Can Services and Platform Thinking Help the U.S. PostalService?  How the U.S. Postal Service might improve the efficiency of itsdelivery platform.

By: Michael A. Cusumano

The U.S. Postal Service (USPS) has been in decline, losing at least $5 billion in operating profit over the past decade, according to Cusumano.  Many reasons have lead to this decline, but none more important than the Internet.  The internet has allowed people to be able to communicate instantly, almost eliminating the need for snail mail.   Cusumano says, “What we have here is an organization disrupted by technological change, especially in information technology” (Cusumano).  A disruptive technology is something that disrupts a business’s way of doing things.  The internet is a perfect example. Before, if people wanted to send someone a birthday card, they had to buy a card, put it in an envelope, buy a stamp and mail it.  The USPS provided this service and it was their main source of revenue.  Now, people can simply send an email or a card via the internet, completely bypassing the post office and this technology disrupted the USPS’s way of doing business.  One could argue that the USPS is way beyond repair, but the author believes he has some solutions to help the USPS survive and flourish.  He says, “One way to do this would be to leverage two related concepts I have been discussing in this column and in other publications for nearly a decade: services and platforms” (Cusumano).   And that statement is what this article is all about!

 Services and platforms are an important tool in business because they can add value to already existing products, and they can add new partners and arenas in which to do business.

So what does the author suggest the USPS do in order to turn things around?  First, upper management needs to change their thinking on its asset and liabilities.  According to Cusumano, currently, they seem to think that the post office buildings, the trucks and employees are liabilities and that these things must be cut.  But in reality, if the USPS cuts these assets, they are only going to “lower the potential value of the network as a service-delivery platform” (Cusumano).   Instead, these assets could be used to create new services and platforms in which new revenues could be made.  

The author also talks about the USPS offering financial tools, banking, insurance, government work, such as census data, delivering birth certificates and reading meters as alternative services to help grow revenue.  

Another suggestion from the author would be to add value to the already provided services.  Things like, digitizing mail, then sending it out electronically to its intended recipient, offering logistic consulting and helping local businesses find the right customers, using their knowledge of the local customers.

Lastly, Cusumano suggests that the USPS “Create platform-based services that generate positive “network effects,” that is, the services increase exponentially in value as more people sign on for them” (Cusumano).   A few examples of this new platform would include, allowing users to upload pictures to a USPS hosted website, and then have USPS deliver the pictures or storing and delivering important documents or forming a partnership with a social media site so people could exchange pictures, cards, etc…

Services and platforms are important to managers because they give managers other alternatives to help generate revenue.  Services can add value to already existing products and platforms can help establish new business relationships and arenas in which to conduct business.