted in time and motion studies,
coupled with time-tested policies and procedures, led to UPS’s reputation for low-cost and highly
predictable customer service. UPS reportedly tracked its drivers so closely that it even knew how
many times they shifted gears in the course of a day.2
Along with efficiency and discipline, Casey had left a legacy of continuous improvement, which
he called “constructive dissatisfaction,” and a set of strong values that included service excellence,
employee ownership, and a commitment to stability for the company’s employees, shareholders, and
customers. The result was a loyal workforce, with extremely low turnover. It was not uncommon for
employees to spend their entire working career at UPS. Internal promotion was standard practice. All
of the company’s CEOs were long-term employees who had risen through the ranks along with their
peers. Most senior managers had business or engineering degrees yet had started their careers at UPS
as part-time package-handling employees or package-delivery drivers.
1 Charles Haddad and Jack Ewing, “Ground Wars: UPS’s rapid ascent leaves FedEx scrambling,” BusinessWeek, May 21, 2001.
2 Neil A. Martin, “A New Ground War: The package-delivery business is turning brutal, hurting both FedEx and UPS,”
Barron’s, April 21, 2003.
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Evolution of Strategic Planning at UPS

The Decade of the 1990s
In the early 1990s, competition from both private companies (e.g., Federal Express) and large
government-supported agencies (e.g., Deutsche Post) started to threaten UPS’s position. Senior
leaders became concerned that the company’s execution mentality was hindering management’s
ability to see significant changes in the environment.
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Into the New Century
In January 2002, shortly after Eskew became CEO, he convened a Management Committee
executive retreat whose purpose was “to focus the group on the kind of company we were going to
be in 2007—on our 100th anniversary.” The outcomes from that meeting formed the “Centennial
Plan,” the third step in the strategic process. As UPS’s version of a five-year strategic plan, the
Centennial Plan was designed to guide the company to its centennial anniversary by providing
themes and broad, overarching direction. Shortly thereafter, the fourth step in the strategic process, a
“Strategy Road Map,” was developed to take the Centennial Plan to an executable level of detail.
Since the Centennial Plan was segmented by years, an annual plan could be separated out and
translated into regional business plans that were handed down to the regions to execute.
With these steps completed, Eskew, in early 2004, decided that it was time for another scenarioplanning
session. He was concerned that UPS was getting closer to 2007—the end of the first
scenario-planning session horizon—and believed that management needed to be thinking further
out. As he put it, “I felt comfortable that we understood the strategy and had initiatives to carry us
through the next five years, but I didn’t know what came after that.” Shortly after the scenarioplanning
exercise was completed, the Management Committee met in early 2005 to revisit and
update the Strategy Road Map.
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regulations but with a more traditional supply chain, competitive landscape, and set of consumers.
The third scenario, “Global Scale Prevails,” portrayed a global marketplace with slower adoption of
new technology because of stable demand, more traditional consumers, and industry consolidation.
Finally, the last scenario, named “Brave New World,” described a future with a deregulated,
globalized marketplace, providing mass customization of goods and services to proactive consumers
and populated with new forms of competition and virtual organizations, such as alliances and
business webs.
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We came out of the first scenario-planning session understanding that it would be difficult
to say which way the world would go. We all liked the top-right quadrant, the “Brave New
World” scenario, and didn’t like the top-left quadrant, or “Tangled Paths” scenario. Left to our
own devices, we would probably have ended up in “Global Scale Prevails,” focusing totally on
physical assets and missing more virtual opportunities. We thought that we should try to
move to “Brave New World,” but we had no control over how the world was going to turn
out. What impact would the Seattle protests at the World Trade Organization meeting have on
the scenarios, for example? A few years later, we wondered about the impact of the terrorist
attacks in New York.
Mind-set shift A more subtle impact was the change in mind-sets. As Rogers put it, “The
session got us thinking far beyond the business-planning horizon.” Higberg believed the sessions had
a more subtle impact as well:
As much as anything else, the scenarios are a mind-set, a place where you’re going to live, a
context. If the world shifts, we’re at least ready for some of the options ahead. If the
competition does things differently, how do we respond? If there’s a major disruption in the
economy, what do we do? Out of the scenario-planning exercise, we got much richer outcomes
than if we had only done competitive analyses, based on trend lines and a view of the world as
all about just slugging it out for market share. Without scenario planning, you don’t see the big
changes until they are history.
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Strategic Plans
The third major step in the UPS strategic process occurred when Eskew became CEO at the
beginning of 2002. He recalled:
The Charter had seen us through the 1999 IPO and up to 2002, but it needed to be refined.
Jim Casey’s company was going to be 100 years old in 2007. Our job in 2002 was to start
planning then to position the company to be where we need to be in 2007, to plan for future
capabilities and accomplishments, and to identify missing pieces. After all, nothing happens
overnight in a company like this.
In addition, Eskew was worried about whether all the Management Committee members were
aligned in their expectations for the future, since many were new to their assignments: “I knew we
needed to create a future together and felt that if we didn’t focus on these longer-term issues in an offsite,
we would keep talking only about the day-to-day responsibilities and numbers.” One CSG
manager described another reason for the planning session: “Prior to the off-site, there was no
framework that aligned the various corporate initiatives and projects with the strategy. We had no
control over the 300 or so functional projects; they were being run on their own. We needed a separate
effort to pull them together, since that was not the purpose of the scenario-planning exercise.”
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Eskew focused the session on qualitative, not quantitative, expectations. He observed:
Strategy development is not necessarily about numbers. Yet it is very hard for operationally
minded execs to get beyond the numbers. In fact, there was almost a rebellion at the off-site.
They wanted me to tell them the numbers. I did my best at that meeting to stay away from
numbers. Instead, I described the future verbally. I wanted to talk about capabilities and what
we needed to build for the future. I didn’t want to frame the discussion with an ambitious
growth-rate number. Now, of course, we have quickly added numbers to the plan because we
can’t operate without them. It just isn’t our nature.
Centennial Plan
To prepare for the off-site, managers were given an assignment: come to the meeting with 40 to 50
predictions about UPS’s future. According to one observer, “The diversity of opinions was
astounding.” There were different assumptions about the future size of the company, its profitability,
the percentage of business that would continue to come from U.S. domestic small-package delivery,
and whether UPS would be a truly global company or a U.S. company with international operations.
The group distilled the predictions to a manageable set. They then reached consensus on what
became known as the Centennial Plan. The Plan included three components. The first was a
qualitative set of “Goals and Characteristics for the year 2007” that addressed issues such as the UPS
brand, competition, growth and profitability, people, customers, operational efficiency, cost control,
and quality. Second, the group developed an overarching sense of corporate direction, with the goal
of creating a global, unified company with “one vision and one brand.” This objective underscored
the need for continued integration of the dispersed logistics units into one cohesive group.
Finally, senior management worked backwards from the proposed UPS of 2007 to identify a set of
four Strategic Imperatives:
• Winning Team: attracting and developing a highly skilled, diverse, and aligned global
workforce
• Value-Added Solutions: providing customers with value-added services combining
movement of goods, information, and funds
• Customer Focus: building customer loyalty and expanding UPS’s services worldwide
• Enterprise Excellence: creating an environment of high-quality service and value
Strategy Road Map
To ensure implementation of the four Strategic Imperatives, which were considered “skeletal,”
individual Management Committee members were assigned responsibility for each of them.
Imperative teams were formed the next month with team members from the various functional staff
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The teams added detailed measures and goals to each of the imperatives and broke them down
into 24 more discrete projects, or “critical initiatives”; these initiatives, in turn, were supported by
more than 100 specific projects. Under the “Winning Team” imperative, for example, there were
initiatives to improve employee and labor relations indices and employee turnover ratios. Together,
the entire set of critical initiatives became known as the Strategy Road Map.
According to one senior executive, “We believed that everything the company did from that time
on should tie into those imperatives. If not, we needed to question the value of the new project.” At
the same time, the Strategy Road Map had no direct connection to the scenario-planning sessions.
Rogers observed: “The Strategy Road Map was constructed in consideration of the scenario-planning
process. You’ll find consistency of thought between the two but not a direct linkage. Why? They are
different types of exercises. You need different types of people involved in each one. There are some
of us who have had a foot in both, but not many.”
Strategic Implementation
The Management Committee established a process to oversee and manage the Strategy Road Map
and implement the Centennial Plan. A Project and Program Oversight Committee was responsible for
providing project management support and rigor to the initiatives, applying standards, monitoring
progress, resolving resource conflicts, and aligning the functions with the critical initiatives. This
support was considered necessary because, in one CSG manager’s view, “If these projects were easy
and compartmentalizable, we would have already done them.” Project priorities were set by the
CEO, since, as another CSG manager commented, “not all initiatives are created equal.”
McDevitt’s Role
Within the next few months, progress on some of these initiatives seemed to stall. Therefore, in
March 2003, Eskew asked John McDevitt to join the Management Committee from his post of vice
president of Air Operations to be in charge of “strategic integration.” Perspectives on what this role
meant varied. To some managers, McDevitt was “the coordinator of strategic initiatives”; to others,
he was “the champion of strategy execution.” Still others saw him as a neutral “tiebreaker on the
Management Committee.” According to one senior manager, “McDevitt was brought in to help
resolve deadlocks. Before that time, Eskew was the only one who could do that at the Management
Committee level, and he needed help.” McDevitt’s role, according to Eskew, was “to oversee these
efforts and put in the discipline we needed to accomplish the 2007 plan. He made sure that the four
strategic imperatives were actually aligned and executed and that development activities were
moving forward at the right speed, with the right support, and with the right sense of urgency.”
McDevitt confessed that he had a real challenge defining the job when he took it on: “In the
beginning, I jokingly told people, ‘Don’t ask me what I do. At this point, I don’t know. But when I do,
you’ll be the second to know!’” He elaborated:
The job involved a lot of change, since various parts of the organization were working on
different projects and often using competing metrics. Roles were not always consistently
defined. There were also different opinions about what we were trying to accomplish and how
to get these imperatives operationalized. My responsibility was to make sure that all the teams
delivered what they said they were going to deliver. I also made sure ideas went from being a
gleam in the eye to reality.
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An Example: Trade Direct
McDevitt’s role in the Trade Direct project, a critical initiative under the Value-Added Solutions
Imperative, illustrated his contribution. Trade Direct was a new service offering that would take
goods manufactured abroad and link them into the U.S. delivery system, seamlessly addressing
customs, regulatory, logistics, and information-processing needs. The project involved two groups:
the Supply Chain Solutions logistics group, which would handle the movement of the goods from
China, for example, to the U.S., and U.S. Operations, which would move the goods into the UPS
physical-delivery system, bypassing warehousing and obtaining large savings for customers. The
project had been in the planning stages since 2000, and despite agreement on the opportunity,
different parts of the organization were at odds over conflicting priorities and goals.
To get the project moving, McDevitt took over direct ownership, since in his view, “We clearly
needed a Management Committee member to come in and drive it.” He took several steps to get the
project back on track: “We set up meetings with all participants and uncovered the problems. For
example, we needed an approach for coming up with the funds to cover IT costs. The issues were
elevated and made visible to the Management Committee, and we made sure accountability was
assigned.” McDevitt believed he was able to do this because “I had access to all of the players because
I reported directly to the CEO.” He attributed his success with Trade Direct and other initiatives to
“accountability through visibility”: “I worked through the staff that already existed. I went to
imperative team meetings and met separately with team leaders below the Management Committee
members. Then, every month, there were report outs on the Strategic Imperatives at the Management
Committee meeting. Nobody wanted to be behind. That’s just in the DNA of UPS.”
Scenario Planning: Horizon 2017
After considerable strategic progress, Eskew announced at the 2004 Management Conference that
UPS needed to embark on another scenario-planning exercise to look further into the future. Kuehn
described the reasoning: “We found ourselves in a situation where the timing of some of our plans
was beginning to go beyond 2007. We needed to revisit the scenarios and recalibrate our compasses,
since the magnetic poles had moved a bit around globalization and trade flows, for example. We had
to be sure that we were not chasing a straw man.” Eskew added:
It was critical for us to look as far down the road as we could at all the factors and forces
affecting our future to think about the kind of capabilities that were needed and the roles that
UPS might play to meet the needs of current and future customers. There was too much
ambiguity. The old scenarios were becoming dated and hard to recognize. We needed to paint
some new pictures so that we could refine our strategy for the next decade.
At the same time, there was concern, voiced by Higberg and others, that “we certainly didn’t want
to just repeat the 2007 exercise.” There was speculation that the scenarios would not change
drastically, although the implications might be different. Most, however, believed that “we would be
more sophisticated the second time around.”

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Senior Management Reactions
Senior managers differed in their views on the value and applicability of the process. Kuehn
believed the sessions had value, since “they helped get our eyes above the horizon a little bit and be
more sensitive to the major forces shaping the world.” Other managers saw value in using the
scenarios to fine tune their tracking of the competition and to define appropriate lobbying initiatives.
McDevitt also found the scenarios helpful: “We don’t want to just plod along. The scenarios helped
us see where the opportunities are. Also, once we have them, we can look back and see where we
were accurate in our work, and we can see what did and did not materialize.”
Eskew continued to believe in the merit of the sessions:
Our goal is not to predict the future but to start thinking about the ramifications of the
various scenarios, so that we can align our planning behind them. The exercise allows us to
more effectively build in midcourse corrections and backup strategies as we create the next
three- to five-year strategic plan for the organization. It is a significant undertaking and a big
time commitment. But, in our business we can’t afford to be caught flat-footed by trends—
trends that we could have anticipated—but that sneak in under our radar screen.
More tactical, operationally minded members of the Management Committee questioned the
worth of the exercise. They found the exercise too abstract and difficult to apply. These managers,
one executive observed, tended to see the exercise as “pipe dreams, daydreaming, and happy talk.
They had a hard time suspending disbelief long enough to free up their thinking.”
These differing opinions were not surprising, for they reflected a fundamental tension in the
company. One observer commented: “The mixed perceptions on the immediate value of the exercise
reflect the tactical and strategic dichotomy that lies at the heart of the UPS character. UPS at its best is
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a mix of execution and vision.” Or as Kuehn put it, “If only 10% of the managers get it, maybe that’s
okay.”

Strategy Road Map Status
In January 2005, shortly after the conclusion of the 2004 scenario-planning sessions, the
Management Committee members spent a day reviewing the status of the Strategy Road Map. Since
roughly 50% of the members who had been at the original meetings in 2002 had retired, the session
also served to give the new members a chance to hear the plans directly from the CEO.
Prior to the meeting, McDevitt and Eskew had handed out homework assignments. They asked
each of the members to review the Road Map and their assignments, the original 2002 direction, and
the current status of the initiatives. Members were expected to report on the status of the projects, the
importance of the effort, and what needed to be added or dropped. In preparation for the meeting,
McDevitt went to the teams and asked them the same questions. Books were prepared for the
meeting that included a report on each critical initiative, comparing the two perspectives of the
Management Committee members and the teams to highlight whether they were in agreement.
Management Committee members, who had not seen the book beforehand, spent the day—after
receiving a brief summary of the strategic process, including a short overview of the November 2004
scenario planning—going through each initiative, item by item. The Strategy Road Map was then
refined, as needed.
McDevitt commented on the outcome of the session, “After reviewing the book, we found that we
weren’t that far off course. I felt comfortable that we could move forward appropriately. This was the
team that would personally take responsibility for the initiatives, since they will for the most part be
here in 2007.” When asked if his work was done, however, McDevitt replied, “While the exercise was
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very beneficial, I can’t say it’s complete. You never know when the next Trade Direct will come up.
Even though we are much more attuned to these cross-functional issues and have achieved a certain
degree of strategic integration, there is a strong tendency to go back to your area and focus there.”
In fact, the need for someone with McDevitt’s responsibilities was currently under review. With
the retirement of UPS’s global transportation chief in mid-February 2005, Eskew had asked McDevitt
to take on that role. But he had not resolved the future of McDevitt’s strategic-integration
responsibility. McDevitt had argued that he should keep the old responsibilities in addition to his
new ones as transportation chief, since he believed that the needs of the old job had changed. But
Eskew was not convinced of the wisdom of that recommendation.
UPS: Beyond the Centennial
Before resolving the question of McDevitt’s role, Eskew wanted to place the decision in the larger
context of strategic planning at UPS. He had two primary concerns. First, he was worried that the
strategic-planning process might need changes to keep UPS on the leading edge. The company had
managed to transform itself several times over the past almost 100 years. But could it continue to do
so with the current processes? Did there need to be a clearer, more direct link between the different
components of the strategic process, for example?
The second concern specifically involved the scenario-planning exercise. Eskew knew that the
exercise had helped him see the future differently, but he was not sure of its organizational impact.
He was not convinced that the scenarios were really forming the foundation for future strategic
plans. Were managers thinking broadly and creatively enough? How could they incorporate the
possibility of wild-card events that they had not even considered in the last session? Were they doing
enough to monitor early warning signals? Should participation be broadened to include field
management? Or, was scenario planning an exercise that only really benefited senior managers and
strategists of the company?
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Exhibit 1 Financial Performance
UPS Sales and Profits
($ Billion)
$۰
$۵
$۱۰
$۱۵
$۲۰
$۲۵
$۳۰
$۳۵
$۴۰
1974 ۱۹۷۹ ۱۹۸۴ ۱۹۸۹ ۱۹۹۴ ۱۹۹۹ ۲۰۰۴
Sales (Black
$۰.۰
$۰.۵
$۱.۰
$۱.۵
$۲.۰
$۲.۵
$۳.۰
$۳.۵
Profits (Gray
($ million) 1974 1984 1994 2000 2004
TOTAL REVENUE 1,303 6,833 19,576 29,771 36,582
Operating Expenses 1,226 6,104 18,020 25,249 31,593
Operating Profit 77 729 1,556 4,522 4,989
Other Expenses and Taxes 32 252 613 1,588 1,656
NET INCOME 45 477 943 2,934 3,333
Year-end stock price a a a 59 85
Employees (year-end) 67,900 141,000 285,000 359,000 384,000
Source: Standard & Poors, Compustat accessed April 25, 2005; company Web page, accessed April 25, 2005.
aUPS went public in 1999.
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Exhibit 2 Organization Chart
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Mike Eskew
Chairman and
Chief Executive Officer
* + ^
Jim
Winestock
Senior Vice
President,
U.S.
Operations
*
Bob Stoffel
Senior Vice
President,
Supply Chain
Group
* +
David Abney
President,
UPS
International
* +
John McDevitt
Senior Vice
President,
Global
Transportation
Services, Labor
and Strategic
Integration
* +
Scott Davis
Chief
Financial
Officer
* +
Kurt Kuehn
Senior Vice
President,
Worldwide
Sales and
Marketing
* +
Lea
Soupata
Senior Vice
President,
Human
Resources
* ^
Dave
Barnes
Chief
Information
Officer
*
Allen Hill
Senior Vice
President,
Legal and
Public Affairs,
General
Counsel and
Corporate
Secretary
*
John Beystehner
COO of UPS and
President of UPS Airlines
* + ^
Vern Higberg
Vice President, Corporate
Strategy Group
+
* Member of the Management Committee
+ Member of the Strategy Advisory Group
^ Member of the Board of Directors
Christine
Owens,
Senior Vice
President,
Communications
and
Brand
Management
*
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Exhibit 4 UPS Charter
The UPS Charter
OUR VALUES – Our enduring beliefs
We believe that integrity and excellence are the core of all we do.
We believe that attention to our customers’ changing needs is central to
the success of UPS.
We believe that people do their best when they feel pride in their
contributions, when they are treated with dignity, and when their talents
are encouraged to flourish in an environment that embraces diversity.
We believe that innovation fortifies our organization through the
discovery of new opportunities to serve our people and our customers.
OUR PURPOSE – Why we’re in business
We enable global commerce.
OUR MISSION – What we seek to achieve
We fulfill our promise to our constituents throughout the world in the
following ways:
We serve the evolving distribution, logistics, and commerce needs of our
customers worldwide, offering excellence and value in all we do.
We sustain a financially strong company, with broad employee
ownership, that provides a long-term competitive return to our
shareowners.
We strive to be a responsible and well-regarded employer by providing
our people with an impartial, rewarding, and cooperative environment
with the opportunity for advancement.
We build on our legacy as a caring and responsible corporate citizen
through the conduct of our people and company in the communities we
serve.
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OUR STRATEGY – The UPS plan of action
Create the future though One Company. One Vision. One Brand.
We will continue to expand our distribution and supply chain solutions to
synchronize the world of commerce – the flow of goods, information, and
funds.
We will expand our position as a trusted broker between buyers and
sellers worldwide.
We will harness the appropriate technology to create new services and to
strengthen our operations and networks.
We will attract and develop the most talented people whose initiative,
good judgment, and loyalty will help realize our company’s mission.
We will continually study customers’ behavior, anticipate their needs, and
design our products and services to exceed their expectations.
We will create a practice of innovation that leads to sustainable growth.
We maintain an environment that enables us to treat every customer as
if they are our only one.
We will leverage the UPS brand to maximize brand loyalty among all
constituencies.
Source: Company website, accessed on August 15, 2005.
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maintain open markets
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Exhibit 7 Sample Questions, Excerpted from Interview Questions for 2004 Session
External Non-Customer Interview Questions
• What external factors will affect the transportation and logistics industry over the next
decade?
• What will deliver success (for transportation and logistics companies) 10–۱۲ years out, and
how will that differ from today?
• Paint me a picture of how transportation and logistics may look in 2017. Which current
competitors will be strong players, and what kinds of new entrants do you see emerging?
External Customer Interview Questions
• What will make a company successful in your industry in the next decade? (What’s going to
be different?)
• If we could answer one question about the future to help your company succeed, what would
that question be?
• What is going to stop being true in your industry over the next decade?
UPS Management Internal Interview Questions
• How would you describe success for UPS over the next 10–۱۲ years? What would it look like
for us? What would be the results?
• How would you like UPS to be viewed within the industry? Within the financial community?
Among customers? Among employees?
• If I could answer any question for you, what would you want to know? What would you like
to know that would give UPS a jump on the competition?
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Exhibit 8 Horizon 2017 Scenario Characteristics
Focal Issue: “The future(s) of UPS’s world market and major regional markets in 2017”
Business Environment
Traditional,
Proprietary,
Incremental
Company City Networks Without Borders
Bordered Disorder Connected Chaos
Domination by global corporations, driving integrated
trading environment
Governments offer quasi-monopolistic market access to
large companies
Regulations protect stronger and longer-lasting IP
Powerful integrative supply-focused technologies
Harmonious, Aligned,
Free, Fluid, Borderless
Commerce, Biz Model, Demand Pro-Active, Open,
Collaborative,
Chaotic, Fragmented, Restricted,
Friction-laden, Bordered
Informal, underground connectivity
Geopolitical tensions and tight regulations
Local arrangements work better than global approaches
Ad-hoc and virtual organizations challenge traditional
arrangements
Terrorism and financial crises create barriers
Nationalistic environment with social and political unrest
Local and regional distribution centers and few global
supply chains
Guarded proprietary IP and technology
Seamless commerce with collaborative networks
Demand driven by wealthier, more informed customers
Rising healthcare, educational standards and literacy
around the globe
More peaceful, better connected, but faster world
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306-۰۰۲ -۲۴-
Exhibit 9 Horizon 2017 Implications and Strategies
Focal Issue: “The future(s) of UPS’s world market and major regional markets in 2017”
Business Environment
Traditional,
Proprietary,
Incremental
Company City Networks Without Borders
Bordered Disorder Connected Chaos
Extremely competitive environment leads to consolidation
Business partners to be carefully chosen
Education, health and financial support for workforce
Global brand, socially responsible company
Harmonious, Aligned,
Free, Fluid, Borderless
Commerce, Biz Model, Demand Pro-Active, Open,
Collaborative,
Chaotic, Fragmented, Restricted,
Friction-laden, Bordered
Demand will be uneven and difficult to forecast
Modular and adaptable technology for local needs
Portfolio is localized by regional and segment needs, but
experience is uniform globally
Decentralized decision-making, with local accountability
Competitive advantage from efficiency, cost management
and security
Regional political relationships necessary
Brand focused on security and trust, with local flavor
Workforce shortages, more unionism
Maintenance of close ties with dynamic markets
Focus on confederations, collaborations, and alliances
Nimble and agile brand
More diverse, global workforce
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306-۰۰۲ -۲۵-
Exhibit 10 Horizon 2017—Early Warning Signals
Focal Issue: “The future(s) of UPS’s world market and major regional markets in 2017”
Business Environment
Traditional,
Proprietary,
Incremental
Company City Networks Without Borders
Bordered Disorder Connected Chaos
EU expands again and again
More lax enforcement of anti-trust laws
Fewer trade restrictions/tariffs
Increase in company sponsored migration
Harmonious, Aligned,
Free, Fluid, Borderless
Commerce, Biz Model, Demand Pro-Active, Open,
Collaborative,
Chaotic, Fragmented, Restricted,
Friction-laden, Bordered
Global institutions under increased attack
Resurgence of nationalistic cultures
More trade restrictions/tariffs
More “guest worker” programs
Bilateral trading agreements rescinded
Volatile currency valuation
Retreat to regional economies
Increase in number of refugees
Increasing adoption of EFT
Increasing rates of literacy
Growing global virtual communities
Freer movement of people
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