“Disruption is a great theory. It’s wonderful to read about, and hear about and watch from the sidelines, and what we’ve learned together is, it’s a lot harder to do,” said John Roberts III.
The president and CEO of J.B. Hunt Transport (NASDAQ: JBHT) joined the company’s EVP and Chief Commercial Officer Shelley Simpson to deliver the opening keynote address on Thursday at FreightWaves’ LIVE @HOME virtual conference. The free two-day conference is being streamed at live.freightwaves.com and concludes on Friday.
J.B. Hunt has become synonymous with technological change as it introduced its J.B. Hunt 360 solution and its well-known $500 million commitment over five years to technological development. But like most legacy companies, getting to that point was not as easy as flipping a switch, and Roberts and Simpson shared with the LIVE @HOME audience some of the inside discussions that started the tech journey, which really began about eight years ago.
Watch: Shelley Simpson and John Roberts III
“As I think about how we view that digital transformation, we’ve really done that from what we consider the cycle of innovation,” Simpson said, noting the task of disrupting the company’s 59 years of history. “[We thought about] ways that have worked in our past but won’t necessarily work in our future, or maybe could be better.”
Roberts, who has been CEO for about 10 years, said the company has always tried to listen to customers, and the “digital transformation discussion is one that hits right in the center of that overall idea of entrepreneurialism and moving toward the better answer.”
He acknowledged that the early days and discussions of how to innovate were a “little bit defensive” as the company tried to determine how to move on from its 20-year-old mainframe computer system.
“So we started talking through a modernization and that evolved — the conversation opened up into what else could we do if we had more bandwidth and flexibility and access, and what would we be able to do for our customers and our people with more data?” Roberts said. “That began a very important conversation for us.”
Simpson tied the point in time that everything clicked to a customer meeting around 2012 or early 2013.
“We [had] developed our very first phase of Shipper 360 working with just a handful of customers,” she recalled. “And in that marketing meeting, our head of marketing said our customers had hit Shipper 360 800,000 times. I remember thinking we hadn’t advertised, we hadn’t talked a lot about it, but that was surprising how much people wanted it.”
More impressively, Simpson said, was that the fourth-most largest group of people coming to jbhunt.com was carriers looking to do business with the company.
“They did that 1 million times,” she said, noting that to find that 10-year-old page the carrier had to navigate through the website. “It was an aha [moment]. We actually have both components of a marketplace — we have the shippers; we have carriers. What if we were to think about this more strategically, what could we do? How could we disrupt ourselves?”
The moment galvanized in 2014 when the company produced a white paper, “660 Minutes: How Improving Driver Efficiency Increases Capacity.” That paper found that drivers were wasting nearly one-third of their available driving hours each day. J.B. Hunt 360 was born out of that moment.
“The biggest opportunity was actually around technology, and that was the launching point for J.B. Hunt 360 — our multimodal digital freight platform,” Simpson said. “For us, we believe that we can eliminate the waste that’s in the system that currently exists for those 3½ million drivers. If we were able to give just one hour back — they would still have nearly three hours of waste — but they’d have one more hour to drive, to make more money or do whatever they choose to do.”
Like other technology investments, though, the idea needed support — and the right mix of people and innovative ideas.
“Much of what we’d done up to that point had been more rigid, more analytical, more engineered — pricing is a science, equipment utilization is full industrial engineering-based — and now we are going to go and try things we wouldn’t let ourselves try before,” Roberts said. “That to me was probably the breakthrough. That discussion where we found ourselves able to embrace this idea that we needed to go do something that was uncomfortable, and quite frankly, it was more uncomfortable than I ever thought it would be.”
One of the key decisions was hiring Stuart Scott, the company’s EVP and CIO. Scott was one of the first members of J.B. Hunt’s executive leadership team that had not come up through the company ranks.
“It’s really a big-picture idea because it wasn’t just Stuart, it was Stuart’s leadership and his ability to come in and really communicate what we needed,” Roberts said.
Invested in the process, J.B. Hunt’s transformation was underway, and it has led it to grow into a near $10 billion revenue company, but it’s a journey that hasn’t always been easy, Roberts admitted.
“Technology is one of the most difficult things that we manage because it doesn’t behave like our equipment or even our people,” he said. “It’s hard for us to see it and get it in a box, and make it do what we want it to do. And if it doesn’t do exactly what we want it to do, we can’t always see why as we can with other things we’re used to managing.”
J.B. Hunt has now invested in an on-campus training and technology center, but it was still looking for something more. That has come in the form of Elevation.
Elevation is a program designed to open lines of communication within the company. The effort gathers, vets, processes and approves any and all ideas from company employees — regardless of their position. Simpson said the program has generated over 20,000 ideas since its launch, with more than 1,000 approved, including some of the company’s latest technological advancements.
“It is open, active, managed with a great team of people, [and allows] everybody to talk to us — a driver can talk to us, a floor manager at a warehouse can talk to us, an IT person, somebody in our shop,” Roberts said. “Anybody can be heard here.
“What we’ve learned is we should keep it going because it’s not only a great way to start IT, it’s a great way to run the business and I suspect it will live on for a long time,” he added.
Roberts and Simpson swapped stories of innovation that came from customer conversations — including J.B. Hunt’s last-mile business — but also noted that innovation is not limited to technology, and the company’s transformation is far from done.
“I do want to say we have a heavy reliance on our technologies and our systems, but the core of the work is done by our people,” Roberts said. “Our systems and technologies only enable those 30,000 [employees] to do a better job. This is not about replacing people; it’s about enabling people.
“In the next five years, I would be very surprised if we aren’t talking about a meaningful expansion in our ability to serve our customers and the revenues and values that would present for us,” Roberts concluded.