Tuesday, September 1, 2015
Frederick W. Smith
Frederick W. Smith was born on August 11, 1944, in Marks, Mississippi, to Frederic C. and Sally (Wallace) Smith. He earned a B.A. in economics from Yale University in 1966 and earned a Silver Star, a Bronze Star, and two Purple Hearts during his time as a Marine Corps officer in Vietnam from 1966 until 1970. A successful athlete and student despite a childhood struggle with an arthritic condition in his hips, Smith ultimately found his calling in aviation. After a brief stint with Ark Airlines from 1969 until 1971, he founded Federal Express (which became FedEx in 1994).
Smith’s idea for FedEx was originally explained in an undergraduate economics paper. The popular legend is he received a “C” for his work, but Smith has suggested that he does not recall his grade on the paper. Smith combined his idea with his experience in military logistics to create Federal Express in 1971, focusing the company’s attention on high-value electronics, medical supplies, and cancelled checks for the Federal Reserve.
FedEx’s main innovation was twenty-four-hour overnight delivery. FedEx used the “hub-and-spoke” system--which Smith credits to Delta Airlines--to maximize the effectiveness of its fleet of planes and trucks.
FedEx was not an overnight success. The company started operations in 1973 with a few vans and fourteen jets operating out of twenty-five cities. They flew at night to take advantage of lower air traffic, and Smith chose Memphis as its center of operations because of its location and an available labor supply. The company carried 186 packages on its first day and endured twenty-six months of losses before showing a profit, and Smith risked alienating two sisters over the alleged misuse of their trust fund money.
His persistence paid off handsomely: FedEx grew to become the first American company to show a profit of $10 billion. By 2004, FedEx’s 141,000 employees were operating 600 planes and 46,000 vehicles in 210 countries. Today, FedEx has built Smith’s P-S-P philosophy--“People, Service, Profit”--into a $34 billion company.
Smith has received numerous honors for his work in the business community. He is a member of the Aviation Hall of Fame, and he received the Peter F. Drucker Strategic Leadership Award in 1997. He was named “CEO of the Year” by Chief Executive in 2004 and “Person of the Year” by the French-American Chamber of Commerce in 2006. Smith has served as the “chairman of the Board of Governors for the International Air Transport Association” as well as chair of the “Business Roundtable’s Security Task Force.” He is a past chairman of the U.S.-China Business Council, and as of 2007, Smith was serving as chairman of the French-American Business Council. Meanwhile, FedEx remains one of Fortune magazine’s most decorated companies.
Smith is an active member of the global philanthropic community as well as one of the most involved community leaders in Memphis. He has also been co-chairman of the U.S. World War II Memorial Project. Smith is also a member of the Business Roundtable and the Cato Institute, and he currently serves on the boards of directors for the St. Jude Children’s Research Hospital and the Mayo Foundation.