Why Posts are able to become leaders in innovation & new technologies
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the Postal Industry, Innovation & Markets
Vol. 4 | Issue 1 | 2016
Why Posts are able to
become leaders in
innovation & new technologies
Content
Editorial THE PUBLIC PRIVATE PARTNERSHIP PATH 3
Robert A. F. Reisner
Driving innovation in big organizations is a real
challenge and studies show that many struggle POSTAL REGULATION OR POSTAL 6
or fail when they try to implement an innovation INNOVATION?
architecture. But why is that so and how can Prof. Matthias Finger
posts accomplish something where so many
others fail? IMITATION VERSUS INNOVATION 8
Adam Houck
The recent roundtable jointly organized by the
Postal Innovation Platform (PIP) and the U.S. TURNING AN AIRCRAFT CARRIER 9
Postal Service Office of Inspector General (USPS Jake Thomases
OIG) tried to shed light on this question. Posts
FROM INNOVATION TO POLICY 12
that have created an innovation architecture
and other companies with a track record in inno- Kathy Siviter
vation joined the discussion to analyze what A NEW INTRAPRENEURSHIP & CUSTOMER 15
tools and strategies can lead to a successful in- CENTRICITY ARCHITECTURE FOR POSTS
novation management and thus drive growth Bernhard Bukovc
and bring the company closer to its customers.
Read some of the results in this new edition of NEW REFERENCE FRAMEWORK HELPS POSTS 17
our Postal Industry Newsletter. TO SUCCESSFULLY IMPLEMENT IOPT
Freek Smoes
In addition, learn more about the topics and
discussions during the PostalVision2020 Confer- INNOVATION IN AN POST 19
ence which have shown that the postal sector is John McConnell
engaging with increasing speed in new technolo-
gies, new solutions in eCommerce and cross- USING INTERNET OF THINGS (IOT) 20
border business. TECHNOLOGY
Patrick Armstrong
It is difficult to implement groundbreaking
changes in large organizations, in particular THE MIKE TYSON EFFECT 22
when they come with a history embedded in Francois Eijgelshoven
government structures. However, most posts
are turning around their organizations success-
fully and some are even setting new standards
in innovation and customer centricity.
the Postal Industry | The Postal Industry newsletter provides original analysis,
Enjoy reading our newest edition of the Postal information and opinions on current issues. The editor establishes caps, hea-
dings, sub-headings, introductory abstract and inserts in articles. He also edits
Industry Newsletter. the articles. Opinions are the sole responsibility of the author(s).
the Postal Innovation Platform (PIP) is a unique open platform and forum that
focuses on innovative postal services and studies the future of the postal indus-
try with a solution oriented approach. It provides a conference, think tank and
Dr. Bernhard Bukovc research platform that is unique in the postal world and shall ease the imple-
Chairman, Postal Innovation Platform mentation of new and innovative postal business solutions.
Subscription | The subscription is free. Please do register at to be alerted upon publication.
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Publication director | Matthias Finger
Editor in chief | Bernhard Bukovc
Publisher | Chair MIR, Matthias Finger, director, EPFL-CDM, Building Odyssea,
Station 5, CH-1015 Lausanne,
Switzerland (phone: +41.21.693.00.02; fax: +41.21.693. 00.80)
email:
Website:
Published in Switzerland
2
Dossier
The Public Private Partnership Path -
Will a Changing Marketplace Offer New Opportunities for Value
Creation for the Posts?
Robert A. F. Reisner *
The concluding panel of the Postal Innovation Platform (PIP) Conference in September 2015 in Geneva addressed
the subjects of Big Data and Public-Private Partnerships. This has been a particularly timely subject for posts
around the world. During the course of the PIP Conference there were multiple opportunities to re-visit the com-
mon problems facing posts as markets continue to be transformed by digital technologies. Multiple studies have
documented the way that posts everywhere are now confronting the implications of serving mailers and consum-
ers who have new tools with which to facilitate purchase decisions and mailers who are creating new digital mar-
ket offerings. The result has often been a decline in traditional revenues for posts. These large scale, labor inten-
sive institutions whose histories begin as governmental enterprises are all facing the consequence of needing to
adapt to changing markets that are testing their ability to be agile.
Today, the posts, whether public agencies or privat- streams into new sources of insight.
ized enterprises, are facing common pressures to As technologies for drawing insight from large, his-
generate new revenues and provide more cost ef- torically unmanageable data sets has emerged,
fective service. Yet in the midst of these pressures, posts throughout the world have recognized that
there are opportunities for renewal. As the era of there are multiple data streams that can yield value
Big Data has emerged, there has been wide scale for their customers and others – whether the issue
speculation that this might offer potential opportu- is a marketing and customer facing challenge such
nities to the posts. There is an irony in recognizing as gaining new insight into consumer demand,
that some of the same digital technologies that identifying new potential customers, connecting
have made transformation of the posts an impera- back end supply chain insights with front end mar-
tive might also offer new opportunities for solving keting demands, exploring customer journeys
problems. But this conversation is more than the through multiple touch points – there is a wealth of
latest panacea. opportunity for the posts to be major players in this
emerging field on behalf of their customers.
One of the reasons that this discussion has seemed
to be such a promising development is that posts In the US, the creation of the Intelligent Mail bar-
are inherently Big Data organizations. Since posts code (IMb) has made it possible within the last 2
are among the largest organizations in the world in years for the USPS to gain visibility into the mail
terms of numbers of people, retail outlets, facilities stream in real time and see the location of hun-
for processing large numbers of letters and parcels, dreds of millions of pieces of mail – every day. Be-
scale of their networks, numbers of assets and ing able to manage these flows has opened many
more, to run a post effectively requires a facility new opportunities that are only beginning to be
with large numbers. A new era of Big Data will explored. And as the USPS has recognized the op-
open the opportunity to find new sources of value portunities that the IMb offers for coordinating
creation. marketing campaigns, gaining customer insight and
improving efficiency, there has been a growing rec-
What's more, as the era of Big Data analytics has ognition that the IMb data can be combined with
unfolded, it has become clear that the concept mail processing machine data that has been avail-
means more than just large numbers. Analytic ca- able for a number of years. We are only beginning
pabilities have made it possible to organize and to see the possibilities and perhaps even more im-
analyze unstructured data that was traditionally portantly, to create the tools that grant both mail-
unmanageable. Whether the issue concerns gaining ers and consumers an opportunity to take advan-
insight from complaints or assessing video of retail tage of this data. So this has become a very prom-
interactions or social media, modern advanced ana- ising field and the panel at the PIP conference con-
lytics have made it possible to translate these data firmed this point.
* Senior Advisor and Director at PricewaterhouseCoopers
3
Public Sector LLP
Dossier
And yet, along with the promise we can see that But none of the questions outlined above are easy
this area is raising many important questions as ones to resolve in the highly regulated government
well: monopoly that is the USPS. As the Washington
Post editorialized recently, “tied down like Gulliver
Who will own the data when it begins to yield by regulators and Congressional barons and relent-
customer insight? lessly lobbied by everyone…the postal service’s
management lacks the autonomy to run the system
If the posts have a fiduciary responsibility to efficiently.” (WP April 13, 2016). This is why the
both protect the privacy of the consumers and final PIP panel was so encouraging to some of us
to protect the commercial interests of their cus- who have been watching the transformation of the
tomers, will it be possible to define a third posts for some time. I was joined on the panel by
“postal zone” in which to create value? And both public sector representatives (Peter Gallagher,
Director for Strategy and Business Excellence, An
Even if these questions are resolvable with an- Post, Jihad Kosremelli, Strategic Planning and Or-
swers that are acceptable to regulators, which ganization Director, Liban Post and João Melo,
are the best institutions to assume which re- Head of Innovation Management & Development,
sponsibilities for developing services? What CTT`) and by a private sector representative (Liam
role should private companies play? When Church, CEO Escher Group). What we heard in Ge-
should the posts be involved with the new ser- neva was what always seems to come from bring-
vices? How should public private partnerships ing small scale practitioners together – practical
be structured? solutions and innovations that they have been
working on the scale of Ireland, Lebanon and Portu-
Public institutions and private companies each of- gal. These were not necessarily “solutions” and the
fer advantages of their own. The public posts have last word for every case. But they were practical
both the monopolies and missions that enable the steps forward.
accumulation of the data and the market scale that
makes this conversation about Big Data interesting Then in January, the Universal Postal Union (UPU)
commercially. Private enterprises often have the published its report on public private partnership
incentives, the agility, and the technical capabilities that was edited by Bernhard Bukovc. (Guide to Pro-
and creative insight to become engines of innova- viding eServices Through Public-Private Partner-
tion. ships, UPU, 2016.) Here again was a discussion of
the multiple practical steps that posts could take.
This duality suggests that there might be both pub- Yet, even with these positive signs, what should
lic and private roles here, the potential for new give everyone pause, is new evidence of the speed
data partnership that could be unique to the postal of market evolution. The speed of change raises
community. These discussions of public and private the question of whether these promising innova-
capabilities are not new questions for the USPS and tive paths will offer long term solutions quickly
for posts all over the world. In the USPS in particu- enough.
lar, the past 2 decades of postal history have in-
cluded an evolution of the regulatory and legal The Marketplace Evolves
framework. US stakeholders are familiar with the Only six months after the PIP meeting described
concept of “work sharing” in which postal rates above, in March 2016, I joined a second meeting of
have been structured to provide an incentive for the Postal Innovation Platform held in Rosslyn, Vir-
the postal operator and private mail service provid- ginia at the offices of the Inspector General of the
ers to share the processing in a manner that allows USPS. Attending this second session, it would be
the most efficient producer of service to assume hard not to marvel at how much has changed in a
the responsibility for the work. In addition, in the short period of time. One PIP panel that was con-
postal reform law of 2006, the USPS was encour- vened at the USPS Office of Inspector General’s
aged to use public private partnerships in its con- (OIG) offices, for example, included a representa-
tracting. (Section 1004 of the Postal Accountability tive from the financial services industry (Vijay
and Enhancement Act of 2006) Sondhi, Visa), a technology company (Brijesh
Kanna, Hatachi) and Amazon (Paul Misener).
4Dossier
This was a panel that highlighted three major issues be whether the USPS should partner or compete.
facing the postal industry globally and the US spe- But as choices are made, the market itself will be
cifically. Financial Services and new technologies changing.
are proving to be valued strategies in different
parts of the world. In the US both are controver- Enter Amazon. Shortly before the PIP meeting,
sial. The argument against the USPS providing new Amazon announced that it was leasing 20 wide-
financial services and for creating new digital ser- bodied cargo jets (Amazon to Start Air Delivery Net-
vices as revenue producing lines of business has work with Leasing Deal, Reuters, Sai Sachin R and
been that these are not traditional areas of postal Mari Saito, March 9, 2016). At Amazon headquar-
competence and there are companies in the private ters they would point out that with the entry of
sector who could offer competitively superior rival Alibaba, the marketplace will be far more dy-
value. Naturally, this raises the question of namic than it is today. When asked, what does this
whether new public-private partnerships might be all mean for the delivery channel, Amazon has a
valuable for the posts. Yet as important as finance good answer – they will only do what they've al-
and technology may be in the discussion of the ways done which is to focus on the consumer.
future of the posts, some of the most interesting
issues today may involve the third company, Ama- What if Amazon is going to redefine the platforms
zon. Amazon is a self-proclaimed newcomer to the and the delivery channel in the future? With such
conversation; and the Amazon representative said developments on the possible horizon, it’s impor-
very little. Yet some of the most interesting recent tant to ask what the future infrastructure will look
headlines have been made by Amazon’s new like. Will the channel become an interested party in
moves – experimenting with last mile delivery in the selection of goods and services? How will it do
multiple markets, leasing wide bodied jets and stat- strategic sourcing in the selection of competitors as
ing that they wanted to provide service from any- delivery vehicles?
where in one to two days, filing new patents and
financing Amazon sellers. In six months, the concept of public private part-
nership has made dramatic strides. In the Septem-
The headlines point to underlying changes in the ber 2015 PIP meeting there was a clear direction
basic business models in the delivery industry. To- that suggested the value of the posts as facilitators
day there is growing discussion of platform indus- of institutional innovation in an era of Big Data.
tries as Amazon, Uber and Airbnb, and many others Only a few months later it's possible to see that the
that can be anticipated with the Internet of Things, competitors who have special facility with such
the connected car, the connected house and other data and defining customer interests will be com-
features of the future landscape are emerging. The petitively more successful. Will the power to define
technologies to make a shared economy possible winners and losers in the future shift to the net-
are themselves encouraging the creation of plat- work? To the platform? Or to the consumers them-
forms. In the postal and delivery sector, there is selves in a world in which Amazon is a bigger player
innovation and competition in all of the major ur- and Alibaba has made the market both more global
ban markets. New players are offering rapid deliv- and more dynamic? The questions will only grow
ery of e-commerce parcels and they point the way more significant with time.
to a future in which online commerce and technol-
ogy driven delivery become increasingly seamless
and swift.
Robert Reisner is a Senior Advisor and Director at Price-
What this increasingly digital future means for waterhouseCoopers Public Sector LLP. He has more than
postal innovation is still uncertain. In the US, mo- 25 years of experience as a consultant and has served in
government at the White House, OMB and the Federal
nopolies over mail delivery and over the mailbox
Energy Administration. In 1993 he was recruited by the
and the sheer size of the incumbent infrastructure
Postmaster General to lead the development of digital
give the USPS certain advantages and point to a initiatives for the USPS as the first Vice President for
hybrid future. The question in the near future is not Technology Applications
going to be whether there is a postal infrastructure
but more likely, what kind of post will emerge. In
the near-term the question is more likely going to
5Dossier
Postal Regulation or Postal Innovation?
A Critical Look at European Postal Regulation
Prof. Matthias Finger *
At least in Europe, the regulation of the postal sector has played a significant role in its evolution over the past 20
years, notably in the sector’s way of adapting (or not) to the profound changes in the market and, more recently,
in its reaction towards digitalization. In this paper I therefore want to ask the question whether European postal
regulation has favored, or not, innovation, and which exact role it has played in helping posts adapt to competi-
tion and technological change. The paper is structured into two sections: in a first section I will recall what postal
regulation in Europe was and, regrettably still is. In a second section, I will then discuss what the implications of
this traditional postal regulation are on the evolution of the postal industry.
Postal regulation in Europe Let me also mention that the definition of the USO
was (and still is) of course solely focusing on the
To recall, postal regulation in Europe over the past physical part of the postal services, namely physical
20 years was about creating competition while letters and physical parcels. This is not surprising,
safeguarding the Universal Service. Competition as the historical public service of the postal opera-
was conceptualized as a gradual reduction of postal tors and its subsequent translation into USO termi-
monopolies, which eventually were abolished in nology all took place prior to the spreading of the
2011 and, for some countries, in 2013. I will not Information and Communication Technologies
comment, here, the fact that, in letter mail, this (ICTs) and their effects on the postal sector, ap-
approach never really worked, resulting, today, in proximately as of the turn of the century.
open letter markets without much competition.
Furthermore, all this was institutionalized in the
What is more relevant for my argument is the Uni- form of so-called Independent Postal Regulatory
versal Postal Service, also called Universal Service Authorities, whose role it was, and still is, to make
Obligation (USO). While the European Commission sure that this, past-oriented USO is cemented and
was able to gradually reduce the postal monopoly, enforced. Needless to say that postal regulators
it was not really able to innovate in matters of the and their regulatory activities have developed dy-
USO. As a matter of fact, the USO was more or less namics of their own, which are increasingly discon-
a copy of the various public service obligations that nected from postal market dynamics.
had been imposed upon the historical postal opera-
tors (incumbents) by the respective national gov-
ernments prior to the liberalization of the market. Implications on postal innovation
Not astonishingly, this equation could not be Now, what were and still are the implications of
solved: it was not possible to offer a pre- this approach to regulating the postal sector on the
liberalization USO without the financing mecha- evolution of the industry and the operators, espe-
nism that went along with, namely the monopoly. cially the incumbents?
Not astonishingly either, competitors were not in-
terested in providing this past-oriented USO. Sub- It is questionable whether this approach to regula-
sequently, all kind of tricks appeared in the various tion directly influenced the evolution of the postal
European countries, and were tolerated by the sector; this influence was rather indirect (see be-
Commission, so that the incumbent could survive low). As a matter of fact, postal liberalization un-
while providing the USO. In parallel, the USO was folded regardless of the gradual monopoly reduc-
gradually redefined, i.e., lowered, at least in these tion (e.g., de-facto liberalization). Indeed, remailing
countries where this appeared to be politically ac- and market entry of parcel competitors happened
ceptable. independently of existing regulations.
* EPFL, Chair Network Industry Management & eGover-
nance
6Dossier
Furthermore, the dynamics of the industry substan- tion between the physical and the digital. Yet,
tially accelerated as a result of the ICTs at the turn the real innovation which incumbents should
of the century, both in matters of letter substitu- have come up with would have precisely been
tion and e-commerce. There may be an indirect at the interface between the digital and the
effect, as the incumbents had market power, thus physical. In other words, the postal regulation’s
probably somewhat slowing down the dynamics of focus on physical mail forced incumbents to
the postal industry. Yet, overall, the dynamics due create a, in my mind, artificial separation be-
to competition and especially due to the ICTs was – tween the physical and the digital, thus leading
and continues to be – too powerful for the above them to pursue two separate strategies – one
postal regulation to have a significant influence on physical (defensive) and one digital (offensive) –
industry evolution. , rather than developing one single integrated
digital-physical strategy. Such a strategy would
The problem with traditional postal regulation is have positioned them uniquely in today’s global
thus not so much with the industry and its dynam- competition.
ics than with the effect it has on the incumbents
(and therefore indirectly also on the industry): in Thirdly, focusing on traditional past-oriented
particular, I see three direct effects of traditional public services and their protection (thanks to
postal regulation on incumbents: the attention by the regulators on this), incum-
bents were – and still are – associated, in the
First, incumbents were forced, by the traditional eyes of both the citizens and politicians, with
postal regulation, to focus on the past, on physi- the defense of the past, rather than with the
cal mail and on the financial challenges resulting opportunities of the future. This has put the
from being forced to provide the USO. Both the incumbents into a losing position, whereby they
money and the energy was thus missing to look constantly have to defend themselves against a
towards the future as well as to innovate. This public opinion which accuses them of reducing
past-oriented regulation certainly deviated the public services, rather than being able to posi-
incumbents’ attention from the challenges re- tion themselves as future-oriented innovators at
sulting from the ICTs the interface of the physical and the digital
world.
Secondly, and more insidiously, postal regula-
tion cemented the increasingly artificial separa-
7Dossier
Imitation versus Innovation: A Nuanced View and
New Opportunities for Posts
Adam Houck *
At a recent USPS Office of Inspector General conference titled ‘Turning the Aircraft Carrier: Injecting Innovation
into Large Organizations’, many thoughts were shared about the nature of innovation, where and how it occurs,
its role as both an enabler and disruptor, and whether it is beneficial to measure its progress. While listening to
the beneficial discussion that day, it became even clearer in my mind how careful we must be when defining
what innovation is and is not.
An option offered by several panelists at the OIG first,” according to Post and Parcel (2014).
conference to introduce new innovation would be
for posts to offer banking and other financial ser- The sharing economy, marked by greater degrees
vices to the marketplace. I would add a word of of collaboration among ecosystem players, repre-
caution, recalling Merriam Webster’s definition of sents significant potential and also threat to posts.
innovation: “to do something in a new way.” As Collaborative logistics is in its infancy and will only
such, I would posit that simply moving into banking continue to drive disruption, transformation, and
and financial service offerings in an attempt to off- innovation in both the first and last miles. Leverag-
set the declines in traditional mail products is a ing scale and first mover advantage, posts can seek
diversification strategy, a signal of strategic intent, to become the hubs rather than the spokes of
more closely resembling imitation than real innova- these collaborative ecosystems and create the plat-
tion. It is important to grasp this nuance, for as forms, security, and tools such as open APIs that
Hamel and Prahalad (1989) noted, “imitation might smaller fringe players might lack due to scope and
be the most sincere form of flattery, but will not scale. As a result, posts could place themselves in a
lead to competitive revitalization.” As such, the key position to establish these sharing ecosystems,
question will remain whether any new service of- contribute, and enjoy the resulting network effects.
fering would be innovative, presenting new ele- While there is no guarantee we can imagine what
ments and efficiencies, or merely demonstrating the resulting innovations might resemble, evidence
the desire to diversify and follow the lead of other suggests some of the most successful innovations
postal operators into adjacent areas of business. throughout history occurred as a result of taking
the time to establish optimal conditions, then invit-
True innovation at times is quite elusive and diffi- ing bright minds to collaborate and exercise crea-
cult to define; let us explore a theoretical example tivity.
where posts could engage in innovative practices in
an Internet of Things (IoT) scenario. USPS OIG Myriad forces drive the need for innovation, per-
RARC authored a compelling white paper in 2015, haps none more so than an industry in the midst of
exploring the applicability of IoT to the rich physical profound disruption and transformation such as
networks of posts and found concrete use cases the postal industry. E-substitution effects, re-
where value existed for citizens, businesses, and urbanization, new entry, splintering supply chains,
posts themselves, namely in last mile delivery. In- and liberalization have driven the need for posts to
deed, it is likely the future will be defined by pursue cultures of innovation within all areas of
greater degrees of partnering and sharing within their business. Posts must look for ways to become
postal value chains and ecosystems. A 2014 IBM more essential to citizens, businesses, and their
report suggests “innovation has become more respective ecosystems and seek new ways to im-
open and increasingly occurs within economic eco- prove customer experience and the value they can
systems…it is about building organizational and deliver. While indeed transformative agendas may
ecosystem-wide capabilities to execute and de- include diversification actions such as banking and
liver.” Evidence of this brand of innovation in the financial services, we must acknowledge that
postal sector can be seen in the recent experimen- unless posts are finding new efficiencies within
tation by bpost’s collaborative City Logistics Project these new product offerings, this is mostly an
in Antwerp, which “cuts the number of individual agenda driven by imitation rather than real innova-
deliveries made to the city centre by consolidating tion.
items within a facility on the outskirts of the city * Senior Manager and IBM Academy of Technology Mem-
8
ber, IBM Strategy and AnalyticsDossier
Turning an Aircraft Carrier:
Enabling Innovation in Large Organizations
Jake Thomases *
There aren’t many industries on earth that need to innovate more than the postal industry. First Class Mail vol-
ume spent the last decade falling off a cliff, bringing revenues with it. The pressure is on to adapt to the email
world, to reconfigure for parcel growth, and to come up with new revenue streams that will keep postal services
afloat. But such changes are difficult for legacy organizations to make. They’re difficult for big private-sector com-
panies too. Getting them to change course is like turning an aircraft carrier – agonizingly slow. That is why the
U.S. Postal Service Office of Inspector General (OIG), in partnership with the Postal Innovation Platform (PIP),
hosted an event in March that brought together speakers from four posts and three private companies to talk
about how they’ve made notable strides. The post representatives were: Claudia Pletscher from Swiss Post, Lily
Loo from SingPost, John McConnell from Ireland’s AnPost, and Jim Cochrane from the U.S. Postal Service. The
corporate representatives were: Brijesh Khanna from Hitachi, Vijay Sondhi from Visa, and Paul Misener from
Amazon.
The concept of innovation has become synony- Postal services around the world sure hope not.
mous with that of the startup. Picture the lonely Whether privatized or not, they have much in com-
prodigy in his parents’ garage, tinkering with a mil- mon with bulky corporations when it comes to the
lion-dollar idea that eventually becomes a billion- difficulty of changing direction. The U.S. Postal Ser-
dollar company. Before Elon Musk there was Bill vice is a top-five largest employer in the nation,
Gates; before Gates there was Nikola Tesla; before with an enormous physical network and a history
Tesla there were the Wright brothers. Brilliant men that stretches back 240 years. It is a similar story in
who, armed with room to breathe, introduced many other countries, where the post is among
technology that changed the world. The assump- their largest and oldest organizations. Not only do
tion is that only the unencumbered inventor can they share the corporate problems tied to huge size
turn a motorized buggy into the Ford Motor Com- and entrenched legacy, but many have additional
pany. burdens like universal service obligations, restric-
tions on the types of services they can offer, and
If that assumption is true, where does it leave busi- rent-seekers in government and organized labor. If
nesses that already exist? Their function is to exe- corporations turn like aircraft carriers, then posts
cute on proven commodities, not new ones. They turn like aircraft carriers powered by oarsmen.
have processes and rules in place designed to opti-
mize the production of one set of goods, not come The startup model is of no use to organizations like
up with a whole new set. Common sense says that these. They are not nimble. They do not have li-
every ounce of effort that goes into maintaining the cense to try and fail forever. They must show con-
status quo is an ounce that doesn’t go into doing sistent profitability. They are answerable to many,
something new. And the bigger the company, the many stakeholders. If startups are the sole wizards
more mechanisms are in place to maintain that of innovation, then non-startups are doomed to
status quo. Each layer of bureaucracy, each irri- eventual irrelevance.
tated shareholder, each piece of regulation, is a
potential obstacle to new initiatives. While 84 per- Luckily, the common wisdom is at least partially
cent of executives say innovation is important to wrong. Many big companies are innovating. Many
their growth strategy, an alarming 94 percent are posts are innovating. But they must do it in ways
unhappy with their current innovation processes. very different than startups. There are more obsta-
Are these large companies incapable of innovating cles to navigate and more resistance to overcome.
the right way? But there are also more resources available to ef-
fect change.
* USPS OIG, Risk Analysis Research Center, Public Policy
Analyst
9Dossier
For the first time, some posts are systematizing the Agree organizationally on how to measure new
way they approach innovation, either organization- innovations. Cochrane is adamant that all new
wide or through the creation of dedicated units ideas must be critically assessed by measuring their
that are more unfettered than traditional R&D. likelihood of generating revenue or cutting costs.
AnPost uses Six Sigma methods, while SingPost set USPS has review committees with defined tools to
up an internal startup focused exclusively on ecom- do just that. Without giving innovators defined pa-
merce. Here are the best pieces of advice handed rameters that they must meet, Cochrane said, they
out by the posts and private corporations invited to may end up creating cool products that customers
speak at the joint OIG-PIP conference. aren’t actually going to use. SingPost and Amazon
are less structured but still insist on evaluating
Do it. Seriously, you don’t have a choice. If this early based on customer satisfaction. Visa takes a
was the year 1316, a thatcher could go on thatch- very different stance – this is its second controver-
ing roofs the same way his father and his grandfa- sial opinion. During the first year of development of
ther and his great great great grandfather did. But any approved innovation, it refuses to use any met-
it’s not 1316, it’s 2016, and the pace of technologi- rics to define the innovation at all. It does not want
cal change means companies can either keep up or innovations being held up against established prod-
get left behind in a hurry. It’s not enough to do ucts and being crushed under the weight of high
something really well anymore. New technology expectations. They need time to develop. Similarly,
soon enables a competitor to do the same thing Hitachi incubates new products within the R&D
better or cheaper. Sometimes new technology re- department until they are fully formed. The scien-
places what you do entirely, in the way that pens tists used to hand them over to the business units
eliminated the need for quill feathers. The average much earlier in the development cycle but found
lifespan of companies in the S&P 500 has plum- that those units were constantly rejecting nascent
meted from 61 years in 1958 to just 15 years today. technologies because they could not immediately
Companies need to be prepared for, even expect, prove profitability. Whether you believe in applying
today’s business model to not be applicable down early metrics or not, it is critical that everyone in
the road. Even an old reliable like Coca-Cola has your organization be on the same page. The worst
diversified into coffee, tea, juice, energy drinks, and possible outcome is to have an innovation depart-
sports drinks. With soda sales flatlining, that looks ment that believes it has plenty of time to prove
like a very smart decision. As former U.S. Army product viability while the business side is demand-
General Eric Shinseki once said, “If you dislike ing proof now.
change, you’re going to dislike irrelevance even
more.” Take advantage of the global intellectual ecosys-
tem. Even huge organizations with hundreds of
Insulate the innovation lab from the rest of the thousands of employees cannot fulfill all of their
business. Visa takes two controversial positions on innovation needs internally. Groupthink sets in,
what should happen inside its innovation lab. This people get discouraged by all the things they’re not
is one of them. Innovators are allowed to pitch allowed to do, and they can grow blinders when it
ideas that violate the company’s internal and exter- comes to anything outside the core business. It is
nal regulations, and if the idea is interesting, they imperative that companies take advantage of all
can pursue it anyway. On its face, this seems like a the potential product developers that exist outside
waste of time. Why bother with a project that can’t their four walls. There are contractors and consult-
be released because it violates Section 37, Rule 98b ants, of course, but also startups and competitors.
of the handbook? Visa’s rationale is that rules can Potential disruptors can become valuable partners
be revoked, or modified, or reinterpreted, and if they are reached out to soon enough. Swiss Post
when they are it is better to have a pilot ready than has standing relationships with intermediaries that
not. Sondhi refers to the risk, compliance, and IT follow the startup scene in Silicon Valley and cen-
security departments as Los Tres Amigos; part of tral Europe; when a technology comes along that
his job is to keep their six-shooters as far away Swiss Post wants, the two sides come together and
from his lab as possible. sign a framework agreement. This is often a head-
ache-inducing process for posts, property rules. In
many cases these rules end up scuttling the deal.
10Dossier
But it is important to continue to reach out none- Swiss Post is cannibalizing its physical mail business
theless. Providing open-source code or APIs is an- with initiatives that offer e-health and e-voting ser-
other way to access outsiders. Hundreds of thou- vices. More cannibalization of mail will probably be
sands of people not employed by Apple are none- necessary by all posts in the near future. So will an
theless developing iOS apps, enhancing the value of expansion of parcel delivery services. Ecommerce
the Apple platform. And posts are beginning to makes up less than 10 percent of all commerce in
create APIs for their largest ecommerce partners. most countries, yet their parcel services are already
This kind of openness allows outsiders to work with strained. Alternative delivery services are already
you without ever setting foot in your office. sprouting up, including from Amazon itself. Posts
could be getting cut out of the loop very soon
Solve tomorrow’s problems today. A company unless they make major changes.
feeling the squeeze on one of its product lines
should try to innovate around that product line, Listening to these thought leaders speak at the PIP/
certainly. But what about the product line that is OIG conference, one feels optimistic. Blueprints to
not yet in danger but will be in five years? By the an innovative corporate culture do exist. Irrele-
time it has a problem it may already be too late. vance is not a fait accompli. But the basic principles
Understanding where the market and the relevant outlined in this article only lay the groundwork.
technology is going is critical to staying afloat. A big Next comes the hard slog of beating out competi-
company that disrupts itself will always beat out a tors and winning over recalcitrant members of
startup because of its resource advantage. Amazon one’s own organization. Sometimes that job feels
writes press releases, dated years in the future, harder than Sisyphus’. But remember, you don’t
congratulating itself for an imaginary achievement, have a choice.
then works backwards to outline a pathway for
how it will actually achieve the goal by that date.
11Dossier
From Innovation to Policy –
PIP and PostalVision 2020 Enable Dialogue
Kathy Siviter *
PIP in March partnered with U.S.-based 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. The PostalVi-
sion event featured over 40 speakers with panels focused on different aspects of the postal ecosystem supply
chain and how it is responding to the “B2Me” changing consumer empowerment model.
From new technology start-ups and entrepreneurs, eTailers are demanding from their logistics provid-
to challenges in the cross-border supply chain, to ers, and a benchmark of existing market capabili-
postal policy within the U.S., the PostalVision event ties to understand what retailers are currently pro-
brought together thought leaders, posts, visionar- viding to consumers.
ies, suppliers, technologists and more to engage in
critical discussions about the future of our collec- Cross-border ecommerce challenges were also dis-
tive industry. PIP organized and moderated a spe- cussed in several key sessions of the event, includ-
cial session on the global postal ecosystem with a ing a lively discussion between USPS Global Busi-
focus on strategic direction and innovation. ness lead Giselle Valera, MetaPack’s Tom Forbes,
Joe Murphy from the U.S. Dept. of State, and re-
New technology and start-up solutions featured in cently appointed head of International Bridge Sho-
sessions included the Starship Technologies ground shana Grove.
delivery robot, which roamed the halls of the
event; a live demo of SMS/MMS mobile engage- The PostalVision 2020 event was not all about inno-
ment from OpenMarket; the Workhorse HorseFly vation, technology and ecommerce – it also fea-
electric vehicle/aerial drone solution; special apps/ tured frank policy discussions among those charged
delivery services from ShipBob, Doorman and oth- with oversight of the U.S. Postal Service and key
ers designed to give consumers more control over stakeholders. A panel of leaders from the U.S.
their delivery; apps and delivery designed to com- postal oversight, regulatory, and labor groups en-
bat difficult address/geographic environments from gaged in a lively discussion around what the U.S.
Fetchr and SwapBox; mail receptacle sensor/ Postal Service needs in the way of policy changes to
notification services from Snaile; SmartBox letter- compete and thrive in the B2Me environment.
box solutions from Parcelhome; visibility/logistics
data tools from GrandCanal; and the latest packag- Posts Face Similar Challenges but Tackle Innova-
ing and parcel processing innovations from Bell and tion Differently
Howell.
Bernard Bukovc, Managing Director of PIP, moder-
Attendees agreed that there is no “one size fits all ated a key panel at the PostalVision 2020 event,
solution” when it comes to new delivery and con- Global Postal Ecosystem Future Trends and Strate-
sumer control technologies, and that the future gic Innovation, which included Preston Finley from
certainly will include a mixture of solutions de- the U.S. Postal Service Strategic Planning group;
signed for different types of delivery and different Claudia Pletscher, Vice President, Development and
consumer needs. Innovation at Swiss Post; John McConnell, Director
of Innovation and Quality at An Post; and Lily Loo,
The event also included an exciting feature presen- head of the Customer Service Group for Singapore
tation by Cooper Smith, Business Insider Intelli- Post. [The presentations and videos of the PostalVi-
gence, about Amazon’s “Dragon Boat” initiative; sion 2020 session can be found on its web site
and presentation by Brody Buhler on recent global (http://www.postalvision2020.com/global-postal-
research from Accenture on what small to medium ecosystem-future-trends/.]
* PostalVision2020, Director, Community and Brand
Development
12Dossier
Changing Business Models innovation model. Finley said the USPS utilizes
large project management efforts at the portfolio
All four posts agreed that changes in the mail mix level to be able to coordinate big innovations into
and volume declines in traditional products have its organization. The USPS uses a rigorous program
forced them to look at new opportunities for management model it calls Delivering Results, Inno-
growth and more non-traditional markets. Finley vation, Value and Efficiency (DRIVE) for changing
said all the posts to some extent are facing similar the organization.
challenges worldwide with financial shortfalls, try-
ing to adjust to new models, mail mixes and profit McConnell said that Ireland, having just come
margins are changing, and posts are looking to through difficult financial times, has launched an
other spaces. The USPS, which Finley noted deliv- Innovation 2020 initiative to position Ireland as a
ers 40% of the world’s mail, has had a less steep global innovation leader, fostering a start-up and
slope of mail decline than some other posts, he entrepreneurial environment. An Post generates
said. ideas from consumers, other posts, competition,
and through an innovation challenge it launched
Swiss Post, though not as big as many other posts, where 7 cross-functional teams have to submit
is the third largest employer in Switzerland, Plet- ideas and business case presentations to an execu-
scher said, and is the biggest online banking com- tive innovation board. The ideas are broken down
munity, biggest transport provider, and has a very into projects, initiatives and discoveries with the
diverse portfolio including many ecommerce and last two being areas the innovation team focuses
communication markets. The B2B business is a on. The projects are divided into commercial inno-
focus area, Pletscher said, but customers have vation (to protect/grow market share) and neces-
changed in that they are becoming more mobile, sary innovation (to retain competitiveness), and
more individual, which means that speed, flexibility initiatives and discoveries (new business lines).
and personalization are key to innovation.
For SingPost, Loo said the transformation efforts
Loo said Singapore Post is also seeing a “vanishing have focused on employees, culture and mindset.
core” in terms of mail declines, and is looking for It runs its customer-centric program so that every
ways to remain relevant and identify growth strate- innovation is translated to a message understood
gies. Singapore is small, so SingPost is more agile, by the employee. “We run an end-to-end program
she said, and its right in the center of a booming to keep everyone informed on what is happening
ecommerce market in Asia. within the organization,” she said.
McConnell noted that An Post is a smaller post, Speed to Market is Essential
with only about 10,000 employees, and it set up its
Innovation group about 2 years ago. It has signifi- Finley said that the USPS, because of its financial
cant strategic capabilities, he said, with the largest pressures, has had to look at becoming much more
retail network in the country, and a lot of expertise nimble and able to take decisive action toward in-
developed over the years, particularly in financial novation that it ever has. “The USPS has always
services, as well as assets such as its trusted brand. been innovative,” he said, “but it has taken time,
Like all postal operators, focusing on 8 key business and now we don’t have time – we need to be able
areas ranging from communications and document to respond and act more quickly.”
management to new businesses in new areas, with
a big part of its income and revenue coming from In addition to its broad innovation strategic initia-
government services. tives, Finley said the USPS also has innovation plat-
forms established in 2014, “for initiatives that need
Different Approaches to Managing Innovation to be fast tracked to take advantage of opportuni-
ties.” He gave the example of the USPS grocery
The four post representatives talked about the way delivery project working with Amazon Fresh, which
they are managing and encouraging innovation he said was put through this more streamlined in-
within their organizations. The USPS, being the novation project process. MetroPost, the USPS’
largest by far, has put in place a very structured same day delivery project, is another example.
13Dossier
“We’ve done a lot in a very short period of time, physical and digital world, building bridges for its
Finley said of the USPS’ strategic initiatives. He said clients as trusted third party intermediary. Plet-
these initiatives are supported by over 100 road- scher noted that its e-voting project is an example
maps and projects, but faster innovation is a key to where the post transports almost all the physical
future success. voting and election materials, but as a choice for
clients, it also offers e-Voting. Going digital also
Collaboration and Partnerships means going mobile, she said, and SwissPost
launched its mobile payment solution last year and
Pletscher said SwissPost strongly collaborates with now is #1 in payment in Switzerland with the big-
other companies, including those in Silicon Valley, gest retailers on board using its solution.
start-ups, and others. “That network is an impor-
tant part of how we foster innovation,” she said, Swiss Post is also in eHealth and eJustice markets,
also noting that internally it has an innovation plat- which Pletscher said means being the preferred
form to enable employees and users of SwissPost provider of physical transport of confidential infor-
to bring forward ideas. mation, but giving clients the choice in their trans-
formation to choose digital or physical. It is build-
“We can choose if the competitor is friend or en- ing secured digital platforms with authentication,
emy,” Pletscher said, “and in Switzerland, we love and identification layers integrated, to be the
Amazon – they are one of our biggest clients, one trusted third party. “It’s not that far from our core
element of the value chain.” She said part of the business,” she said, “it is just independent in terms
game change is that competition and client lines of the channel.”
are becoming more blurred. “We are too small to
fight, so we are coupling with others, enhancing Focus on the customer is one of the USPS’ key
our capabilities, sitting at the table with competi- strategies, Finley said, which is to build a world
tion to enable projects and find smarter ways,” she class customer care process in all the places the
said. “We can react in different ways, but if we are USPS touches customers, including gaining insights
game changing, the idea is not to stay in the middle on the retail experience, the experience of large
and wait to be squashed, it is to expand the value customers entering mail, all the way to the last mile
chain.” customer experience at delivery. “If we can’t pro-
vide the service at a price point and with consis-
Loo said Alibaba is one of SingPost’s key sharehold- tency,” he said, “businesses will just turn off whole
ers, with over 14% ownership. Over the past 2 ZIP Codes and shift their business to someone
years, SingPost’s vision was to become a regional else.”
leader providing a full end-to-end chain for ecom-
merce and logistics, but also offering modular solu- Looking at the future, Finley said, means looking
tions within the network. It acquired two compa- through all the various lenses needed to evaluate
nies in the U.S., Loo said, which are active in the the competitive landscape – customers, technol-
ecommerce space. SingPost is developing a re- ogy, industry partners, legislative/regulatory as-
gional ecommerce and logistics hub in Singapore to pects, global market changes – to help define the
provide warehousing/fulfillment solutions. So its USPS’ key strategies.
strategy is not just to focus in Singapore, but to
provide a wider choice for customers. “We protect the core, but grow the wings,” Loo
said, noting that for SingPost the core is mail but
Some customers, like Calvin Klein, opt for the end- the “wings” are ecommerce and logistics, which are
to-end Singapore Post ezyCommerce solution in- the key growth areas for SingPost. “Coming from a
cluding customer care centers, so Singapore Post is customer-centric focus,” Loo said, “it’s about your
handling their customer calls, and Loo noted the brand and your promise, and our brand is collabo-
entire solution was live within 10 weeks allowing ration of the network. We need to think about
them to sell to their Asia-Pacific customers. what we promise the customer and make sure we
deliver on that, not try to deliver on everything
Start with the Core and Innovate Around It else,” she said.
Swiss Post sees itself as intermediary between the
14Dossier
A New Intrapreneurship & Customer Centricity
Architecture for Posts
Bernhard Bukovc *
It took a while until postal operators started to behave like businesses. From government agencies to business
minded companies it has been a long way. The journey is of course not over, not for postal operators and not for
any other business in the world. Postal operators, having been seen as slow movers and bureaucratic in the past,
are suddenly forerunners in cultural change processes. So why is it that businesses and industries around the
world can learn today from posts how a new intrapreneurial and customer centricity architecture can be imple-
mented?
Compared to other businesses postal operators by what their customers need or will need in the
have a certain advantage. Most other businesses future, in other words, what they will buy. They
were born as businesses, have operated in market have to be close to their customers and understand
conditions and have always competed with other them. This is more difficult than it seems. Many
companies in the same market. For posts it was companies, not only postal companies, prefer to
different. They did not know real market conditions look first at their products and services. They find it
and had to learn how to behave in such an environ- difficult to change their products or services, try
ment. At the same time they experienced a steep new ones or maybe even replace the existing ones
decline in their core product, mainly driven by with new ones. The process of reinvention is
changing consumer behavior and ICT develop- loaded with too much risk and hardly any manager
ments. In the change process they were already wants to take the risk and be responsible for a rein-
going through they had to even further adapt to vention process which might eventually fail. There-
develop new business areas, include ICT in their fore, customer centricity has become one of the
existing product and service portfolio and, not cornerstones of every business.
more and not less, reinvent themselves. Therefore,
posts have learned over the past one to two dec- It is not a simple part of the company's mission
ades to manage change and master the reinvention statement. It's a culture that must penetrate every
processes. Other businesses were also affected by business line and needs to go down to every em-
the behavioral change processes and technical de- ployee. Identification with the company, its goals,
velopments. However, many realized too late what its products and services and closeness to the cus-
was going on, they were focusing too much on their tomer are integral elements of this customer cen-
traditional product portfolio and were not envisag- tricity architecture. Only this way the customer can
ing to change or reinvent themselves. In other get the answers he is looking for and at the same
words, posts were pushed into changing again and time the customer is heard by the company and its
again over the last two decades and have so far staff. Only this way the company will understand
successfully mastered the challenges. In the end, what its customers think of the products and ser-
they come out of these processes stronger and vices and understand changes in the market as well
more successful than they have been before. as in consumer behavior. Several postal operators
have thus started to implement companywide staff
As I said above, the journey is not over. Most com- training programs that have the objective to tune
panies in the world struggle with basic business the entire company's culture into a customer cen-
requirements. Two areas stand out which often tric mode. At recent Postal Innovation Platform
define which company will succeed and which one (PIP) events DHL and Singapore Post explained their
will struggle. One is intrapreneurship, the other is approaches and underlined the importance cus-
customer centricity. tomer centricity has within their organizations, how
important it is to roll out these programs to the
It is obvious that companies have to put their cus- entire staff and thus establish a new culture where
tomers first, that they have to define their actions the customer is in the center of everything.
* General Manager, Postal Innovation Platform & Entre-
preneur
15Dossier
Intrapreneuship is another pillar which will become port.
increasingly essential in the coming years. Intrapre-
neurship means entrepreneurship within an estab- All these figures give one clear message. Intrapre-
lished organization and it follows the same princi- neurship is considered as an essential tool to drive
ples described above. It is not a simple part of the new ideas and innovation within an organization,
strategy or mission statement. It is a culture and but it is difficult to get it right. As said above, posts
thus needs to penetrate every unit of the entire might have the advantage of being for many years
organization. There is no half-hearted approach or already in a profound tuning process. Changing the
compromise for its implementation. organizational culture is already part of the game
and has slowly but steadily invaded the mindset of
However, even in established companies with a postal operators. But in order to do it right posts,
reputation of innovation and entrepreneurship this like all businesses, need to follow some basic princi-
is not an easy task and when listening to top execu- ples.
tives of these companies the satisfaction level with
their innovation and intrapreneurship architecture First, it is not enough to dip the toes. Posts need to
is low. Dr. Altriger of Harvard published in 2013 her fully dive into these processes, whether it is a cus-
research on innovation models in global companies tomer centricity architecture or the implementa-
indicating that 70 - 90 % of all projects trying to tion of an intrapreneurial culture stimulating inno-
stimulate intrapreneurship within an organization vation.
fail (1). This figure only underlines that tuning an
organization for intrapreneurship is far from easy Second, these processes are not limited to execu-
and that even global big players struggle when it tives. Cultural change needs to happen on all levels.
comes to its implementation. Every employee needs to embrace a culture of put-
ting the customer into the center and of thinking
McKinsey conducted a survey (2) among executives like an entrepreneur.
asking them about innovation in their companies
and how they would rate it. To start with, 84% of Third, it is important to define what innovation
the executives agreed that innovation is important means within the context of the organization. This
to growth strategy. 80% of the executives also said will depend on what products or services the com-
that the current business models are at risk, thus pany provides and what business it is in.
underlining the need to innovate. However, only
6% of these executives were satisfied with the in- Fourth, it will be important to measure the proc-
novation performance within their organizations. esses and results. This is not always easy, but pa-
rameters that help to measure the efforts, actions
Also Accenture worked on the question of intrapre- and outcome are relevant and can show shortcom-
neurship and innovation in large organizations (3). ings or successful strategies.
They interviewed 600 corporate employees, 200
corporate decision makers and 200 self-employed Fifth, the organization must be capable of living the
individuals. 52% stated that they had pursued an new culture. The environment must be capable of
entrepreneurial idea at work. However, apparently supporting intrapreneurship and customer centric-
employees are of the opinion that they need more ity and clear accountabilities must be in place. This
support to generate new ideas. Half the employees requires the respective architecture, e.g. with a
agree that management support is very important, customer centricity architect and an innovation
but only 20% were of the opinion that their em- architect in place. These people or units should be
ployer would offer enough support to develop in charge of implementing the culture, monitoring
ideas. Also more than half of the employees the developments and having top level support.
thought that their company would not support
ideas from all levels, but rather limit the expecta-
tions to business decision makers. In sum, while (1) A New Model for Innovation in Big Companies, Dr. Beth
Altringer, Harvard Business Review, 2013
more or less everyone agreed that intrapreneurship
(2) http://www.mckinsey.com/business-functions/strategy-and-
is important and will lead to new ideas and innova- corporate-finance/how-we-help-clients/growth-and-innovation
tion, most didn't believe that their company was (3) Corporate innovation: Nurturing and Enabling an Entrepre-
good at it or was ready to deliver the required sup- neurial Culture, Accenture 2013
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