Trucking’s a very interesting business in which few carriers survive and thrive from decade to decade. Think of the trucking companies that ran for 40-plus years, but when deregulation hit in the 1980s, many of those “old” companies didn’t exist by 1990; however, there are a few still running strong today. Why did they not only survive but continue to grow year after year?
“It’s organizational ambidexterity: the ability of a company to manage its current business while simultaneously preparing for changing conditions,” Stanford Graduate School of Business Professor Charles O’Reilly recently wrote. “You often see successful organizations failing, and it’s not obvious why. ... The reason is that a strategy that had been successful within the context of a particular time and place may suddenly be all wrong once the world changes,” he continued.
In other words, doing business the same way as you’ve done in the past while expecting the same profitable results just doesn’t work in the business world, particularly within our venue of trucking.
Take Federal Express, for example. In the 1970s, it was an overnight envelope and document delivery service. Today, there’s not much FedEx doesn’t ship by air and ground—from that same overnight envelope to LTL to behemoth machines to special expedited services for the automobile industry. It’s very different from that ‘overnight document delivery service’ thesis idea devised in college by Fred Smith, FedEx founder and CEO.
Unfortunately, at the same time FedEx was growing its business, many of the old tried-and-(thought to be) true LTL companies failed. Think Consolidated Freight, the largest LTL company in the ’50s, ’60s and ’70s. It no longer exists.
This ‘organizational ambidexterity’ is exactly why FedEx has grown to its current size. A successful micro- or small motor carrier needs to follow this same approach in order to grow to its greatest potential and continue to be a viable and profitable business for decades to come.
According to O’Reilly, this is not without risk. “If you’re a small company, you place all your chips on this one thing, whereas a large organization can do lots of experiments.”
As a small company, you must take a more calculated approach to growing your business into a different niche than the one in which it started. A very wise business adviser once told me that you don’t want your business to be a Cat D-8 bulldozer blade on the front of a Datsun pickup. In other words, don’t spread or diversify yourself so thin that you lack the business acumen and financial power to move your company forward. Keep a more narrow focus on what you do—and do it well.
Develop strategic contingency plans and establish execution strategies in the event of an emergency or crisis situation. Think of the changes caused by the new hours-of-service regulations, even though trucking had months to prepare. The carrier practicing organizational ambidexterity would’ve had a procedure in place to create benefit to both itself and its shippers when the new law was implemented.
Contact Tim Brady at 731-749-8567 or at www.timothybrady.com
