What CEOs Can Learn From the Mailman
No matter what market your company is in, once your value proposition ages, customers will move on to the next faster, better, or cheaper solution for their changing requirements. Look at the USPS and then examples of how mail is handled in other countries and you’ll see the importance of reinventing your company to keep up with the times.
August 16 2011 by Bob Donnelly
Even though the world has changed dramatically your local mailman is still delivering the mail the same old way. Many CEOs are still trying to sell the same old stuff in the same old way, too!
The current CEO of the USPS was a mailman! Sound familiar? His company — the USPS delivers 563 million pieces of mail on average every day. That’s about 40 percent of the world’s volume.
With 571,000 full time employees, USPS is second only to Wal-Mart as a private employer and has more post offices than the combined outlets of Wal-Mart, McDonald’s and Starbucks. If it were a private company it would rank 29 in the Fortune 500.
Is there a strategic plan for the USPS — NO!
No matter what business you are in the same principles apply.
Innovation is critical
Life is about change and all markets change. This is especially true today as the internet is rapidly changing the way we work, shop and live.
As social media and mobile telephony proliferates, and social networking become more a part of our daily lives, the old fashioned letter and putting the remittance in the mail is rapidly disappearing. The obvious result is that the mailman’s bag is getting lighter along with the postal service’s revenue.
This isn’t news. For the last four years the USPS hasn’t been able to meet its budget, most of which goes to wages and benefits. Sound like shades of GM prior to bankruptcy?
When compared to its competitive innovators — Fedex and UPS, USPS would appear to be facing a similar scenario that the auto industry went through. Both Fedex and UPS have considerably lower salary and benefits costs. Not to mention a continuum of planned logistical innovations and a perpetual search for cost efficiencies.
Embracing technology is a strategic imperative
Staying ahead of the technology curve is the challenge for any CEO. And for those who haven’t we have witnessed what happens when they seek a “silver bullet” solution in desperation. Nokia is a great current example with their “quick fix” gamble with Microsoft.
Looking at how mail is handled in other countries reveals that digital mail products have been introduced that allow people to send and receive letters via their computers.
In Finland, for example their postal service (Itella) maintains a digital archive of its users’ mail and also assists their customers pay bills online through their secure network. In Sweden, the postal service (Posten) ha developed an application where people can convert digital photo’s on their cell phones into postcards. And another service is being introduced that will allow mobile phone users to send letters without stamps.
Studying the competition is essential
The goal is to sustain the value proposition or else customers will switch to the next better solution for their problems, or to satisfy their changing needs.
In Germany, Deutche Post is now a private firm and has acquired DHL. Denmark and Sweden merged their postal services into PostNord. In other countries post offices have closed and postal services are now offered in convenience stores, gas stations, and supermarkets.
Business is about numbers
Key performance indicators are an essential management tool as they are the predictors of the future. Planning anticipates the inevitable, but if you aren’t able to see it, you certainly can’t do anything about it. In this case, the postman can “feel” it as well.
The overall volume of mail is on a precipitous decline. The system as it is currently configured with a one-price-fits-all location policy is no longer financially viable. The overall costs of running and managing such a large organization (31,781 post offices) – 80 percent of which lose money, is draining the owners (U.S. Government i.e. taxpayers).
The population keeps growing. It is estimated that the number of addresses that the USPS services grows by about 1 million a year. In addition, the USPS continues to raise salaries and benefits of its workers without regard to the negative productivity of the organization’s output.
You don’t need a calculator to see where the USPS is headed. Likewise, you don’t have to be a genius to see where Nokia is headed, either.
What’s the plan?
If you can figure out what the USPS needs to do, you can also figure it out for your business.
What’s the turnaround formula for the USPS? Reduce costs quickly — go to fewer days of delivery, consolidate post offices, allocate postage based upon distance like UPS and Fedex, offer employee buy-out packages, consider faster and less expensive ways of sending mail/paying bills electronically through the postal service, electronic versions of money orders, etc.
The real question is — does everybody need to get their mail delivered personally to their home every day? I don’t.
Why do I need it delivered at all? Why couldn’t I pick it up at a postal location? Or have the USPS e-mail me to let me know “you’ve got mail” like AOL?
Why not have postal services in locations where current postal customers go anyway — the supermarket, gas station, bank, etc.?
Planning anticipates the inevitable
Do you have a strategic plan for your business, or are you drifting into financial chaos like the USPS? Or seeking a quick fix like Nokia?
What strategies are you developing to maintain the competitive advantage in your industry? Where are you on the technology adoption curve? Keeping ahead of your competitors?
In the not too distant future there probably will not be a postage stamp as we know it today. Will you still be in business when we get there?
By the time Nokia completely transitions their operating system that runs its mobile phones to Microsoft Windows by the end of this year at the earliest, will anybody care?
Just like the USPS, Nokia is losing customers so fast that by the time their new operating system is ready to go they may be irrelevant, as their competitors will already have converted many of their customers to their more sophisticated technology. Nokia’s shares have fallen to their lowest level in 13 years, and their new CEO already announced that sales for the next quarter will be substantially below earlier expectations.
The lesson here is that no matter who the company is, once your value proposition ages customers will move on to the next faster, better, or cheaper solution for their changing requirements.
How CEOs of firms who have recently faltered, like Borders and SAAB for example, can continue to claim that they will return to a position of prominence, or return at all for that matter, is truly a CEO completely out of touch with reality.