The 12 Traits of Highly Profitable Trucking Companies: Legacy-Focused Leadership – Playing the Really Long Game
KSM Transport Advisors (KSMTA) has worked with over 200 trucking companies since our inception. Our primary service focuses on guiding trucking company leaders in understanding their freight network and determining strategies to improve the density, velocity, and ultimately the profitability in their geographic footprint. In delivering this service, the KSMTA team has observed and documented 12 key traits of highly profitable trucking companies.
This article is part of a series highlighting the key traits and focuses on trait number four of 12.
“A society grows great when people plant trees whose shade they know they shall never sit in.”
– Greek Proverb
The term “legacy” can evoke a range of emotions from positive to negative. On one hand, it can be associated with outdated systems, processes, and business models that restrict the potential of companies and individuals. On the other hand, it can embody a noble pursuit that transcends conventional business metrics and timelines. When legacy serves as a guide for business decisions, it reflects a leader’s willingness to forego short-term gains in favor of building a foundation that will have enduring impact beyond their tenure. In our analysis of the most successful trucking companies, we have observed that a legacy-first approach can foster sustainability and growth in ways that no other business strategy can match over the long term.
The trucking industry is known for its volatile market cycles, often tempting even the most steadfast executives to prioritize immediate profits (and cash) over future gains. Such decisions can manifest in lengthening the trade-in cycles for equipment, relaxing safety standards for hiring, or rashly entering the spot market during the recent peak. Unfortunately, many trucking companies succumb to irrational decision-making to meet unrealistic short-term financial targets or compensate for the inflated cost of running an operation that should really be smaller. Exercising discipline and reevaluating the stakeholder(s) end goals becomes crucial to avoiding short-term gains at the expense of long-term profitability. Employing legacy-first principles in decision-making activities enhances long-term financial outcomes and underscores the importance of thoughtful analysis and contemplation in team members’ minds.
The Legacy-First Approach
Operating a business with legacy-first principles involves adopting a long-term perspective that prioritizes preserving and growing the company’s legacy rather than pursuing short-term gains. Here are some steps to take in operating a business with legacy-first principles:
- Define Your LegacyThis may seem like a rhetorical starting point, but very few trucking companies have an operating vision beyond one or two years – and it typically involves a specific truck count (see this article about vanity metrics). The vision of what a legacy should be will elicit a clear and emotional response. How do you want the business to impact the communities in which it operates? How do you want to use the company’s profits to positively impact society? Will the legacy of the business be connected to industry innovation far into the future? Now that you’re the second or third generation, how do you redefine the legacy with your own unique DNA imprint? The above questions are helpful prompts to aid in a legacy-defining journey.
- Implement a Long-Term FocusCreate a long-term strategy that aligns with your defined legacy and values and considers an honest assessment of your current and future strengths, weaknesses, opportunities, and threats. It’s admittedly tricky to think too far into the future. With trucking’s fluctuations in supply and demand, the standard response we hear from executives when mentioning planning a decade into the future is, “I’ll be long gone by then – it will be up to the next generation to figure it out.” This thinking implies that legacy is unimportant. Think years and decades ahead, not weeks and quarters.
- Make Decisions With the Future in MindConsider the long-term impact on your business and its legacy. For example, suppose you decide to commit a significant amount of capacity to one shipper because of favorable current rates. How does that limit the actions of future you (or colleagues) if that same customer decides to change suppliers three years down the road or they experience a negative material change to their business? In this example, part of defining a legacy and long-term focus may involve establishing a list of things the business won’t do – such as committing more than 15% of total capacity to any one shipper. These things should be unwavering, just like the company’s commitment to building a legacy.
- Legacy Equals InnovationWhen thinking of a company that has left a significant impact on an industry or community, innovation is a key element of that narrative. In trucking, there are endless examples, but one of the best examples of innovation tied to legacy is the story of Schneider National and the visionary leadership of Don Schneider. Schneider was an early adopter and investor in leading-edge technology, focusing on using data to reduce inherent inefficiencies in truckload transportation. As the early days of deregulation collided with industrial computerization, Schneider National was able to leverage innovation to grow and do so with enviable margins. Schneider is known ubiquitously as “truckload university” due to its reputation for creating and nurturing many well-known TL executives. When defining legacy, know that innovation must be part of the journey.
- Invest in Your PeopleDocumenting and refining best practices for training purposes is often non-existent in most businesses regardless of industry. To build a legacy-driven business, it’s very important to document both the practices that led to the best outcomes as well as the practices and decisions that resulted in poor results. Identifying and understanding both sides of the coin builds the “why” narrative that helps team members when creating their own operational journeys. Once a suitable inventory of internal training content has been established, the content must be supplemented with courses and thought leadership external to the business, including skills outside the vacuum of the trucking world. Among high-performing trucking companies, having a well-defined training and development program for all role types is a common denominator.
- Engage With Your CommunityIt’s not necessary to wait for some significant liquidity event to establish your legacy in the communities you serve. Building solid relationships with your community by supporting local initiatives and other volunteer activities will help refine “who” and “how” your long-term legacy will have the most significant impact. Today’s actions will reverberate for decades in the hearts and minds of current and future community stakeholders.
Following these steps and adopting a legacy-first approach to business can create a sustainable and successful enterprise that leaves a positive legacy for future generations.
Our next article in The 12 Traits of Highly Profitable Trucking Companies series will highlight the key trait of “Centralized Pricing: A Winning Structure.”
To learn more or discuss any of the ideas shared above, please contact a KSMTA advisor or complete this form.
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