The FedEx Analogy

Last week, we talked about software companies that are integrated into other industries, creating amazing businesses that are able to achieve massive growth. One such company is FedEx. Started by Fred Smith in 1971, FedEx revolutionized a business that had been around for a very long time: letter and package delivery.

Software was one significant differentiator for FedEx. Let's think about the similarities between the construction industry and courier services before the arrival of FedEx, so we can imagine how construction will be disrupted by technology.

It can be speculated that some concept of mail service has existed for as long as people have been writing. By the same token, some concept of construction has existed since humans felt the need for shelter. Or, as the case may be, the need to honor their dead: Some of the oldest known man-made structures were tombs and monuments, such as the Great Pyramids at Giza. Obviously, the building of these structures required a massive labor force – much like what is required of a modern-day postal service. You may know your postal carrier as Jim, but chances are your BFF across town doesn't get her mail from Jim.

Both the postal service and construction must also be reliable. No one wants to walk into a building that may or may not slide down a hill any more than they want to use a delivery system that may or may not get their package to its destination. Additionally, both rely heavily on logistics. Materials, be they bags of concrete or sacks of letters, must be managed and moved large distances.

Enter FedEx. While the US Postal Service and smaller courier services may have done a sufficient job in terms of reliability, Fred Smith saw opportunity for improvement. Getting letters and packages to their destinations quickly was next to impossible the way things were, so Smith invested in a small fleet of aircraft meant specifically for package delivery. Not only did this give FedEx the ability to keep track of packages from start to finish, it also allowed it to offer a competitive service at a reasonable price.

As FedEx began to grow at a nearly unprecedented rate, Smith quickly realized the importance of being able to control, and thereby manipulate, the system in which he worked. The company purchased squadrons of vans and aircraft and acquired existing courier services throughout the US, and eventually, the world. It also added freight services and logistical software companies to its portfolio, giving FedEx greater control over delivery logistics and the ability to keep a competitive edge to its pricing.

"Information about the package is as important as the package itself."                     – Frederick W. Smith

Gone are the days of dropping a letter or package in the mail and hoping it arrives at the proper location at a particular time. The modern FedEx portfolio is as much about the software that tracks information as it is about the package itself. From the moment you leave a package at a FedEx counter, a tracking number is provided that can show the sender and/or the recipient the parcel's location throughout the entire shipping process.

By embracing technology, FedEx was able to revolutionize a stagnant industry and create a shipping giant, competing with the long-established postal service and providing a speedier and more reliable alternative for clients.

Tags: Construction Software Development FedEx

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