Postal Sector Policy Reform, in its totality, covers questions of postal regulatory framework, structure (monopoly or regulated competition, corporatization or privatization), scope of the Universal Service Offering, how to finance the USO as well as the future oriented USO. To survive, Posts must ask themselves the hard questions and accept the need to change.

Singida Post Office, Tanzania

In setting its direction for the future, it’s very important for any Post to ask itself very difficult questions. Not only investigative questions about the business but also about the organization structure, the operations and the Post’s viability.

The Key Question: What business are you really in? & Why is this question important?

Many Posts are facing declining growth in the area of mail. Have leaders defined their mission too narrowly? Did they think that their “product” was their business? Did they focus only on their Posts’ current capabilities? Did they misunderstand this question or assume that the answer was perfectly clear?

Some railroad companies thought they were simply in the “train” business transporting people from A to B. Others that succeeded, understood that they were really in the larger “freight hauling” or in the business of moving people as fast as possible from A to B.

Western Union believed it was only in the “telegraph’ business. If they had understood that they were really in the larger “communication” business, they would have accepted Alexander Bell’s offer to sell them his telephone patents. They refused and missed a great opportunity.

For years, the companies that have succeeded have been those that have remained thoroughly customer focused and that have evolved—in terms of the products and services they offered—as the needs of their customers changed.

For example, the fast-food, worldwide, franchise chain McDonald’s realized that they were not in the hamburger business but in the real estate business. McDonald’s restaurants are in over 100 countries. There are over 36,000 locations worldwide, of which only 15% are owned and operated by the McDonald’s corporation directly. The rest are franchisee-operated. They buy the properties and then lease them out to their franchisees. In addition, the franchisee pays them a percentage of their gross hamburger sales which goes toward marketing.

Starbucks understands clearly that it is not just selling coffee. They provide customers a social experience, a place to spend time. In the same way Hollywood has realized that it is not in the movie business but in the larger entertainment business. Oil companies have realized that they are not in the petroleum business but in the larger energy business.

Nike doesn’t make shoes. It has diversified into other products and inspires the athlete in all of us. Red Bull does make the energy drink but understands that it is in the larger business of helping us live our lives to the absolute extreme. Tesla is not in the car business. It is in the larger business of electric mobility. Volvo has positioned itself as being in the family safety business. Kellogg doesn’t just make cereal. It’s in the health and wellness business. Apple is clearly in the life-style business.

What have other Posts done?

Posts in industrialized counties have generally responded in one of 4 ways:

Do Nothing (wither, wane and waste):  Ride out the storm of declining
lettermail and take a wait and see attitude. Try to improve, defend or extend the life of lettermail by continuing to encourage people to write letters. Ultimately this strategy can only lead to lower sales, a shrinking post office network, bankruptcy and irrelevance.

Do Less (reduce, restructure, reorganize): Give the impression of leadership, continue to cut costs, shrink the organization, automate mail sequencing, restructure routes, close owned post offices particularly in rural, decrease post office hours, switch to alternate-day delivery for mail, eliminate Saturday delivery, eliminate door-to-door service, consolidate plants, privatize or franchise, use pricing leavers, reduce pension liabilities and initiate regulatory changes to reduce service or reduce delivery speeds of products. This very traditional strategy sets aside the key role or essence or identity of any Post that is to provide Universal Service. It will buy the Post time but remember that no organization ever shrank its way to greatness.

Austria Post Office

Do More (enhance, extend, evolve):  In the 1980’s, Colgate, the health care and personal products giant, got into the frozen meals market. The toy company Lego also tried selling candy. Many Posts have faced similar identity crisis. These Posts were unclear about their business and wasted efforts by stretching into areas that were inconsistent with their essence. They introduced more and new retail products (magazines, stationery, pens, gifts, etc.) to capture incremental revenue; diversified (financial / banking services, parcel or logistics space, retail services or customised delivery by industry); positioned the Post as the low-cost delivery channel for online parcels and waited for that third-party business to come.  In some cases, it was logical to expand into mail-related complementary products and services, government services and emerging services such as telecommunications, e-commerce and business services. However, were they in the “services business” or in the “communication business”? Other Posts also sold insurance and travel packages and toasters. That was not because they had previously defined what business they were in but simply to maximize what was sold in their post office real estate. In some cases, the result confused customers and gave an advantage to their competitors. This again is a traditional strategy of leveraging (stuffing) the bricks and mortar. This strategy gives the semblance of true innovation. It can be compared to treading water – like “Do Less”, the Post is splashing about but not really swimming anywhere very fast.

Do Different (change, capitalize, connect): Forward-looking Posts started by answering this key question and defined themselves to be in the “transportation” or “delivery business”. They focused on delivering parcels. With that in hand they changed their culture, formed partnerships with the growing online retailers and interconnected the disparate parts of their business. They have seen their parcel business improve dramatically.

Singapore Post Regional eCommerce Logistics Hub

Change: They moved from a traditionally hierarchical and political culture to an innovation culture. Posts need inspiring and inclusive leadership that listens, encourages ideas, leads by example, focuses on long-term growth and rallies employees and customers alike via an articulated, concise idea or vision that ignites excitement and expresses what the company wants to be.

Capitalize: E-retailers are selling and shipping products to growth areas in China and Asia. These Posts are helping them sell and ship more products abroad. In the process, the Post will make more money.

  • China Post and TOM Group operate ule.com. The site offers a very wide range of products to Chinese consumers on behalf of retailers from China and worldwide. China Post’s over 50,000 post offices also provide over-the-counter sales, services and a dial-in service hotline for Ule. Australia Post, New Zealand Post, Post Denmark Deutche Post, Poste Italiana and others already have agreements with China Post.
  • Posts in France, Australia, Singapore, Italy and others have signed agreements with Alibaba. The Australia Post agreements with Alibaba allow e-retailers to sell via Tmall.com more easily and Australian consumers to use Alipay gift cards from Australia Post on Tmall.com and Taobao alike. The strategy helps the Australia Post parcel business both ways – outgoing and incoming.

Connect: These Posts interconnect their warehousing, logistics, delivery and customer service capability. They speed-up the delivery process, increase delivery options, provide real-time tracking and lower overall cost for customers. They also partner and integrate with a major e-retailer.

  • China Post signed an agreement with Alibaba to boost Alibaba’s presence in lower-tier cities. The two opened up their warehouses, processing centers and delivery resources to each other, building an e-commerce logistics platform in an effort to develop new business and new markets.
  • Finnish postal operator Itella has been investing in warehousing, automated e-commerce fulfillment process and delivery systems. It formed a partnership with e-commerce marketplace Mitäsaisiolla.fi (MSO.fi), a grouping of 200 e-commerce merchants. The alliance will offer online merchants a market platform and logistics service as a single solution including better customer service and faster delivery times.
  • Alibaba invested $250m (USD) for 10% of SingPost allowing SingPost to accelerate its transformation into a regional e-commerce logistics specialist to pursue a market forecast to be worth $1 trillion (USD) in sales by 2020. Alibaba will also make use of SingPost’s cross-border e-commerce logistics services, including delivery of products into the postal company’s expanding network of self-service parcel locker terminals called POPStations.

The above answers to the key question may or may not be the answer for your Post. To answer this question, you must look at your own environment and your country.

Ask yourself: Who is our customer? What do our customers value? What customer needs in our market are not currently being adequately met? What is the potential of this market? How is this market changing? Who are our competitors? What technologies are emerging that will impact this market?

So, what business are you really in? Are you sure?

You may want to look at our page: A New Strategy for Posts

Post Office Moshi, Tanzania

The Very Important Secondary Questions

To develop insights and generate new ideas, you must engage your key leaders and challenge them in an honest discussion about your products, your results to date, the possible future and your vision.

Don’t ask yourselves questions that simply serve to agree with and validate your current strategy. Don’t ask yourself fact-finding questions. Ask yourself investigative type questions that will force you to look at a number of possible responses.

To spark disruptive innovation in your organization, you must challenge your team’s thinking and break down long-held assumptions about your industry, your business and your products. Here are a few key questions:

  • What is wrong with your organization?
  • What is wrong with your products?
  • What features of your products do people like?
  • What are the impediments to innovation in your post office?
  • What would you change in order to increase your revenue?
  • What are you doing to make every post office at least break-even (revenues cover costs)?
  • What would you have to do to be self-sufficient and operate without a subsidy?
  • What would you change in order to lower your operating cost?
  • What would you have to do to generate an annual profit?
  • Do you hold campaigns to increase your sales and do you track the effectiveness of those merchandising and marketing campaigns?
  • What would you change in order to give people more access to post offices?
  • What would you change to increase the volume of mail?
  • How would you improve security oversight over reporting on funds at the post office level?
  • How would you ensure that you have trained territory managers and a written process of periodic financial reviews at each post office?
  • How would you ensure that when you build or repair post offices are you getting the best possible rates?
  • How would you improve the reliability of your stamp and product supply chain process?
  • How would you ensure that your counter staff to improve customer service or experience, in order to give customers the service they require and improve your overall sales?
  • What would you set annual and quarterly sales growth targets for your territory managers?
  • How would you create an innovation culture in your organization?
  • Who are all of your competitors?
  • Why are your competitors successful?
  • How can you do what they do?
  • How do your customers communicate with friends and family?
  • What products or services (postal and non-postal) do your customers need?
  • Who are you not selling to because you think they can’t or won’t pay?
  • What are the gaps in what consumers want versus what is available in the market?
  • How can you inject an emotional customer experience in your product / service?
  • What can you do to encourage and support commerce and exports?
  • How will it be rewarded?

Leapfrog Business Consulting can also review with you the possibility of establishing more permanent vehicles for the open discussion of new ideas through facilitated work sessions, collaborative activities and structured systems such as venture boards, innovation councils, centers of passion, cross-group solution teams, a product development system that rewards innovation, including customers in product innovation, mentor systems, open innovation systems…and more.

Please click here to contact us for a free, no-commitment discussion.