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This chapter is from the book

One such example

One of the new cities we opened during that first month was a small town in Indiana. The only reason we decided to serve it was that it had an RCA plant that shipped 20 packages a day. By the time we got the additional 15 cities opened, April 17, 1973, we had 40 packages a day, so that would mean 50% growth—exciting.

So, we sent one of our best salespeople there with instructions to GET THE PACKAGES from RCA and to call when he had received the commitment and the packages.

He called me that first day and said the traffic manager wouldn't see him. I suggested that he get a good book and wait in the lobby all month until the guy would see him.

He called the next afternoon and said that he finally saw the traffic manager at 3:30 p.m. after waiting in the lobby all day and that the man wasn't going to switch carriers.

I asked why.

"He claims that everyone says they have overnight service. He's satisfied that no one delivers on the promise, and there's nothing I could say to him to convince him otherwise. I think he's being paid off by our competitor."

Sometimes, salespeople say that as a last resort.

"Did you offer him free service for the week? Did you offer to ship empty boxes so he could test the system and our promise? Did you explain the hub system and that we have our own airplanes?" I was desperately trying to figure out why people didn't believe us. This guy wasn't the first and, as I was learning, wouldn't be the last.

"I did all of that and more. I'm telling you, Mike, he's not going to use us."

"Okay, see if you can get a plane tomorrow to Boston. We need more salespeople there."

I'd like to say Federal Express had built a strong service ethic by design, but the reality is that we learned a number of very valuable lessons in the early days, most of which were taught to us by our employees.

Fred Smith had started with a People–Profit ethic. The idea was to focus on employees, and they would produce the profit. He wanted to build a different kind of company. Back in the 70s, people were numbers to large companies. Companies didn't care about their people. Fred wanted to build a people-first company. I had added the word "Service" to the mix, so the mantra had become and still is today: People—Service—Profit.

That was all well and good, but we needed PACKAGES and we needed them NOW.

One of the most valuable lessons was the power of people when they have a common vision and commitment. In this case, the vision was GET THE PACKAGES, and everyone understood it. In many cases, they understood it a lot more than I or other senior managers did, as this example demonstrates.

All kinds of things began to happen, but the biggest lesson in those early days was taught to me by a tracing clerk named Diane. Diane wasn't very busy tracing things because we had so many people and so few packages. It was pretty hard to screw things up in those early days.

Imagine Atlanta, GA, with five drivers and three packages. The couriers would jump over one another for something to deliver and, more often than not, the package would arrive at its destination before the person receiving it. Great service. The people getting the packages loved it and told our people so, and that made our people strive even harder for the recognition.

On a Friday afternoon, about two weeks after we opened the new cities, Diane got a call from a woman from the small town in Indiana, the town with the RCA plant that wouldn't use us.

The woman was crying and through the tears managed to get out:

"I don't know who Federal Express is. All I know is that my wedding dress was in Jacksonville, FL, yesterday, and you were supposed to deliver it by noon today. It's 3:30 p.m., and it's not here! I'm getting married tomorrow, and because we're a small town, it's the social event of the season. More important, it's the event of my life. Can you help me?"

Diane related to the problem and told the woman she'd call her back. Then, she used our tracing system at the time—call each station (there were only 25) and see if one has a package that doesn't belong in its station. On the sixth call, she found the package in Detroit, more than 300 miles away.

Now, she had a problem to solve. She was going to get the package delivered that afternoon. There wasn't a doubt in Diane's mind. All of us were out trying to sell shippers or investors, so there was no one in management to ask. Looking back, I'm not sure that she would have asked permission anyway. She was committed to getting the package delivered.

She lined up a Cessna and a pilot to fly the package to Wilmington, IN, of course. Any frontline employee would do that. After all, this woman was getting married.

On Monday morning, Diane received a call from the woman who was on her honeymoon in Mexico (not an easy task in those days to get a call placed from Mexico). The woman told Diane she had gotten her dress, described the wedding, and thanked her. Then, she asked if she could talk with a senior manager to relate the story. Diane transferred the call to me.

The woman described what had happened and what Diane had done for her. There were tears in her voice.

As she was describing Diane's actions, tears and all, all I could see was dollar signs. "How much did this cost?" I asked myself silently. As the woman went on, I scribbled a note to talk with Diane right after the call. After all, I had grown up with UPS. When a customer had a problem, you did what you could, but renting a plane wasn't on the list.

Then the woman gave me a clue that I didn't pick up until later, "Mr. Basch, it wasn't all good news. There was bad news also."

She got my attention. "Was it wrinkled?" I asked.

"Yes, but that's typical. We ironed it. The bad news was that I wasn't the center of attention at my own wedding. I had told a few people about my wedding dress having its own airplane, and the word spread. Pretty soon, the topic of discussion was this outrageous new airline for packages that had a plane per package." She laughed as she related the story.

I still wasn't laughing. I was still thinking about the cost and Diane gone astray, and then I envisioned hundreds of employees hiring planes and pilots at random. However, like all vice presidents, I was polite, thanked her for the call, and then went down the hall to find Diane.

"Why on earth would you charter a plane for a wedding dress?" I asked seriously.

"You said 'GET THE PACKAGES' and, for me, that means you give great service and solve the customer's problem. Then they talk about you, and you get more business."

Today, that makes enormous sense to me, but then it went totally over my head. "Come on Diane, if we spent $300 for every package, we'd go bankrupt."

After a couple of minutes of her attempting vainly to explain what GET THE PACKAGES meant to her and, in her fervent belief, what it meant to the company, she finally blurted out in total frustration:

"I figured we're going bankrupt anyway. What's the difference?"

There was obvious truth in that statement, so I let it go. Being people first meant honesty, and Diane was no stranger to our financial situation.

Two weeks later, RCA started giving us 20 packages a day.

A couple of their executives were at the wedding, and they went back and asked their traffic manager if he knew about Federal Express. One executive, in particular, made it plain that he should at least try our service. He did, and they began using Federal Express on a regular basis.

If I'd had a tail, it would have been between my legs as I went down to Diane's desk to relate the news. She had a smile on her face as I arrived telling me clearly, but at least silently, that she already knew about the RCA packages.

It was an incredible lesson—one of thousands of lessons learned in those early days. The biggest lesson was that if you were clear about what you wanted as leaders and then let people give it to you without tying their hands behind their backs, you got it. Often, you got it in ways you didn't expect, such as chartering an airplane for one package, but you got it.

The bottom line: We learned through failure, and failure is the feedback of a well-designed (either consciously or unconsciously) system. More important, our people had the freedom and the focus, GET THE PACKAGES, to use that feedback to take the necessary actions to achieve the goal.

I've been involved in 13 start-ups, and it's always the same. The feedback is so tied to the customer that people do whatever is required to meet the goals and succeed. That's why I find start-ups so stimulating. The systems cycle of goal/relevance/action/feedback is natural and is not clouded by politically driven motivations that get in the way of success.

Some companies, such as UPS, Federal Express, Cisco, Prentice Hall, and many others, have built the success structures to take them forward into megacompanies that don't lose sight of the customer. This book is about building those success structures.

We didn't get capital until that November, but we survived because we had commitment. During the summer of 1973, 600 employees received a pay envelope with their checks and a note. "Please don't cash the check because there's no money in the bank, but hang in there. We'll succeed together."

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