How Do You Compete With FedEx and U.P.S.? Branded An insider's guide to small-business marketing. Recently, while wrapping up a meeting with a new client, Lone Star Overnight, the company's chief executive talked about what he's doing to shift his company's culture. I've always been fascinated by company culture, but it's especially interesting when someone is trying to transform a 20-year-old company with revenue of more than $50 million. Rick Jones joined the Lone Star as chief operating officer in 2007 and took over as president and chief executive officer in June 2010. At that time, the struggles of the carrier and transportation industries reflected the struggles of the overall economy. Mr. Jones's assignment was to restore his company to profitability and make sure his people stayed around for the long haul. His first task was to figure out what his customers wanted that his competitors - United Parcel Service and FedEx - weren't providing. Given their size, Mr. Jones knew he wasn't going to be able to compete with them on price. Mr. Jones, who spent his formative years in management at U.P.S., looked closely at customer feedback and had an aha moment when he noticed a pattern in the compliments his company received. Lone Star's small-to-medium-sized business customers appreciated responsiveness, a willingness to accept responsibility for actions and fix problems quickly. Customers also liked the flexibility of drivers who were willing to wait for packages or pick up lab samples at 3 a.m. They also said they liked that Lone Star drivers and staff were friendly. "We get compliments all the time from customers saying they had a bad day, and our driver made it a good one," Mr. Jones said. Yes, we have to execute delivery services to standards. And what we do above that is what differentiates us. The challenge was how to replicate the behavior of those employees and scale it across the company. And that's where company culture became an issue. "We had a loyalty-based culture that placed a lot of value on longevity rather than contribution," he said. The problem was we had a lot of compliments on newer employees but few on those who had been here longer. That was his cue to move from a loyalty-based system to a merit-based system. He started the shift by spending some time crafting a leadership manifesto. Inspired in part by a Vistage session he attended (led by corporate culture specialists, Logistyle), the one-page manifesto reinforced the behavior he wanted from himself and those who work with him. For example: Mr. Jones stressed that praise is due to those who are willing to try even if they fail, that kindness should never be confused with weakness, and that people should be encouraged to take risks and shake up the status quo. He put it all down on paper and shared it with his employees. Of course, changing behavior at any company can be a challenge and is often met with resistance. "I heard, "I've been here a long time, and I've never had to do that before,"" he said. But he stuck to his vision of rewarding people not for their length of service but for furthering the brand by doing the things customers wanted and needed. Lone Star now gives raises based on how much employees contribute. It has started a company-wide sales lead program that should be particularly attractive to drivers. Those who bring in warm leads that convert to shipments get 10 percent of the resulting revenue for a year. "A driver who is astute and engaged can literally double, triple, quadruple their pay," said Mr. Jones. We want the link to be very direct. We are not giving employees some points to save up. I tell my sales people I will shed tears of joy when they are the highest paid people in the company. Jones noted the company has seen double-digit growth since the inception of this program. Is the culture taking hold? Mr. Jones thinks so. I heard him dig through a stack of papers at the other end of the phone in search of a customer quote from a recent survey. There was mirth in his voice when he found it: "I would rather strap a letter on a turtle and send it on its way, hoping it would get there, rather than use U.P.S." MP Mueller is the founder of Door Number 3, a boutique advertising agency in Austin, Tex. Follow Door Number 3 on Facebook.