Faced with current unfavorable economic circumstances and the ultra competitive landscape, organizations are under more pressure than ever to innovate in order to wish to survive. Managers and organizational leadership believe that innovations are necessary to transform organizations to a sustainable level (Davis, 1991; Fussler, 1996), but are not always apparent how managers can achieve this.
United Parcel Service (UPS) the largest delivery organization in the world is an organization that has encouraged innovation since it was founded in 1907. Innovation is part of the culture of the organization and that is why the organization has been around for the past 103 years.
The major instrument used by the organization is the "Winning Team" strategic imperative (Soupata, 2005). This strategy is a human resources effort developed to attract, develop, and retain a skilled, motivated, and diverse global workforce whose interests and values align with UPS strategic corporate goal, and subsequently result in highly engaged employees. It also is intended to preserve and build upon UPS's culture and legacy of integrity, ownership, performance, respect, and innovation. The organization in addition to the winning team strategy and uses Managers Incentive Program where management staff take part in profit sharing at the end of the year in form of company stock. The make every management staff a part owner of the company (Soupata, 2005). The Managers Incentive Program make 43% of full-time employees are also shareholders (UPS Sustainability Report, 2009). The human resources strategy in the organization creates a fertile ground for innovative employees and the organization also do not frown at failure due to new ideas. The global employee retention rate in 2009 was 92.6% (UPS Sustainability Report, 2009).
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UPS also has an engineering culture whose innovative thinking helped align its business model with efficiency and reduce its carbon footprint. UPS managers and employees are invariably motivated by doing the right thing (Carmichael & Rubin, 2008). UPS has a culture of aligning business and engineering objectives with environmental issues. The culture at UPS is one of relentless pursuit of constant improvements and if possible full blown innovation (Hess & Kazanjian, 2006). The question being constantly asked, how can packages be delivered faster, cheaper, and more efficiently and this goes on until improvements are made.
Long before it became fashionable for organizations to embrace, UPS as an organization has had environmental sustainability as part of its corporate goals. UPS has lots of environmental initiative that is about ensuring long term business success while contributing towards economic and social development, a healthy environment and a stable society. UPS expanded its fleet of alternative-fuel with the deployment of 200 next-generation hybrid electric delivery trucks in eight U.S. cities. The 200 new hybrid electric vehicles (HEVs) join roughly 20,000 low-emission and alternative-fuel vehicles already in use and have been deployed in Austin, Houston, Philadelphia, Chicago, Washington, D.C., Long Island, Minneapolis and Louisville. Before this latest deployment, UPS was operating 50 hybrid electrics in Atlanta, Dallas, Houston and Phoenix (UPS Sustainability Report, 2009).
Bob Stoffel UPS senior vice president of supply chain, strategy, engineering and sustainability said that because UPS uses technology properly used, the organization has been able to have a 35 percent fuel savings, the equivalent of 100 conventional UPS delivery vehicles (UPS Sustainability Report, 2009).
The 200 new HEV delivery trucks are expected to reduce fuel consumption by roughly 176,000 gallons over the course of a year compared to an equivalent number of traditional diesel trucks. The hybrids also should reduce by 1,786 metric tons the amount of CO2 gases released annually into the atmosphere. These vehicles also use regenerative braking. The energy generated from applying the brakes is captured and returned to the battery as electricity. The combination of clean diesel power and electric power, supplemented by regenerative braking, allows dramatic improvements in fuel savings and emissions reductions.
In furtherance of its determination to continue to invest in sound environmental management, UPS also introduced carbon neutral shipping service which includes reusable shipping envelopes, Eco Responsible Packaging and UPS Paperless Invoice (UPS Sustainability Report, 2009).
The organization has been able to be environmentally responsible because it has encouraged its employees to be innovative and also take into cognizance that sustainability of its environment equates to the sustainability of the organization too. The DIAD technology is used for package tracking, but through internal innovation effort of employees, an add-on software loaded into the DIA to monitor fuel efficiency and automotive information system. In 2006 this effort led to a savings of 330 quarts of oil (Carmichael & Rubin, 2008).UPS has taken the opportunity presented with environmental issue and decided that it is in the overall best interest of the company to a big player in this endeavor.
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The company has seen taken compliance with regulation as an opportunity. It is usually better on the long run for organizations to comply with the law than fight it. The US automobile companies fought the California clean air act, while the Japanese car companies embraced it and moved ahead in car emission technology. UPS usually comply with regulation and it has benefitted financially and also from public perception. Hewlett-Packard in anticipation that lead will someday be banned created solders that are an amalgam of tin, silver, and copper, and even developed chemical agents to tackle the problems of oxidization and tarnishing during the soldering process. In 2006 when European Unionââ‚¬â„¢s restriction of hazardous substances directive was released, HP was ready (Nidumolu, Prahalad, & Rangaswami 2009). UPS innovated by using compliance to induce the organizations, its customers and suppliers and partners to experiment with sustainable technologies, materials, and processes.
Since UPS has been able to keep pace with regulations, the focus is now turning efforts to reduce the consumption of non-renewable resources. Apart from using bio-diesel and fuel efficient trucks, each individual building of the organization has undergone environmentally friendly renovation. In the main computer center in Atlanta, water coolants have been installed to cool servers and mainframes instead of air conditioners helping to reduce the cost of maintaining the machines. Innovation opportunities that presented itself here is that the organization to start reducing the consumption of non-renewable energy sources, and designing the envelope is such a way that it can be used more than once.
Another stage of sustainability in the organization is the design of sustainable products and services. In furtherance of its objective the organization has also started developing sustainable and eco-friendly products for customers. UPS customers now can purchase certified carbon offsets to help mitigate the climate impact of their shipping and higher volume shippers can contract for their deliveries to be offset according to their own particular shipping patterns.
UPS provides each business units with clear technology standards and platforms, then the units free to develop at their own expense applications that the central IT unit subsequently supports (Ross & Beath 2002). In some of UPSââ‚¬â„¢s units, new business models are being developed in order to find novel ways of delivering and capturing value, which will help further the sustainability goal. Innovating with new technology can devise new business models by combining digital and physical infrastructures (Ross & Beath, 2002). Within the Information Technology unit, most servers are now being virtualized, the impact of this move is that there are less physical machines to maintain, less electricity usage and less overall cost to the organization (Broadbent & Weill 1997).
There is no doubt that UPS is a global leader in logistics and has also become a global leader in environmental sustainability. Stakeholder, customers and the general public expect organizations to take responsibility for environmental issues they have helped to create, and UPS has not be found wanting in this regard. It is an organization that has be very proactive in this field.
As the organizations expand globally and into new business endeavor, it has used new technology to try and mitigate the negative impact of its action. Since 2004 UPS has tracked and released sustainability report that also include goals, objective and achievements. As UPS continue to expand into new business, new risk will be encountered, but the organization is well equipped to deal with environmental issues that come up just because it is proactive in all it undertakes. In UPS Sustainability = Innovation.