thedrifter
12-24-08, 08:32 AM
Investor's Business Daily
Frederick Smith Makes Sure FedEx Delivers
Tuesday December 23, 5:58 pm ET
Curt Schleier
Frederick Smith's middle initial is W.
It really could be I for innovation.
Smith's innovative idea changed the world's expectations -- a delivery company that would get packages there the next day, no matter what, and that didn't rely on passenger planes.
But it wasn't a flashy, eureka moment that got him started, he told the American Academy of Achievement. Rather, it was careful and steady observation.
The concept of what became the $39 billion FedEx (NYSE:FDX - News) actually started percolating for Smith, now 64, in the mid-1960s, while he attended Yale University. A pilot, he earned extra cash flying charters out of a New Haven, Conn., airport.
"I flew around to all those airports and all those high-tech companies, including IBM (NYSE:IBM - News) and Xerox, (NYSE:XRX - News) that's what their pilots used to talk about: What a difficult proposition it was to keep their field service engineers and their parts and logistics systems operating," he told BusinessWeek. "In fact, a lot of the corporate airplanes up there were doing nothing more than flying (computer) parts and pieces around."
It started him thinking the country was "going to need a completely different logistics system." After graduating from college, Smith served as a Marine officer in Vietnam.
Long-Distance Vision
He spent much of his time overseas thinking about his idea, fleshing it out. He decided that to move packages as fast as he wanted, he'd have to set up a clearinghouse system, with hubs to distribute the items. When he returned to his native Memphis, Tenn., in 1971, it was time to get started.
To persuade Wall Street investors to fund the idea, he backed up his premise with facts. He had three independent marketing studies that showed the concept would work.
He started small to master his system: eight planes for overnight delivery between any of 11 cities.
Initially, the marketplace was unimpressed. The first day of operation, March 12, 1973, FedEx handled seven packages. So Smith took a step back to regroup: He suspended the service, sent the sales force back into the field and analyzed his errors. He relaunched a month later among 25 cities; this time the company handled 186 packages.
A year into the operation, the firm ran out of money. But Smith didn't lose confidence. "I was very, very, very sure that what we were doing was extremely important and was destined to be successful," he said.
His optimism stemmed from his awareness that few businesses proceed as planned, so attitude is crucial. "There's zigs and zags, victories and defeats," he said. "You need conviction -- and the willingness to persevere. That's probably more important than anything else."
When challenges got hairy, Smith drew on his experiences in Vietnam. "I've had all kinds of adversity," he told the academy. "But I think you have to put those things in perspective. I have to go back to my experience in the Marine Corps. My life has been a walk in the park compared to the adversity a lot of other people have seen."
Smith learned about leadership in the Marines. Good leaders, he saw, get their people to excel. "A manager is not a person who can do the work better than his men; he is a person who gets his men to do the work better than he can," he said.
On Time
Smith invested big in technology -- understanding that to make money you must spend it. Certainly his customers were spending far more on FedEx than on whatever delivery method they had used.
Their packages had to land when promised. "The business had to operate with a level of precision and reliability that heretofore had not been possible in the service business," he told BusinessWeek.
FedEx developed a way to print bar code numbers so packages could be tracked. They spurred the development of handheld computers that could read the codes and transmit the data to a mainframe.
Smith, still the CEO, stays grounded, a trait he drew from his platoon sergeant, Jack Jackson.
"I was the officer and he was the senior NCO, and of all the education I ever got, I think he was the one who gave me the Ph.D. When I first met Sgt. Jackson, I had grown a moustache and taken up the affectation of smoking cigars. ... I thought this made me look, you know, quite dashing and much older than my 22 years. And the first thing that Sgt. Jackson (said) after I asked him to, in essence, take the insignia off (and) tell me what I could do to improve my performance (was) ... 'Well, the first thing (is) shave off that ridiculous mustache, and quit smoking cigars, because you look absurd. And be yourself.'
"And I don't think I ever forgot that. I don't think I ever tried an affectation after that point 14 my life."
This story originally ran Feb. 23, 2006, on Leaders & Success.
Ellie
Frederick Smith Makes Sure FedEx Delivers
Tuesday December 23, 5:58 pm ET
Curt Schleier
Frederick Smith's middle initial is W.
It really could be I for innovation.
Smith's innovative idea changed the world's expectations -- a delivery company that would get packages there the next day, no matter what, and that didn't rely on passenger planes.
But it wasn't a flashy, eureka moment that got him started, he told the American Academy of Achievement. Rather, it was careful and steady observation.
The concept of what became the $39 billion FedEx (NYSE:FDX - News) actually started percolating for Smith, now 64, in the mid-1960s, while he attended Yale University. A pilot, he earned extra cash flying charters out of a New Haven, Conn., airport.
"I flew around to all those airports and all those high-tech companies, including IBM (NYSE:IBM - News) and Xerox, (NYSE:XRX - News) that's what their pilots used to talk about: What a difficult proposition it was to keep their field service engineers and their parts and logistics systems operating," he told BusinessWeek. "In fact, a lot of the corporate airplanes up there were doing nothing more than flying (computer) parts and pieces around."
It started him thinking the country was "going to need a completely different logistics system." After graduating from college, Smith served as a Marine officer in Vietnam.
Long-Distance Vision
He spent much of his time overseas thinking about his idea, fleshing it out. He decided that to move packages as fast as he wanted, he'd have to set up a clearinghouse system, with hubs to distribute the items. When he returned to his native Memphis, Tenn., in 1971, it was time to get started.
To persuade Wall Street investors to fund the idea, he backed up his premise with facts. He had three independent marketing studies that showed the concept would work.
He started small to master his system: eight planes for overnight delivery between any of 11 cities.
Initially, the marketplace was unimpressed. The first day of operation, March 12, 1973, FedEx handled seven packages. So Smith took a step back to regroup: He suspended the service, sent the sales force back into the field and analyzed his errors. He relaunched a month later among 25 cities; this time the company handled 186 packages.
A year into the operation, the firm ran out of money. But Smith didn't lose confidence. "I was very, very, very sure that what we were doing was extremely important and was destined to be successful," he said.
His optimism stemmed from his awareness that few businesses proceed as planned, so attitude is crucial. "There's zigs and zags, victories and defeats," he said. "You need conviction -- and the willingness to persevere. That's probably more important than anything else."
When challenges got hairy, Smith drew on his experiences in Vietnam. "I've had all kinds of adversity," he told the academy. "But I think you have to put those things in perspective. I have to go back to my experience in the Marine Corps. My life has been a walk in the park compared to the adversity a lot of other people have seen."
Smith learned about leadership in the Marines. Good leaders, he saw, get their people to excel. "A manager is not a person who can do the work better than his men; he is a person who gets his men to do the work better than he can," he said.
On Time
Smith invested big in technology -- understanding that to make money you must spend it. Certainly his customers were spending far more on FedEx than on whatever delivery method they had used.
Their packages had to land when promised. "The business had to operate with a level of precision and reliability that heretofore had not been possible in the service business," he told BusinessWeek.
FedEx developed a way to print bar code numbers so packages could be tracked. They spurred the development of handheld computers that could read the codes and transmit the data to a mainframe.
Smith, still the CEO, stays grounded, a trait he drew from his platoon sergeant, Jack Jackson.
"I was the officer and he was the senior NCO, and of all the education I ever got, I think he was the one who gave me the Ph.D. When I first met Sgt. Jackson, I had grown a moustache and taken up the affectation of smoking cigars. ... I thought this made me look, you know, quite dashing and much older than my 22 years. And the first thing that Sgt. Jackson (said) after I asked him to, in essence, take the insignia off (and) tell me what I could do to improve my performance (was) ... 'Well, the first thing (is) shave off that ridiculous mustache, and quit smoking cigars, because you look absurd. And be yourself.'
"And I don't think I ever forgot that. I don't think I ever tried an affectation after that point 14 my life."
This story originally ran Feb. 23, 2006, on Leaders & Success.
Ellie