May 22, 2019

Postal customers await the next chapter in the effort to stabilize and ensure a future for the USPS.  It likely will come with the early-July release of a new “ten-year plan” being developed by Postal Service management.  Unlike the President’s Task Force, the development of this plan is being done inside USPS headquarters with little or no input from users of the mail.

It will be very interesting to see how it differs from and builds on the last similar effort by postal management in 2010: Ensuring a Viable Postal Service for America: An Action Plan for the Future.  Management said in 2010, and every year since, that the USPS business model is broken, and that it needs a new business model.

The article “What is a Business Model?” in the Harvard Business Review brings the realization that it is a term of art with many variations.  Michael Lewis said it is “how you planned to make money.”  Peter Drucker defined a business model as “assumptions about what a company gets paid for.”  Joan Magretta said that business models are “at heart, stories — stories that explain how enterprises work. A good business model answers Peter Drucker’s age-old questions, ‘Who is the customer? And what does the customer value?’ It also answers the fundamental questions every manager must ask: How do we make money in this business? What is the underlying economic logic that explains how we can deliver value to customers at an appropriate cost?”

We have heard that the Postal Service is using a projected loss on the order of $125 billion and showing how it would propose to close the gap with a list of actions, some with their control and others requiring new law and regulation.  Which, of course, is very akin to the 2010 methodology.