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Logistics Industry: Key Lessons from Brad Jacobs’ Latest Book

On Monday, Brad Jacobs, renowned serial entrepreneur and executive chairman of XPO Logistics, unveiled his eagerly awaited book titled “How to Make a Few Billion Dollars.” In this debut literary endeavor, Jacobs candidly shares the plethora of valuable lessons gleaned from his journey of spearheading billion-dollar enterprises in fragmented markets.

Within its pages, Jacobs offers a rich tapestry of insights, ranging from invaluable advice on reshaping one’s perspective to shedding light on the intricate relationship between technological advancements and human growth. Challenging conventional notions of success, he presents innovative strategies for attaining ambitious objectives, drawing from his wealth of experience and expertise.

Drawing from a decade of dedicated efforts in establishing a highly competitive and lucrative family of logistics enterprises, Jacobs imparts three insightful lessons that resonate with professionals across the transportation and logistics spectrum.

Plan to invest in technology

Jacobs shares a noteworthy exchange with his mentor, Ludwig Jesselson, the former president and CEO of Philipp Brothers. Jesselson emphasizes the pivotal role of accurately identifying and capitalizing on major trends for business success. Jacobs, in alignment with this advice, underscores the significance of a 2 million-year-old megatrend that has recently gained momentum: technology.

Acknowledging the inevitable challenges in integrating technology into a business model, Jacobs highlights a crucial takeaway from his experience— “If you aspire to achieve substantial financial gains in virtually any industry, it is imperative to strategically invest in technology.”

“Does technology pose a threat, an opportunity, or perhaps both? Can business processes be automated to enhance customer service while reducing labor costs?” Jacobs contemplates, inadvertently shedding light on the ongoing challenge faced by logistics providers as they navigate lower margins, compelling them to optimize efficiency to both benefit shippers and value employees’ time.

The tech dialogue, as guided by Jacobs, extends to the realm of Artificial Intelligence (AI), exploring its potential applications across various industries, particularly within the intricate web of supply chain dynamics.

“Humans are on the decline, and computers are on the rise—that’s the most prominent trend I observe. Any business neglecting this shift is poised for a rude awakening,” he emphasizes.

Yet, Jacobs acknowledges the inherent difficulties in embracing technology.

“Spotting tech trends isn’t hindered by a lack of information; rather, it’s the colossal implications that make it challenging for people to fully comprehend them.”

In the face of such complexity, the question arises: How do logistics companies discern the opportune moments to embrace technology?

Jacobs proposes a straightforward approach: Engage with your customers.

“To discern a burgeoning trend effectively, inquire with your customers about their ideal technological solutions, assuming feasibility and cost are non-issues. This eliminates any mental barriers,” he advises.

Following these insightful conversations, Jacobs’ teams at XPO, alongside warehousing spinoff GXO and freight brokerage spinoff RXO, systematically evaluate the costs and potential returns linked to each idea. This strategic budgeting approach ensures affordability while prioritizing initiatives with the promise of the highest returns. Jacobs underscores the disciplined nature of this process, emphasizing that it also allows room for innovation.

Unlike his other ventures, Jacobs highlights that XPO’s growth was distinctly centered on the industry’s pressing need for innovation. Establishing XPO in 2011 to leverage the truck brokerage opportunity, he strategically incorporated three pillars of scale, data science, and automation, with a pronounced emphasis on substantial early investments in technology. The efficient logistics of the company ensured that products were delivered to customers on time, contributing to a positive customer experience.

Emphasizing Team Collaboration

Spanning across the book’s insightful 200 pages (augmented by an additional 40 pages featuring educational resources, including recommended readings and interview prompts borrowed from the entrepreneur), Jacobs dedicates considerable attention to acknowledging the human dimension inherent in business operations.

This thematic exploration permeates various aspects of the book, ranging from the pivotal role of company culture in mergers and acquisitions to the significance of personality in hiring decisions, and even delving into the structural dynamics of company meetings.

Reflecting on the launch of two spinoffs from XPO, he asserts, “It demanded immense perseverance from the team and an unparalleled wealth of collective knowledge,” recognizing that assembling a team of intelligent, diligent individuals with diverse backgrounds and perspectives is indispensable for achieving scalability.

He leverages the leadership teams at XPO, GXO, and RXO as exemplars of triumphant businesses, each steered by individuals with diverse backgrounds and educational experiences. This serves as a testament to the potency of comprehending and embracing differences while rallying towards a shared objective, ultimately fostering robust growth.

“On one hand, I seek ambitious individuals with robust egos on my team—self-assured winners driven to dominate the market and amass success,” he asserts. “Simultaneously, they must genuinely respect others, as even a hint of arrogance can be a warning sign. … ‘Can this person engage in dialectical thinking?’ That is, are they capable of contemplating from multiple perspectives and harmonizing streams of information seemingly diverging?”

Once the team is assembled, the critical question arises: How do you sustain the cohesion of that team?

This challenge, frequently observed in logistics roles with the increasing integration of technology, underscores the importance of constructing an incentive structure that cultivates loyalty and ongoing business enhancement.

In addressing this, the billionaire entrepreneur underscores the most potent tool elucidated in his book: compensation.

In an industry notorious for surreptitiously slipping noncompetes into employee contracts, where the mantra “We are family here” is espoused as a cultural ethos, Brad Jacobs breaks through the norm with authenticity.

“Not a single one of our 174,000 employees shows up to work because they want to make money for Brad Jacobs. They come because they want to make money for themselves and their families—to buy a house, put their kids through college, or fulfill an even bigger dream,” he articulates.

This principle guides Jacobs to be recognized for overpaying, a deliberate move to retain top-tier talent committed to their work. However, he advocates for appropriate incentivization.

“I’ve been meticulous about aligning the incentive structure with company goals. If a salesperson’s commission hinges solely on revenue, it grants them carte blanche to bring in new customers that may or may not align with the company’s operational capabilities. This can compromise efficiency and have a negative impact on customer service, margin, and overall profit.”

Jacobs acknowledges this historical challenge within the industry and emphasizes his strategic decision as a CEO to break away from the “penny-wise and pound-foolish” mentality prevalent in the transportation sector. By paying competitively, akin to major corporations, XPO has successfully positioned itself to compete at the highest echelons for top talent.

Lead with love

Leading with love takes center stage in Jacobs’ approach. While many entrepreneurs’ books delve into myriad solutions for business challenges, Jacobs opens his with a lesson on love and empathy, recounting his experience officiating his daughter’s wedding.

“So what’s love got to do with making a few billion dollars? It has a lot to do with getting your brain in the right place to make good decisions. Fast-paced business environments swing between ups and downs, with many stressful interactions. Love is an expansive emotional state that allows you to neutralize conflict and get everyone to a better place,” he contends.

Jacobs introduces several concepts fostering a “durable love vibe” for steering a company, including the practice of one-on-one “gratitude conversations” where a leader openly expresses appreciation for a team member.

Acknowledging the innate human response to stress—typically leaning towards frustration and self-criticism, a trait he attributes to our hunter-gatherer ancestry—Jacobs emphasizes the role of a CEO. According to him, a proficient leader, especially one adept at generating billions of dollars, must guide individuals to embrace challenges.

“While life may entail discomfort, a skilled leader can achieve significant outcomes by reframing these discomforts in ways that facilitate their constructive utilization.”

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