Globalization and the Internet have revolutionized the operations of the FedEx Corporation, CEO and founder Fred Smith ’66 told an audience of around 100 students, faculty and others at the Yale School of Management on Tuesday.
The third and final speaker for this year’s SOM Leaders Forum, Smith identified four key trends that he said are fostering “momentum” in both domestic and international FedEx business. The post-World War II manufacturing shift to high-end luxury goods, rapidly integrating world markets and the emergence of Internet-based commerce have altered the world’s business landscape, he said.
A former marine and Vietnam War veteran, Smith founded FedEx in 1971. The company is a leading courier service and is divided into four operating divisions: FedEx Express, FedEx Ground, FedEx Freight and Kinko’s, a chain of office supply and printing centers the company acquired in 2004.
In a brief introduction, SOM Dean Joel Podolny lightheartedly debunked a popular legend that Smith proposed the business plan for FedEx in an undergraduate paper that earned him a C grade.
“This is inspiration to all of us who got C’s, but I now know that [the rumor] is not true,” Podolny said.
While many countries will continue to take measures to protect their basic commodities and intellectual property from the effects of globalization, an increase in the international exchange of high-tech and luxury products is inevitable, Smith said. These items have proved easily transportable, he said, and global markets for them are key to FedEx’s success.
In addition, the Internet has helped multinational companies market their products to consumers with more precision than ever before, Smith said. It allows courier companies and their clients easily to navigate “byzantine” bureaucratic regulations that hinder the transportation of goods across borders.
Smith said FedEx expanded rapidly into Asia, and China in particular, before many other large corporations, and that China will only grow as an “economic colossus.” Despite setbacks caused by poor infrastructure and ineffectual government in developing countries, Smith said, commercial interests will always find a way to overcome problems.
“Commerce is like water in a stream: If it comes to a rock, it’s going to go around it,” he said.
In a departure from the lecture’s theme, Smith also mentioned his military experience. He said the leadership skills he gained in the armed forces contributed directly to his management skills.
“The leadership that’s taught by the military is the best, and it is the best for a very simple reason,” he said. “In all organizations, what you’re really talking about is how you withdraw discretionary effort from people around organizational goals.”
Many students said they enjoyed the presentation for its focus on international markets.
Jennie Vry SOM ’07, who will accompany first-year MBA students to China in January, said the talk was especially relevant in light of her upcoming journey.
“It was interesting to hear how much China impacts them,” she said.
All first-year MBA students are required to participate in one of nine international and domestic trips as part of the school’s new core curriculum. Each trip is linked to a different core course and explores the class’s theme in an international context.
But James Arthur SOM ’07 said he thought some of the questions asked by audience members — which ranged from inquiries about FedEx’s early financing to the CEO’s military background — were distracting from the focus of the talk.