Frederick W. Smith Interview (page: 3 / 5) Founder, Federal Express	Print Interview

There are always detours. What kind of adversities have you had to overcome?

Frederick Smith: I've had all kinds of adversity, 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 that a lot of people have seen. I've enjoyed every bit of putting the company together. Even the bad parts I learned from. I've enjoyed it immensely, and I enjoy what I'm doing today. I enjoy running the company.

Going to war does give one some perspective.

Frederick Smith: It really does. I can't emphasize that enough. That puts a different perspective on things forever.

From what I've read, 24 years ago this month you were at a low point in trying to make Federal Express happen. Can you tell us something about that?

Frederick Smith: We'd run out of money and we didn't have all of the regulatory requirements that we needed. My half-sisters were up in arms because it looked like we were going to lose some money. I mean, everything was going wrong, except the fundamentals of the business were proving every single day that the idea was right. I mean, every single day the traffic was going up, and so eventually everything came right and worked out fine.
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The motivation I had in those days was that I didn't want to let down the people who had signed on with me. It goes straight back to that Marine Corps experience. I wasn't afraid to lose my money. I knew I was right, I knew I had put this thing together properly and that it was going to be all right. That was what stood me in good stead.

You never lost confidence.

Frederick Smith: The reason I never lost confidence is because I never believed that the consequences of losing were as bad as some other people might have thought, you know? "Oh my goodness, I've lost my money!" or what have you. I mean, I just wasn't motivated along those lines. And I was very, very, very sure that what we were doing was extremely important and was destined to be successful. So that's the definition I think of an insane person, or a zealot. And most entrepreneurs, I think you would find, have that sort of green wire laid in there just a little bit cross-wise. And they begin to get focused on something, and they believe in the idea or themselves far beyond what they probably should.
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Did you ever wake up in the middle of the night and say, "I want to give it all up?"

Frederick Smith: No, I never felt that way at all. I was very committed to the people that had signed on with me and if we were going to go down, we were going to go down with a fight. It wasn't going to be because I checked out and didn't finish it out.

What sacrifices have you had to make?

Frederick Smith: You have to pay a big personal price in terms of time and other things. You have to have a decision regarding priorities. If you're not willing to work hard, if you're not willing to give it your total commitment, you're probably not going to be successful.

That means you're probably not going to be a very good golfer. You have to do what I do, take up tennis, where you can do it in an hour and a half. You can't spend five hours on it. You have to prioritize what's important for you and what's not.

What do you think are the most important principles, or ideals, or policies that have made Federal Express such a success?

Frederick Smith: First and foremost is our corporate philosophy, which we call PSP: People, Service, Profit. If you're going to run a high service organization, you have to get the commitment of the people working for that organization right at the start. If you don't, you'll never be able to deliver at the levels of expectations of the customer.

You can't make people do what's right. You can lead them, and you can empower them to make the right decision, but if you don't produce a culture that allows them to do that, then all the rest is just bumping your gums as one of my old business partners used to say. That's Jim Barksdale of Netscape, by the way, who's been very successful himself.

Our "People, Service, Profit" philosophy insists that our people be treated fairly. If we give good service and we come up with a reasonable profit, we make that a good deal for our employees, with profit sharing, promotions, complaint procedures. If you spend any time looking at the culture of FedEx you'll find that PSP philosophy is the foundation of everything else. Secondarily, our management system is built on continuous quality improvement.

We decided a long time ago that percentages were not acceptable to our customers. In other words, 99 percent sounds great, unless you're the one percent who we don't deliver for. So we never talk about percentages. We built a management system which measures problems on an absolute basis. And the secret is, as traffic or volume increases, the number of complaints have to go down on an absolute basis. In other words, we've got to get better and better year after year.
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We spend a huge amount of money, particularly on the technology, to allow us incremental improvements in every part of the operation year after year, month after month. That's the second thing that was a big part of our success. The third underlying element of the FedEx culture, after the philosophy and the continuous improvement management system, has been the focus on change.

As time changed and markets changed and peoples' expectations changed, we changed with them. For example, when it became obvious that people wanted to interface with FedEx electronically, many years before people were doing this, we built an electronic interface system that allowed them to do business with us. When the Internet came on the horizon, we built versions of that that allowed people to interface with FedEx over the Internet. And now there are millions of people doing business with FedEx every day electronically.
[ Video ] Low High    [ Audio ] Quicktime	[ Key to Success ] Perseverance

There are lots of different examples of that. We have a culture that allows us to change without threatening the people that work at the company.

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