Growing Up as a CEO

Walter Riley built just what he thought he wanted -- one of the fastest-growing companies in America. Then he tore it down and began rebuilding it, trying to completely remake his own style of managing. Why? Because he expected more than what he was getting out of being a business owner. And because he started to see that his company needed more than his old self could give. -- J.H.

By any standard measure, G.O.D. (Guaranteed Overnight Delivery) Inc. has always been a star. During its first six years of life it grew more than 8,100 percent, while its segment of the trucking industry shrunk by two-thirds. By 1988 it had $17 million in sales, about 260 employees, and a national reputation. It has posted profits every year except one.

Walter Riley, G.O.D.'s chief executive, has always found surprising ways of responding to the impressive numbers. In 1986, when sales approached nearly $13 million, he took all his managers and supervisors on a wild trip to the Bahamas, where they organized a triathlon and bombed around in banana boats. To celebrate 1987's successes he took them on a picnic, then presented them with a vacation house he had bought for their use.

But Riley saved his biggest surprise for 1988, when sales rose by 18 percent and profits by more than 25 percent. That was the year he shocked everyone by tearing the company to shreds.

Nothing was spared. He remade the management structure. He abolished the intricate sales-incentive program. With his new executives, he spent 150-plus hours writing a one-page statement of corporate purpose and values. "I decided," Riley quietly remembers, "to crush what we had and start from scratch."

But why?

Ask, and he will give you reasons: his salespeople were disgruntled. His dock workers were dissatisfied. His managers were distrustful. Yet what ultimately propelled Riley was not one of these things nor even the combined effect of them all. What propelled him was his own disgust with the kind of manager he had become. "I hated the things I was doing," he says softly. After all the effort and pain and setbacks and successes, he discovered he wasn't the person he wanted to be.

He was an accomplished strategist, to be sure -- a brilliant business-problem solver. But he had hoped "to inspire people" as well, he says. He had hoped to be a role model, a compassionate mentor, a leader. He had hoped to be loved. "Instead," he says, "I was a dictator."

He created a company that, for all its success, mirrored some of his worst instincts: impatience, mistrust, anger. It had become a place he was miserable being in but could not imagine staying away from. Now, he wanted to try -- this time with the help of others -- to build a company that was more than the product of his bullying self-interest.

Starting over, he felt, was his only way out.

* * *

Exactly how things had reached this point in the spring of 1988, even Riley finds difficult to explain. What he had wanted most, for as long as he could remember, was to make his company grow -- and fast. For the preceding six years at least, that's just what he had done.

In 1982 he took the moribund local carting company he had bought only 18 months earlier and reinvented it, responding to trucking deregulation in a way that would turn Seigle's Express -- the company's name back then -- into an industry juggernaut.

Riley had known when he took the Kearny, N.J., company over in late 1980 that it was in trouble. In the face of postderegulation price-slashing, he says, "our core busi-ness was going to deteriorate." Seigle's was small and had made its money by offering low prices while operating on slim margins. When larger carriers responded to the new environment by cutting prices by as much as 45%, Seigle's didn't have the cushioning to survive the brutal ride.

So Riley had begun immediately to look for a market the discounters weren't serving. He thought he knew one. Would you be interested, his salespeople asked potential customers, if a carrier offered you consistent overnight delivery? Would you pay a premium for it?

As Riley suspected, the answer was yes on both counts. Now, all he had to do was figure out how to provide a level of service that had heretofore never existed in the trucking industry.

Seigle's would have to go regional -- catering to the Northeast Corridor -- and deviate from the way such truckers usually handled their cargo. Typical methods involved too much transferring among different vehicles for freight to get moved overnight. Riley admired Federal Express Corp.'s revolutionary hub-and-spoke system, in which all letters were sorted through one central terminal in Memphis. So fascinated was he that he took to sending empty envelopes just so he could corral Federal Express drivers and batter them with questions. Where does all the freight go? he'd ask. How many stops do you make in a day?

Riley immediately began testing variations on the hub-and-spoke system, ways to cut down on goods handling. Then he heard about the Surface Transportation Act, which would legalize the use of small, 28-foot trailers pulled in tandem. Perfect, he thought. The small trailers could efficiently make local pickups and deliveries, then be hitched together for the nightly run to the North Jersey hub -- the only place the cargo would be transferred. Two months before the act was even passed, Riley bought 30 of these pup trailers and seven tractors at auction.

Once he'd set up the hub and spoke, Riley had to make sure the industry knew about it. He saw the opportunity for some cheap marketing when a salesperson complained that the name Seigle's sounded too much like, well, the kind of small-time business that carried hats from one place to another -- certainly not the regional powerhouse they all believed they were building. So Riley kicked around a bunch of names for the new overnight service, to be set up alongside Seigle's, which would remain a local carter. Guaranteed Overnight Service. Overnight Express. And, finally, Guaranteed Overnight Delivery. Riley, not the subtle type, loved the G.O.D. initials. Don't even think about using it, warned a local ad agency. Riley thanked the agency for its advice, then instructed that all the trucks be painted with the G.O.D. logo in six-foot-high black-and-red letters.