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Government: The FedEx approach

Fred Smith, the founder and CEO of Federal Express, was on Fox's Sunday political program, Fox News Sunday with Chris Wallace. The interview was part of Fox News Sunday's American Leaders series where the program is reaching out "beyond the Beltway to talk with some of the country's most interesting and innovative people."

And Wallace's first question was about why government is inefficient. Here is the transcript:

CHRIS WALLACE, HOST: We're joined by Fred Smith, the founder and CEO of FedEx, the company that radically changed how the world ships packages.

And, Mr. Smith, welcome to "FOX News Sunday."

SMITH: Thank you very much.

WALLACE: Let's start with a clip from Republican presidential candidate Mike Huckabee who, on the campaign trail, brings up FedEx in the context of the government's failure to track the 12 million illegal immigrants around the country. Take a look.


MIKE HUCKABEE, FORMER GOVERNOR OF ARKANSAS: We've got a government that says we don't know what to do and how to keep up with people. If necessary, we ought to outsource this whole issue to FedEx and UPS. They seem to have a better way of keeping up with packages than our government does with people.


WALLACE: Now, I don't know if you consider that a serious proposal or not, but when you look at the government as a business executive, do you see practices and principles that you think could be applied to government to make it run more efficiently?

SMITH: Well, of course. I think that the industry of the United States has proven, just like Governor Huckabee mentioned, that using information technology is possible to handle very large problems.

There are structural issues inside the federal government that prevents it from doing so, but technologically, it's very feasible.

WALLACE: I mean, are there things that as you sit down there in Memphis and you look at here in Washington that you just shake your head and go, "Man, if I were running that agency or that operation, I could change it?"

SMITH: Well, I don't think that I'm that...

WALLACE: I'm not asking you if you're running for office today.

SMITH: Yeah, but of course. I think anybody that's in the private sector understands that there is a lot of built-in inefficiency in government, and that perplexes a lot of people.

WALLACE: Give us an example.

SMITH: Well, the procurement system in the Department of Defense is built around not making a mistake, not having someone make money from the federal government that shouldn't and so forth. It's very risk averse.

And I think in the private sector, you would see a structure that's much more cost-effective rather than trying to prevent error. And those end up with having radically different results.

When I heard the first part of the interview -- the part about using IT -- my thought was that this guy simply doesn't know what he is talking about, but... by the end, I think he is right on the mark. The risk factor -- and allowing people to make mistakes.

You can see the video for yourself here.

An aside: I did some reading about Smith -- here is a PBS piece naming him an innovator... and, of course, his Wikipedia entry... and what impressive accomplishments.
This from the PBS piece:

Acting on observations he'd made in a college economics paper, Smith built a unique hub-and-spoke delivery network to keep pace with the developing computer industry. In 1973, Smith launched Federal Express with his own money and established the company as the delivery service of choice for modern businesses.

Can you imagine coming up with the idea for the hub-and-spoke delivery system?

Posted on Dec 03, 2007 at 12:17 PM


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