Tuesday, April 28, 2009

Frederick Wallace Smith (More about business innovation)

Frederick Wallace Smith (born August 11, 1944 in Marks, Mississippi), or Fred Smith, is the founder, chairman, president, and CEO of FedEx, originally known as Federal Express, the first overnight express delivery company in the world, and the largest in the United States. The company is headquartered in Memphis, Tennessee.

Early years

Smith is the son of James Frederick Smith — who (before age 20) dropped his first name, expressing a strong preference to be known as Fred or Frederick — the founder of the Toddle House restaurant chain and the Smith Motor Coach Company, in which in 1931 The Greyhound Corporation bought a controlling interest, and which Greyhound renamed as the Dixie Greyhound Lines.[1][2] Fred Smith, the father, died while Smith the son was only 4, and the boy was raised by his mother and uncles.[3]

Smith had a great interest in flying, and became an amateur pilot as a teen. He attended high school at Memphis University School.

In 1962, Smith entered Yale University. While attending Yale, he wrote a paper for an economics class, outlining overnight delivery service in a computer information age. Folklore suggests he received a C for this paper although in a later interview he claims that when asked he told a reporter "I don't know what grade, probably made my usual C". The paper became the idea of FedEx (for years, the sample package displayed in the company's print advertisements featured a return address at Yale). Smith became a member of Delta Kappa Epsilon fraternity and Skull and Bones.[4][5] He received his Bachelor's degree in economics in 1966. In his college years, he was a friend of George W. Bush.[6] Smith was also friends with John Kerry and shared an enthusiasm for aviation with Kerry[7] and was a flying partner with him.

Marine Corps service

After graduation, Smith joined in the U.S. Marine Corps, serving for four years, from 1966 to 1969, as a platoon leader and a forward air controller (FAC), flying in the back seat of the OV-10. Much mythology exists about this part of his life; Smith was a Marine Corps "Ground Officer" for his entire service. He was specially trained to fly with pilots and observe and 'control' ground action. He never went through Navy flight training and was not a "Naval aviator" or "pilot" in the military. Individuals who completed Navy flight training and became a "Designated Naval Aviator" (pilot) were obligated to serve six years at the time.

As a Marine, Smith had the opportunity to observe the military's logistics system first hand. He served two tours of duty in Vietnam, flying with pilots on over 200 combat missions. He was honorably discharged in 1969 with the rank of Captain, having received the Silver Star, the Bronze Star, and two Purple Hearts. While in the military, Smith carefully observed the procurement and delivery procedures, fine-tuning his dream for an overnight delivery service.[3]

Smith also served with, and became a personal friend of, legendary Special Forces-Intelligence hero Marine Lt. Col. William V. "Bill" Cowan during his Vietnam service. Cowan's wvc3 group is famous for daring hostage rescues, and assisted Smith in FedEx's expansion into the Middle East.

Business career

In 1970, Smith purchased the controlling interest in an aircraft maintenance company, Ark Aviation Sales,[3]and by 1971 turned its focus to trading used jets. On June 18, 1971, Smith founded Federal Express with his $4 million inheritance (about $21 million in 2008 dollars)[8], and raised $91 million (about $484 million in 2008 dollars)[8] in venture capital. In 1973, the company began offering service to 25 cities, and it began with small packages and documents and a fleet of 14 Falcon 20 (DA-20) jets. His focus was on developing an integrated air-ground system, which had never been done before. Smith developed FedEx on the business idea of a shipment version of a bank clearing house where one bank clearing house was located in the middle of the representative banks and all their representatives would be sent to the central location to exchange materials.[3]

Smith has served on the boards of several large public companies, the St. Jude Children's Research Hospital and Mayo Foundation boards. He was formerly chairman of the Board of Governors for the International Air Transport Association and the U.S. Air Transport Association. Smith is chair of the Business Roundtable's Security Task Force, and a member of the Business Council and the Cato Institute. He served as chairman of the U.S.-China Business Council and is the current chairman of the French-American Business Council. In addition, Smith was named 2006 Person of the Year by the French-American Chamber of Commerce. He is a member of the Aviation Hall of Fame. Smith was approached by Senator Bob Dole, who asked Smith for support in opening corporate doors for a new World War II memorial.[9] Smith was appointed to co-chairman of the U.S. World War II Memorial Project. Smith was named as Chief Executive magazine's 2004 "CEO of the Year".

In addition to FedEx, Smith is also a co-owner of the Washington Redskins NFL Team. This partnership resulted in FedEx sponsorship of the Joe Gibbs NASCAR racing team. Smith also owns or co-owns several entertainment companies, including Dream Image Productions and Alcon Films (producers of the Warner Bros. hit film Insomnia starring Al Pacino and Robin Williams).

A DKE Fraternity Brother of George W. Bush while at Yale, after Bush's 2000 election, there was some speculation that Smith might be appointed to the Bush Cabinet as Defense Secretary.[10] Despite some speculation and even pushing from former Senator and Reagan Chief of Staff Howard Baker, he was not appointed — Donald Rumsfeld was named instead. Although Smith was friends with both 2004 major candidates, John Kerry and George W. Bush, Smith chose to endorse Bush's re-election in 2004.

Smith was a supporter of Senator John McCain's 2008 Presidential bid, and had been named McCain's National Co-Chairman of his campaign committee. Some had speculated that Smith might have a role as an economic advisor in a theoretical McCain administration.

Mr. Smith was inducted into the Junior Achievement U.S. Business Hall of Fame in 1998.

He was awarded "CEO of the Year 2004" by Chief Executive Magazine. [11].

Smith was presented the 2008 Kellogg Award for Distinguished Leadership by the Kellogg School of Management on May 29, 2008.[12] He was also awarded the 2008 Bower Award for Business Leadership from The Franklin Institute in Philadelphia, Pennsylvania.[13]

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