Product innovation is a blind alley in physical mail

John Modd, director mail at Triangle Management Services and editor of Mail & Express Review talks innovation for Post&Parcel. I’ve been associated with the mail industry for almost 20 years. Throughout that period there has been a constant call for ‘more innovation’ if the postal sector is to survive and thrive in the face of direct competition from new players and indirect competition from new forms of communication delivery such as the internet.

Truth be told, I’ve struggled to really understand the meaning of the word innovation in our industry.

I strongly believe that the most important component of innovation is that which results in a significantly different way of doing things that directly impinges upon the customer’s own experience of the product or service. Let us call it ‘first order’ innovation. Of course innovation can be applied to ‘the how’ a service is provided, as well as ‘the what’, but in so far as the former element is invisible to the customer, it at best seems to be a ‘second order’ of innovation, not to be denigrated or ignored, but not what really the product and service innovation we are continually told is the holy grail for our industry. Indeed, such second order stuff is sometimes almost frowned upon as reinforcing the traditional postal industry tendency to look inwards rather than out to the market.

A couple of examples of this type of first and second order distinction come from the airline industry. The creation of a no frills low cost model was first order innovative since it very fundamentally altered the customers’ experience (for the worst some might say)-‘the what ‘. The use of fundamentally different materials such as carbon fibre to make planes lighter and more fuel efficient was a second order ‘how’. Very clever and technically innovative no doubt but not directly affecting the customer. (I know you could argue indirect benefits since it might reduce airline costs but you see where I am going.)

If you think about it, delivery of communication in the form of physical mail is more of a how than a what.  That may be why we in the industry get so confused about defining and understanding innovation.

The fundamental what is communication from sender to receiver.  First order innovation, the significant change in the customer experience, only emerges when new forms of communications delivery mechanisms are developed: telephone, fax, the internet, and whatever comes afterwards. In that context the form of sender/receiver communication called physical mail is simply one of a number of delivery mechanisms.  Almost by definition it cannot in itself be subject to real first order innovation: it is merely one element of a process of innovation over time in communication delivery mechanisms.

Of course you can make improvements to bits of the customer experience associated with that particular physical delivery mechanism, but essentially I would argue it is not susceptible in itself to first order customer experienced innovation.

Of course there have been some ancillary improvements in the customer experience, but even here the ideas have tended to trickle down from the parcels sector rather than as a result of creative thinking in mail marketing departments: day certain delivery, proof of delivery, online tracking, improved information flows, that kind of thing.

Even these have only been introduced at the premium end of the market. The humble ‘bog standard’ letter at well under a dollar/euro/pound cannot support such fripperies.  Maybe as technology becomes cheaper (for instance the much heralded RFID becomes ten a penny) this may happen but I would not hold my breath.

So now, at last, I get to the point. For the delivery of the vast majority of physical letters I would argue that first order innovation is probably impossible in a real sense, and even at a product enhancement level is neither affordable nor necessary.

For the entire search for ‘value added’ and new bells and whistles, physical mail is an undifferentiated commodity product. It can never be as fast or cheap as the internet. It has some advantages in being tactile and readable in one’s own time and without sitting in front of a machine. But there is not much else in its favour. Over time it will all but disappear.

But there is still a lot of it (at least in the developed world), and there are a few years of life left yet.

So, in the physical mail part of their business, I would argue posts should be doing what you should always do in a declining commodity market. Pare back on all unnecessary overhead expenditure, drive ferociously for operational efficiency, milk the profits, and put all your management energies into areas of growth whether in B2B and B2C parcels, or financial services or whatever.

Oh, and by the way, get your governments to understand the Universal Service Obligation as we have traditionally understood it is dead. But that debate is for another day…