A couple ofyears ago, I was having a beer in London pub with an executive from the RoyalMail of the United Kingdom. We were discussing the reorganization of the UK’smail system and the challenges it faced. With the recent announcements from theUS Postal Service (USPS), I can’t help investigate why these systems arefailing.
The USPS hasbeen struggling with a decline in mail and recently announced that it is facing$238 billion in losses in the next 10 years. It would like to close somebranches, reduce delivery days, lay off workers and increase rates as a way tofight this downward spiral.
This could be an effective approach and is a goodexample of stratagem 16: sometimes running away is the best strategy.
Thisstratagem says that retreating can preserve our strength and maintain thepossibility of exerting our power at a later time or place. Nearly 10 percentof the decade’s most competitive companies began their rise with some kind ofretreat. Chinese military history is filled with stories of armies that cameback from retreat, often after tens of years, to claim ultimate victory.
But it’s notthat simple. As an independent government agency, the USPS has to answer toCongress. Even though the USPS does not receive taxpayer dollars and is fundedentirely by its own revenue, it is required to follow government rules andregulations.
The PostalReorganization Act of 1970 prohibits the USPS from closing small branches basedsolely on economic factors. The act also keeps the agency from expanding itsservices beyond postal delivery.
We oftencompare USPS to UPS and FedEx, but how can we? UPS and FedEx are privatebusinesses pursuing profit. They have fewer locations, less overhead and fewerrestrictions.
The USPS, onthe other hand, has 32,000 post offices throughout the country. It has morelocations than McDonald’s, Starbucks, Walmart and Walgreens combined. The USPScan’t cut costs, can’t add services and yet is expected to be profitable.
Despite thefact that the USPS urgently needs to adjust to changing market conditions andreduce costs, there has been massive opposition to cuts in service. Even thePresident and members of Congress have opposed plans to cut delivery to fivedays.
Like anybusiness, the USPS needs to adjust to its market and start making money orchange its mission. As we’ve seen bymany of the successful “ethonomical” entrepreneurs we’ve covered, its possibleto pursue a social mission while making profit. But pretending that you arepurely a for-profit entity or purely a social one, leads only to conflict. Congressneeds to allow the USPS to reorganize and restructure its business model to beprofitable, or its needs to recognize its social purpose and allow it to find anew path.
Companiesthat successfully extricated themselves from situations like the USPS offer usinsight into how the USPS, and you, can win. Start by asking customers toidentify their three most important needs. If the USPS can meet those needs,while reducing costs by cutting everything else, it may just find a valuablepatch of soil on which to retreat. It is, for example, the only organizationthat touches every house in the country every day. Maybe there is a better wayto extract value from this unique position.
During these rough economic times, ask yourself howyou can streamline your business without reducing the most important servicesyour clients rely on.
1. What wouldmy customers say are their three most important needs?
2. What otherproducts or services are we offering that we could live without?
3. How couldreducing these products or services affect our bottom line?
4. Are thereextra perks that we offer customers or employees that they do not need?