Instead of disrupting the market, the U.S. Postal Service is digging itself a deeper grave

The U.S. Postal Service is in big financial trouble. The mass adoption of the Internet, and delivery competition like FedEx and UPS has made the current postal service far less necessary than it has been.

Like any large organization facing extinction, they can either disrupt the marketplace with change from within, or let other forces put them out of business.

I always like to point to Apple as a company that knows how to disrupt itself before others disrupt it. The laptop disrupted the desktop, the iPad is disrupting the laptop and the iPhone. And, they did a pretty good idea of disrupting another industry—Music, with its iTunes service.

As traditional “snail mail” heads to irrelevancy, the U.S. Postal Service clearly needs to reinvent itself by re-creating its value to the marketplace—it needs to disrupt itself.

Instead, the organization is doing what many failing companies do—cut customer service to save money and stave off short-term losses. This isn’t going to work for the USPS, and hasn’t worked for any other large organization (think Kodak, American Airlines, Blockbuster, Circuit City, etc.)

Facing bankruptcy, the U.S. Postal Service is pushing ahead with unprecedented cuts to first-class mail next spring that will slow delivery and eliminate the chance for stamped letters to arrive the next day.

While saving an estimated $3 billion, will prove counterproductive, pushing more of America's business onto the Internet to send letters, pay bills, etc. It will also turn off businesses who currently rely on the post office for speedy delivery—think about Netflix's DVDs-by-mail, and newspapers and time-sensitive magazines delivered by postal carrier to suburban and rural communities.

"Over time, to the extent the customer service experience gets worse, it will only increase the shift away from mail to alternatives. There's almost nothing you can't do online that you can do by mail." said Jim Corridore, analyst with S&P Capital IQ, who tracks the shipping industry.

The USPS says that the organization is enacting these changes as it is waiting for Congress to grant it authority to reduce delivery to five days a week, raise stamp prices and reduce health care and other labor costs—more adjustments that will prove counterproductive.

So, if the USPS continues on this track, and fails to reinvent itself by providing GREATER not LESSER customer value, perhaps the private sector will step up and find ways to replace the Postal Service all together. I think it would be great to see FedEx or UPS step into the role of low-cost letter delivery, or perhaps an entrepreneurial upstart may appear—a la how Jet Blue, Southwest and Virgin America are disrupting the airline industry while United and American die a slow death.

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