Sustaining excellence as a company and as a

Sustaining excellence as a company and as a leader © Fed. Ex Corp. October 2005 Tom Schmitt, President and CEO, Fed. Ex Global Supply Chain Services

Visible signs of sustained excellence at Fed. Ex Visible signs ● Visible ● Sustaining excellence for the long haul ● Sustaining personal excellence 1

Visionary Leadership – Fed. Ex began as a term paper and grew into an industry we didn’t even know we needed. ● Fred Smith said it was possible to send overnight letters all over the world by routing them through Memphis, Tennessee. … Turns out he was right. 2

Fed. Ex changed the face of business in America. “Next day” became the rule, NOT the exception 3

Growing up fast – from start-up to a billion dollar company. From start up to a billion dollar company From an $84 million capital investment, Fred Smith purchased 33 Dassault Falcon corporate jets and painted them in bold purple and orange colors. § In less than 10 years, Fed. Ex was a billion-dollar company- the first U. S. corporation to achieve that benchmark revenue without the benefit of a merger or acquisition. 4

Moving from boxes to bytes. § “… the information about a package is as important as the package itself. ” Frederick W. Smith Chairman, Fed. Ex Corp 5

From Letters to Logistics. ● In April 1973, Fed. Ex delivered 186 packages in 25 cities ● Today Fed. Ex is a $35 billion corporation offering services to more than 220 countries. ● More than 6 million shipments every business day move by a Fed. Ex company. 6

What makes a product or a company become a household word? ● In the United States, Coca-Cola is synonymous with “soft drink” and has been for more than 40 years. ● People say ‘Kleenex’ when they mean any brand of tissue. ● People say ‘Fed. Ex’ when they mean overnight. 7

The Fed. Ex unique style of management did not go unnoticed. ● “World’s Most Admired Companies” - No. 7 (2007) – Top honors in six of the eight reputation attributes: Innovation, People Management, Use of Corporate Assets, Quality of Management, Long-term Investment and Quality of Products and Services. ● “America’s Most Admired Companies” - No. 6 (2007) – Fed. Ex was #1 across all companies in People Management and Quality of Products and Services 8

Federal Express becomes Fed. Ex … can you find the Fed. Ex arrow? 9

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Sustaining excellence for the long haul ● ● ● Visible signs Sustaining excellence for the long haul Sustaining personal excellence The Fed. Ex DNA ● Visionary Leadership ● Operational Excellence ● Customer Centricity ● People First 11

Visionary leadership Skating ahead of the puck keeps Fed. Ex out in front of the pack. ● Flying Tigers ● Kinko’s 12

Customer Centricity Combining operational excellence and true customer centricity - a winning combination. ● Fed. Ex achieved service excellence by going for root causes and managing in a service quality index from day one. – WAR 1/10/100 operations style – 10 -15 scans for every package that moves through Fed. Ex – Sales dashboards to measure performance – Same-day contingency plans for inclement weather or disasters ● More and more, the company began turning to its customer to ask how the Fed. Ex experience could be better. 13

The Customer Summit: Bring on the customers – the grumpier the better. ● Every year Fed. Ex executives – from the Chairman on down sit for two days and get chewed out. ● We listen to the grumpiest customers we can find. ● We get feedback from customers on how we’re doing and how we can make things better. © Fed. Ex Corp. October 2005

People First At the heart of the Customer Summit (as well as everything else we do) is a promise. ● You’ll see Purple in the logos of all our operating companies – it’s what unites us. It’s also a promise. ● We change the way the world works and lives when we do one simple thing: put customers at the center of everything we do. 15

Fed. Ex made it clear – its people came first. And its people responded by putting the customer first. ● Legends were born in the early days of Fed. Ex, fueled by the resourceful spirit of its employees. – Pilots loaded packages onto planes – Couriers sometimes used their own cars. – Once a pilot used his personal credit card to refuel his aircraft – A part-time courier pawned his wristwatch so he could fuel the delivery van. 16

That passion lives on today. ● It’s what has kept that 1973 entrepreneurial spirit alive through four decades. 17

Sustaining personal excellence as a leader ● Visible signs ● Sustaining excellence for the long haul ● Sustaining personal excellence ● Balanced effectiveness ● Cycle of communications ● Keeping the balance in place 18

Keeping the balance in place Harnessing the power of passion and simplicity to get results ● Some people prefer leaders who think only with the rational, analytical left side of the brain. ● That’s not necessarily the right balance 19

Keeping the balance in place Harnessing the power of passion and simplicity to get results ● The ability to distill the most complex issues into simple, easy to communicate points is essential to success – A strong correlation exists between simplicity and clarity of thought 20

Keeping the balance in place Management savvy: work smarter, not harder ● Think “what would have to be true …” – Incrementalism is the deadly enemy of innovation ● Don’t fall into the “process over content” trap 21

Keeping the balance in place Be ambitious for your people and ‘the cause’ ● Good ambition creates dedicated and high-performing professionals ● Bad ambition leads to the wrong path 22

Keeping the balance in place Put people first – every time and you will be rewarded. High Will, Low Skill High Will, High Skill Coach for performance Get out of the way Low Will, Low Skill Low Will, High Skill Reassign Boost energy around the will axis, motivate 23

Keeping the balance in place Leadership – leave a place better than you found it. “I know the answer, but I can’t tell you. ” Hire leaders who are better than you in at least one key area that matters. 24

Keeping the balance in place Collaboration – think ‘one big team’ ● Be wary of the dedicated “devil’s advocate” ● Be inclusive from the beginning 25

Keeping the balance in place Vision – imagine the possibilities. ● A single vision can launch a company but only long-term vision can sustain that innovation ● Think breakthrough 26

Keeping the balance in place Time management – align time with the right goals. ● Time cards for managers and professionals? What are you thinking? 27

Keeping the balance in place Focus – use a laser, not a floodlight. “Don’t confuse efforts with results. ” Jim Barksdale former CEO, Netscape 28

Keeping the balance in place Execution – don’t sacrifice good for better. – Instill a bias for action • But you’ll need to be willing to take a few risks. – Be directionally correct. • Hold out for the perfect answer and you’ll still be looking while your competitor gets the business. 29

Keeping the balance in place Determination – stick to it. ● Hire people with optimistic outlooks and can-do attitudes over sheer talent. ● If you can dream it, you can do it. ● Check your inner compass and follow your heart. 30