Be like Fred

Fred Smith, founder and former CEO of FedEx, leans forward in his chair and peers out at the crowd of students and academics at the Massachusetts Institute of Technology’s (MIT) Wong Auditorium. He’s about 45 minutes into a “fireside chat” with MIT professor Yossi Sheffi, and there’s the sense that he is about to share something of great import. “I’m going to tell you something, “ he says. “I get a lot of emails from nuts.”

The audience laughs appreciatively. A blunt talker and former U.S. Marine, Smith gives the impression that he doesn’t suffer fools gladly or make much time for pie-in-the-sky dreamers. 

But then he goes on.

“Most people in my position would be like, ‘Send this to the nut-response unit!’” Smith says. “But I always reply to them if they are even remotely credible because I want to see if maybe this is that one person with that one breakthrough idea.” 

In his corporate “business casual” uniform of blue blazer and oxford shirt, Smith looks very … ordinary. He doesn’t look like someone who hunts down innovation. If you asked a person on the street to name an innovative company, chances are they’d mention Apple or Amazon or Google—probably not FedEx. But as Sheffi reminded the audience at the start of the event, when FedEx began operations 50 years ago, no one imagined that you’d someday be able to send a package across the country overnight and track it throughout its journey.

“He changed everything,” said Sheffi. “He didn’t just start a company. He started an industry.”

So, when it comes to the topic of innovation, Smith is someone to listen to. Right now, he’s got his eye on artificial intelligence and machine learning, betting that FedEx’s Dataworks division is going to transform the way FedEx operates and provides value to its customers.

“We now have customers who are just buying our digital services, not our transportation services,” he told the MIT audience. “It’s nascent, but it’s going to be a very big deal.”

But even more than new technology, Smith wants to talk about how it is that you keep innovating year after year.

“First, above all else, you’ve got to tolerate characters,” Smith said. “A lot of people who have really good ideas are a little strange. But great ideas come from strange places, so you’ve got to tolerate people that don’t fit the cookie cutter.” 

Take the people who developed package-tracking technology. According to Smith, “they didn’t look like me with a blazer and a tie; they looked like the crowd in the bar in the Star Wars movie.”

It would, of course, be wrong to think that Smith threw money at every crazy idea that crossed his desk over the years. He’s clear that he takes a very analytical approach to assessing new ideas, and it’s readily apparent that his BS detector is robust. Nor is Smith without his own blind spots. Is he right to dismiss Amazon’s potential to be a serious competitor to FedEx in the logistics sphere? Only time will tell.

Still, there’s something very profound about being open to an idea that comes from a sphere that is totally alien to you. It sounds deceptively easy. After all, who doesn’t like to think of themselves as open-minded? But the practice of truly listening to someone who has a viewpoint different from your own can be intensely uncomfortable. It’s easy to get defensive or dismissive, assuming that a new way of doing things simply wouldn’t work in your particular operation. 

But, according to Smith, there’s an even bigger risk in avoiding that discomfort. “Quite simply,” he said, “if you are in business and you don’t innovate, you’re in the process of commoditization or extinction.”