Tuesday, May 10, 2011

Postal Watchdogs Trying to Unleash USPS Innovation

The watchdogs that keep an eye on the U.S. Postal Service have taken on an unusual role – dreaming up new products and other innovations for the Postal Service.

The trend is highlighted by the USPS Office of Inspector General’s release yesterday of a request for proposals to determine how the Postal Service can innovate. The selected consulting company would “benchmark the Postal Service against ten successful companies” to identify best practices and processes in “innovation management” that can be adopted by USPS.

Just last month, the OIG suggested the Postal Service consider such new lines of business as electronic mailboxes, financial services for the “unbanked,” and facilitation of online and international commerce. (See The United States Postal-Online Ordering-eMailbox-Bank Service?)

But it’s not the only Postal Service watchdog that is suggesting as well as barking. The Forever Stamp was championed by Ruth Goldway, chairman of the Postal Regulatory Commission.

And Ms. Goldway's chief counsel, Michael Ravnitzky, has shown that the Postal Service could serve a variety of customers by mounting mobile sensors on delivery trucks. (See How About A Drug-Sniffing, Meter-Reading, Photo-Taking, Bug-Spraying Postal Service?) In another research project conducted outside of his work for the PRC, he concluded that the Postal Service could pay for new electric delivery vehicles partly by entering the "vehicle-to-grid" electricity market.

“Innovation is the development of new products, services and processes,” says yesterday’s RFP. But why then are so many of the proposals for new postal products and services coming from outside the Postal Service?

Some critics claim that the Postal Service is too bureaucratic to innovate, but that’s not completely fair. “If it fits, it ships” has been not only a clever slogan; it represents new thinking about simplifying postage for customers. And the Flats Sequencing System would be a significant innovation if it turns out to be successful. (The jury is still out on that one.)

Hindering innovation has probably been the “bunker mentality” adopted by postal management the past few years as declining mail volume and Congressional budget games lead USPS from one financial crisis to another.

Out of necessity, its energies have been focused on downsizing and cost cutting. Has any major government agency ever reduced costs as rapidly as the Postal Service has in the past few years?

The Postal Service's size and complexity are also barriers to innovation. Even in the management ranks, USPS is made up mostly of specialists who lack the broad understanding of processes and customers necessary to implement meaningful change (or, in many cases, to write proposed regulations that would work in the real world). And insiders talk about “brain drain” – the loss to early retirement of some of the most knowledgeable people.

Then there’s the Bernstock Affair. Robert F. Bernstock was the head of mailing and shipping services who was brought in from the private sector to revolutionize the Postal Service’s marketing efforts.

But mostly what he became known for during his brief and checkered stint with USPS was awarding no-bid contracts to his buddies and using USPS staff to conduct personal business. After the firestorm of criticism that accompanied Bernstock’s departure, it was only natural for postal executives to focus on efficiency while leaving to others the generation of wild ideas and the floating of trial balloons.

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