USPS needs "incubation space" to address digital challenge

The US Postal Service is moving into the digital age, but in its current financial and political situation it can only achieve the move through incremental change, it said on Wednesday. Speaking at the PostalVision2020 conference in Arlington, Virginia, Deputy Postmaster General Ron Stroman said the USPS recognised that digital communications “is here and not going away”.

But he said the Postal Service would need “incubation space” if it truly wanted to innovate in that direction and make a major shift to digital channels.

Whether this space was available to USPS was very much up to Congress, Stroman warned.

“The process now within the Postal Service is that we have to scrutinise each proposal very closely to tell whether we can make a profit or not,” he said.

“We are having discussions on where we can move forward with our partnerships, where the profitable returns are, we are looking at foreign posts to see what they are doing and we are talking to Congress. All of this needs to take place and in a careful fashion.”

Stroman pointed out that the Postal Service has gone down the digital route before, implementing various electronic communications services in the late 1990s and early 2000s before it was then “stopped by Congress”, with lawmakers deciding the field should be left for the private sector.

“It wasn’t a question of whether we were ahead of our time – really, we were stopped,” said the Deputy Postmaster General, who has a long experience from Capitol Hill as a senior staffer in Congress before joining USPS earlier this year.

“We don’t want to get into a situation where we are stopped from moving into the digital space by Congress. We have to be aggressive in this area – but we have to move carefully,” he added.

The PostalVision event on Wednesday saw a warning from journalism professor Jeff Jarvis that an incremental move by newspapers to head off competition from digital news providers had failed, leading to a similar situation the Postal Service is now finding with its constantly declining mail volumes.

But Jarvis agreed with Stroman that the government had no license to fail, and therefore its digital innovation was constrained.

He advised: “By working with outsiders, you can mitigate that risk.”

Regulators

Members of federal regulatory agencies at Wednesday’s event supported the idea of more partnership working at the Postal Service, and also agreed there needed to be more room for the Postal Service to lose money on experiments on digital innovation and decide on its role in the digital revolution.

Ruth Goldway, chairman of the Postal Regulatory Commission, said at present the USPS was being held back by only being allowed to experiment in projects with a $10m revenue limit.

She said the Postal Service needed to be allowed to make a move into the digital space in the context of how best to serve its customers, rather than how much profit such a move would achieve.

Goldway said: “What I see as the most important part of the Postal Service is not whether it makes a profit at the end of the day, but whether it is an enabler for this country and for democracy.”

David Williams, the USPS Inspector General, also pointed to the need for the USPS to be less bound by the requirement to make money.

He said: “The job of government is not to prosper, but to make its people prosper. If it doesn’t do that, it doesn’t matter whether the government prospers or not, we don’t deserve to exist.”

The Inspector General, whose office has issued two papers this year on the opportunities for the USPS to become a trusted platform through which digital transactions and services can be developed by independent partners, said USPS should be “a Postal Service that serves commerce, and doesn’t compete with it.”

The Deputy Postmaster General very much agreed with the need for private sector partners to work with the Postal Service, but said on Wednesday there still needed to be an incubation period for projects, allowing for services to be tried where profit is not the first priority.

Stroman said: “I think the ability to partner with the private sector is going to be absolutely critical for development of the Postal Service. The question is how do we help facilitate that? As long as we are driven by the bottom line at the end of the day we are going to have to be very circumspect with our options.”