Derek Leathers is the Vice Chairman, President and CEO of Werner Enterprises, a global industry leader. Leathers has over 29 years of experience in the transportation and logistics industry.
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3 Value Bombs
1) Have an internal commitment to continuous learning and be open-minded – ask for feedback from other people.
2) Be hardworking in any business you go into, focus on how many complicated problems you can solve, be visible, foster relationships with people who genuinely care about you, and learn from them and spend time with them.
3) Recognize acceptable risks and take them.
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Today’s Audio MASTERCLASS: Disrupting The Status Quo In The Logistics Industry with Derek Leathers
[1:31] – Derek shares something interesting about himself that most people do not know.
- He loves to cook. He grew up with a family that loves to spend time around the kitchen.
[3:16] – How did you get to where you are today?
- After college, he thought his path was in investments and banking, but he worked as a dispatcher to fill in the gaps because of an economic downturn.
- The moment he started talking to drivers, it just felt right.
- He rode the wave he was on, took the risk, chose to be a dispatcher, and gave up being an investment banker – and it worked well for him.
- He made a lot of mistakes, but he learned from them and got better along the way.
[6:00] – What is Werner Enterprises, and what are your job duties as a Fortune 500 CEO?
- Werner Enterprises is a premier truckload transportation and logistics company – they help customers worldwide move their goods and products at the lowest cost possible. They have about 13,000 associates and were founded in 1956.
- One of Derek’s day-to-day duties as a Fortune 500 CEO is ensuring the company’s culture and people are top notch.
[9:49] – What is the single most significant change in logistics over the past several years, and how are you currently dealing with it?
- The most significant change in logistics is integrating technology into what has traditionally been making decisions
- Network optimization.
- Machine learning – Artificial Intelligence.
- Use of technical tools to remotely manage their workforce.
[11:39] – How has Werner Enterprises adjusted to the changing world to disrupt the status quo?
- Werner Enterprises has adjusted by providing diagnostics and solutions to its customers from the usual one-way trucking business.
- They have also launched their logistics business.
[16:13] – What are the core values of Werner Enterprises, and why are they important?
- The foundation of Werner Enterprises’ core value is integrity.
- Derek believes that none of the other values matter if you do not have integrity and the people around you.
- The pillars of Werner Enterprises are Teamwork, Community, Innovation, and Leadership.
- The pillars of Werner Enterprises supports safety and service.
[18:01] – How have you navigated Werner Enterprise through this global pandemic?
- They knew they had to stay available for business even though there is a global pandemic.
- 50% worked from the office, and the other 50% worked from home remotely.
- They created a safe and confident work environment in the office.
- They improved their communication and kept the team informed.
[21:59] – What is the absolute best advice you’ve received over your tenure as a businessman?
- Have an internal commitment to continuous learning and be open-minded – ask for feedback from other people.
[23:47] – What is a terrible piece of advice you received?
- The command and control approach.
[25:09] – What advice would you give to our listeners who are trying to make their way in the business world today?
- Be hardworking in any business you go into, focus on how many complicated problems you can solve, be visible, foster relationships with people who genuinely care about you, and learn from them and spend time with them.
- Recognize acceptable risks and take them.
John: What’s shakin’, Fire Nation? J.L.D. here with an audio masterclass on disrupting the status quo in the logistics industry. To drop these value bombs I have brought Derek Leathers on the mic. He is a vice-chairman, president, and CEO of Werner Enterprises, a global industry leader.
Derek has 29 years of experience in the transportation and logistics industry, and is gonna break down the job duties of a Fortune 500 CEO in the world today, how he’s navigated his company through a global pandemic, the best advice he’s received throughout his career, as well, Fire Nation, as the best advice that he would give you while trying to navigate your career in the world today, and so much more when we get back from thanking our sponsors. Derek, say, “What’s up?” to Fire Nation and share something interesting about yourself that most people don’t know.
Derek: Well, first off, hello, Fire Nation. I’m glad to be here. I’m glad to be with you, John. Yeah, so something they don’t know. That’s an interesting question. I would say one thing people wouldn’t know or wouldn’t realize is even based on the typical stereotype of a CEO is, one thing I do is I love to cook. I’m a fanatical cook in terms of wanting to always experiment and have a good time in the kitchen. I grew up helping my step-father at times run a catering business. My brother’s a chef, and it’s kind of in all of our blood. And all of us just love to spend time around the kitchen and create new and exciting things.
John: Derek, if I was coming over to your house, and I said, “Cook me your favorite dish,” what would that be?
Derek: Well, that’s a tough one. You know, if you were coming to my house, I’d probably wanna cook you something that maybe you don’t experience all the time. And so, I’d make a killer gumbo, at least in my mind. The most people who’ve had it really love it. I grew up in the South, and so, it was kinda something that seafood was more available down at the Gulf. And so, we’d go down, and we’d make gumbo on the beach even as a kid sometimes. And it’s something I just love doing.
John: I love me some gumbo. I’m actually French Canadian, but [speaking French] so I have a lot of relatives down in the Louisiana, New Orleans area. So, that would be right up my alley. And Fire Nation, as you heard, Derek has been rockin’ it in the logistics and transportation industry for 29-plus years now. And we have a lot to learn from him – how he’s navigating this large company through a pandemic, what he’s seeing as disruptions in the logistical industry and some other things. But first, I wanna just get to know you a little bit better, Derek. So, give us your background. Like, how did you get to where you are today?
Derek: Well, it’s been a long road, that’s for sure. But probably the most interesting aspect of it was coming out of college. I went to college at Princeton. I had the opportunity to experience what was the best, amazing four years of my life. But coming out, I was going to go into investment banking. I was trained for that. I was an economics major with a minor in finance. I’d always thought that was my path. I had taken a job at Citi to be an investment banker. And then it got deferred just because of a slight economic downturn. And so, I took a job as a dispatcher just to fill the gap. So, I just wanted to go make some money. I had to make some money.
I had nowhere to go and no money to cover the rent, so to speak. So, I took a job as a dispatcher, headset on the head, with full intent of leaving that job once the time came to go pursue what I thought was my dream. And the second I put that headset on and started to talking to drivers, it just felt right. And I’m a big believer in, you know, you gotta find your own wave, and whatever feels right for you, that’s the wave you gotta ride. And so, I took a big risk – a lot less money, a lot less fanfare around being a dispatcher vs. an investment banker. But that’s what I wanted to do. And it’s worked out well for me.
I’ve held jobs in every aspect of trucking as I came up through the ranks from safety to operations to training to, really, every role you could have. And then ultimately found myself in Mexico City running a Mexican truck company, and that was awesome. That was four or five years, partly pre-NAFTA, partly post-NAFTA, and really trial by fire. And kinda really, I would say, that’s the defining moment in my career where I had to cut my teeth and learn and make a lot of mistakes, but you get better for it and learn, hopefully, along the way.
John: It is so fascinating how timing and luck play such a role in life. I mean, back in 2008, I thought that I was in my full-time career path at John Hancock as a financial corporate guy, making my way up the ladder. And then, of course, that big crash happened, and I kind of left that path because of that reason. But if that never happened, and the bull market was roaring, I would’ve probably found myself with the golden handcuffs and never left. And you could’ve been in a similar situation. And it’s just really interesting how just, like, timing and luck and circumstances have such an impact, Fire Nation. And sometimes, you just gotta be open to what’s coming.
And I love that phrase that you use, you know, “Just ride the wave that you’re on and make it happen.” And that’s what Derek did. And Derek, now you’re the vice-chairman, president, and CEO of Werner Enterprises. So, for Fire Nation, break it down. What is Werner Enterprises? And let’s really get into what your job duties are and entail as a Fortune 500 CEO.
Derek: You know, at it’s basic level, what we are is a premier truckload, transportation, and logistics company. What’s that mean? It means we help customers all over the globe move their goods and products that they care about to the customers that they care about and try to do it at the lowest landed cost we can. In terms of size and scale, we’re one of the larger players in that space. Most people don’t necessarily know of the name because it’s a B-to-B kind of model. But they recognize as soon as we talk about the blue trucks going down the road and blue trailers, and now over the last few years, converted to white trailers.
But we’re a $3 billion market cap company, about 13,000 associates, founded in ’56, truly the American success story. Our founder dropped out of high school to start the company with one truck and spent decades going from one truck up to 20 and then eventually 50. And as we sit here today, we’re knocking on the door of about 8,000 trucks, $2.7 or so, $2.8 billion in revenue, offices across the U.S., Canada, Mexico. We have offices in Shanghai and Shenzhen, China. And the business has just continued to evolve into, not just trucking, but logistics and freight forwarding. And we do a lot of things for a lot of people.
But at the end of it all, what it has in common, is moving people’s goods to their customers.
John: And what do you do? Like, what the heck does the president, CEO of a Fortune 500 company do day-to-day?
Derek: Yeah, I mean, so the biggest thing, I think, that you have to do is, you know, people talk about shareholder value and stakeholder value. Those things matter. Obviously, they matter. We gotta pay the bills. We’ve gotta make profits. And we’ve gotta get people excited in the story. But the singular thing you do everyday is you are responsible for, sort of, the culture and the people of the organization.
And so, you’ve gotta start and finish your day thinking about, “How do you get the right people? How do you attract them to a company like yours? How do you train them and mentor them and develop them properly? How do you retain them long term?” Because if you do all that, and then you give them the right tools – and so, you’re usually, as the CEO, the one that pushes through certain decisions, that maybe the ROI didn’t look right, but you know it’s the right decision. And it’s the right investment in the toolset or technology or whatever, that you know your people would be more productive if they had it.
If you do those things, then all the tradition CEO stuff that people do think about, like earnings and earnings calls and profitability and shareholder value and share price, will follow. And I’ve always believed that. I believe that business is a blocking and a tackling thing, right? So, you’ve gotta do the basics well, and you’ve gotta out-operate your competitors, and you’ve gotta give your customer a low cost/high value solution. And then all of the profits will happen. If you try to cut your way to profitability, it doesn’t work long term. If you try to be so financially focused that you lose sight of the people, that’s a diminishing return kind of model in my mind.
So, it’s really setting the culture, setting the people, and really, turning them loose. That’s probably the hardest part of that is turning them loose and letting them be their true self and really help make a difference. So, maybe in a shorter sentence, it’s kinda trying to become that true north of your company.
John: Fire Nation, are you the true north of your company? And, you know, if you’re one person, if you’re leading a team of five people, 15, 30, that true north has to be clear. And let’s be honest, Derek, there’ve been quite significant changes in logistics over the past few years. I mean, I’ve had some really interesting conversations over the past few days with driverless truck companies and with the president of Union Pacific and what they’re doing and that logistical area. So, what have you found is the single biggest change in logistics over the past few years? And how are you currently dealing with it?
Derek: There’s so much change. I mean, you’ve talked about several of them, the electrification and focus on alternative fuels to be able to still move all of these products is a key focus. But if I was picking one single thing, it’s really the advent or the integration of technology into what has traditionally been, kind of, a point A to point B business. Because if you’re not optimizing your network every day, if you’re not using machine learning and AI and other tech tools to make decision making better, if we hadn’t leaned in heavy to all of the visual tools that are available to take all of this complex data that we have and present it at the desktop in a way that it’s digestible, it’s just too big of a mountain to climb.
There’s too much data happen. We deliver over three, almost 3 ½ million miles of freight a day, every day. And one thing I remind people of, the complexity of our business is, our factory has no roof, meaning our drivers are out there every day, and wherever they are today is not where they’ll be tomorrow. So, you’re managing nearly 13,000 associates, which with 85% of them being in a different spot today than they were yesterday. And you’ve gotta manage all of that remotely.
And so, putting more power into the palm of their hand as it relates to mobile apps and communication and videoconferencing and the ability to try to stay connected to this mobile, sort of – not just mobile, but mobile workforce that’s constantly moving around the country.
John: So, a very popular phrase in the world today is, “Adapt or die.” So, let’s talk about how Werner Enterprises has adapted to the changing world. And even talk about, maybe, how you’ve, in some cases, disrupted that status quo.
Derek: Yeah, so, I mean, I think that applies to us very much. If you look back, we were a premier player for a long time, always at the top of the game. And then there kind of entered this period of the ‘90s where – and actually even more so, I would say, the first decade of, from 2000 to 2010 – where everybody was holding onto the roots. And the roots are a one-way trucking business that, “You call, we haul from A to B.” And that business was obviously gonna get continuously commoditized. And I was an early advocate to say, “We have to evolve. We have to be able to provide, kind of, mode agnostic solutions to our customers.”
What that means is if that freight oughta move by rail, we should be the one involved in that decision. We should be consulting our customers, recommending a better solution. But to do that, that means that you gotta have those solutions in your portfolio, otherwise you’d just be shipping business out the door. So, we launched our logistics business. We’re a major player at intermodal and truck brokerage. We launched one of our global logistics to provide solutions to our customers overseas. We’ve recently launched Werner Final Mile as people have been increasingly, kind of, in the click world as it relates to making large-scale, big, and heavy purchases. But you have to evolve.
And so, today, as we sit here, that traditional business – that one-way truckload business – is one of the smaller parts of our portfolio. It’s still important to us. It’s still our roots. It’s still what we call the “foundation.” But our dedicated business is quite a bit larger than that. Our logistics business will eclipse it in size in the coming years because we had to evolve and really meet our customers where they were at.
John: Fire Nation, we have so many more important topics we’ll be discussing as soon as we get back from thanking our sponsors. So, Derek, we’re back. And something we talk about on this show quite often is how it’s important for companies, and even just entrepreneurs if they’re doing the solo game, to have core values, to be that kind of north star that we’ve already talked about a little bit. What are the core values of Werner Enterprises, and why are they important?
Derek: When I became CEO, I looked at our values. And I looked at how we presented them to newcomers coming into the business. And it was a multipage document inside an employee handbook that, frankly, you needed a couple translators to really come out of there with something to understand. What we wanted to do instead was take that down to a really digestible, back-of-a-card, it can fit in the backside of your badge kinda framework and talk about who are we and what matters. And so, our values are founded in integrity. And so, we have this little diagram with integrity at the foundation. It's because I believe if you don’t have integrity, and the people around you don’t, then none of the other values matter.
Like, if that crumbles, everything falls apart. And then the pillars of those values are teamwork, community, innovation, and leadership because those are the things, we think, that really define us. It’s interesting, we’re going through an evolution with “teamwork,” and we’re gonna change that to “inclusion” because we think it’s a broader term that more better captures what we mean by that pillar. And those pillars support safety and service because that’s the business we’re in. We’re not in the trucking or the logistics business. We’re in the service business. And the only way to do it is to do it safely. And so, everything we do leads to this, sorta, top of the pyramid that’s safety and service.
And people have them on the back of their badges. We actually take them out in meetings. When there’s tough decisions to be made, I’ll often ask, “Well, what’s the compass tell you?” And I really believe you’ve gotta use your values almost like a compass to guide you in tough times.
John: Fire Nation, integrity the core value. What is your singular core value, something that you need to eat, live, and breathe every single day? And Derek, we’re going through a global pandemic. Nobody’s untouched by this. I’m sure Werner Enterprises is not either. How are you navigating your company through COVID?
Derek: Well, it’s been tough, obviously, on everybody. But look, early on we knew as soon as this became a reality, we knew that we’d be designated an essential business, and we were. We knew that for us that means we’re open for business and have to stay open for business, not only on the PPE front and getting those kind of supplies to hospitals that need it in locations around the country, but you saw the barren shelves that took place early on when people were starting to hoard paper supplies and other things. And so, we had to make different decisions than a lot of other companies.
And so, the first one we made is we knew we had to keep a larger than normal population in the office to be able to run the optimization and everything else that we do to make the network move. And there was a lot of questions about how we go about that. I mean, when in doubt, I always go with the simplest answer. And I said, “Let’s ask them. Let’s ask people to sign up for those of you that don’t have preexisting conditions or high-risk comorbidities. If you don’t have people in your household that are elderly, and you’re willing to stay on the ship and ride this out, then let us know and identify yourself.
And everybody else, let’s try to move and maximize the amount of remote working we can do.” In the office that translated to about 50% of the office ended up working through the pandemic, myself included, from the office. And about 50% worked from home. Doing that enabled us to immediately instill social distancing from day one in the office, provide PPE and sanitation equipment in the office, while also having the tech capability to spool up and be remote in numbers that we never thought possible. And one interesting thing I’ll share with you and your listeners is, our office infection rate is about five times lower than the work from home crowd.
And that’s something that doesn’t get a lot of play out there, but it’s interesting. And I think makes sense because you can instill long-term discipline in an office setting with signage and sanitation and availability of supplies on demand better than you can when everybody’s asked to fend for themselves from their own household. And so, it hasn’t surprised me that we’ve been able to create a very safe, very confident work environment in the office, and yet our work-from-home crew has done stellar as well, and they’ve really rose up to the challenge. So, that’s one thing we did. The biggest thing we did obviously, back to the remote workforce, is develop a cadence on communication.
We set up a COVID-19 task force. We had email blasts going out to the trucks every day. I did a weekly video to the truck every week, giving them an update on our infection rates and what steps we were taking to provide more PPE to them. And really, just keeping them informed and reinforcing the behavioral things that we needed because if you add our truckers and our mechanics in – which can't work from home – we, essentially, were 90% work from the office, if you will – counting truckers and mechanics – through the entire pandemic.
And our infection rate's been significantly lower than the national average, despite the fact that we're crossing state lines every day. So, it can be done. It just takes a lot of focus.
John: I think it would surprise a lot of people that the at-work rates are lower than the at-home rates. But in addition to everything that you’ve already shared, Derek, I also think it makes sense for those reasons, but also because I feel like there’s probably a sense of camaraderie and accountability when you know you’re going into an office every day of being like, “Hey, we’re doing all the right things at the office. Now when I go home, I also need to be doing the right things. I’m not just gonna go out to a bar that’s crowded. I’m not gonna go to this event or that event because I’m not gonna be the person that’s coming in and ruining it for everybody in this office.” So, there’s kinda that sense of responsibility as well.
So, I bet people are being more proactive and protective outside of your office than people that are just at home being like, “Well, you know, if I get it, I get it,” or whatever their attitude might be. They don’t have that added sense of responsibility. So, you, Derek, have received a ton of advice over the years. I mean, some of it’s been good. Some of it’s been bad. Some of it’s been terrible. What would you say is the best advice that you’ve received over your tenure as a businessman?
Derek: Yeah, I think the best advice is, “You really have to have an internal commitment to always be learning.” If you wake up someday and think you know it all or you’ve learned it all or you’ve got all the answers, I think that’s a really dangerous place to be. I have an expression I use at Werner all the time which is, “The worst ideas come from the top.” And what I mean by that is not that the people at the top are incompetent, or that I’m saying I’m incompetent, it’s just that they don’t survive.
Ideas that come from the very top don’t have to survive what I call the “gauntlet of no’s,” whereas an idea coming from the frontlines, there’s so many people that wanna say, “I tried that before. That doesn’t work. That doesn’t make sense,” that if it survives all of that, it’s because it is truly a stellar idea. From the top, it doesn’t get that same vetting. It doesn’t get that same friction. And it doesn’t get scrubbed and evolve into really what the right plan or best plan might be. So, I think you have to be openminded, ask for feedback all the time, always want to learn. I played athletics my whole life, played football in college.
And so, it’s kind of ingrained in athletes that whatever’s stuck to the tape, you need to learn from. And so, that includes every speech, every presentation, every dialogue you have, you need to autopsy it afterwards and figure out how to get better from it. So, that, “Always be learning,” and then surround yourself with people that you can learn from. And that means diversity of thought. That means different people from different backgrounds and different thought processes, and the way they think about approaching problems, is critically important as well. So, those would be a couple things that come to mind.
John: “The worst ideas come from the top.” I love that. And no pressure here, if you can’t think of anything, if nothing’s top of mind, no big deal. Just say so. But what’s a terrible piece of advice you received?
Derek: Over the years I’ve had several people try to advise around how the command and control approach at all times is best, or how the boss is expected to weigh in on every decision or make every decision or be more authoritarian in their approach to keep people quote “on their toes.” I don’t buy into that methodology at all. I make a point in every meeting – there’s this concept called a halo effect where if the boss speaks, everybody starts to fall in line. And I think if you really buy into that – and I do – that means you shouldn’t be speaking nearly as much as other people. You really oughta wait and hold your thoughts till the end of the meeting so real discussions can take place.
And then at the end of the meeting, don’t weigh in with, “This groups right, and this group’s wrong,” weigh in with open-ended, provocative questions that make both groups continue that debate. It takes a little longer, but the outcome is so much stronger when people buy in and believe it themselves vs. just being told what to do. So, I think anybody who thinks that that authoritarian approach or a very directed approach is the best way to lead, is just missing the boat on what you can get out of people if you pull it out of them and turn them loose.
John: What advice would you give to our listeners who are trying to make their way in the business world today?
Derek: A few things. I mean, I’ll start with the obvious, right? I think hard work still gets just overlooked. I mean, you gotta work hard. In any business you go into, you wanna be the person known as someone who really will get after it and get after the work and is always looking to consume more work, that isn’t always focused on “What’s in it for me?” or, “What’s my next move if I do this project?” but rather, “How much more complicated problems can I solve?” And visibility is easier today than ever before, in my view, because that isn’t as much the norm as it once was. So, you can standout even easier.
I think another one is, you gotta find out and figure out who in that organization really cares about you and foster that relationship. It amazes me the number of times people have an obvious mentor that’s obviously weighing in and leaning into their career, but they’re not really paying that back or giving their half of that relationship. When you find those people, learn from them and lean into it and spend time with them because people want to help other people. I mean, I really, truly believe that. And so, find that person that cares about you and embrace and develop that relationship.
Another one is recognize acceptable risks and take them, meaning people shy away from hard-to-solve problems or hard-to-do projects. And if it’s an acceptable risk, and you think you can add value, you gotta jump on it. And when I moved to Mexico City, I was probably not fully qualified for that role. And I have mentioned already, I made some mistakes. But I knew that I would give it my all to turn that company around. And we did, and we ended up making it one of the most profitable divisions – actually the most profitable division – at the company before I came over and joined Werner. So, those are a couple things.
And then the last one is anybody – and you mentioned it earlier – anybody who says, “Luck doesn’t play a role,” is just not being forthright. Everybody needs a bit of luck in their life. And you need to just have time in your luck, but you gotta recognize them when they present themselves, and you gotta make a decision to move. You can’t just sit back and let those opportunities pass because they don’t grow on trees. When they present themselves, they have to be taken advantage of, and you’ve gotta jump on them, and you’ve gotta give it your all.
John: Value bombs have been dropped, Fire Nation. Hope you are listening closely because you know that you’re the average of the five people you spend the most time with. And you’ve been hanging out with D.L. and J.L.D. today, so keep up that heat. And if you head over to EOFire.com and type “Derek” in the search bar, the show notes page will pop up with everything we’ve talked about as well as links to Werner and everything that we chatted about. So, Derek, I just wanna say thank you, brother, for sharing your truth, your knowledge, your value with the Fire Nation today. For that we salute you, and we will catch you on the flipside.
Derek: Thank you. Thanks for having me.
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