Douglas Oberhelman, CEO of Caterpillar spoke on campus today about four central topics:
- The last 20 years at Caterpillar and the next 20
- His personal legacy and dreaming big
- Accountability-the essential ingredient for successful employees and organizations
- Government policy
The first topic demonstrated Doug’s great optimism for the future. At CAT, the revenues in 1992 were $10 billion. Twenty years later it is over $60 billion. He expects that number to jump to 70 billion next year. Specifically he discussed the global expansion he has seen (or helped drive) from the perspective of leaving something better off than it was when you started. He expressed thanks for Lee Morgan, former CAT CEO (Monmouth College trustee chair) for leaving a legacy of positive momentum and “setting things in order” to work better for the “next guy; they set us up” [When I joined CAT], I was focused like any other recent graduate on paying off my students loans. I didn’t think, “I will be the next CEO of this company”. But as he had more international experiences, Doug saw the great potential at CAT and a vision of leadership grew in my mind.
Oberhelman has seen so many challenges met and positive changes at CAT over the last 20 years. The last time a CAT CEO spoke at Monmouth College (Lee Morgan), Doug reminisced about that earlier era. “There were 1991 predictions that the Japanese were going to take over everything, manufacturing, finance and even real estate; buying Rockefeller Center in NYC and everything in Hawaii. Now everyone predicts the Chinese will be dominant in a few years and own everything”. Doug does not agree with those pundits, but expressed knowledge that we face some major choices as a nation, including political leadership. This is the least productive political environment in my lifetime–it must be improved to realize greater prosperity and growth as a nation and overseas.
“Growth is good and dreaming big is essential for anyone who wants to be successful”. Oberhelman was optimistic about CAT and the global economy. Even though 20 years ago the world had 1.5 billion less people living on the earth, the last twenty years saw almost 3 billion people lifted out of poverty.
“As a company, we are focused on productivity. Productivity comes from quality built equipment and products that work 24/7. As a company we have proven we can build those quality products. [But they are not the cheapest available] Nowhere is that more obvious than in the Chinese where there are 100 + competitors and more construction than you can imagine. CAT plans to operate 26 manufacturing facilities in China (they now have 17 factories in operation) where they ran only one sales office in 1992. We built a second company under another brand name to sell less expensive equipment to supply demand in Chinese domestic market. It is our core business to focus on value, not price so as other less expensive products enter the market we were persuaded to produce product at a lower price point in China. I do not see that as a future direction, but it works in the current state of the market there.
He dreams under his watch he will “set them up” (future CEO’s of CAT) for even greater growth, maybe “seven times” its current revenue projection of $70 billion to $490 billion in 2032. Oberhelman would be happy to see the number of employees increase three-fold from 150,000 to 450,000 worldwide under that kind of revenue growth. CAT hopes to provide job opportunities and prosperity everywhere they operate. As an example of the commitment to stay ahead in quality and durability, CAT spent $450,000 on R & D in 1992 and recently spent over $2.5 billion in 2011. They successfully exported $3 billion of products in 1992 and project well over $20 billion in 2012. “95% of my customer base is now overseas”.
His vision of accountability and leadership is unique. “I like the metaphor of running a hardware store”. When someone calls or comes in with a problem you know you better answer the call [because Walmart is down the street, and cheaper than you are]. You find a way for CAT products to be the solution.”
Management is the area where “the desk is a dangerous place to view the world. I trust my team and let them go”. Doug makes it a practice to see at least one customer a week. Oberhelman is definitely keeping it real at CAT.
