812: Amy Brady, CIO at KeyBank, and Ryan Kean, CIO of Total Quality Logistics, join Peter High on the virtual stage at our September 2023 Metis Strategy Digital Symposium to speak about strategic automation across the enterprise. Both executives talk about the opportunities for automation within their enterprises, the impact generative AI has had on the organization, and how automation fits into the long-term strategy for the firm. They also discuss the talent component of the equation, how they train employees in the relevant skills, and how they communicate the value of automation in their respective teams. Finally, the panelists cover the best practices for adopting automation, sources of insight for professional education, and the trends in automation that they both have on their radars.
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781: Martin joins Peter in a discussion on how he has developed his team and the new platforms and capabilities that he has driven across the company. He highlights the use cases for AI and ML technologies in areas such as personalization, recommendation, and marketing as well as emphasizes the importance of developer productivity and the automation of software engineering tasks. He shares insights on fostering resilience and scalability within the organization, as well as the impact of COVID-19 on the travel industry. Finally, he touches on future trends in self-service analytics and quantum computing, reflects on the keys to his career success, and looks ahead at the potential use cases for generative AI at the company and beyond.
769: Our latest episode features a panel from our Metis Strategy Digital Symposium in May 2023 where Michael and Rob discuss the topic of design thinking in ecosystem business models. Michael explains how he brings design thinking into ArcBest as a mechanism to drive innovation and the role ArcBest Technologies plays in ArcBest’s innovation ecosystem. Rob details the innovation cycle within Broadridge and how he brings the customer’s voice into that cycle to ensure continuous value is getting delivered. Finally, both executives speak on driving centralized innovation within their ecosystems and deploying those innovations to internal and external customers.
The recent system failures at Southwest Airlines and the Federal Aviation Administration caused major disruptions for travelers, pilots, and cabin crew across the country. It also underscored the importance of prioritizing technology modernization initiatives, data integration, and the management of technical debt as the aviation industry races to make updates that many consider long overdue. This article will give a brief overview of both incidents and share lessons technology leaders can take to their own organizations.
In late December, a winter storm and frigid temperatures impacted airlines across the country. While many airlines bounced back relatively quickly, Southwest did not. Cancellations mounted and the company was unable to address them in a timely, automated way.
Southwest’s flight and crew scheduling is managed by a mainframe-based software that was built decades ago and is nearing the end of its life, according to the airline. When the system is overwhelmed, employees have to resort to manual processes. As the backlogs grew in December, “there just was not enough time in the day to work through the manual solutions,” Southwest COO Andrew Watterson said. By December 25, the Southwest team decided “the only way to pull the airline’s operations back from the brink would be to cancel even more flights: around two-thirds of its schedule for several days.” Nearly 17,000 flights were canceled, disrupting the lives of about two million customers.
The company is working with GE Digital to add new functions to its mainframe-based software, Crew Optimization (formerly known as SkySolver), to improve the flight and crew scheduling process. GE Digital owns the Crew Optimization technology. Bob Jordan, Southwest Airlines’ CEO, said the technology and processes worked as designed but “they just were all hit by overwhelming volume.” A GE spokesperson told the Wall Street Journal that its software isn’t an end-to-end solution, but rather a backend algorithm that airlines can supplement with other software to manage disruptions. Southwest and GE Digital are working together to develop a new release for the software to address past problems to reduce the need to do so manually.
Unions at Southwest have been urging the company to modernize the antiquated scheduling technology. “We’ve been harping on them since 2015-ish every year,” Southwest pilots union vice president Mike Santoro told CNN. In 2022, the Southwest flight attendants union wrote a letter to management prioritizing “modernization of the antiquated reserve system” and “improved communication tools to alleviate long scheduling hold times” over pay increases. Watterson said that Southwest was working through multi-year system upgrades, and had focused on maintenance and group operations ahead of crew-scheduling updates.
As a result of the disruptions, regulators and lawmakers have called for investigations and penalties against the airline. Additionally, the company’s board has created an operations review committee and the company has committed more than $1 billion of its annual operating budget to maintaining and upgrading IT systems as part of a five-year strategic plan. The events have cost Southwest Airlines an estimated $725 to $825 million, and the ripple effects continue to be felt.
Just weeks after the Southwest meltdown, the FAA’s system experienced an outage that led to thousands more travelers experiencing flight delays and cancellations. Like Southwest, the FAA’s outage originated from systems scheduled for upgrades. The affected system, Notice to Air Missions (NOTAMs), is a critical tool for alerting pilots about conditions that could impact flight safety and for real-time information on flight hazards and restrictions. Pilots are required to consult NOTAMs before every flight.
Due to safety concerns and to address the outage, the FAA grounded departures nationwide for the first time since 9/11. “Today’s FAA catastrophic system failure is a clear sign that America’s transportation network desperately needs significant upgrades,” said Geoff Freeman, president and CEO of the U.S. Travel Association. “Americans deserve an end-to-end travel experience that is seamless and secure. And our nation’s economy depends on a best-in-class air travel system.”
The FAA has identified a damaged database file on systems scheduled for upgrades as the cause behind its system outage, and found no evidence of a cyberattack. Investigations are ongoing to prevent any similar disruptions to travelers in the future.
New tools are being developed, some originating from startups, to modernize and automate processes and systems in the airline industry that are manual, siloed, and outdated. Executives at a number of major airlines have reaffirmed their commitments to investing in technology modernization and operational infrastructure during their January quarterly earnings calls.
The examples above serve as cautionary tales on the potential dangers of not addressing needed system upgrades in a timely manner. Technology leaders can keep the following points in mind as they build organizational resilience amid a fast-changing technology landscape:
Don’t put modernization efforts on the back burner. CIOs and their organizations are constantly balancing a shifting portfolio of initiatives. Challenges at Southwest and the FAA illustrate the heightened risk and serious consequences of waiting to make critical upgrades or letting technical debt pile up. If your team doesn’t have a strategy for chipping away at that technical debt, it’s time to address it.
Connect the dots between internal systems, employees, and customers. Long-reliable legacy systems may be an afterthought for many organizations (until they stop working, that is). Incorporate maintenance and upgrades into short-term and long-term business and technology strategies with an emphasis on how these systems ultimately affect employee and customer outcomes.
Have a backup plan and prepare for the worst. Develop and regularly test response plans with teams to reduce risk and ensure the organization is prepared to navigate potential mishaps.
Leverage cloud-based systems where appropriate. Partnerships with cloud providers are expected to help airlines improve their technologies. A shift to cloud solutions is no simple or risk-free task, and successful implementations go well beyond simply installing the technology, but strategically scaling these technologies can create greater operational agility, help automate processes, and make data integration more seamless and secure.
Continue to enable real-time data and communication that can take place across teams and organizations. Where possible, eliminate silos that can slow and reduce the quality of data sharing and, at worst, bring operations to a halt. Ensuring accurate and accessible data enterprise-wide is not a small task and often requires a robust data strategy to execute effectively, but its benefits can extend well beyond helping with crisis response.
Continue to gather and listen to feedback. For executives especially, careful listening and communication are key to empowering teams, creating an effective digital experience, and ensuring they have the tools needed to do their jobs.
726: Michael discusses how he is driving new digital touchpoints for customers and implementing a frictionless experience for truck drivers and other business partners. He describes the structure of the conglomerate, the various verticals he leads, and how marketing and data fit within his purview. Michael covers his career prior to Pilot and what innovations and new trends in technology are on his and Pilot’s roadmap. Finally, he describes the relationship Pilot has with universities to bring in new talent and foster a culture of innovation, among other topics.
724: Jen discusses her philosophies in leadership and how she has used those lessons to realize the art of the possible at Cargill. She explains her preference for the term ‘digital’ over ‘IT’, describes the value both federated and centralized solutions have within her team, and shares anecdotes about how technology has improved the customer experience at the company. When it comes to leadership, Jen shares her “Four Ls of Leadership,” the “platinum rule” she lives by, and how these frameworks have pushed her to be a strategic driver in the CIO role. Finally, Jen reflects on the keys to her continued success, the progress we still have to bring more women into STEM fields, and the trends in technology that are on her roadmap.
XPO Logistics, Inc. is a leading provider of freight transportation services, primarily less-than-truckload (LTL) and truck brokerage. XPO uses its proprietary technology to move goods efficiently through supply chains. The company has a global network that serves 50,000 shippers with approximately 749 locations and 43,000 employees. In the fourth quarter, XPO will spin-off its tech-enabled brokered transportation business, with the remaining LTL business, which is a roughly $4.4 billion business. The current CIO at XPO Logistics and president of the less-than-truckload (LTL) business Mario Harik will assume the role of chief executive officer of the new XPO.
The growth of XPO Logistics has been remarkable. “We’ve integrated 18 acquisitions, and we grew the business over more than a decade now to be the seventh best-performing stock among Fortune 500,” noted Harik. “We have done so through becoming an innovator and one of the largest players in our industry. Technology has been a key part of making that happen since the onset of the company.”
Technology is where Harik has left, perhaps, his most profound mark, and it will be a critical aspect of the future of XPO’s LTL business after the spin-off. XPO Logistics started as a truck brokerage company. Harik was key to developing the technology that connected shippers with carriers, leveraging machine learning and data and analytics more generally to accomplish this in a seamless fashion. “We built a platform which eventually became XPO Connect which is one of the fastest growing platforms in our industry,” said Harik, noting that the growth in that platform has been a key driver of the company’s strong financial performance over the past decade. “With our less-than-truckload business, our technology using machine learning and data allows us to optimize how the network actually operates, [including] how we move freight between our terminals. This is a business where we have 294 terminals across North America. Then the technology allows us to effectively find the most efficient routes of that freight between our terminals to maximize efficiency.” Harik also underscored that machine learning and data science were used to optimize routes for the delivery of freight, again, impacting the bottom line of the company in the process. This has been the fruit of a $3 billion investment XPO Logistics has made in technology over the last decade.
In addition to spending, Harik has focused on developing a culture of innovation. “We built our own engineering talent to build proprietary software,” said Harik. “When you design your own software and build a company fit for purpose, that gives you a competitive advantage.”
Harik notes four aspects of the chief information officer role that contributed to his ascent to the CEO role. First, he noted that the CIO role provides a great overview of how a business operates. As such, a thoughtful CIO has access to a number of levers to pull to improve the business with technology.
Second, the CIO’s position in the corporate structure provides insights to understand the commercial impact of technology. The modern CIO has an ability to contribute to both sides of the profit equation: both cost reduction – the historical domain of the CIO – and revenue augmentation – the newer area to which great CIOs are contributing, and an area of great focus for Harik and his team. This more pervasive value creation, with greater touchpoints with the company’s customers, provides all the more justifications for CIOs to take on the top post.
Third, CIOs who establish feedback loops can be among the most informed executives within the company based on the data they collect, synthesize, analyze and put to work for each part of the company. “[It is important to] have strong feedback loops to listen to your employees and your customers about what is it that the technology has to do to improve performance or improve service levels or improve what you are delivering to your customers or to your employees,” said Harik. “Those feedback loops also work well for CIOs beyond the technology; they can lead to greater understanding of how you can improve the business, driving stronger growth, as well.”
Finally, fourth, CIOs manage a complex group of people who are among the highest compensated, with skills that are in short supply but that also add tremendous value. For an IT leader who can create a talent factory within his or her four walls, this creates a profound opportunity to take what works well within IT and make it more pervasive across the enterprise. Harik noted, “It’s about recruiting, retaining and providing for a world-class team of folks that effectively drive the results in everything that you do, and that’s the case in technology as in business.”
Harik, armed with an engineering degree from MIT, began his career building software. That innovative approach to building software continues to this day. He also has been an entrepreneur, starting and running companies along the way. By the time he took on the CIO post at XPO, the traditional role of an insular CIO, leading a support organization never occurred to him. “[As the third employee] at XPO, I’ve been working alongside [founder and current CEO] Brad Jacobs and the leadership team to build XPO,” underscored Harik. “This transportation powerhouse is steeped in technology. When you think, again, about all the experiences that you have, and when you look at technology as being a key driver of business performance, that becomes just a logical thing to focus on, given that that’s going to have the biggest impact and the solutions you build.” Harik has been fortunate to work in a business that from the earliest days was technology driven. Now most other industries have developed a version of this. As such, more CIOs should take heart that bigger opportunities might present themselves if they manage their teams and their careers in a comparable way.
Harik also emphasized the need for technology leaders to embed themselves in the operation. “Good technology is fit for purpose with what you’re doing as a business,” he said. “We spend a lot of time having our tech team either visiting terminals or spending time with operators in the field, to look at how technology is being used and how the use of that technology can be improved. What new features we’re going to be launching and how we’re going to improve them?”
When asked about where the new XPO will focus he noted a pivot from a strategy of improving margin to a strategy of both growing the business – gaining market share – as well as improving margin. “We’re going to do this by a couple of ways,” noted Harik. “We’re going to grow volume share through investment in our fleet, in doors and people. We are expanding our network. So far, over the last year, we’ve added five new terminals to our network and we also produce our own trailers. This year we’re going to produce double the number of trailers we did last year. More than 4,700 trailers that we’re going to be producing in our manufacturing facility as an example. We’re going to continue to capitalize in our industry that our firm pricing dynamics where we are going to continue to focus on pricing and make sure we are charging our customers a fair price for the services we offer.”
He rounded out the list by noting the importance of providing excellent service for XPO’s customers, delighting them in every interaction. He also believes there are pathways to continue to optimize costs. In both areas, technology is key.
Harik’s is an aspirational journey that CIOs with aspirations to earn their way to the CEO role should follow.
Peter High is President of Metis Strategy, a business and IT advisory firm. He has written two bestselling books, and his third, Getting to Nimble, was recently released. He also moderates the Technovation podcast series and speaks at conferences around the world. Follow him on Twitter @PeterAHigh.
717: Mario discusses his journey from CIO to CEO and his vision for the future of the business. He begins with his initial reflections on his transition to the CEO role and explains what helped him rise to the position. He gives an overview of how XPO was founded and the different verticals and spin-offs that have been a part of the company’s history, including the Less-Than-Truckload vertical he served as President for before his promotion. Mario describes the skillsets on his team, lessons from the company’s many successful M&A integrations, and how he fosters a culture of innovation. Finally, Mario speaks about the tech trends in data that are on his radar for the future of XPO and looks back at the keys to his career success.
682: In this interview, Rahul discusses his transformation efforts to modernize the 160-year-old railroad. Rahul covers his purview as CIO, what it means to be a tech executive at a railway company, and the internal operational lens of his purview. He also reflects on his experience in B2C functions and how they have informed his B2B role at Union Pacific. Rahul also describes what he means by transforming Union Pacific into a platform company, creating a high-performing culture through recruitment and DE&I, and why he has chosen to rebrand IT at the company. Finally, Rahul looks ahead at trends in technology that he is keeping abreast of and clues us in to the keys to his career success.
668: In this interview, Maya covers the company’s mission of “delivering value faster” to customers and leveraging technology to improve the customer experience. She begins by reflecting on the challenges American has faced during the COVID-19 Pandemic, the new sources of innovation that arose during the time, and how the next generation strategic initiatives that began at the company prior to the pandemic became a major source of resilience. Maya also discusses how technology is being leveraged to improve customer and employee experiences, how her experience as President of AAdvantage Loyalty Program influenced how she views the customer experience, and how her long tenure as CIO has opened up a world of opportunities. Finally, she talks about her personal and professional growth as a woman in technology, the trends she is excited to see in customer experience design, and the keys to her continued success.
