Welcome to How Leaders Lead. Where every week you get to listen in while I interview some of the very best leaders in the world. I break down the key learning so that by the end of the episode, you'll have something simple you can apply as you develop into a better leader. That's what this podcast is all about. And today, my guest is Carol Tomay, the CEO of UPS. And let me tell you, there aren't a lot of leaders out there who have the smart s and empathy and let me tell you energy that Carol has. She actually retired in 2019 after nearly two decades as the CFO of the Home Depot. She was already a legend, but then the opportunity to take the helm at UPS came along. It got her out of retirement and back into doing something that she absolutely loves, which is helping people develop. And boy, does that passion for people come through in this conversation. But that's not the only thing. You can also hear just how committed Carol is to being financially successful. Now if you've ever felt like you had to choose between focusing on your people or making money, then just keep on listening. Carol is proof positive that you can do both. Everything changes when you see your people as an investment, not as an expense . It's such a powerful mindset. And it's one you can learn from Carol right now. So here's my conversation with my good friend and soon to be yours, Carol Tomay . Believe it or not, you and I have a lot in common from our college days. We were both lousy students in college until we found out what we loved. Yours was finance and mine happened to be marketing. And we both were with our future spouses at a Roman Toga party. Oh my gosh. That's crazy funny. Good. Crazy funny and true, right? Crazy funny and true. Tell me, how did you discover your love for finance? Well, you know, it's really interesting. I should have known it as a little girl because my dad was a community banker, but I didn't think so. I thought I was going to be a botanist and actually save the world by saving rare plants. That didn't work out so well for me. So I started working for my dad during the summers of college and that really introduced me into the world of finance. And I found that it was my true love. So your dad was a banker. Do you have a story from your childhood days that really impacted the kind of leader you are today? Oh, yeah. You know, my parents, both, taught me the importance of giving back. You know, they taught us to who much is given much is expected. And I'm so grateful for those life lessons that I learned as a little girl, because it really pushed my leadership agenda forward. Who believed in you before you might have even believed in yourself, Carol? Oh, for sure, my parents and my grandmothers, they told me I could be anything and do anything that I wanted to. And I believed them. And you know, I grew up in a town of 3,000 people in Jackson, Wyoming. So I thought I could rule the world because they told me I could. How do you instill that belief in others? Well, every day, I believe that my job is to invest in people and help them reach their highest potential, whatever it may be. You know, what I find that a lack of confidence holds people back sometimes because they don't believe that they can do it. And yet we know time and time again. If you put people in opportunities, they'll show us how high they can go. So I try to do that by providing people stretch opportunities. You know, without mentioning any names, can you give us a little example of where you really got turned on by really helping somebody discover how much power they had from within? Perhaps it was the biggest lesson I learned early in my leadership days was the importance of putting people first. I had a woman who was working for me who really needed some coaching. She wasn't hitting it on all cylinders and she needed some coaching. And David, I didn't want to do it. I didn't understand the importance of leadership that's about investing in them and putting them first. In fact, I was so not wanting to do this that it was time to give her performance review and I actually gave her review on the phone. Well, you can imagine what she did. She quit. And do you blame her? Of course not. But what was in my face is that she didn't quit the company. She quit me. She quit me because I was a bad leader. So I vowed on that day that from that moment on, nobody would ever quit me again. If they left me, they were leaving me because it was a great opportunity or they were going to leave me because it was time for them to go retire or the job wasn't right for them. But no one was going to quit me. And since that incident which happened in the 1980s, no one has ever quit me because I am laser focused on putting people first. That's just such a great example of learning from something that doesn't necessarily go your way. And then what have you learned about giving feedback and what's a one on one coaching session with Carol Tomay like today? So feedback is a gift if you're willing to receive it. I think it's a gift if you're willing to give it as well because sometimes people are conflict avoidant and they think that feedback is conflict. It's not conflict at all. It's development. So I call it tough love. I'm a straight shooter and it's in the moment. I don't let time pass. If I see something that's awesome, I'll call it out on the moment. If I see that there's something that needs some adjusting, I'll pull a person aside and give them that feedback right then. And then oftentimes we'll agree upon, well what are the next steps so that I can continue to give feedback as they're working on the next steps? That's great. As you were climbing the corporate ladder, how did you learn to balance the need to collaborate and at the same time differentiate yourself from others? You know, it's not easy. I could tell you I'm very competitive and I'm sure you're competitive as well. How do you find that balance? Well, I realize particularly in companies of scale where there are a lot of people that you have to collaborate to succeed. And I looked at it through the lens of a banker. I was a banker in my early career and I realized that the power of building deposits by collaborating really, really helps when you need to take a few withdrawals to get some things done. And as a finance leader, I was oftentimes taken withdrawals telling people they couldn't have that capital they wanted or we needed to cut the budget. But because I had built up deposits with them by helping them achieve their business or personal objectives, I was able to take those withdrawals. So you start out as this, I'm sure, hard driving finance expert and do you recall the time at Aha moment where you said, you know, I've got to really evolve from being an individual contributor to actually be an a leader. When I was named the CFO of the Home Depot, it was just a really special day for me. And Bernie Marcus, who was the chair of the board at that time, called me into his office. He's an iconic retail leader and I had never been called into his office before but I was thrilled to go in and I sat down on the couch in his office. He said, Carol, I have two pieces of advice for you. He said, the first piece of advice is this. I think you're very charming and you should use your charm on Wall Street. And I said, well, I can do that. And then he said, I won't know you're doing your job until somebody calls you a B and you can fill in the rest of the letters. I said, well, I can do that too. So my first year as CFO, I was the B, fill in the rest of the letters. And at the end of my first year, it was time for 360 reviews. You know, when you get reviewed by your peers and your subordinates and your bosses and my 360 review came back and it was terrible. And I'm like, oh my gosh, I leaned into this too hard. I got to lean back and understand that in my position of power, I need to actually lead and lead by collaboration and lead by inspiration and not lead by just being the B, you fill in the letters. And Carol, you seem to be a big proponent on taking on tough jobs in new areas that will really grow yourself. Give us an example of how that worked for you. Well, my mother told me that every day should be a learning day and I've had so many opportunities to take advantage of that great advice during my career. For example, Home Depot entered China through an acquisition and was running 12 retail stores in China and the business model was not right for China. And I kept talking to the leaders of the company, we should shut this down, we should shut this down, we're not making any money, we've got the wrong business model. And I was finally told, China's too big, it's too important, we're not going to shut it down and you're going to run it. I'm like, I'm going to run it? Yes, you're going to run China and you're going to stay the CFO of the company. I'm like, all right, I'm going to run it. And it was such a great learning opportunity for me because I was able to do everything in our power to fix the stores, but we still didn't have the right business model. So I put together a different business plan, pitched the plan to the board, which was to close the existing Home Improvement Retail stores, but open up standalone paint stores. Because as you know, with your business, former business in China, the paint in China isn't very good. And I'm like, I can stand up, standalone paint stores have the paint manufactured in the United States, ship it over to China, sell it to China, make 35 points of margin and make these stores profitable in the first year. So I convinced the board I could do that and we did. The stores were for well profitable in the first year. So then I went to the board and said, okay, showed you that we could make a buck in China, but we can't scale it, it's going to take too long to scale. So we should shut it down and close this business and exit the country. And so we did. And a great learning for me. Fast forward now to 2022. And we've been dealing with all kinds of challenges in China. UPS is a huge business in China. So I took my lessons and learnings from that experience back in the 90s to today to make sure that we can stay essential, that we can continue to operate and make a buck in China. It's a really good learning. You know, it's really interesting that whoever you work for at the time, you were the naysayer in China. And they handed the problem to you. Do you do that now? Is that something you do? Oh, all the time. All the time. Be careful when you start complaining about things because we'll just give you that opportunity to fix it. And it leads to such a great growth experience, no matter what the outcome is. You mentioned Home Depot and how did you find your way to Home Depot in the first place? And as I understand it, you were the first officer to come into the Home Depot from outside the company. What was that like and how did you get acclimated? Well, my husband and I moved to Atlanta, Georgia in 1992 as a result of my work . I had just completed an IPO for a paper and packaging company called Riverwood International at the time, now known as graphic packaging. And as a result of the IPO, they asked me to come down and join the company. And I did. And my husband, Ramon, followed me. In the early 90s, I had never heard of Home Depot. At that time, Home Depot did not exist out in Colorado where we were living. And my husband didn't move with me originally. So I would commute between Atlanta and Denver. And that's a long commute, so I wouldn't go home every weekend. And on the weekends where I didn't go home, I would drive Atlanta getting to know our city. And one day I was driving down the street and I saw out of the corner of my eye a parking lot filled with cars and a store with a bright orange oning. I'm like, I wonder what that is. And I love to shop. So I drove into the parking lot and walked into my first Home Depot store and I was blown away. The merchandise was piled high. The associates had aprons on it and they were having fun with the customers. And I'm like, this is just way cool. So I walked the store for about two hours. Just love, love the retail experience. That night I called my husband Ramon. I said, you know, there's this company. It's called the Home Depot. I don't know much about it, but we should buy stock. So we did. And then he moved to Atlanta. Right. He moved to Atlanta and we bought our first house and we're home. We don't do it DIYers. We love to do it ourselves. So we were in the stores every weekend. We loved Home Depot. Then one day I'm happy at work and I got a telephone call from a search firm who said, you know, Home Depot is thinking about going outside of the United States and they've never done that before. And the company I was working for had a global presence. They said, they'd really like to talk to you about joining their team and helping them grow globally. I'm like me? You know, I love the store. I'm a shareholder. Okay. I'll go over. I'll talk to them. So here's a true story. I had my first interview and after my first interview, I'm like, I don't think this is for me. I mean, I love the company, but I don't know if I'm going to be challenged enough. The cash pours out of the stores. It's got a great credit quality. I was working for a company that was junk rated at the time. I'm like, you know, this is, I just don't know if I'm going to be challenged enough. So they said, do you want to take a minute before you tell the company? No. I said, well, I probably should take a minute. So they said, why don't you go meet with one of the founders, Arthur Blank. I'm like, all right, I'll go meet with Arthur. And so Arthur is another retail icon. And he said to me, he's like, Carol, we don't know how high is up for you. That's for you to show us, but we will give you every opportunity to reach your highest potential. I'm like, oh, every opportunity to reach my highest potential sold. And so I joined in 1995 when the company had just 400 stores and revenues of just $14 billion. I'm so very glad that I didn't say no, because it's an incredible company. And I had an amazing experience there. And you were the first person to come in from the outside. And it's, I think it was probably a very male culture as well. You know, how did you get acclimated? And you know, did they kind of put you through the ringer? They hired me for a particular purpose. They wanted to grow outside of the United States and they wanted to actually increase their financial acumen. Because for so long, everything that Home Depot touched just turned to gold. But the company was maturing and they wanted to increase their financial acumen . And every time I would open my mouth and talk about things like economic value added or return on invested capital or we should be hedging them Mexican peso, they would just look at me like, who are you? And what are you talking about? So I'm like, oh dear, this isn't going to work. And Arthur was really, he had such a big impression on me. He's like, you know, Carol, you got to decide if you really like retail. And I'm like, I'm an amazing consumer. I shop all the time. I need to learn retail from the other side, from the merchandising side, from the supply chain side, from the customer service side. So I would put on an apron and I would in my free time evenings, weekends, I would work in the store. And I learned so much about the business and fell just in love with the business. Now I'll tell you the truth. I tended to stay out of the electrical and the plumbing aisle because I didn't want to have anyone burn down their house or flood their house because advice I gave them. I was really, really good in the gardening aisle. I was great in the gardening aisle. Well, you got to know what you're good at. You know, and you were very good as the CFO of Home Depot. You know, the shareholder value grew 450% in that time. What do you think you did as CFO to really make such a huge difference? My learning is that the best finance people are business people first and finance people second. I knew the business inside and out. All the dials that you could turn to create value was really focused on capital allocation and appropriate capital allocation because there can be strategic adventurism that doesn't create any value. And we see that happening lots of companies and I was laser focused on how we allocate a capital. And one thing that Frank Blake did when he became our CEO is he added strategy to my portfolio. And I think that makes so much sense to have strategy and finance aligned because it's so much about how you allocate capital. I also walked in the shoes of our people, of our associates. You know, Home Depot's leadership construct is an inverted pyramid where the leaders of the company are at the bottom of the pyramid because they bear the weight for the actions that they take and the decisions that they make. Bear the weight to free up the associates to take care of the customers because Bernie Marcus said, if you take care of the customers, everything will take care of itself. And I actually believe that to my core, I believe that what Peter Dorker said, he said, culture eats strategy for breakfast. I think that's right. If you've got a culture where you put people first, you're serving them, right? Leaders second, people first, it makes a huge big difference on the customer experience and the financial results. Let's face it, your life is just too important to delegate to someone else. That's why I'm so passionate about self coaching. If you're new to this concept, I put together a free self coaching guide that will walk you through the principles of how to become a great self coach to really find fulfillment in your life and career. You can get it at takechargeofu.com/guide. This free guide will give you a simple plan you can follow to kickstart your self coaching journey. This guide will help you become the very best you you can be. Get in at takechargeofu.com/guide. Well, you've been very focused on delivering a great bottom line. You've done that terrifically at Home Depot and you're doing it now again at UPS. And you believe in putting people first. A lot of people think you can't do both. I mean, how do you balance putting people first and still be this results oriented executive that you obviously are? Well, I think it depends on your philosophical approach to people. Are they an investment or are they an expense? I think they're an investment. And if you invest in people, they're going to give you great customer service and deliver great results. And I've certainly seen that in spades here at UPS and I saw it at Home Depot too. That doesn't mean that you shouldn't constantly look for opportunities to optimize your organizations and drive productivity through technology and other innovation. But if you invest in your people, they'll do amazing things for you. So you retire from the Home Depot in 2019 and out of the blue UPS where you've been on the board since I believe 2003 has the CEO leave and you get asked to be the new CEO. Tell us a story about how this happened. So I was very happily retired. I had groomed my CFO successor when he was ready for the job. I got out of his way and Richard McPhel who replaced me at Home Depot is doing an awesome job. So proud of him. So I was happily retired. I was on my farm in the northwest part of Georgia with my husband. He joined a number of corporate boards and Ramon and I had created our own family foundation and we were starting our philanthropic work. So it was all good. I was not looking for this. It had not planned for this. And when the UPS board came to me, I should back up and say, well, why did they even look outside? They worked diligently as David Abney was getting ready to retire to think about the skills and attributes that the next CEO should possess. And they came up with a persona of what those skills and attributes are or were at the time. And when they matched that persona against the existing leadership team, well, UPS had a terrific leadership team. There was no one that really matched that those skills and persona they were looking for. So they decided to go outside and they launched a formal search. And as they launched the formal search, they came to me and said, would you like to be considered? And I'm like, me? You know, don't you think I'm too old? I'm retired. I'm in my 60s. Don't you think I'm too old? And they're like, no, no, we don't think you're too old. And we'd really like you to think about this. So I'm like, huh, all right, I'll think about it. So I thought about it. And I'm like, well, why would I do this? Why would I go back into the workforce? And the first reaction was, well, I love UPS. It's a value-based company whose values are aligned with mine. And that's super important to me. Secondly, is, you know, I love to create value. And the stock price at UPS had been flat for about six years. And the operating margin was contracting and the return on capital was contracting. And I'm like, huh, I wonder if I could get in there. If I couldn't figure out how to turn the dials, you know, working with the team , turn the dials to create some economic value, wouldn't that be fun? Because I like to do that. But more importantly, I love to develop people. That's what I really love to do. And I'm like, gosh, this company has over 500,000 people. I could really develop a whole lot of people and wouldn't that be fun? So all of those questions were being answered in a favorable way. But then I realized that I needed to have the support of my spouse. Because we've been married nearly 40 years, and it was really important to me that we stayed married. So I said to Ramon, I'm like, what do you think? What do you think about this opportunity? And he's fully retired. And he said to me, would you please go back to work? You are driving me crazy. So then I had his affirmation, which was awesome. So you know, I said, yes, I'd love to be considered. And I was just honored and privileged to be asked to take this role. Well, it's such a great company. And it has such an impact all around the world. And what did you learn, Carol, as CEO, that you didn't know as a board member? You know, I had some big ahas, actually. It was board members. We drop into a company of four or five times a year. We hear what management wants to tell us. You can't step over and get into running the company. So there's a line, right? The questions that you can ask and those that will be answered, you know, I didn't know as much as I thought I would know coming in. But I was really very fortunate to be, I'll call it an insider, outsider. Because this is the first time that UPS had gone to the outside for a CEO. And its culture is very, very deep and very unique, 115 year old company. So I was so worried that I would be rejected, you know, like a transplant being rejected by the body. But I wasn't. So I was so much welcomed, which I was so grateful for because I knew I couldn 't do it by myself. But here are some of the big learnings that I had. You know, as a board member, we hadn't paid enough attention to associate happiness. And when I got into the company and I said, how do we measure associate satisfaction? I was told, oh, well, we take surveys and we measure satisfaction. I'm like, well, what's the score? How do we measure? They're like, well, we roll up all the survey into a likelihood to recommend. And I'm like, okay, well, what's the number? What's the likelihood to recommend? And the response was, well, it's 51%. And I'm like, 51%. That means that 49% of UPSers wouldn't recommend us as a place to work. I'm like, hair on fire. What are our action plans? And we didn't have any. And so that was not going to work for me. So we put together action plans to start to move the needle forward and actually set a North Star and said we want that likelihood to recommend number to be 80%, not 50. 51%. And it's now north of 60. So we've moved it in the right direction. We've got ways to go, but we're moving in the right direction. I also learned that we had a lot of initiatives in flight. There were so many initiatives in the line. I couldn't even count them. I'm like, oh my gosh, how do we know what's going on? Who's doing, who's on first? What's going on? So I'm like, we're going to focus on what's wildly important. We're going to really narrow down what's wildly important to our customers and our our shareholders and our people. So we had all the in-flight initiatives up on a wall and a huge room and all the in-flight initiatives were up on the wall. And I gave the leadership team green dots and red dots. And I said, put the green dots up on those initiatives that we should continue and put the red dots on those initiatives that we should stop. All the green dots went up, not a red dot went up. I'm like, no, we're not leaving the room until you put the red dots up. So the red dots went up. And then it was fascinating to see all the initiatives that had no dots, no energy to keep or stop because they weren't wildly important. So we narrowed the list down to those initiatives that were critically important to drive our strategy forward, which is customer first people led innovation driven. And I think that strategic clarity and the focus and the narrowing has really translated into better performance and higher satisfaction from our customers as well as our people. Tell me about the monthly wildly important video that you send out to UPS employees. Yeah, so it's just what's wildly important to me. It's not scripted. We film it on an iPhone and it's what's top of mind, wildly important to me. And it runs the gamut. It can run from safety to mental health to, you know, kicking ass and taking, you know, running from the competition, it's just whatever is wildly important to me. But it also allows me to get a personal connection with UPSers because the one, I have very few regrets. But one of my regrets is I will never meet everybody in our company face to face. I never will. We're just too big. The scale is just too enormous. I never will get to meet everybody face to face. And so I try to have a connection with them at least virtually. Now, Carol, I understand in these wildly important videos, you also tell people when you screw up or you make a mistake, tell us about that. Why do you make yourself so vulnerable? Oh, I think it's really important to show vulnerability as a leader. And look, we're not perfect. And if I screw up and I do, I'm going to first want to call it out and also talk about the learnings from it. This is an important part of our culture transformation here too. We were a company that didn't like to bring bad news forward. We thought, well, if we just worked it, we can work this issue and it will disappear. It's very dangerous, actually. It's very dangerous. I'd rather have the bad news be brought forward. And then we can work on it together to solve the problem. And if you mess it up, it's okay to bring it forward because we can work it through. So I do it really to teach that it's okay to show vulnerability and to learn from it. This is every time something goes sideways here. My question is, what have we learned? You're, I know you're a big believer in culture and you mentioned you joined UPS because it was value-based. What have you decided to preserve about the UPS culture and what are you changing? Yeah, so I have never in my life seen that company like UPS. No matter what comes its way, it gets it done. Think about this. I started onboarding March of 2020, became the CEO in June of 2020 in COVID world. UPSers were essential workers. When I onboard, we're like, okay, everyone's starting to shelter in place. Everyone's shelter in place. We had to continue to deliver essential goods so that people could live as their sheltering in place. And you wouldn't believe what this company did to enable itself to do that. We didn't have PPE hanging around. We had to source that from around the world so that we could protect our employees. We had to change our operating procedures. We had to get authorization from governments around the world that we could continue to fly our planes and enter their space so we could pick up those goods to get them delivered. Believable in the second quarter of 2020, we had to hire 40,000 people just to manage the volume. And UPSers did it and they did it beautifully. No complaints. They got up every day, went into the office, if you will. Went into the packing centers, the sorting centers, were flying the planes, driving the package curse and delivering packages and since then, we've had so many really amazing opportunities to just show up. When the COVID-19 vaccines were approved, we were the first company to deliver those vaccines and we delivered every vaccine with 99.9% efficiency. We never missed it. We never missed a delivery and we kept those vaccines cold. We manned your dactored dry eyes to make sure we could get those vaccines delivered and keep them safe. So UPSers are doers and I would never change that. Our service levels for the past five years have beat every competitor and they 're going to do it again this year. We are the best in the world and we're not going to change that. So what are you trying to bring to the culture that's different? Yeah, so sometimes our behaviors don't match our values. Sometimes they don't. And in this world, the world needs more empathy. We need more listening. We need to take a moment to say, "Hey, how are you doing?" Lots of people are dealing with lots of issues. We've got mental health issues all over the world. We need to make sure that our leaders, our people are more empathetic. That's just really, really important to me. So we launched a new leadership framework in 2022. It's a very, very simple framework. It's head, hearts and hand. Head is all about strategy. Heart, well, that's the empathy and then hand, well, that's the doing aspect of our culture that we never want to change. On the strategy part, I think our strategy is clear, but I will say we, like everybody else, we need to improve our digital fluency. The world is being eaten by technology. We need to make sure that we understand that and that the solutions that we are providing for our customers are really powered by technology because every experience is off of your phone. So we are teaching, we took all of our leaders, our top 150 leaders and put them through digital fluency training in 2022. And we're going to expand that around the leadership team in 2023 because it's critically important. When you make changes as a leader, especially in an environment where you didn 't necessarily build from the ground up, you can always get pushback. Has this been true for you, Carol? And if so, how have you handled it? And is there an instance where you had pushback and you had to work through it to get to where you really wanted to go? Yeah. So when I joined the company, it became apparent to me that some of our policies were not contemporary and actually were impeding our ability to attract the best and brightest. And by that I mean, we didn't allow natural hair. So if you were an African-American and you wanted to have an Afro or a twist or a braid, we didn't allow that. We didn't allow tattoos. So if you had a tattoo, it had to be covered up. I'm like, for heaven's sakes. You know, our tattoo policy was more restrictive than the US Army. I'm like, we got to let this go. We got to let people bring their real genuine authentic self to work. I'm okay with natural hair. I'm okay with facial hair for men. We didn't allow that either. Oh, by the way, in today's world, you see a lot of facial hair. You see a lot of natural hair and you certainly see a lot of tats. I think the latest statistic is like 40% of Americans have a tattoo. So I'm like, we got to let that go. We don't want facial tats. We don't want anything disrespectful, but we got to let that go. Our people, for the most part, loved it. Our retirees sent me a lot of nasty grams. They didn't love it so much. They didn't. But I appreciate you reaching out. I appreciate your feedback. I do. But I believe that to move this company forward, you need to allow people to bring their real genuine authentic self to work. That's great. And I know you've thought a lot about the importance of understanding your personal purpose. How did you end up defining your purpose for yourself and give me an example of how you use that and the way how you make decisions? Well, for a long time, I thought my purpose was to make a difference. And that's a good purpose. And I really tried to do that every day. But when I got to UPS, I first asked the company to work on its purpose. We knew we were a values-based culture. We knew that we moved 6% of the US GDP every day and 2% of the world's GDP every day. We knew what we did, but we hadn't declared our purpose. So I put together a cross-functional team and I said, "Your job is to define our purpose." So they did a masterful job of interviewing UPSers and retirees and customers and suppliers and communities. And they iterated and iterated and landed on our purpose, which is moving our rule forward by delivering what matters. And I love that purpose so much because it's not just about moving goods, it's about doing good too. And as the company was working on its purpose, I started to reflect on May and say, "Carol, you could have spent some time here. You need to really think about your purpose." Making a difference is good, but it's not deep enough. So I spent a lot of time. I was very reflective and this is what I landed on, which is lead to inspire, serve to create, give, to remain. And this purpose for me really drives me every day. So I know that one way I can make a difference here is to inspire over 500,000 people every day to get up and continue to do it. So my eyes spent a lot of time talking to people virtually or in their starting centers or on the package cars and right along, trying to inspire people to reach their highest potential to continue to do great service. Serve to create is all about investing in people and helping them reach their highest potential. This gives me joy. I know it's my purpose. You know, I have lost count of the number of people who worked for me who are now CFOs of publicly traded companies. I am super proud of the people who have worked for me who are now CEOs of publicly traded companies, including Ted Decker, who is the CEO of Home Depot. I hired him 20 years ago. How a lot who is the CEO of attractive supply and I could go on and on. So I love to invest in people, serve to create, help people reach their highest potential, and then give to remain. No, I love Hamilton. And one of the lyrics in Hamilton is, you know, when you're gone, who's going to tell your story? I'm not giving the justice, but that's kind of what it says. When you're gone, who's going to tell your story? And I'm like, well, if I give, if I give of my time, if I give of my money, then maybe when I'm gone, somebody will tell my story. I love all three of those things. And it's great that you've thought that through. And you encourage people to develop the purpose and then not just develop it, but you say, go public with it. You know, why? Well, first of all, I think we all should do it. We all should have a purpose. It changes your life. You know, when I declared it, I'm like, it just kind of changed how I interact with my family and with my friends and with my colleagues and with God. It changes your life in a very positive way. It also gives you direction. So if you wake up in the morning and you're on the wrong side of the bed, you 're like, well, I know what my purpose is. And it gets you back on the right side so you can go on declaring it to, I believe in declaring it because if you declare it, you own it and you do it. So I think it's just really important to make it public because then other people can actually hold you accountable to it. Remember, feedback is a gift. And so if you're not living your purpose that you've made public, then people can give you feedback on that. We'll be back with the rest of my conversation with Carol Tomei in just a moment. Now Carol mentions this inverted pyramid concept that she and the other executives at the Home Depot led with. It's such a powerful idea and you really need to hear Frank Blake unpack it. He's the former CEO of the Home Depot and the conversation I had with him will help you see your employees the way they should be seen and it'll help you lead your business. Everything you do is uphill. Nothing cascades down. When I hear leaders say that they've got a message and it cascades down through the organization I go, oh no, it doesn't. Gravity is not your friend in an organization. You have to push your message up because in the end people really don't know what they care what you're talking about. You have to provide that motivating force for them to care about what you're saying. Go back and listen to my entire conversation with Frank. Episode 19 here on How Leaders Lead. You know, you've had an amazing turnaround and since you've become CEO and Wall Street obviously loves what you're doing with your better, not bigger strategy. Tell us about it. When I arrived and said I've got to get inside the business model to determine really how we can create some economic value here. What I discovered is that we were treating every package the same. Well, all packages are not the same. All packages are not created equal. Instead I said let's step back and think about the customer segments that we want to serve and those segments should be the ones that value our end-to-end network and are willing to pay for it. Through that analysis we determined that one of the segments we wanted to serve most were the small and medium-sized customers. We had been losing share in that segment for seven straight years before I joined. This is a segment that really does value end-to-end networks. My question to the team is well why? Why are we losing share? They're like we don't have the fastest time in transit. I'm like well what is it going to take to have the fastest time in transit? They're like well money and I'm like well we have money. Let's do it. We did it. We accelerated a project that wasn't fly but not scheduled to complete for a couple of years. We got it all done and the first year I was there. We started to take share and since then we've never lost share. We gained share every quarter sequentially. So that then said all right let's pivot into the areas of the market that value our network. Let's grow there and if the revenues or the boxes have to equal 100% that means some things are going to shrink while some things grow. Our largest customer is Amazon. We've been very public about this. We love Amazon. It's a great customer our largest customer. But they're building out their own supply chain too as they are delivering more of the inventory that they hold in their stocking DCs. And we reached agreement with Amazon about the volume that we would take from them and deliver for them and the volume that they would deliver for themselves. By reaching that agreement it creates a glide path down with Amazon. They're still our largest customer. But a glide path down that allows us to build a network up with the segments of the market that we want to grow. Healthcare logistics would be another of those segments where we want to grow. We've been in the healthcare logistics business for about 15 years but we are on a terror. This is a very growthy business for us. It will be over $10 billion next year. The addressable market is $60 billion. We can double this. So we're going to lean into healthcare logistics because we're the best in the world at Colchain logistics. So that's really better not bigger. We also took a look at the portfolio and we had an LTL or Lesson Full Truckload business called UPS Freight. Capital intensive low margins, slow growth. I'm like, I hate this business. So we sold it. We just shrunk. You think about, you know, that was a real clear indication of getting not bigger but smaller. It allowed us actually to improve our margins. So the profitability of the company improved greatly. Now, that's worked for us very well. We always want to be better. We always want to be better. A better customer experience, a better experience for our people. But we believe now it's time to get bolder, to make some bolder moves. And by that, I mean leaning heavily into the areas of the market that really will benefit from what we have to offer them. And Colchain logistics, healthcare logistics is certainly one of those. We just completed an acquisition of a Colchain logistics company in Italy called BOMI. This is the largest acquisition that we've made since I joined the company. You know, that's a bold move. Really excited to welcome the BOMI folks to our team. We're building out logistics as a service. We've got this amazing network, a hub and spoke network powered by our error and ground. You know, the network works. Now I want to grow on the edge. And we can grow on the edge with logistics as a service. And those are big bold moves. Because to think about UPS, you can think of us, you know, we were like a truck ing company. And now we're turning into technology companies. So that's pretty cool. You're really redefining the business, but sticking to your core and better and bolder sounds like it makes a lot of sense, you know. And I understand when you're doing strategy, you actually do war games to help you formulate it. Walk me through that process. Yeah, I love war gaming as a part of strategy. So the first time we did it, everybody thought I had lost my mind. But what I asked the team to do was to assume the personality of one of our competitors and to attack us and to tell us what the attack plan was. So they did. And the attack plans were super scary and really thoughtful. So they attacked. And then I said, okay, now, assume the persona or return to UPS persona and fight the attack. Because by fighting the attack, it actually created opportunities for initiatives and growth. It's a really, really clever way to think about strategy. You talked about the need to be bold and you can't be bold unless you're truly innovating. Tell us about your innovation process and what's the most exciting thing you see happening right now that's coming up and new at UPS? Well, there are a couple of things I'm pretty excited about. One is we've used RFID technology on our healthcare packages. We've used packages that carry back scenes because we wanted to make sure we never lost that package as it was on its journey across the network. That's really powerful, actually, from a customer service perspective. But I said, could we actually think about it through the lens of productivity and put RFID technology on all of our packages? And so we piloted that in 2022. And I'm super pleased with what I'm saying. We now have an RFID technology on all packages and 101 of our buildings. And the implications of this are twofold. One, we don't lose the package because we know where the package is because we 've got the sensors and we know where the package is, which is helpful from a customer service perspective, even though our on-time delivery is north of 97 percent, sometimes we lose a package. So it's important to know where that package is. But here's the productivity side that I hadn't really thought through, but it's pretty cool. So we have employees, we call preloaders, who put packages into the package car to load the car for delivery. And they are actually scanning the packages into the car, but we didn't have the RFID label, so it was more of a manual scan. One in 400 packages are misloaded. In other words, it's put into the wrong package car. If it's put into the wrong package car, that package goes out for delivery, but it can't be delivered. It's in the wrong car. When it comes back, it has to be re-sorted and go back out again. So that's a customer dis-satisfier and actually it's not good for the package to get it re-sorted. So with the RFID technology, the misloads are diminishing. We want it from one in 400 to one in 800. Now one in 1000, that's six Sigma perfection. I'm like, "Holy crap, this is really good because we're going to drive productivity." And oh, by the way, those manual scans that the preloaders are using to get the packages into the car. Guess what? The car can scan the package because the car is smart. So we're going to drive a lot of productivity. So I'm pretty excited about that. The other thing I'm excited about, and this is really early days, but we're working with a company called Beta Technologies to work on the creation of a battery powered aircraft. We were the first company that was authorized by the FAA to fly drones. There's not really a commercial application for drones, but aircraft that actually carries cargo, that could be powerful when you think about it through the lens of sustainability. So we're working with Beta Technologies on an electric vertical and takeoff landing aircraft that carries cargo about 1400 pounds of cargo. It could replace fossil fuel powered theater aircraft. And we're working with the FAA to get that authorized to carry packages. And we were very fortunate just to have that cool aircraft, if you will, down at Worldport, which is our big air hub in Louisville, Kentucky. We were there with a separate-- My hometown, by the way. Thank you very much. So we were there with the Secretary of Transportation, and it was really fun to see the juxtaposition between the 747 cargo plane and next to this battery powered theater aircraft. So cool. So I'm excited about what technology will be for air travel. We are greenhouse gas hogs, as you would appreciate. We have made over 35 million metric tons of greenhouse gas every year. We've pledged that we will be carbon neutral by 2050. You know, part of it's not so hard. We can power our buildings with renewable energy. We can use alternative fuels for our vehicles. The long-pull and the tent for us is aviation, aircraft. There's not a solution right now for all the planes that fly every day. So we've got to work as an industry to find some solutions there for sustainable aviation fuel. Do you have anything unique in your process as churning out these big ideas? You just mentioned three or four, and I think based on your excitement, I think you could keep on going. I could. I could. If you think about this, our strategic platform, Customer First People Led Innovation Driven. Innovation Driven is where a lot of this activity is happening. All of this to get a better customer experience and drive productivity in our business. You know, it's often said that CO job, it's lonely at the top. Have you ever felt this, Carol? And if you have what advice would you give to leaders who may be experiencing that kind of reality? Yeah. So people told me that before I took the job and I'm like, "Oh, how lonely can it be? Can't be that bad." It's really, really lonely. It's really, really lonely. Because you're the boss. I was always like a member of staff, right? And now I walk out and nobody's walking out with me. I'm like, "Okay." So I'm like, "Okay, I get it. I understand why. So what do I do? I'm really fortunate that I have an amazing spouse who's just a great sounding board for me. I've got a few, just a handful of really close friends that are like my personal board. Some of them are former colleagues. Some of them are just friends. But they're a personal board that I can talk to without sharing, you know, confidential information but just more thematic, some things that we're challenged with. And then candidly, I joined the business council, which, David, you know, these groups, the business round table, the business council. I think these organizations are really, really helpful for CEOs because we're all faced with the same issues. How do you get people to come back to the office? What are you doing about the macro environment? We're all faced with the same issues and it's helpful to have, it doesn't matter what industry you're in. It's just helpful to talk to other leaders about how to think about it. You know, this podcast is all about leadership. And I know, you mentioned earlier, you're passionate about leadership development. Tell us what you're doing unique at UPS to bring your leaders along. Well, we have, for my executive leadership team, I have defined development plans for each of them. And we meet frequently to go through the development plans to measure progress against those development plans. And oftentimes, development plans are confused with operating plans. We have operating plans. That's not what I'm talking about. I'm talking about leadership development plans. Those are harder plans to put together than operating plans candidly. It's much easier to talk about the numbers, right? You hit it, you didn't, you missed it, what are you doing? But leadership, how are you showing up in front of people? How are you developing your people? So I spend most of my time on people development and it's not just my direct reports, but how they're developing their direct reports. And I know, I know our people, I know them. Everyone gets motivated by different things and you've got to understand that. You really got to understand that. So you can help invest in them and help them reach their highest potential, whatever it may be. Yeah, we've got the traditional training programs and external partners that we use to help on this. But I believe the leadership development is personal. And if your boss takes a personal interest in you, you're going to grow differently. We also have coaches we bring in to, I think that's important. Sometimes it's necessary. But for me, it's personal. You know, I've heard you say that you really want the next CEO to come from within. This is really important to you. What do you do along those lines to make sure that you've got that next person? I have made some pretty hard calls since I've been here about people who are here and people who are no longer here, trying to make sure that I've got the, you know, just the best leadership team and investing in each of them so that as we continue to work on CEO succession, and I'm not going anywhere right now. I'm not. But I've already started CEO succession. I'm talked to the board periodically about CEO succession and people that I'm investing in and what their investing plans are and what I expect to see. And I say, and if I don't see this, this is what I'm going to do. So I kind of have laid out a plan. I have a work with a third party on this as well. We've created a CEO scorecard of the future. What I think the attributes and skills are for that next CEO. I'm really, really committed to this because I do not want to put the board through what the board went through. I think you risk a lot when you go to the outside. There are lots of cases that it works just fine, but there are lots of other cases where it doesn't. And when I think about my personal legacy, it's not going to be about the financial results for the shareholder value. Although I hope we can, you know, check the box there. It's going to be about people. It's going to be about people. I will fail miserably if I don't have a solid successor behind me. Carol, you know, this has been so much fun and I want to have some more with my lightning round with Q and A. Are you ready for this? Okay. What's one word others would use to describe you? Prepared. What would you say is the one word that best describes you? Prepared. If you could be one person beside yourself for a day, who would it be and why? I am not afraid of anything except for flying. I really have a serious fear of flying and I have to fly all the time. I think the person I would want to be is Houston Mills. Houston is in charge of all of our pilots. He is a captain in our air network and he's a lovely man. I think I would like to be Houston and actually fly and then maybe I wouldn't have such a fear when I returned to Carol. What's your biggest pet peeve? I have a few but I don't like to be surprised. You love the fish. What's the largest fish you've ever caught? I love to fish. I love to fish brown trout. In fact, I was just fishing on the Green River in Wyoming this fall. I think the biggest fish I ever caught, actually I had to say even though I love to fish trout, I was a captain shot on my lake on my farm. It was enormous but I threw it back in because I don't want to eat that fish. What's the single biggest thing you learn from being a downhill skiing racer? I understand you're quite good. No, I'm fearless. The thing I learned about it is you need to walk the course before you race it down and if you know downhill racing or any slalom racing or grand slalom, you actually walk up the hill to learn the course. You side step up the hill to learn it. That goes back to this preparedness thing. You walk the course and then when you get on the skis to go down, you can go really fast. What's your favorite quote? My Angelo, don't make money your goal. Instead do what you love and do it so well that people can't take their eyes off of you. There's something about you that few people would know, Carol. I can read upside down. We are out of the light, me round. I just have a few more questions. I'll let you go back to work. Carol, you're a real trailblazer in the Fortune 500. There are very few, not as many CEOs as we would really like to see that are female. Tell us about the velvet hammer. Well, at Home Depot, I created the first resource group and it was for women. We had our very first meeting at my home and we couldn't even fill up the living room. That's how few of us there were. It was really great to get that organization started and as we were thinking about what we should call ourselves. I reflected on a woman who had a huge impact on my life and that was Fay Wilson . Fay was a member of the Home Depot board when I joined the company and she was wonderful to me. She took me under her wings and really helped me navigate the company. Fay is just something else. The first time I went into her office, it was pristine. There was nothing there except a book on her desk. When I looked at the cover of the book, the title was The Art of War. I just learned so much from Fay. I thought about how we might honor her by naming this resource group. I'm like, "Well, we could call it the Wilson group." Then that sounds like a musical group. That doesn't work. I'm like, "Well, Fay is very petite. She's from North Carolina and she's just got this lil teen voice. It's just like velvet. It's just so smooth." I'm like, "She's smooth like velvet, but she is hard like a hammer." We decided to call ourselves the velvet hammers. It was a great way to honor her and a really fun way for our group to come together. Do you have something like that at UPS? Yeah, we do. It's called the Women's Link. That word term works, but the women are powerful here. What three bits of advice, Carol, would you give to aspiring leaders? Well, I think it's really surround yourself with the best and brightest people. People who are smarter than you, faster than you, better than you. They lift you up and give you wings to fly. It's just critically important to talent selection that people that work for you, because it will really push you forward. I would also say build strong networks. Networks are critically important to help you grow your career and help you develop as a leader. These are networks that you can have inside of the company, outside of the company. And remember, as you're building those networks to build those deposits, so if you need to take a few withdrawals, you can. And then I would say become a master of your art, whatever your art is. Become a master of it. Because that certainly is kind of important as you think about developing others. You need to be a master of whatever your art is. Any particular advice for women leaders? So for women, I think it's really important to be you and not to assimilate. It's easy to think that you need to be like everybody else if you're the only one in the room or one of a few in the room, but actually bring your real genuine authentic self to work. I think that's just so important. And to remember, and this is less than I learned, I used to get together with a bunch of women, as a member of various women's groups. And we would get together and say, gosh, how come there aren't more of us in leadership? And how come this is? How come that? And how come the other thing? And I'm like, we're talking to the wrong people. We need to be talking to the men. So it's like key for she, right? So it's like, how do you bring men into the conversation to help you grow? And I've certainly been lucky because most of my mentors have been men. It's been fantastic. So Carol, you are definitely inspirational. It's clear that you're passionate about raising people up within your organization. And you talked a little bit about the fact that you and your husband have a foundation. So you're obviously focused on giving back to others that need you. And I think you definitely walk the talk. And you know, as we talked about at the top of the show before we started this interview, I'd hurt so many good things about you. And now I know why. I mean, you're, you're, you're incredible. And congratulations on all your success and good luck. And what's your unfinished business at UPS? Oh, we got a lot to do. We got a whole lot to get done. I'll figure that. I'll figure that. Well, thank you so much for sharing everything. I really appreciate it. Thank you, David. It was great being with you. Thank you. Well, I think if you looked up the word dynamo in the dictionary, you could just put Carol's picture in there as the definition. I'm so inspired by all the great work she's doing at UPS and the incredible strides they're making to improve and innovate. It's clear she's focused on the bottom line at UPS, but she's also focused on her team. A lot of people think you got to pick one over the other, but Carol shows us there's another way. We can focus on both when we learn to see our people as an investment, not as an expense. When we pour into them and develop them and look out for their growth, they're going to turn around and grow your company. This week, I want you to think about a person who invested in you. Take the time to express your gratitude to that person. Handwritten notes are always classy. Hey, just sending a thoughtful text works too. But more importantly, I want you to think about a person that you can invest in the same way that person invested in you because you have the power to help that person become the leader. They could never be without you. I want you to remember just how much it meant to you when someone saw you as an investment. That's going to help you apply that philosophy with your people and you know how important this is. So if you want to know how leaders lead, what we learned today is the great lead is to see their people as an investment. Coming up next on how leaders lead is the great Bernie Marcus, the co-founder of the Home Depot whom you heard Carol reference earlier in this episode. If I would be in the store, there would be six or seven people around me and I would see a customer down the aisle. I would leave them and take care of the customer. I set the example. So after a while, if there was a customer down there, people would split off and take care of the customer, leave me by myself, which is what I wanted them to do. So be sure to come back again next week to hear our entire conversation. Thanks again for tuning in to another episode of How Leaders Lead, where every Thursday you get to listen in while I interview some of the very best leaders in the world. I make it a point to give you something simple on each episode that you can apply to your business so that you will become the best leader you can be. [BLANK_AUDIO] [BLANK_AUDIO]