The Expeditors Podcast is back, and in the first episode for 2022, Chief Strategy Officer, Ben Clark, talks about the Expeditors approach to strategy and innovation and how the two work together. As you move forward this year, what can you discover when you ask, "Why?"
Chris Parker: Hello everyone, and welcome to the Expeditors podcast, where we look at the world of shipping through the lens of a global logistics provider. I'm your host, Chris Parker, and welcome to 2022. I hope you've taken the time to decompress, reflect and figure out new ways to take yourselves forward while taking care of yourselves and each other at the same time. To kick off this year, I wanted to start us all on the right foot and get a deeper understanding of strategy and innovation to give you something to chew on the next time you're folding laundry or walking the dog. We're going to define strategy and innovation and learn what a balance looks like between the two. And I've brought on the best person to talk about this, our Chief Strategy Officer, Ben Clark. Ben, welcome to the podcast.
Ben Clark: Thanks. Happy to be here.
Chris Parker: Yeah. Pleasure to have you. How was your New Year's?
Ben Clark: It was really good. Thanks. Yeah, it was with my family. I got to spend some time with my daughters and my wife, and my extended family. So, it was nice. A little bit perilous traveling this time of year. But, we were able to make it safely.
Chris Parker: Yeah, absolutely. Any big thoughts or resolutions for 2022? What are you focusing on in your life?
Ben Clark: Yeah, trying to drink more water and trying to stay connected with friends and family. Maybe a little bit more than I have been.
Chris Parker: Yeah. Yeah, absolutely. No, it's very, very important these days. Let's get to know you before we talk about today's topic here. Walk me through your career here. Where did you start? When did you come into Expeditors, and where's your career taken you?
Ben Clark: Yeah, sure. So, I'm a lawyer by trade.
Chris Parker: Oh, okay.
Ben Clark: And I actually worked for a couple of firms before going in-house in the late nineties, worked for a couple of aerospace companies, including Honeywell in Phoenix, Arizona. I then moved to Dallas, worked for a chemicals company, Celanese, and briefly for a materials automation company called Dematic before joining Expeditors as General Counsel in 2015. And I was really privileged to lead the legal department until the beginning of 2020, when I started as the Chief Strategy Officer here.
Chris Parker: The Chief Strategy Officer role and our strategy group, in general, is kind of new when you look at our 40 plus year history with the company. What is this group set out to do?
Ben Clark: Yeah. So, our charter is really twofold. One is to administer and facilitate changes to the enterprise strategy. That's the strategy component. And then separately on the innovation side, it's a small group of individuals that are focused on creating new PNL centers, new businesses, as well as sort of inculcating this culture of innovation throughout the company.
Chris Parker: So, when you started out at Expeditors as General Counsel, what interested you or compelled you to take on this role as Chief Strategy Officer?
Ben Clark: Yeah. Well, first off, from a career ambition standpoint, I wanted to be the Chief Legal Officer of a publicly-traded company. I loved the logistics space, tremendously excited by that. And candidly loved the opportunity to move out to Seattle. I love this city. And then, I guess really importantly, meeting the team here, I was just tremendously impressed by the leadership and the culture and the ethos here.
Chris Parker: Fantastic. All right. Well, let's go ahead and jump into today's topic since we're on strategy and innovation already-
Ben Clark: Great.
Chris Parker: I wanted to start off with innovation first, and then we'll touch strategy later here. So, first and foremost, what is innovation, and how does our organization, for example, define this?
Ben Clark: Yeah, sure. Look, there are a lot of different definitions for innovation. At Expeditors, we say innovation is something new that creates value. It could be any sort of new item, service, and value to anybody. It could be a customer. It could be internal stakeholders. It could be the community. So, innovation is an extremely broad concept, as we define it at Expeditors. And, I would say it's occurring all the time, with this broad of a definition at a desk level, within branches, and certainly at a more institutionalized level at a corporate level as well.
Chris Parker: With innovation, I think of something very dazzling, exciting. Is that how you see innovation as well?
Ben Clark: It can be, but typically or very often, I should say, it isn't. It can be more pedantic. It could be something- Oftentimes, what I find is that the great innovations to be discovering new implications of prior technology that's been exploited in one area and applying it in a new area. And, you can look at the iPod. I like to think right now, there's almost like a gold rush in terms of finding new applications of various technologies that are already out there. RPA, API, IoT, the acronym soup, but these things are occurring all the time, all around us. And so, innovation though can proceed. And I would say, very often does proceed through incremental, evolutionary steps, not revolutionary.
Chris Parker: So something I've heard you say outside of this conversation is that Expeditors is an intrinsically innovative company. What do you mean by that? Why do you think that is? Why do you think we are innovative?
Ben Clark: Yeah. Well, look, I've worked at a lot of different places. To me, coming to Expeditors, I've been struck by both a level of humility but humbly confident that we will be able to reach resolution on any challenge working together. The other thing that's one of our key cultural attributes is being visionary. And I find that question arises more than I've seen it before. Where are things going to go? And the fact that I think we're constantly asking that question of ourselves in our meetings as well as this curiosity, "why do we do it that way?". I think that lends itself to and is conducive to innovation generally.
Chris Parker: It's better when we're the ones asking that and not an outside party, right?
Ben Clark: You'd rather get all of that out behind the curtain.
Chris Parker: Yeah. Yeah. For sure. For sure. So, okay. So, if you're saying that Expeditors is a "because of our culture, we're an innovative company here". What do you point to as like really good, strong examples of Expeditors' strategy and innovation working together?
Ben Clark: Yeah. So, we started off with a very innovative concept, which was to marry air freight with customs brokerage. Previously, those had been separate. And we were the first to bring those together. And since that time, we've had a number of major innovative movements, including the creation in the early 2000s of our transition and implementation approach. That was really part of a strategy to move from a decentralized lane-by-lane procurement strategy to a more centralized global strategy. And what that enabled us to do was to really understand customers' global needs instead of its lane pair needs and to procure on that type of basis.
Chris Parker: Yeah. Becoming less transactional, thinking more broadly.
Ben Clark: And trying to and being able to get some economies of scale. And then, more recently our service provider program, we moved from what was a traditionally adversarial approach with respect to procuring capacity from carriers to a much more collaborative approach with carriers, trying to work with them, to make sure that they were achieving success and getting good results as well.
Chris Parker: If we're already a very innovative company, why do we need a strategy group?
Ben Clark: Yeah. Great question. There're different types of innovation.
Chris Parker: Sure.
Ben Clark: I guess there's sustaining innovations, the types of innovations that a company needs to continue to provide its services. There's efficiency innovations. That was a big topic when I was first coming to age, if you will, in the late eighties, early nineties. Japan was the icon for that with Kanban and Kaizen events and that sort of thing. But increasingly, there's been a lot of focus academically on disruptive innovation. And that was really put forth in Clayton Christensen's The Innovator's Dilemma, the theory of disruptive innovation, and the point behind all of that is, in an environment, disruptive innovation is not something that established firms are well-positioned to address and the best that you can do. So, this thinking goes is to create an organization, like our strategy innovation group, that is chartered to kind of identify new businesses. They have to be able to fend for themselves. They have to be able to compete effectively in the marketplace, but they're chartered on trying to find new opportunities. And that's why we created this strategy and innovation group.
Chris Parker: Yeah, absolutely. So, now that we've talked about innovation and why we have this group, let's go into strategy. How does Expeditors, or how do you define strategy?
Ben Clark: Yeah, I like the definition. I think that Lafley and Martin and I think Michael Porter puts forward of, "Strategy is an integrated set of choices that uniquely positions a company or a firm to create sustainable advantage and superior value in its industry or within a competitive landscape." I like that because it identifies that strategy is choice. It's both choice as to what you're going to do and what you're not going to do, which bets you're going to make and why you're going to make it. It informs that as well.
Chris Parker: I like that. It's understanding your values, taking a good look and defining them, and structuring them in some way that determines how you move forward. Is that right?
Ben Clark: That's right. I mean, Lafley and Martin, in this book, Playing To Win, talk about a strategic choice cascade, their five key questions that any strategy should address, what are our winning aspirations and goals? Where are we going to play? How are we going to win? That's kind of the heart of the strategy. What capabilities do we need to win where we want to play, and what management systems do we need in place to ensure that we have those capabilities? In terms of, I don't think there's any one right way or gospel for sure here, but a heuristic or construct that they put forth that I like is this concept of a strategy logic flow, which is to try to first- You really do have to start with, what do you stand for, to your question. What are your values? But having that aside, look at your industry, and that can be difficult. How do you even define your industry?
Chris Parker: They're merging. There's so much gray area.
Ben Clark: Exactly and if you're too narrow, you're going to be too circumscribed in your thinking. So, you want to think broadly, and then you want to segment that industry and then having segmented it, and that's non-trivial trying to figure out how to do that. What are the structurally attractive segments? And then, so if you could be number one in all of those segments, which ones would be the most attractive to you. Then you want to look at, well, what do customers want in that those particular segments? What capabilities do they value? And what's your gap analysis? How do you compare against that?
Chris Parker: Yeah, exactly.
Ben Clark: And then, if you were to try to achieve success in those particular areas, what would the competition do in response? And so, a strategy really needs to take all of those facets into consideration; I think to be effective. There are examples. A lot of people say, "Well, in the time of Henry Ford, the very best buggy whip manufacturer, if they're continuing to innovate on the type of leather they're missing, whoa, your whole market's about to go away".
Chris Parker: That example has happened multiple times.
Ben Clark: It happens all the time, and that's disruptive innovation. That's why you want to have a group in part to identify this is something big that's about to hit us, that we can't just focus on sustaining and emerging innovations. We need a group that's focused on transitioning us to a new world, that type of thing.
Chris Parker: Absolutely. Let's take what we've talked about with Expeditors and our approach to strategy and innovation and turn it around towards our audience. What does too much innovation look like? What does flying too close to the sun with innovation look like? What kind of approach lends itself to sifting through an oversaturation of new ideas, new things out there?
Ben Clark: Yeah. The one example I can give, and sort of arguing back to childhood, is seeing the rapid innovation, if you will, within fast-food restaurants, different types of branded sandwiches, that type of thing, you can get to a point where you're actually confusing your customer base and hurting sales, and you may have to dial that back. Another example, Coke. When they went to New Coke, and then they realized that was a mistake, they shouldn't have over innovated. They had something that was working, they went back to it, and then they wound up having to give both. So, it's easier to talk about it in the context of consumer products, but I think that approach can arise when you've got a group that's charged with continually cranking out new innovative ideas. You have to make sure that those ideas are tested, that they're addressing fundamental needs or what we call jobs to be done. There's a whole theory around that. That's critical. You want to make sure that there is, in fact, a market or a fundamental need that's being addressed.
Chris Parker: What would you say are some of the pitfalls then of the imbalance of strategy and innovation? When the two aren't aligned, when you aren't balancing them, what can happen? What are the outcomes there?
Ben Clark: Yeah. Well, you can go too hard in either direction with innovation. If, as part of a strategy, you're highlighting a fundamental pivot in some key area, you should be innovating toward that. If, on the other hand, your strategy is doubling down on certain core capabilities, and you're innovating in a way that actually undercuts the relative advantage that you already have, you may be innovating counter strategically, and you wouldn't want to do that. So, I don't view them necessarily as in conflict altogether. I think innovation can be a really nice compliment to strategy. But, you want to make sure that innovation isn't contra-strategy.
Chris Parker: Could you give us an example of that?
Ben Clark: Well, like I mentioned, for example, the strategy, say Coke, for example, was to expand sales within a particular market region and yet at a corporate level, they're making a decision that we got to gut the old Coke, well, that may be contra narrative in that region. And so, that innovation wouldn't be connected well with the local or regional strategy to grow in potentially a new market. You're still trying to make inroads with the old Coke. Don't start saying that it's no good.
Chris Parker: Right. So, then you're going to start alienating the people of that loyalty from their customer base and stuff like that.
Ben Clark: It can be confusing.
Chris Parker: Yeah. Absolutely.
Ben Clark: And so, it's particularly clear around marketing strategy. So, that's an example that comes to mind.
Chris Parker: One thing that you mentioned when we were chatting before this episode was, if you build it, they will come is kind of cardinal's sin of innovation. What do you mean by that?
Ben Clark: Yeah. Well, look, again, it comes down to jobs to be done. You want to start in any innovation effort with knowing that you're addressing a fundamental need at some level, a job to be done. And, I think you have to be humbly curious, you'll have a supposition about what customers want, but you really want to test that. I like a quote from the physicist Richard Feynman. He said, "It doesn't matter how beautiful your theory is. It doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong." I like that. And I like the idea of approaching innovation methodologically, almost through the scientific method. And, we talked about being humble. Another quote I like from Feynman is, "I'd rather have questions that can't be answered than answers that can't be questioned." If you find that you've got a lot of entrenched rules that you can't go question, that's a concern. That can pose real obstacles for innovation.
Chris Parker: But doesn't heavy testing, the scientific approach, slow innovation down? My concern is that if you take a test-heavy approach, and it's very methodological, which is, wow, what a tongue twister of a word, that leaves opportunity for competitors to swoop in and move forward and take the lead on these things, no?
Ben Clark: Yeah, absolutely. I mean, the challenge is to identify the critical assumptions that you need to test. You can't test them all.
Chris Parker: Sure.
Ben Clark: And so, one thing that certainly we do, and I know others, is you first try to prioritize the assumptions to identify which are the ones that you're really uncertain about and that have a big impact on the result. And there's some subjectivity in that prioritization, and it's the high-risk ones, the ones where you're not really sure where it's going to come out, and that'll have a big impact. Those are your critical assumptions. And those you want to test as best you can. And sometimes, those assumptions aren't susceptible to testing. It may be a churn number, a retention number that requires the passage of time. So, you have to try to find the best proxy for that assumption, but you want to have some basis that is data-driven that relates to those key critical assumptions.
Chris Parker: When you talk about being entrenched in strategy, whether those are the rules that were set by others, I am now thinking of buy-in. If someone wants to bring forth an innovative idea or, "Hey, let's look at our strategy." When buy-in is difficult, what does one do? And does the logistics industry, is it inherently more difficult for buy-in?
Ben Clark: I don't know. I don't think it is. I don't think it's any more difficult or less difficult than any other industry. I think, as with any effort like this when you're innovating, you may well be challenging existing beliefs. And so, as with any sort of change management approach, there's a lot of seeding. There's a lot of data collection, and there's a lot of active listening too. What you don't want to do as an innovator is dismiss the institutional knowledge, a lot of people who've been doing it for a long time. You have to take that into account. Because a lot of times that intuition is right, notwithstanding the data that you have that suggested might not be right.
Ben Clark: And, you may also want to evaluate what are some of the changing circumstances that might give rise to why that was right in the past. And, maybe won't be right going forward. For example, the 2008 crash. How collateralized debt obligations and mortgage-backed securities, while at one point, prior to 2008 were a sure bet that had changed, and there were some fundamental, underlying reasons. That sort of thing is happening all the time. Usually not with those catastrophic of results.
Chris Parker: Sure. As we wrap this up, I want to try- I'm seeing this episode as like something to listen to as you think about your New Year's resolutions or going forth into 2022. So, I'm thinking of my father-in-law, who is a dairyman out in Idaho. He's my number one fan here. I'm pretty sure he listened to all my episodes. It's very flattering. I really appreciate the support that he gives, but for him, he's not in this industry. If he's going to be listening to this episode, what can he take away from our conversation as he goes forth in his job?
Ben Clark: Yeah. First, I should caveat, I know absolutely nothing about the dairyman industry. So, profound respect. I guess what I would say that brings me to this idea a framework is, identify the rub points. What are the things that, first off, being curious, why do we do it the way that we do it? Why am I finding that my yield is what it is, is less than perfect, or why is it taking this long? Those why questions may give rise. If you find yourself asking the same why question a number of times, you may have just identified a job to be done?
Chris Parker: Sure. Yeah.
Ben Clark: That may warrant a process review. Is there a way of doing it? Almost always, there's some fat on the bone, so to speak, where you could do it faster, better, cheaper. The question is, does it warrant the effort to even do that, to do some process optimization? Process optimization is a perfectly good example of innovation. You're improving; you're creating something new of value. So my call out to anybody, be it folding clothes like, "Why am I folding it this way? Why is it taking, could I do it faster?". You could almost gamify it. The more you're curious about that, I think, the more it will lend itself to possible innovative approaches.
Chris Parker: And that is probably one of my favorite cultural attributes of Expeditors culture is curiosity. That one, to me, is one of my absolute favorites because it not only gives permission but it encourages asking questions. It encourages taking things apart, seeing how things work, and understanding not only the why but the how, and then what do you do with it? Where do you go from there? It's great.
Ben Clark: Absolutely. And embrace your inner child too. That's why that's constantly coming out. Why do we do it this way? A lot of times, those are great questions, even though they may not seem that at the time.
Chris Parker: For sure. For sure. All right. So final question to you. What do you think is the next frontier for logistics? What excites you the most? I know there's no crystal ball, but what're you pumped up about, or learning more, at least seeing it develop further.
Ben Clark: Well, I'll give you two answers, maybe. I think there's a lot that is yet to come from the promise of blockchain and particularly in logistics and supply chain around pedigree identification. There've been some efforts there, but that really requires, for a full innovation, some trust among ecosystem partners that maybe isn't there yet, but I think there's a lot yet that can happen.
Ben Clark: Two other areas, I think, though, that are kind of related. Cognitive automation and quantum computing. I think, and this may be out there a bit, but I do think that's going to lead to a whole host of benefits for logistics and an example, as in dynamic route optimization. I think there's always going to be this core need to move things from point A to point B, but how to do it, how to make changes in real-time and make the most intelligent changes and to help people within the supply chain make better, faster decisions. It's still going to be humans making those decisions, but they're going to be aided by a whole suite of tools and technologies that they don't yet have. So to me, this is a really exciting time just in business general. I think, again, there's this gold rush where we're applying various different technologies and systems and tools to new areas, and that can be extremely innovative. So, I think there's a lot that's going to happen, but those are a couple of examples for logistics.
Chris Parker: Yeah. Fantastic. Thank you for that. Well, thank you so much, Ben. I wanted to leave folks with maybe like a book or something. You seem like a very well-read person. So is there one book that you've just loved that gets your creative juices going that we can share with folks?
Ben Clark: Yeah, well, I mentioned The Innovator's Dilemma by Clayton Christensen. The other one, I may have alluded to this too, Playing To Win: How Strategy Really Works. It's a nice kind of how-to, and again, I don't view it as gospel, but I think it's a really nice construct for how to approach this at an enterprise level, but even at a functional level. The authors talk about nested strategic choice cascades. And so that's by A.G. Lafley and Roger Martin. Lafley was the former P&G CEO, and Roger Martin is a biz school professor, but I think they do a really nice job of giving a practical approach to devising corporate strategy.
Chris Parker: Yeah. Incredible. All right. If folks want to get into contact with you, where can they find you?
Ben Clark: Oh, well, so at Expeditors, it's email@example.com. I welcome that.
Chris Parker: Yeah. All right. Well, thank you so much for the time. It was great chatting with you. Looks like I've got a lot of reflecting to do.
Ben Clark: All Right. My pleasure. Appreciate it.
Chris Parker: Thanks for listening to today's episode. If you've got any questions or want to learn more about today's topic, check out the show notes for more information. And before you go, make sure you're subscribed on whatever podcast app you're using so you won't miss the next episode. To learn more about Expeditors, you can find us on LinkedIn, Facebook, Instagram, and Twitter, or simply visit us at expeditors.com. Take care, and I'll see you next time.