on Nov 11th, 2013 in Strategy & Public Policy | 10 comments
 

Innovation is a hallmark of the digital revolution yet for many companies innovation remains hard. The popular book The Innovator’s Dilemma notes that companies often either ignore a disruptive technology or if they recognize it, they try to manage it like their traditional business. The book says companies need to recognize the disruptive technology and then set up a separate unit to manage it.

The U.S. Postal Service finds itself struggling to innovate in a rapidly changing communications market. Yet, stakeholders agree that innovation is necessary to transform the Postal Service into a 21st century provider. The Postal Service has indicated a willingness to try new things, as allowed under the current law, but the time it takes new ideas to become a product or service is often too long in this fast-changing market. Some stakeholders have suggested the creation of a small, dedicated innovation unit that would have the authority to make partnership decisions and the flexibility to bring innovative products and services to market quickly. The major postal reform legislation now before Congress includes a provision that could essentially lay the groundwork for such a unit.

The Postal Service actually tried small, cross-functional business units in the late 1990s. It had an international business unit that was given considerable autonomy and an Expedited Package Services (EPS) group located completely outside of headquarters in Atlanta. The EPS group was given freedom to pursue new partnerships and parcel services. Insiders might argue over how much of the credit EPS deserves, but in its short life, a number of package services were revamped or unveiled, including Parcel Select, Carrier Pickup of residential packages, and the groundbreaking contract with FedEx to provide airlift for Priority Mail. These separate units probably had some flops too, but innovation means taking risks and being allowed to fail occasionally.

Do you think a small, agile, cross-functional “innovation unit,” led by a chief innovation officer, would help the Postal Service launch new products and services? Or does a dedicated innovation czar create a bottleneck that is inconsistent with the spirit of having innovative thinking permeate the entire organization? Would an “incubator” or “innovation lab” approach be better? What institutional changes might be needed to promote innovation? Does the current regulatory environment allow the Postal Service enough latitude to innovate effectively?

10 Comments


Thank you for putting those questions out there for us to comment on and contribute to.

One thought keeps coming to mind for me, and it has to do with the basic premise, the concept of "disruption."

Will apologize in advance if this is presumptuous, but I will say that I DEEPLY admire what the USPS is and does and accomplishes around the globe every day (and ESPECIALLY for our military service members, you are the lifeline to home and you represent all that they are away fighting for) so I'm going to speak candidly and from the heart about this issue that has been a long time irritant though I have never shared this before because I frankly had no interest in being targeted by marketers and others making their living off the jargon du jour.

So, with that said ...

Frankly, I've gone back to lessons I learned from my grandparents about how to build a business and raise a family through two World Wars and the Great Depression of the 30s-40s. I detest this concept of "disruption." It's like saying a baby's birthday "disrupts" the child's grown. Pleez. I've got a decades-long cultivated engineering school schooled mindset, and I love technology as an tool, and enabler of great things, but frankly I think the concept of "disruption" is rooted in things that are fearful, lazy and reactive. Forget "disruption" --- GROW INSTEAD.

[and p.s., apologies in advance if this post starts a flame war on your board; no disrespect intended, but we NEED the USPS to keep on doing the excellent work you're tasked with, and I just had to speak out. I hope it helps.]

Another fearless leader to give more bonuses to for inspiration. How did that work for the Superintendent of the Atlanta City School System.

How can the postal service come up with new ideas when there can't even staff the city of Newport News Virginia with carriers......a postmaster that refuses to hire any CCA's is killing his moral and positive energy on the floor. ..overworked employees run rampant through the postal service. ...drug addictive and alcoholic carriers are all that's left!!!!! Shame on the upper management for ruining people's lives by forcing employees to work so much overtime and take all their days off...and get his own day off!!!!

How can we even discuss innovation for the USPS when they need Congress' permission to even create such a unit? And no doubt will have to get Congress' permission to implement any innovation. As long as (certain members of) Congress throttles USPS operations such conversations are academic. USPS should either be folded back into the government or cut free to truly operate as a private business. Currently we have the worse combination of both.

Agreed that it can be hard. But it can be done. Fifteen years ago they developed Parcel Select, Carrier PU, Click and Ship, Delivery confirmation (now much improved), strategic alliances, etc.

Invention Unit...

Innovation may be a core element in economic growth as well as in the ability of individuals and companies to adapt to changing markets. To innovate or not and how to go about it may not however be the question the Postal Service should be asking itself.
The network the Postal Service administers is basic and fundamental infrastructure. The questions being asked here belong to a different category of entity. I know that the conventional wisdom is and has been that the Postal Service is and should be business enterprise operated under business principles with the same sort of goals and incentives as business aspires and responds to. The problem is that this has always been a false narrative, an instance of cramming everything into the box of a single definition.
We don't ask the interstate highway system to make a profit or be businesslike. The innovations that apply to the highway system or other infrastructures are fundamentally different than the sort of innovation that Schumpeter described in his theory of creative destruction. What we continually fail to do, and that definitely applies to the Postal Service, is recognize the differences inherent in various entities.
The efficient operation of a business or corporate entity is not the same as the efficient operation of government or an infrastructure. They have, or should have, different goals and different incentives and when we fail to recognize those basic differences then we shortchange ourselves. o business starts from the premise of universal service or access. That may be a goal in terms of reaching more customers but it is a goal that follows profitability. Infrastructure, on the other hand, has a basic goal of creating universal service and access. Infrastructure provides a platform that offers opportunity for business entities to exercise creativity and innovation. The profitability of a business entity is measured by the income statement and balance sheet. The utility of infrastructure cannot and should not be measured so directly. A successful infrastructure may cost the community money but those costs are recouped through the actions of businesses that use the infrastructure.
The Postal Service, those who create the laws that govern it, and those who use it have fallen into the trap of defining the world in such narrow terms that they have lost sight of the real value of the postal network. Discounts like the one offered for using QC barcodes ignore the value of the infrastructure. Let the mailing industry find innovative way to make mail more useful. Let the Postal Service build and maintain and infrastructure that all sorts of businesses and industries can use profitably. The problems facing the Postal Service are not problems of innovation but problems of identity. We are not faced with an innovation crisis we are faced with an identity crisis.

This article speaks to innovation. Hopefully all who work in the industry and in this organization believe that innovation is very important. The issues around innovation are most likely the largest concern. How do you innovate? This article suggests a small “innovation unit”, but would it not be better for the whole organization to invest in an overall approach to innovation? The article also mentions a cross functional team, how about a team that can think outside the Postal Service and the confines of the organization. The organization seems to be stuck in a save (dollars) mode and seems that it has been for many years. Certainly an organization should work toward efficient procedures and policies but at the same time offer products that would advance the organization and at the same time give the customer quality products.

The USPS partnered to launch a very innovative idea known as eBillpay. In many cases the USPS ended up delivering a hard copy envelope containing the payment in a check. I still use eBillpay, but about 10 years ago the USPS dropped out of the partnership. That was the type of adaptive technology that would have helped them counteract the diversion of first class mail to the internet. I don't know why they dropped out, I seem to recall that private industry objected and Congress or the courts or the PRC said the USPS could no longer participate (profit from) eBillpay.

So it begs the question, if the USPS was to innovate through this hypothetical unit, would they be allowed to implement and then continue their innovative product? Or would Congress/courts/PRC shut them down?

Could the USPS get back in the online payment business today?

It seems to me that innovation must be encouraged and rewarded throughout at every level, but an innovation organization is also needed to explore ideas if big changes are to come about. The USPS is about securely, and reliably delivering communications and commercial resources.

Today that isn't just hardcopy, but also softcopy. USPS must get involved in securely delivering softcopy internet communications.

I would gladly pay an annual fee to have a USPS.com email address that I could rely on for life. And I'm confident the basic fee would be modest given the scale of market concerned and other products available. Rather than a 'free' service, where the provider rummages freely through my emails to build commercial data bases on me and my connections, I would know USPS was protecting my privacy. A USPS based email address and larger environment would set up many synergistic opportunities such as my email address could deliver my physical mail.

All in all, the USPS has an enviable record of accomplishment for a mission as large as it has. With the money running out, I see great promise in the institution's response with its use of IT solutions. GoPost is one example of the synergies of the internet and physical delivery of mail emerging from USPS adapting to the times.

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