Merge's Blog

Survival depends on how you transform to fit your environment

Fred Smith, the man who founded Federal Express in 1971, is a classic example of someone who built a successful company by being responsive to changes in customers’ expectations and in the business environment.  FedEx originally started as an idea in a term paper that Smith wrote for an economics class in 1965, while he was still an undergraduate at Yale University.  His premise: as productivity increases with the use of machinery, breakdowns in equipment can easily destroy any efficiency and profitability.  Therefore, a system needs to be developed to ensure that organizations have rapid access to spare parts and materials as they are needed.  With this as a starting point, in 1973, Smith created the now-famous hub-and-spoke-system with his “hub” in Memphis, Tennessee.  Success followed, but the world began to shift more towards a knowledge-based economy.  So the company that started with an intention to move materials and spare parts evolved into one that focused on overnight deliveries of high-priority documents and packages.  Then, organizations figured out how much more efficient they could be by cutting back on inventory and supplies, so the need for last-minute shipments decreased.  And Fedex, the company that was born to deliver overnight, shifted its focus towards building a better network of ground transportation so that it could deliver items to get there in a few days instead of “tomorrow”.  Customers’ expectations continued to change, and the company realized that its clients were intensely interested in the status of their packages, not just when they were shipped and when they arrived, but also while they were in transit.  So Fred Smith recast FedEx into what it is today – an information-technology firm that is not just in the business of transportation, but also in the business of providing information about those shipments.  From central computer systems that track everything from vehicle to weather scenarios, to hand-held bar-code scanners that trace packages, to extensive use of the Internet, FedEx provides not only the means to move things around, but also the knowledge of where everything is.  As the world continues to change, FedEx’s track record suggests that it will continue to morph to meet the needs of the customer and the environment.

Do you think FedEx would still be around if it operated today as it did back in the seventies?  There are two big trends occurring in the business world today – an increasing expectation of “instant gratification” by customers and social media as a growing medium by which people communicate.  Are you, your people and your organization responding to these changes?  For example, how long does it take for you or your staff to respond to customer queries?  If it’s not fast enough, clients will go elsewhere.  Does your organization have a Facebook page and a LinkedIn profile?  If not, your competitors are talking to people who you are missing.  Your long-term success depends on how you transform to fit your environment.  What are you doing to be responsive to the changes in your business environment and the needs of your customers and clients?

 

 

 

 

 

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