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2076 : STEP FOUR – PLANNING FOR IMPLEMENTATION

Guided by the principle of asset parsimony, Smith rented old hangar
space at extremely favourable terms.

He conducted the first beta test in March 1973, with planes flying in
from 12 cities in the East and Midwest. Six parcels were carried.
Undeterred, the company extended the test the following month to a
fuller network of 25 cities. The more positive results from that test
represented the birth of the air express industry.

To keep things simple and to avoid re-inventing the wheel, Smith
recruited a number of staff from competitor UPS to enable him to copy
elements of the UPS organisational system. He continually combined his
inspirational and business skills in recruiting other employees who were
entrepreneurial, possessed deep experience in their specialist field while
often lacking corporate experience. Most importantly, aspiring recruits had
to demonstrate that they were willing to make sacrifices for the company.

Smith possessed the interpersonal skills to sell the dream of what the
company could become and to inspire supreme loyalty – when pressure
from the shareholders and a lawsuit from his sisters in relation to the
family trust brought him close to resignation, Federal Express senior
managers threatened to resign en masse if Smith went ahead with his
resignation.

Smith was never a man to be daunted by criticism: ‘Folks are entitled
to [criticise]. It’s a free country, increasingly a free world, so let them
take their best shot. If they’re right, they may tell you something you
didn’t know before.’156 His determination and self-belief were tested to
the full in 1974, however, when Federal Express was on the verge of
bankruptcy. As he laconically phrased it two years later: ‘Everything was
going wrong, except the fundamentals of the business were proving
every single day that the idea was right.’157

The early success of the venture required flexibility, particularly in terms
of securing larger aircraft. Starting in 1975, Smith lobbied government
authorities to overturn restrictive regulations which not only prevented
Federal Express from transporting payloads in excess of 7,500 pounds, but
which also dictated pricing structures. It took until 1977 for the regulations
to be overturned, an event which triggered Federal Express to purchase
seven Boeing 727s, each with a load capacity of 40,000 pounds.

Close observation of customers made Smith aware that information
about a shipment was just as valuable as the contents of that
M