InformationWeek

November 27, 2000

Chiefs Of The Year:
Two-Man Team

Rob Carter, Frederick Smith
Federal Express

t Federal Express Corp., VP and CIO Rob Carter has an office down the hall from the CEO, he sits on the executive committee, he can walk into the boss' office any time he has reason, and he's not only an expert on information technology with a sometimes science-fiction flavor, he's an expert on the movement of packages and freight.

In fact, according to Carter's boss, FedEx founder and CEO Frederick Smith, Carter could work on the operations side of the $15 billion business just as easily as the IT side--if it weren't for the fact that he's an expert on the ways breakthrough IT projects can make FedEx a smarter, faster company. Smith, a pro football fan, compares Carter to the star quarterback of the Indianapolis Colts: "We have the Peyton Manning of the IT world with Rob."

Carter, a seven-year FedEx veteran with 20 years of IT experience, is equally full of praise for his boss. "Fred is an amazing IT strategist--he's our secret weapon," Carter says. "He has thought of a number of ways of applying IT strategy before they were common." Carter was the company's first chief technology officer before assuming the CIO role after the retirement earlier this year of Dennis Jones, now president and CEO of Accel-KKR, a Silicon Valley investment firm. "Fred had the CIO reporting to him before it was cool," Carter says. "Before him, CIOs reported to the CFO, never the CEO."

Rob Carter, Frederick Smith Photo by Jack Kenner Carter and Smith don't take fishing trips or watch football games together, but their admiration for each other is plain. They view themselves as a type of team that didn't exist in business just a few years ago--a deeply IT-savvy business chief and a deeply business-savvy IT chief.

Smith, who founded FedEx in 1971, says the FedEx-style CEO-CIO team will be a requirement for success in business in the future. "Having been on the board of a number of companies, I can tell you that any business in any industry that can't develop a close relationship between the business side and the IT side--between the CEO and the CIO--isn't going to succeed long term," Smith says.

Carter and Smith say their working relationship is informal. They meet at least once a week to talk about new ways to solve business problems, more often if they're trying to solve a sticky problem. They can reach each other just about any time on the phone, and Carter says they often talk at night and on weekends. Smith made IT initiatives such a key component of the business that several years ago he formed the Z-Committee. The name has no real meaning, but the group, which includes the company's five executive committee members as well as top executives from FedEx's many business units, has the last word on IT initiatives.

"We're constantly pushing the envelope," Smith says. Carter may bring an idea for new technology to Smith, or Smith may bring an idea to Carter. "Fifty-one percent of the time I have cockamamie ideas, and Rob has to bring me down to earth," Smith says. Carter, as might be expected, disagrees with that. "One of the things that makes the job fun is that Fred is a visionary individual." A standout example, he says, is that in 1986, Smith was the force behind FedEx's designing and manufacturing of its own handheld scanners, called SuperTracker, to capture detailed package information.

Former CIO Jones says Smith has always had a close business relationship with his top technology exec. "Fred is a guy who understands that the CEO has to have a CIO he can trust, and that often means he'll have to ignore the advice he's being given by other experts in the business and trust the CIO," Jones says.

Smith set the tone for FedEx's central focus on IT early in the company's history when he began to build a mainframe-heavy IT structure. When asked why the company spent so heavily on IT, he told a gathering in 1979, "Information about the package will soon become as important as the package itself." That's a prescient statement, but Smith is modest about it. "That wasn't any great insight into the coming millennium," he says, but adds that FedEx acted first on the idea.

In 1994, with Carter as CTO and Jones as CIO, FedEx launched its Web site, letting customers track, ship, and dispatch parcels and documents via the Internet. In 1996, the company added InternetShip to its Web site. This feature lets customers label and track shipments electronically. The company does 70% of its business that way--no paper needed.

The relationship between Smith and Carter remains focused on the idea that information about a package can be as important as the package itself, as illustrated by a high-speed networking project code-named Project Grid. The executives had been discussing options for making real-time information about packages available any time, anywhere on the FedEx network. One day in 1997, Smith called Carter into his office and decided the time was right for action. "He told me we need to do whatever was necessary to make information move more quickly," Carter says. "That might sound like an IT thought, but it was the business thought." Carter came back a few weeks later with the idea of connecting all FedEx locations around the country using T1 lines.

Recently, Carter has overseen projects such as a futuristic scanner, worn on a warehouse worker's hand as a ring. The 1,200 ring scanners let employees scan the package bar codes quickly as they load them into the truck, speeding the process of loading trucks and linking in real time to the systems used to track packages. The company is building a document-management system to handle the 30% of business not done electronically, especially international shipping. The system, slated for completion some time in 2002, will let FedEx keep track of shipping information that includes not only the name and address of the sender and the recipient and billing information, but international compliance information for each shipment.

FedEx is also building a new generation of wireless handheld tracking devices for drivers that are custom-designed but based on cheap, commercially available parts. When these new handhelds are deployed next fall, they'll provide much more than real-time information on the location of each package. Carter and Smith say the handhelds will be light years beyond simple wireless tracking devices, though they won't divulge exactly how FedEx will use that new mobile computing power--that's a company secret. They did let one detail slip: Drivers will no longer have to insert handhelds into on-truck docking stations to transmit package delivery data back to regional offices; they'll use public wireless networking.

Smith says the essential idea behind FedEx from the start has been that if customers can trust FedEx to deliver by a specific time, they can keep inventories to a minimum. FedEx's IT infrastructure makes guaranteed deliveries happen, which is why his CIO is so important. "From the day we started, I tried to make as my business partner the smartest IT person I could find," Smith says. "We've been very lucky. Each CIO has gotten smarter and smarter and better and better." And that makes for a great team.

Return to the "Chiefs Of The Year" introduction page.

Photo by Jack Kenner

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