Corporate Strategy: Reinventing the Post Office

Save for the uniforms, postal services have very little appeal amongst young adults today. Why snail mail when you can email? Why pay for stamps and envelopes when you can send documents electronically, at no charge? Why head to the post box or post office when this can be done just about anywhere? These questions do not confound Wilson Tan, Group CEO of Singapore Post – or as it is commonly known around the country, SingPost.

 
Established way back in 1819 – the year that Singapore was founded by the British – SingPost has a long tradition of delivering the mail. According to its most recent annual report, providing postal services to the masses generated revenue of S$268 million in the nine months between last April to December 2009 – not too shabby for an organisation that charges a mere 26 cents for every piece of standard mail delivered locally.
 
With mail revenue accounting for nearly seven out of every ten dollars of revenue, it is by any measure, SingPost’s core and single largest business segment. However, there is disquiet in the air. In the three months to December, the company reported that its mail revenue dipped by 1.2% to S$94.4 million. Many questions loom in the minds of stakeholders. How can a postal service provider possibly survive in a world where everything seems to be tilting in favour of digital delivery? Are current profit levels sustainable in the long run? Will employees lose their jobs?
 
To those questions, Tan has a response: “Forget about postal services. Concentrate on Sing Post services.”
 
Reclaiming “cool”
Tan is not optimistic about the future of the snail mail. Speaking at a recent Wee Kim Wee Centre CEO talk, he told an audience of mostly SMU undergraduates of a worry – What happens to SingPost on the day postal services become unnecessary? “Every year, postal letters that we send are reducing at a rate of about 5% . . . When you start to compound this annually, in 10-15 years, letters may no longer be relevant!”
 
Adding to this worry is the fact that youths today no longer send letters or visit the post office as often as they used to. The numbers of “uncles and aunties” who make up SingPost’s primary customer base are also declining. As such, the youth market becomes especially crucial to protect the company’s future revenue sources. That is why SingPost is going all out to woo the young – and occasionally getting into trouble while doing just that.
 
Over the 2010 New Year holiday, a masked “vandal” painted graffiti art on six SingPost post boxes (see picture at left). This was intended as a publicity stunt that would put SingPost into the good book of the rebellious, bold and anti-establishment youth. Instead, it got into the bad books of the authorities and some Singaporeans who complained that the campaign would send the wrong messages to the young.
 
The company’s marketing spokesperson explained to the press that the stunt had been conceptualised as a viral marketing effort that was meant to strike a nerve with the young and young-at-heart as being “innovative” and “out-of-the-box”. It was intended to promote an art competition where post boxes would double up as canvases for street art. But faced with a wave of negative public reactions, Tan had to issue an apology.
 
Botched as the campaign might have seemed, Tan remains steadfastly determined to pursue the youth market. “Viral marketing is the way forward, in terms of how we should communicate,” he insists. “If you don’t send letters and you don’t visit the post office, how [else] do I communicate with you? Youths are the new customer base. If we don’t go out and use viral campaigns to reach out… can we be cool?”
 
Diversify and deliver
It may be impossible to preserve the art of communicating via letters. As such, Tan believes that, in order for SingPost to survive in the long run, it must think outside of the (post) box. This underlies his reason for insisting that his employees forget about postal services and instead, focus on SingPost services.
 
“When you think only about postal services, you’re constricted… you restrict yourself to only postal activities. But if you step back and understand that this is not just about postal services, but rather, what the organisation, as a whole, should do; that even though the organisation is called ‘SingPost’, our services can mean a lot more.”
 
Encouragingly, this openness to non-postal-related business ideas has spawned several new revenue streams. There’s “vPOST”, a service that facilitates the shipping of items purchased from American, European or Japanese online stores into Singapore. There’s “S3: Self Storage Solutions”, a no-frills consumer warehousing service. There’s also “CASHOME Remittance Services”, which offers real time money transfer services to countries like the Philippines, Indonesia, China, India and Malaysia – countries of origin for most of Singapore’s foreign and migrant workforce. 
 
Then there’s “KPO”, a prominent new development which stands for Killiney Post Office, located by the junction of Killiney, Penang and Orchard roads – a prime real estate, right smack in the city’s tourism and shopping belt. What used to be just a regular post office now doubles up as a trendy pub and café. According to Tan, the concept has proved so popular that one should expect to queue on weekend nights just to get in.
 
For SingPost, the value of KPO goes beyond short-term gains. As young people head to the pub, says Tan, “we can, at that point, learn more about you: what makes you tick; how we should interact with our next generation of customers and clients. I’m very convinced that we will not be able to persuade a new generation into the post office, but we can certainly deliver SingPost services to them. That’s where we are choosing to focus.”
 
Reinventing the core
With a varied mix of businesses all coming under one stable, the act of balancing between the old and the new can be tricky. Where should the heart of the business be? Can new ventures really succeed if the organisation remains preoccupied with the old? How can old businesses evolve if the organisation has its hands stretched across multiple new areas? Here, Tan takes, what he calls, a “surgical” leadership approach. What this means is that he is always prepared to slice off the areas to which he thinks are no longer worthwhile for the company, and reallocate resources accordingly.
 
“We need to adapt ourselves to the environment. There will be times where we must be prepared to cut off things that have been good for us in the past, but may no longer be relevant today… Sometimes, we hold on to the things that we’ve been doing well, so we tell ourselves to continue doing ‘this’ again and again, but perhaps the time has come where ‘this’ is no longer relevant,” he noted. “Sometimes, it’s better to shift gears and move on.”
 
However, while seeking out new gains is important for long term survival, a company also needs to protect its core revenue streams. After all, gestation periods for new product and service offerings may be long drawn. It may also take a while to garner that critical volume or traction needed to turn in a profit. Then there is the chance that the venture might fail. Tan admits that the core business of postal services is not an easy one to be in, given the odds that are stacked up against it in this digital age. But instead of channelling frustrations at technological advancements, Tan is all for technological change.
 
He is proud of the fact that of all the letters sent in Singapore (by 7 pm within the central business district, 5 pm anywhere else), 99% gets delivered by the next working day. This, he said, is achieved through a culture of embracing change. Not too long ago, letters were sorted by hand. Back then, many employees were hired specifically for that task and yet, only 93% of the mail would make it out of the post office by the next day.
 
Enter the mail sorting machine – a piece of equipment that reads postal codes on envelopes and sorts them accordingly. What happens when the handwriting is illegible? The machine separates those into another belt; a human reads the address in a different room (via video feeds) and re-codes the envelope with an electronic marking. The letter is then routed back into the main sorting belt – all in a matter of seconds. With technology, employees who were once tasked with mundane, menial tasks can be “retrained and retooled”, and put on jobs that are new, less tedious and more fulfilling, said Tan.
 
Balancing the old and the new is a delicate act that Tan likens to an orchestra. Sometimes, the strings may take the lead, and at other times, it may be the woodwind section. This analogy applies to the company’s business units because different businesses can be tasked drive the organisation forward at different points in time. It also applies to employees because no matter where the “musician” sits, there will be occasions in the symphonic movement where one instrument takes the lead.
 
Good music does not come from the conductor, but it helps if the conductor listens attentively, Tan said. The best thing that a CEO can do is to hire well, so that he may surround himself with better, smarter and more competent “musicians”. At the end of the day, as long as there is beautiful music, there will be applause.
 
About the Author
[email protected] is an online resource that offers regularly updated business insights, information and research from a variety of sources, including interviews with industry leaders and Singapore Management University faculty. The resource can be accessed at http://knowledge.smu.edu.sg.
 

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