Slice of luck helps Deutsche Post head

Despite a tough operating environment for logistics, Deutsche Post's chief executive Frank Appel maintains his company does not need a radical overhaul; it just needs to be better at what it does, he tells JAMES WILSON

WHATEVER ELSE he achieves in business, Frank Appel will have at least one claim to make at dinner parties: he was the last chief executive to sell a bank in the good old days before Lehman Brothers went bust.

Deutsche Post DHL, Appel’s company, gave up control of its Postbank subsidiary in a deal with Deutsche Bank on September 12th, the Friday before Lehman’s weekend collapse. The impending maternity leave of one executive helped accelerate a deal that, hours later, might never have been done.

Luck matters in business, Appel admits – and he recognises that it helped him climb to the top of Deutsche Post, the world’s biggest logistics company. “I was in the right place at the right moment . . . I was lucky and I feel like that, you know? Performance is a prerequisite but it is not sufficient.”

But Appel’s performance has evidently helped. Nine years after leaving university, he became a management board member at Post, one of Germany’s blue chip companies. Six years later, after several board roles, he was the obvious successor to Klaus Zumwinkel when the long-time chief executive stepped down, snared in a personal tax evasion scandal. In the 15 months since he took the top job, Appel has repeatedly had his mettle tested. Selling Postbank was a big call: arguably tougher was the decision to close, at a cost of billions of euro, DHL’s sick US express business. Nor was that an end to his problems: the economic downturn is sucking the life out of the logistics business while the old German mail service is shrinking – apparently inexorably. Dividends have been cut. Shareholders are restless.

Appel knows that his new strategy, launched in March, must help the company outperform peers by 2015. Getting union agreement to reshape the mail business is an urgent structural challenge. He also wants to sharpen second- and third-tier management, saying flatly: “I am not convinced that everyone on the second and third levels is good enough.”

One of a group of relatively young bosses at German blue chip companies, Appel seems determined to make change at Deutsche Post after Zumwinkel’s 18-year tenure. Company presentations are less formal, communication is wider and, according to Appel, outsiders notice that the management board are “acting more as a team”.

The prospect of managing through a big global downturn does not change his view of the business or its prospects. “Fundamentally, globalisation will proceed,” he says. Logistics, he believes, is an “immature” business with good scope for growth in areas such as managing congestion and environmental protection. “If we find answers to these problems, we can do a lot of business. There is huge opportunity to do things better . . . I want to shape things. That drives me,” he says.

The middle child of a northern German family Appel, until the age of 31, pursued laboratory work and a PhD in neuroscience. “I was interested in the ‘why’ of human behaviour,” he says. He left academia to join McKinsey, the consulting firm, from where he was brought into Deutsche Post by Zumwinkel.

Appel is reluctant to criticise his mentor and predecessor. But, to an outsider, it seems Appel has been lucky here too. If Zumwinkel had not left in disgrace, he would probably have become supervisory board chairman, peering over Appel’s shoulder.

Instead, Appel has had the freedom to make what he terms his most successful decision: closing the lossmaking DHL US Express business that Zumwinkel decisively expanded.

One lesson Appel does draw is that making changes becomes more difficult the longer a chief executive is in the job – a chief executive can make changes more easily before decisions become part of his legacy. A second is the need for good advice: Appel regrets that he was “not convincing enough” in the past to persuade Zumwinkel to act to solve the business’s problems.

And a third is the simple decision not to hang around too long.

“I already know that, when I stop being chief executive of this company, I will not move to the supervisory board,” he says. Only he and his wife know the date by which he wants to leave.

Appel says Deutsche Post does not need a radical overhaul or transformative deals – it just needs to be better at what it does.

His recently launched strategy promised the guiding principles “respect and results” and “simplifying services” but was short on detailed targets.

The strategy “was a journey for me too”, says Appel. Starting from what he calls “classical strategic stuff”, he became convinced that the more important question was to motivate 500,000 staff with a clear view of what their company should do. He names Ken Blanchard’s book Gung Ho! (subtitle: “Turn on the People in any Organisation”) as an influence.

Dismissing the idea that the result is too woolly, he says there has been good feedback from employees. “I hear people say,‘I don’t care or understand about ebit numbers or the bottom line – but, if you tell me we want to make a contribution and make life for our customers simpler, I know what you are talking about’,” he says.

If the less bullish message seems right for tough times, he says, that is a coincidence – but it helps people be more receptive. In managing, Appel says he delegates as much as he can.

“I try not to become the bottleneck for decision-making . . . in times of heavy demands on my time, I have to make faster decisions and rely on and trust people,” he says.

Pegged during his consultancy days as less a creative thinker than a strategic one, he feels no compulsion to prove he is a good all-rounder as chief executive, remembering lessons from McKinsey about playing to strengths.

The balance in his executive board works, he says – “If they are all small Frank Appels we will not be successful.”

Errors have been made; more will be. From his past observations as a neuroscientist of the workings of the brain, Appel says he has learnt to be fatalistic about mistakes – and derives a leadership lesson. “I can accept how things are as long as I know that I did not intentionally do things wrong. – (Copyright The Financial Times Limited 2009)