Can a better business model save 6-day delivery?

  • Share
  • Read Later

Everyone from the Government Accountability Office to the Postmaster General has argued that the Postal Service may need to cut six-day mail delivery back to five. The move would save the Postal Service some $2 billion to $3 billion a year. That’s a big deal for an organization that is saying it might be insolvent come October.

But today the head of the Postal Regulatory Commission argued otherwise. Ruth Goldway, who chairs the commission that oversees the Postal Service, took to task all the reports (and there are quite a few) that conclude the Postal Service needs to cut service as mail volumes wane. “An axiom in the business community is that a company cannot cut its way to success,” she told the House Committee on Oversight and Government Reform. “It has to have a real plan.”

What would that plan look like? Goldway has a list of about a dozen ideas, but the underlying theme is this: for years the Postal Service has been playing the volume game and it can no longer do that. Instead of continuing to focus on jamming as much as possible through its channel, the Postal Service needs to instead come up with new, higher-value products that people want to pay for.

Crazy-talk, right? Innovating your way to success. How novel.

One of Goldway’s ideas: better tracking systems in order to compete with products offered by FedEx and UPS. (She didn’t use those particular companies’ names, but I was able to read between the lines.) Another thought is rebranding the Postal Service to be a one-stop shop for government services. Get your passport, national park tickets and EZ Pass all in one convenient location. A third idea: build on the financial services already offered at post offices, like money orders, and position the Postal Service as a viable alternative to private check cashers and pay-day lenders.

It all has the makings of a great business-school case study.

Now, there are still plenty of problems that the Postal Service needs to address immediately, not with a 10-year plan. Like most other public bodies, the Postal Service is drowning in its retiree health-care and pension obligations. Goldway certainly acknowledges that some issues are imminent.

But at the same time, it’s refreshing to hear someone also talk about the longer-term picture and not simply write off the Postal Service for dead.