Mr. Smith has often declared that you can build a successful company only if you continually adjust to the shifting marketplace. “Engage in constant change,” he told Fortune Small Business in 2002. “Every business is in the process of being commoditized. The question you have to ask yourself is, What do I have to change to avoid being commoditized?” Trucks delivering documents is not a business that can be sustained at premium prices indefinitely in an electronic age. Although Mr. Smith has not said as much out loud, he no doubt recognizes it. But change makes employees wonder what will happen to their job, and Mr. Smith recognizes that too. Clear and constant communication, he has said, is the only way to get employees to view change as an opportunity.
When FedEx bought RPS in 1998 and got into the ground shipping business, Mr. Smith talked himself hoarse to drive home to RPS and FedEx employees that their jobs were safe, and to explain why ground shipment was a sensible complement to the air delivery service. He did the same during the Kinko’s acquisition, spending weeks explaining why FedEx wanted to be in the retail photocopying business. “If you can put that into a culture that knows change is inevitable and an opportunity, not a threat,” Mr. Smith told Fortune in 2004, not long after the Kinko’s acquisition, “then I think you have the potential to have a company that can grow to a very large size.”
The first step in the FedEx way of integration is to clear the decks. Although it was only a $2 billion piece of a $29 billion company, the Kinko’s integration was designated the top priority throughout FedEx. The message came down straight from Mr. Smith and the strategic management committee, and served to brush aside any bureaucratic hurdles. That priority was reinforced by appointing three members to the strategic management committee: Gary Kusin, executive vice president of market development/corporate communications, FedEx Kinko’s; T. Michael Glenn, CEO of FedEx Services; and Robert B. Carter, executive vice president and CIO of FedEx. The triumvirate had the ultimate say on integration matters and, every Friday, the ear of Fred Smith.
The next step is to break down every activity into a work stream. Work streams for Kinko’s included rebranding, marketing, training and hiring, sales, sourcing, technology, and the physical build-out of stores. Each work stream was co-led by a Kinko’s staffer and a counterpart from FedEx, who together assembled a subteam. Like the military, FedEx spends a lot of time defining goals and making sure they are absorbed by the staff. Nobody starts moving until everybody understands what they need to accomplish and by when.
The FedEx Kinko’s subteams met with the integration committee every week leading up to Day One, usually from 8 a.m. to noon, alternating from week to week between Kinko’s Dallas headquarters and FedEx headquarters in Memphis. “You weren’t going in there to tell the committee everything you were doing,” says Brian Philips, the FedEx Kinko’s COO who as FedEx’s vice president of marketing led the rebranding team from the FedEx side. “Subteam leaders had to come in and say, ‘Here are the decisions I made this week. Here are the things I need from the committee, and here’s what I am going to do between now and next week.’” FedEx has used the same procedure in every major acquisition and integration.
Leading up to Day One, the teams focused on hiring and training staff for the new FedEx Kinko’s stores. The training effort required some 700,000 hours of education for 18,000 FedEx Kinko’s employees. Store managers selected senior Kinko’s team members to take on the new shipping functions, while new hires took over the simpler entry-level positions in the document and print side of the business.