Intellectual Property: Buried Treasure on the Postal Platform

Ursa Major Associates consultant John Callan discusses the hidden value of intellectual property (IP) in the postal/parcel space, as detailed in a new white paper he has authored along with John Cronin and Nathan Doudera of ipCapital Group. This year’s PostalVision 2020/2.0 Conference surveyed a vast territory for 21st century postal prospectors to explore in search of profitable new sources of revenue. Guided by the theme “Platform Possibilities,” the participants excavated postal platform layers described by Intrinsic Values, Digital Applications and Physical Products that are built upon a supporting network infrastructure, hoping to find some new precious commodities that might help replace the high yield of diminishing First Class Mail.

One rich vein of revenue was discovered in parcel products promising e-commerce-driven growth at the retail-oriented “first mile” in the way of “If It Fits, It Ships” Flat Rate Priority Mail Boxes. Another was found at the wholesale-oriented “last mile” in the way of Parcel Select. But even when achieving as much as 20% of total revenue, parcel shipping profits alone will never replace First Class Mail.

In its 3rd Quarter, ended June 30, 2012, 10Q filing, The USPS reports:

“The Postal Service continues to implement innovative new products to generate new revenue and to prevent existing revenue streams from migrating to electronic alternatives. Existing products and online services have been enhanced with “ease of use” in mind in an effort to grow business. However, it is not possible to achieve financial stability through revenue initiatives alone, without a fundamental change in the business model.”

Another source of potential value, unrecognized by many in the postal/parcel industry that is increasingly showing up at various points along the postal/parcel value chain is Intellectual Property.

The number of patents filed by the USPS, rival carriers, and value chain intermediaries has grown significantly in the past two decades. For the most part these patents are not being meaningfully leveraged, and the values of these assets are not recognised. If the USPS or other players in the postal/parcel industry start to think about IP strategically, they may find patents to be a valuable buried treasure!

In many industries, IP is both crucial to core business, and provides additional revenue streams through direct monetisation. In pharmaceuticals, imaging, consumer electronics, mobile communications and even in service industries like data management, IP is the motive power of innovation and a key element of business success.

IP enables companies to improve competitive advantage, define operational boundaries, expand and protect brand, generate licensing revenue, gain transaction leverage, and increase shareholder value. IP becomes more strategically important as industries transform from old legacy technology dependencies to new high-technology based models.

Disruptive shift

The white paper published today follows on from a presentation by John Cronin of ipCapital Group at this year’s PostalVision 2020 2.0 Conference

In recognition that such a disruptive shift is now occurring in the postal/parcel space as well, intellectual property expert, John Cronin of ipCapital Group, was invited to share his view of the role IP could play in the future of mailing and shipping during the PostalVision 2020/2.0 Conference.

John revealed an intriguing glimpse of past and recent IP activity all along the postal/parcel value chain. His analysis illustrated an enlightening range of patent holdings by leading carriers; UPS has 1,491, DHL has 870, USPS has 758 and FedEx has 113. For service and applications providers, Pitney Bowes has 6,083 patents, Neopost has 1,530 and has 138.

John also revealed that the largest proportion of carriers’ patents is for optical recognition of data and counting mechanisms. The second largest collection of patents is for sorting and labeling. Yet increasingly more patents are being filed for postage, tracking, and data management systems.

As technology pervades the rapidly transforming postal/parcel value chain, it is important for the USPS as well as carriers and service providers to be aware of possible disruptions that can be caused by IP.

IP can serve as a catalyst and an accelerator, or a governor and an obstacle to the smooth flow of materials along the postal value chain. Disruptions can come in a variety of forms, be minor or major and have narrow or systemic impacts on the value chain. Regardless of their scale, IP disruptions threaten the status quo and change the landscape of the industry.

Risks and rewards

Given the likelihood of accelerating disruption along the postal/parcel value chain, John Cronin expressed his belief at PostalVision 2020/2.0 that the Postal Service ought to spend more time examining the possible risks and potential rewards of IP and should develop a well-crafted strategy for its approach to this untapped source of non-product dependent revenue. IP strategy can be and should be a driving force of innovation.

Ursa Major Associates, the organising consultancy for PostalVision 2020, has joined with ipCapital Group to explore possible ramifications for IP disruption on all players in the global postal/parcel ecosystem and the partnership has authored a whitepaper, “Can Intellectual Property Save the USPS? How Recognizing the Increasing Importance of IP in the Postal/Parcel Industry and Harnessing the Power of Disruptive Innovation Can Revivify the USPS”.

Based on ipCapital Group’s expertise in IP strategy, and thought leadership in the IP/innovation space, the paper suggests four possible models that the USPS could adopt to plot its IP course for the future:

  • Open Source Model,
  • Free Enterprise Model,
  • Government Use Model, or
  • a Hybrid Model.

All of these models view the USPS as a platform, wherein the USPS provides the infrastructure for the postal value chain and private sector companies build upon and around it. Each model would influence a substantially different IP landscape for the postal/parcel industry, so the USPS must choose its path strategically based on how it wants to reposition its business.

It is clear that the USPS is facing a serious challenge. One way for the USPS to revamp its business model and thrive in the digital age is to strategically use Intellectual Property to drive innovation.

The USPS may well discover IP to be a hidden treasure; a highly leverageble asset class that could be a source of new profitable revenue to an organization that is in desperately in need of a refresh.

John Callan is co-founder and Executive Director of the US-based consultancy Ursa Major Associates, LLC, as well as the creator of PostalVision 2020, the initiative and Conference designed to re-invent the postal ecosystem in America.

  • Click here to download the full white paper from John Callan of Ursa Major Associates, and ipCapital Group’s John Cronin and Nathan Doudera (PDF, 463KB), as published on Post&Parcel today.

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