Fresh Start 2002: On the Road Again

The first time the headhunter called about the top job at Yellow Freight System, Bill Zollars said that he wasn't interested. He was perfectly happy as a senior vice president at another big transportation company, Ryder, where he had helped build the integrated-logistics unit into a $1.5 billion business. But the recruiter kept urging Zollars to reconsider: Here's a chance to build a new company out of one that's been around for more than 70 years.

It was Summer 1996, and Yellow was trying to set out on the road to recovery. The previous year had been the worst in the company's history: It saw $30 million in losses and the second round of layoffs in two years. In 1994, the Teamsters had gone on strike for 24 days, which cost the company dearly.

Zollars, who had left Kodak after 24 years for the chance to run Ryder's logistics unit, was intrigued. He met with Maury Myers, the new CEO of Yellow Corp., the holding company that included Yellow Freight and two regional carriers. Yellow Freight generated $2.5 billion in annual revenue, or about 80% of Yellow Corp.'s total sales. The survival strategy, Myers told Zollars, wasn't to reestablish the Yellow brand as a long-haul carrier, but to transform the company into something completely different: a carrier that offered multiple services and that was built around unprecedented customer service.

It was an opportunity that Zollars couldn't resist. He signed on with Yellow to help a troubled company start over. And today, nearly six years later, Yellow is a different company. It still transports primarily big, heavy freight -- minimum 100 pounds -- called "less-than-truckload" (since a single shipment doesn't fill an entire trailer, workers load multiple ones on the same vehicle). But how and when those parts and products reach their destination is another story. Gone is the one-dimensional long-haul approach and the complacency ingrained from years of regulation. No more telling customers, "Sorry, we can't do that." The new mantra is literally, "Yes we can." In an attempt to offer what Zollars calls "one-stop shopping," Yellow has added a variety of services, including regional and expedited shipping, to satisfy a broader range of transportation needs.

The old Yellow gave customers a rough estimate of when a shipment would arrive. It might show up then. It might not. The new Yellow is faster, more precise, and, the economic meltdown notwithstanding, more profitable. The four years before 2001 were the most successful in the company's history, with the annual revenue for 2000 reaching a record $3.6 billion. Even as the overall tonnage and revenue fell off in 2001, the newest services continued to grow -- a sign that Yellow is headed in the right direction, says Zollars.

That financial success has deep strategic roots. Long known for its bright orange trucks, the company is now considered to be a technology leader in its industry. Yellow's systems monitor 13,000 trucks nationwide and around 70,000 national and international shipping orders each day. The once-rigid delivery schedule is flexible. Customers decide when their freight will be delivered: in a week, three days, or several hours. They specify morning or afternoon delivery or, if they prefer, the exact hour. Yellow offers a money-back guarantee on expedited deliveries.

"We've gone from being a company that thought it was in the trucking business to being one that realizes it's in the service business," says Zollars matter-of-factly. That's a pretty simple way to describe a pretty big transformation.

First, Say What's on Your Mind

Before he began shaking things up at Yellow, Bill Zollars decided that he had to explain himself and his ideas to the staff. He also decided that he had to do it quickly, frequently, and in person. But there was a problem: Only a fraction of the 25,000 employees at the time worked at the company headquarters in Overland Park, Kansas, outside of Kansas City. Most worked at terminals that were located in several hundred cities. So in early 1997, after a few months on the job, Zollars hit the road. For the next year and a half, he regularly visited terminals around the country, where he conducted a series of town-hall meetings. There were no fancy slides or videos. Just Zollars, an affable former college-football player from Minnesota, standing on a loading dock or in a sales office, talking to the people responsible for carrying out his plans. "There were days when I gave the same speech 10 times at 10 different locations," he says. "I'd start at 6:30 AM with the drivers, then I'd talk to the dock workers, the people in the office, and the sales staff. At night, I'd meet with customers. I wanted as many employees and customers as possible to hear it from me face-to-face."