Fedex

vase Studies

e deral E xpress: T he
V ision M ade R eal*

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A

B RIEF A ND

V AUNTED

H ISTORY

. h e n ext t ime a t eacher gives y our m ost cre­
[ive p aper a g rade o f C, j ust r emember, t hat
-as t he s ame g rade F rederick W. S mith re­
eived for a Yale u ndergraduate p aper w hich
- ontained e arly plans for a n o vernight a ir ex­
ress v enture, t he original b lueprints f or Fed­
ral Express. Vision is t he r oot o f l eadership,
a nd S mith's p lans w ere certainly visionary.
However, s ucceeding in business ( and m aking
e tter t han a C a t Yale) r equires m ore t han
·sion. A l eader's vision m ust also b e well exe­
uted, else t he vision r emains o nly a d ream,
ot a reality.!
After a t our o f d uty as a M arine C orps
p ilot inV ietnam, S mith r eturned t o fulfill his
ream. H e a nd his business p artners c ommis­
,ioned two i ndependent m arket r esearch stud­
-es w hich suggested a m arket n iche f or a reli­

- This case was prepared by Greg Bounds.
The author thanks Fred Smith. CEO o t Federal Express,
- JI his gracious contributions and Anne Manning, senior
5pecialist, corporate relations, t orherassistance in preparing
-,is case. For more details on h ow Federal Express executes
-:s vision, see one of the key sources of information for this
:.ase, Blueprints for Service Quality: The Federal Express
Joproach, American Management Association Membership
°ublications Division, N ew York, 1991.

a ble, time-definite o vernight delivery service.
T hen t hey e xecuted t he vision. T he e ngineso f t he F ederal E xpress eight-plane fleet first
h ummed o n April 17, 1973, m arking t he b irth
o f a n ew c ompany a nd t he g enesis o f a new
service industry, o vernight a ir express.
Seven o f t he e ight p ackages s hipped t hat
first n ight w ere trial r uns a ddressed f rom o ne
F ederal E xpress salesperson to a nother. T his
was a n i nauspicious b eginning f or a s tartup
that w ould b ecome t he o nly U.S. c ompany to
t op $1 b illion in revenues within its first 10
years. A lthough c ompetitors h ave flocked to
t he m arket, F ederal E xpress r emains t he u n­
questioned l eader i n o vernight a ir express,
with 45 p ercent m arket s hare a nd a bout $8
billion in 1992 revenues. F ederal E xpress com­
mands t he w orld's largest a ir c argo fleet, 420aircraft, a nd m ore t han 9 4,000 employees
worldwide to move nearly 300 million packages
e ach y ear to a nd f rom c ustomers in nearly 170
countries. T o c rown t hese b usiness successes,
in 1990, F ederal E xpress b ecame t he first win­
ner o f t he M alcolm Baldrige National Quality
Award in t he Service C ompany category.
'What is t he s ecret t o s uch b usiness success?
P atented business school answers include: first

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Federal Express: The Vision Ma "

e ntrance to t he m arket, p roduct d ifferen tia­
tion, innovative systems, l eading t echnological
c apability, a nd r eliable, high-quality service.
T hese answers a re all true; f or e xample, Fed­
eral Express p ioneered t he " hub a nd s poke"
p ickup, s orting, a nd delivery n etwork t hat
a llowedit to b e t he f irst to t ransport small
packages a nd d ocuments f or c ustomers d oor­
to-door, f rom o ne U.S. l ocation to a nother,
o vernight. H owever, t he f undamental p rinci­
ple u nderlying all o f t hese answers, a nd l ead­
ing to F ederal E xpress's business success a nd
1990 B aldrige a ward, was s tated q uite s imply
in its 1991 a nnual r eport: "Since o ur first day
o fo perations, a n i ntense f ocus o n t he n eeds
o f our c ustomers a nd a n a bsolute c ommitment

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to c ontinuous q uality i mprovement h a\
f ined F ederal E xpress."
C EO S mith r eiterated t he c onceptual,
plicity o f b usiness success in a keynote sl
b efore a n ational c onference o n q ualit\'
l eadership h eld i n c onjunction with t he
r ige award c eremonies: '...