Interview: Ken Allen, CEO of DHL Express
This article was written before the coronavirus pandemic had escalated in the UK, Europe and the USA and first appears in the April 2020 issue of CA magazine.
Ken Allen left school at 16 with no plan, but a knack for numbers. By 2009 he was Global CEO of multinational giant DHL Express. With a new book recounting his career and management philosophy, he tells Ryan Herman how he got from A to B
Ken Allen is singing the Travie McCoy/Bruno Mars song Billionaire, albeit with his own unique take on the lyrics.“I wanna be a billionaire, so freakin’ bad/FedEx and UPS will be so sad/ I wanna be on the cover of Forbes magazine/ TNT is never to be seen...”
The man who is known in China as “the singing CEO” says, “I guess I’m not what you would describe as a typical boss.”
Vocal range may not be his strong point, but Allen knows how to strike the right note in business. In 2009, he became the CEO of DHL Express. The previous year, the logistics giant had posted losses of €2.2bn (£1.83bn). But by 2010, DHL was in the black.
By 2018, he was able to boast it had become “the most profitable express company in the world”. Its operating profit for last year was expected to reach €2bn. The story of how he transformed the German company’s fortunes is set out in his recent book, Radical Simplicity. This idea of taking a radical decision to solve a problem dates back to his adolescence. Born in Horbury, Yorkshire, Allen grew up on a council estate, left school at 16 and was a father by 19. “When I left school, I wasn’t in with a great bunch of people, to be honest, and I was trying to get my life back on track,” he says.
“That meant I had to find a different group of friends, which isn’t easy at that age. But I guess the simplicity part is knowing you have to do something different. The execution is the hard part. That did make me see things in a much clearer way. It was a big part of how I got to where I am now.”
On the double
His first job was with sports manufacturer Slazenger, where he started work in accounts.
“I know this sounds crazy, but I loved the process of double-entry bookkeeping. It’s so well done, it’s simple to understand and that simplicity has stuck with me throughout my career. It taught me the basics of what to do in business – make sure you get the core elements right, make sure the detail is there, and make sure you follow up.”
That experience came to the fore when, in 2008, having spent more than 20 years rising through the company ranks, he was tasked with sorting out DHL’s American operation.
“We had bought a domestic player that was low quality and it became a disaster,” he says.
If you have an environmental carbon audit in the same way you have a financial audit, that’s when things start to move rapidly.
“When I looked around the boardroom there were 15 people, none of whom had experience of the domestic market. “I remember one of the sales guys spent about 15 minutes going through all these new accounts he had signed up. But when the finance guy revealed the revenue figure, it had gone down!”
By way of explanation he was told “the service isn’t that great so we get a lot of churn”. He says, “What is the point in bringing in all this new business if you’re not satisfying your existing customers? And that is the thing about radical simplicity. It seems obvious, but instead of looking at the root cause they sent out loads of salespeople to bring in more business. I thought, ‘I have to dig into each individual element.’ I spent a lot of time with customer service, who always know what the issues are, and I spent a lot of time going around the country. It was clear that the management team wasn’t up to it.”
Shutting down the US domestic operation meant the loss of around 10,000 jobs. But without such drastic action, it could have been many thousands more.
For any chartered accountant with ambitions of becoming chief executive, he offers this advice: “You’ve got to talk openly and intelligently in detail with customers and suppliers, and really understand the product proposition of your company – why do people buy your product and like your brand?
“But I’m also a big believer that there should only be one strategist in a company, who takes input from everybody else, and that should be the CEO. Across many industries, most strategies are 86% generically the same. It’s how you execute that strategy that sets you apart.”
A core part of DHL’s future strategy is sustainability. Allen attended the World Economic Forum in Davos this year and is keen to stress that away from the glamour, it’s the opportunity to get some of the business world’s biggest players in the room to set out an agenda on the environment and society that appeals to him. But how does a company such as DHL, which relies heavily on aviation and transport, become a part of the solution rather than part of the problem?
“We have focused on three areas, known as GoHelp, GoTeach, and GoGreen. GoHelp is about using our logistics capability in times of crisis. When a hurricane strikes or a natural disaster occurs it’s not money that people need, it is logistics support and companies like ours that can fly in water [supplies].
“We have a subsidiary programme from GoHelp known as GARD – Getting Airports Ready for Disaster. We work with the UN and other agencies to get planes in quickly and deliver the supplies that people need. GoTeach is about making education available to as many people as possible and creating a more equitable world. And GoGreen has been a core part of the business since 2009/10.”
In 2008, DHL became the first logistics company to set a target for reducing carbon emissions, and comfortably achieved its goal of 30% by 2020.
You’ve got to trust your people to react to events. You can’t do that centrally. It has to come from people on the ground.
“We use green electric. We made our own scooters, teardrop trailers, and electric vehicles,” he adds.
He concedes, though, that tourism and the boom in eCommerce means our skies will continue to be crowded.
“Because we are an aviation network. We need to invest in driving different types of fuels, which is why we support the concept of a carbon tax.
“The interesting thing about carbon reporting is that the more you can get it integrated into your strategy, that’s when it comes to life. So, if you have an environmental carbon audit in the same way you have a financial audit, that’s when things start to move at a rapid rate.”
In 2019, Allen became CEO of DHL eCommerce Solutions, which he sees as a key driver for the global economy. “At the moment people are talking about the slowdown of global GDP. Yet employment is at its highest levels in most economies, and I’m not sure how GDP and some other measurements look at areas like Uber or Airbnb or Amazon or Alibaba. The digital economy is a lot harder to measure than the old industrial economy. How is anyone going to account for 3D printing?
“People say to me, ‘Is Amazon a customer or a competitor?’ Well, yeah, they are definitely a customer. You could say they are a competitor as well. But the question I put back is, ‘What would the parcel market be like without Amazon or Alibaba?’
“And the other big change that has happened is that now every brick-and-mortar retailer has to have an online offering. For the logistics industry, that is an ongoing source of growth. I call it a revolution.”
The industry faces daily challenges. But when Allen puts a major upheaval such as Brexit into a broader context, it sounds like a mere bump in the road. DHL was investing in customs clearance agents long before the government confirmed that frictionless trade would come to an end in 2021.
“What people forget is that tariffs and trade agreements are changing all the time,” he says. The key, Allen adds, is having people who understand the local issues of every territory in which DHL operates. “If you think about a global network like DHL Express, stuff happens all over the world, every day, whether it’s a strike, planes are grounded for some reason, an outbreak of a virus like the one we have at the moment, a natural disaster, a breakdown in the supply chain... You’ve got to trust your people to react to events. You can’t do that centrally. It has to come from people on the ground.”
Allen never set out to be a CEO and he almost fell into his senior roles at DHL. But his unique management style and ability to keep a cool head in a crisis have unquestionably worked in both his and the company’s favour. He likes to use the expression “be yourself, because everyone else is taken”. He adds, “I love that moment when Lady Gaga appeared in Madison Square Garden and said, ‘Don’t let anybody tell you that you’re not good enough, you’re not smart enough, you’re not pretty enough, you can’t sing or dance, you just tell everybody that you’re a goddamn superstar and you were born this way.’”
You said it, Ken. But are you going to sing it?
This article first appeared in the April 2020 issue of CA magazine.