Changing Business Models Spur Need for Posts to Innovate

The recent review the Canadian government has undertaken on the operations of its state-controlled Canada Post brings to the forefront again the question that so many countries are dealing with in terms of their posts – what do people need from their national postal system? The United States is not the only country facing a dramatically changing mail mix as profitable product lines decline in the face of electronic alternatives. And these changes are driving posts and their governments to look at new business models and ways to innovate. As always, PostalVision 2020 and the Postal Innovation Platform (PIP) have enabled dialogue about the future of the posts not just in the U.S. but in other countries.

PIP earlier this year partnered with PostalVision 2020 to present an insightful panel of posts talking about the challenges they are facing and how they are attempting to foster innovation in their organizations. And the day before the PostalVision event, PIP held its own event bringing together both postal and non-postal business representatives to talk about how they foster innovation in their organizations.

The dialogue will continue later this month in Hong Kong at Post-Expo, where PIP and PostalVision 2020 again will partner, sponsoring a LIVE Innovation Showcase. For now, enjoy these highlights from the recent PostalVision 2020 event when a diverse group of posts came together to talk about innovation and the challenges they are facing today.

 

Posts Manage Innovation Differently

Bernard Bukovc, Managing Director of PIP, moderated a key panel at the PostalVision 2020 event, Global Postal Ecosystem Future Trends and Strategic Innovation, which included Preston Finley from the U.S. Postal Service Strategic Planning group; Claudia Pletscher, Vice President, Development and Innovation at Swiss Post; John McConnell, Director of Innovation and Quality at An Post; and Lily Loo, head of the Customer Service Group for Singapore Post. [The presentations and videos of the PostalVision 2020 session can be found on its web site (http://www.postalvision2020.com/global-postal-ecosystem-future-trends/.]

All four posts agreed that changes in the mail mix and volume declines in traditional products have forced them to look at new opportunities for growth and more non-traditional markets. Finley said all the posts to some extent are facing similar challenges worldwide with financial shortfalls, trying to adjust to new models, mail mixes and profit margins are changing, and posts are looking to other spaces. The USPS, which Finley noted delivers 40% of the world’s mail, has had a less steep slope of mail decline than some other posts, he said.

Swiss Post, though not as big as many other posts, is the third largest employer in Switzerland, Pletscher said, and is the biggest online banking community, biggest transport provider, and has a very diverse portfolio including many ecommerce and communication markets. The B2B business is a focus area, Pletscher said, but customers have changed in that they are becoming more mobile, more individual, which means that speed, flexibility and personalization are key to innovation.

Loo said Singapore Post is also seeing a “vanishing core” in terms of mail declines, and is looking for ways to remain relevant and identify growth strategies. Singapore is small, so SingPost is more agile, she said, and it’s right in the center of a booming ecommerce market in Asia.

McConnell noted that An Post is a smaller post, with only about 10,000 employees, and it set up its Innovation group about 2 years ago. It has significant strategic capabilities, he said, with the largest retail network in the country, and a lot of expertise developed over the years, particularly in financial services, as well as assets such as its trusted brand. Like all postal operators, focusing on 8 key business areas ranging from communications and document management to new businesses in new areas, with a big part of its income and revenue coming from government services.

The four post representatives talked about the way they are managing and encouraging innovation within their organizations. The USPS, being the largest by far, has put in place a very structured innovation model. Finley said the USPS utilizes large project management efforts at the portfolio level to be able to coordinate big innovations into its organization. The USPS uses a rigorous program management model it calls Delivering Results, Innovation, Value and Efficiency (DRIVE) for changing the organization.

McConnell said that Ireland, having just come through difficult financial times, has launched an Innovation 2020 initiative to position Ireland as a global innovation leader, fostering a start-up and entrepreneurial environment. An Post generates ideas from consumers, other posts, competition, and through an innovation challenge it launched where 7 cross-functional teams have to submit ideas and business case presentations to an executive innovation board. The ideas are broken down into projects, initiatives and discoveries with the last two being areas the innovation team focuses on. The projects are divided into commercial innovation (to protect/grow market share) and necessary innovation (to retain competitiveness), and initiatives and discoveries (new business lines).

For SingPost, Loo said the transformation efforts have focused on employees, culture and mindset. It runs its customer-centric program so that every innovation is translated to a message understood by the employee. “We run an end-to-end program to keep everyone informed on what is happening within the organization,” she said.

 

Speed to Market is Essential

Finley said that the USPS, because of its financial pressures, has had to look at becoming much more nimble and able to take decisive action toward innovation that it ever has. “The USPS has always been innovative,” he said, “but it has taken time, and now we don’t have time – we need to be able to respond and act more quickly.”

In addition to its broad innovation strategic initiatives, Finley said the USPS also has innovation platforms established in 2014, “for initiatives that need to be fast tracked to take advantage of opportunities.” He gave the example of the USPS grocery delivery project working with Amazon Fresh, which he said was put through this more streamlined innovation project process. MetroPost, the USPS’ same day delivery project, is another example.

“We’ve done a lot in a very short period of time, Finley said of the USPS’ strategic initiatives. He said these initiatives are supported by over 100 roadmaps and projects, but faster innovation is a key to future success.

 

Collaboration and Partnerships are Key

Pletscher said SwissPost strongly collaborates with other companies, including those in Silicon Valley, start-ups, and others. “That network is an important part of how we foster innovation,” she said, also noting that internally it has an innovation platform to enable employees and users of SwissPost to bring forward ideas.

“We can choose if the competitor is friend or enemy,” Pletscher said, “and in Switzerland, we love Amazon – they are one of our biggest clients, one element of the value chain.” She said part of the game change is that competition and client lines are becoming more blurred. “We are too small to fight, so we are coupling with others, enhancing our capabilities, sitting at the table with competition to enable projects and find smarter ways,” she said. “We can react in different ways, but if we are game changing, the idea is not to stay in the middle and wait to be squashed, it is to expand the value chain.”

Loo said Alibaba is one of SingPost’s key shareholders, with over 14% ownership. Over the past 2 years, SingPost’s vision was to become a regional leader providing a full end-to-end chain for ecommerce and logistics, but also offering modular solutions within the network. It acquired two companies in the U.S., Loo said, which are active in the ecommerce space. SingPost is developing a regional ecommerce and logistics hub in Singapore to provide warehousing/fulfillment solutions. So its strategy is not just to focus in Singapore, but to provide a wider choice for customers.

Some customers, like Calvin Klein, opt for the end-to-end Singapore Post ezyCommerce solution including customer care centers, so Singapore Post is handling their customer calls, and Loo noted the entire solution was live within 10 weeks allowing them to sell to their Asia-Pacific customers.

 

Start with the Core and Innovate Around It

Swiss Post sees itself as intermediary between the physical and digital world, building bridges for its clients as trusted third party intermediary. Pletscher noted that its e-voting project is an example where the post transports almost all the physical voting and election materials, but as a choice for clients, it also offers e-Voting. Going digital also means going mobile, she said, and SwissPost launched its mobile payment solution last year and now is #1 in payment in Switzerland with the biggest retailers on board using its solution.

Swiss Post is also in eHealth and eJustice markets, which Pletscher said means being the preferred provider of physical transport of confidential information, but giving clients the choice in their transformation to choose digital or physical. It is building secured digital platforms with authentication, and identification layers integrated, to be the trusted third party. “It’s not that far from our core business,” she said, “it is just independent in terms of the channel.”

Focus on the customer is one of the USPS’ key strategies, Finley said, which is to build a world class customer care process in all the places the USPS touches customers, including gaining insights on the retail experience, the experience of large customers entering mail, all the way to the last mile customer experience at delivery. “If we can’t provide the service at a price point and with consistency,” he said, “businesses will just turn off whole ZIP Codes and shift their business to someone else.”

Looking at the future, Finley said, means looking through all the various lenses needed to evaluate the competitive landscape – customers, technology, industry partners, legislative/regulatory aspects, global market changes – to help define the USPS’ key strategies.

“We protect the core, but grow the wings,” Loo said, noting that for SingPost the core is mail but the “wings” are ecommerce and logistics, which are the key growth areas for SingPost. “Coming from a customer-centric focus,” Loo said, “it’s about your brand and your promise, and our brand is collaboration of the network. We need to think about what we promise the customer and make sure we deliver on that, not try to deliver on everything else,” she said.

 

Save the Date for 2017!

PostalVision 2020 will continue to bring together thought leaders and posts from around the world, to discuss innovation and the challenges they face now and in the future. Save the Date now for our 2017 event – March 21-22, 2017 at The Ritz Carlton Pentagon City (just outside Washington DC), and stay tuned for more information.

 

By Kathy Siviter

The comments in this blog are moderated. Each comment will be reviewed to ensure that it contains no crude language, solicitations, personal attacks, or anything that may be regarded as inappropriate is included.  In an effort to facilitate an ongoing conversation, comments will be reviewed in a timely manner. The views that are expressed in this blog are those of the individual contributors and do not reflect the views of PostalVision 2020. If you have any questions about commenting or are experiencing issues, please contact Bryan Klepacki

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