The Importance of Leadership in a Restless Economy
Authored by SMC³ on January 29, 2024
SMC3’s Jump Start 2024 conference began with Andrew Slusher, SMC3’s CEO, noting record-high attendance. Drawn by the promise of dynamic conversation on the state of the supply chain, participants saw the first day unfold with a series of presentations that varied from the qualities of leadership to what macroeconomic trends to expect in the coming year.
The keynote speaker this year was Carly Fiorina, politician and former CEO of Hewlett-Packard, and the first woman to lead a Fortune Top 20 company. Fiorina’s remarks centered on the importance of good leadership to weather changes in any industry. She remarked that the pace of technological change in many industries is accelerating rapidly, sparking changes that supply chain professionals will be forced to grapple with.
“Because of artificial intelligence,” she said, “There has been more computing power sold in the last 90 days of 2023 than has been sold in the entire history of the human race.”
And while the supply chain is being rocked by these technological shifts, Fiorina also noted that logistics was an unusual industry in that it also beset many low-tech problems—such as capacity issues for truck drivers.
To overcome these issues, Fiorina said, it was necessary to have strong leaders that could carefully maneuver through change. To illustrate her point, she drew on her famous stint at Hewlett-Packard, noting the difficulties the company faced in becoming bloated and complacent—as well as the challenges she faced as a woman in a traditional work environment. Defying both these circumstances required cultivating the qualities of leadership she needed to change the company for the better.
In defining the characteristics of good leaders, Fiorina was quick to say not just what they are, but also what they are not.
“Managers are not leaders,” she explained. “Leaders challenge the status quo. Leaders change the order of things for the better in order to solve a problem.”
For other essential qualities, Fiorina listed courage and collaboration as particularly important. The latter, she stated, is a distinct asset for those involved in the supply chain.
“It’s particularly dangerous when your industry is beset by change—when you need innovation,” she said. “That is the time when every single one of us has to work really hard at reaching out to people who are not like us, who bring a different point of view, who will ask that awkward question, who might spark a different perspective.”
Fiorina wasn’t the only speaker concerned with leadership and change management. Bill Cassidy, senior editor at the Journal of Commerce, interviewed Debbie Sparks, executive director at the National Motor Freight Traffic Association (NMFTA), on what leadership has meant for her in taking the helm at the venerable nonprofit. NMFTA has been a cornerstone of the less-than-truckload industry since 1956, and when Sparks assumed a leadership role there, she knew she had to evolve the organization beyond its traditional freight classification function and to get it thinking about digital standards and cybersecurity.
In evolving the organization’s priorities, Sparks stated the importance of maintaining good relationships with the board members, exercising candor, and drawing in diverse perspectives throughout an organization.
Through conversations with members and the board, Sparks distilled four key pillars to focus on to make NMFTA more relevant to its members: cybersecurity, digitization, marketing, and classification.
In pursuing these new focuses, Sparks described the necessary shifts within an organization’s culture.
“You’ve got to ask hard questions,” she said. “You’ve got to be willing to hear the hard answers, and then you’ve got to put a plan in place to deliver upon it.”
Other presentations attempted to illustrate the supply chain in the context of broader macroeconomic forces. Avery Vise, VP of Trucking at FTR Transportation Intelligence, peered at possible futures for LTL in the wake of the failure of Yellow.
Vise pointed out that the failure of Yellow represented a short-term boost and needed change to the industry, but both were insufficient to rescue it from chronic sluggishness. LTL remains quite weak, and economic forecasts don’t show that changing until the end of the year. In this regard, LTL is tied up in the weakness of truckload.
The last two presentations of the day focused on the influence of global macroeconomic forces on the supply chain, as well as the financial outlook for the United States more specifically. Economist Dr. Jeffrey Rosensweig from Emory University provided a snapshot of the global picture.
Dr. Rosensweig noted that not many economists are predicting a recession. He also noted the ascendance of China and India’s economies, though the former is wracked by crises in its real estate and banking sectors.
In analyzing the pandemic, he noted that it was the shortest but deepest recession in U.S. history, with more than 20 million people losing their jobs in just two months.
America continues its trend of friendshoring—that is, instead of simply buying from China, America is choosing to do business with countries that have similar political interests, such as Vietnam, Canada, and Mexico.
Rosensweig registered his concern that the government continues to spend too much—noting with some unease that all the debt being assumed could cause a plummet of America’s dominance in the world economy.
Armada Corporate Intelligence’s Keith Prather then stepped in to give a deeper dive on trends shaping America’s economy specifically. Experts are expecting the volatility of recent years to settle, with growth returning to stabler rates.
Prather noted that this was likely coming soon. He explained that the global supply chain often lags trends in the economy, going through periodic 14- to 18-month recessionary cycles before reconnecting with the broader economy.
The reason for this disconnection, Prather said, is that supply chains are often overstocked, sitting three percent heavier than they were before the pandemic. This creates stalls in the generation of supply chain activity both downstream and upstream.
But despite all this, Prather seemed optimistic about 2024’s prospects. He spelled out three factors driving the economy’s recovery—and freight growth in particular: consumer spending, non-residential construction, and government spending.
“I’m going to say,” Prather concluded, “that I think we’re finally back in cycle worldwide. I’m calling it a global supply chain reset. We’re going to see freight moving, and that’s different from where we’ve been over the last year, and late last year, or late 2022.”