Destined to Diversify

Recent research from Accenture

shows diversification is at the
heart of the strategy adopted
by postal organisations that
achieve high performance.

Destined to Diversify
For the past decade, postal operators have been facing the challenges
of globalisation, liberalisation and technological advancesand more
recently, the worst global recession in a century. Over the past two
years, postal organisations have experienced a shift in their perspective
on the future. Volumes were always expected to declinebut not at
the levels now being experienced. In reality, a strategy focused purely
on cost reduction and efficiency improvement cannot deliver the
level of change that is needed to secure a commercially viable future.
Our latest report Achieving high performance in the postal industry:
Accenture Research and Insights 2010 clearly demonstrates the risks
around continuing to pursue a traditional strategy and the success
that diversification can bring.
Postal Strategies: The Four
Categories
Accenture has been monitoring
developments in the global postal
industry for many years using our High
Performance Business Methodology,
evaluating the performance of postal
operators from both a quantitative and
qualitative perspective. This body of
research allows us to monitor how the
industry has changed over time and to
better understand how market demands
are forcing postal organisations to strive
to continually improve. Perhaps this is
best evidenced in the area of the postal
organisations strategy. In 2006, our
research showed that choice of strategy
did not seem to be a major factor in
determining success; having strategic
clarity was sufficient. In 2009, we found
that strategic choice had become more
important and, indeed, four strategic
categories were emerging across the

industry. In 2010, we discovered that

choice of strategy was absolutely vital
to success and reflected as a top priority
among those postal players we identified
who achieve high performance.
Figure 1 presents our four strategic
categories and positions each of our
surveyed organisations under the
strategic category that best reflects
their assessed performance. While
such a snapshot at a point in time is
interesting, it is the progress over time
that gives us the best insight to the
industry and the characteristics
associated with high performance.
Global players: the geographic
diversification that is being pursued
by these organisations is truly global.
They have identified the market
segments that work best in a global
sense, that is logistics and express, and
invested heavily in building capabilities
across the international marketplace.
DPWN and TNT are the only two postal
organisations that have adopted this
strategy on such a global scale and
the reality is that when evaluating
their businesses at a corporate level,
it is difficult to make a comparison
with other posts. Therefore, express
and logistics services players UPS and
FedEx are included in our global player
category for benchmarking purposes.
Looking forward, it is difficult to see
any other global players emerging.
Regional diversifiers: this category
approaches geographic diversification
on a more regional basis with

organisations extending into adjacent

markets. Looking at the operators that
are pursuing this strategy highlights
similarities in many of their domestic
markets. Most notable is the size of
the domestic market which in almost
all cases is relatively small. As a
result, while a nationally based
service-diversification strategy could
offer new revenue streams these are
likely to be limited. The proximity of
other geographies, therefore, offers
an attractive opportunity.
Service providers: these postal
operators have adopted a focus that
is primarily based on expanding the
range of services within their domestic
market. This would appear to be the
most obvious choice of strategy for
postal operators in large countries-in
particular expanding operations where
their brand is already strong and they
have an existing operational platform.
An additional factor may also be the
lack of opportunity for geographic
expansion as a significant proportion
of our service providers are operating
in geographies that are discrete
entities.
Traditionalists: the traditionalist
category has been historically the
preserve of the operators that are
focused on continuing to provide
traditional postal services. The focus is
on providing better versions of these
services by integrating technology,
improving flexibility and overall
reducing cost. Certainly many, in fact
most, of the operators offer products
and services that are the same as
service providers. But the financial
contribution of these services is too
small to affect their current financial
performance.

The Path to High Performance

While adoption of a specific strategy
is important to achieving high
performance, it is not the only factor.
When we took a closer look at the
postal organisations that achieve high
performance, we discovered some

Figure 1: Four Strategic Categories for Achieving High Performance

Strategy

Global Players

Regional Diversifiers

Service Providers

Traditionalists

Criteria

At least 25% of
revenue outside
domestic market
in 2008.

At least 12.5% of
revenue outside
their domestic
market in 2008.

Dominant strategy
of diversification
through convenience
and proximity.

Strategic approach
primarily focused
on improving the
efficiency of mail.

Revenue came from

more than one
continent or trade
bloc.

Revenue from
adjacent countries
on the same
continent.

Service beyond
mail, shipping,
banking and
stationery.

National focus.

Clear strategy of
international growth.

Dominant strategy
of regional growth.

Innovative solutions
across channels.

DPWN (Germany)
FedEx,
TNT (Netherlands),
UPS.

Austria Post,
Itella (Finland),
Le Groupe La Poste
(France), Posten
Norge (Norway),
Posten (Sweden),
Swiss Post.

Australia Post,
Correios Brasileiros
(Brazil),
New Zealand Post,
Poste Italiane,
Singapore Post,
South Africa.

Whos Who

common themes around their business

approach.
Customer centricity: postal
organisations that achieve high
performance adopt a customer-centric
approach, prioritising customer needs
at every juncture of their business
operations-from product development
through to customer service. These
operators recognize that customers
have the ultimate choice and they do
all they can to continue to improve
their offering and maintain their
customer base.
Cost focus: for postal organisations
that achieve high performance, cost
focus extends beyond improvement of
their own operation to a fundamental
consideration of their structure and
the opportunity to outsource both
core and non-core elements. These
operators are not just looking to
outsource backoffice systems-they
seek to incorporate lower cost, more
flexible providers into their core
operations.

Digitisation: technology is seen as

an opportunity not just a threat for
the postal organizations achieving
high performance. They are using
digitisation to offer enhancements to
the existing product offering, to create
new products and to streamline their
operational processes. Both physical
and electronic environments are being
embraced to help maximize their full
potential.
Sustainability: the environment is
a significant factor for all businesses
today. Postal organisations that
achieve high performance view this
not as an imposition or an overhead
cost but as an opportunity. They
have developed products and pricing
strategies that position their
businesses with the impact of
sustainability in mind and are using
the changed practices and behaviours
to drive new revenues.
The common theme running throughout
our research findings is the critical
importance of mindset. Postal
organisations that achieve high

An Post (Ireland),
Canada Post,
Ceska Posta
(Czech Republic),
Correas (Spain),
De Post-la Poste
(Belgium),
Japan Post, Magyar
Posta (Hungary),
Post Denmark,
Royal Mail (UK),
USPS.

performance appear to have a mindset

that actively seeks out potential
opportunities. Whatever changes occur
in their operating environment and the
broad marketplace, they are willing to
challenge the fundamentals of their
business to grow. Accenture believes it
is this proactive survival of the fittest
mentality which is perhaps the greatest
asset in the journey to achieving high
performance.

The Advantage of Ambition

A final critical factor that arises from
our analysis of postal organisations that
achieve high performance is ambition.
Associated with mindset, ambition is the
starting point for growth and progress.
Today, postal organisations are operating
in very different environments with
some still largely under the control
of government and many needing to
accommodate the needs of the private
sector marketplace. This environment
provides the context for each post;
the balance of focus between social
service provider and commercial
business; between doing the same
better and diversifying into new business
areas. However, with the volume decline
that has been experienced as a result of
the global economic recession, it is clear
that continuing to do the same but
better is not enough.
Cost reduction alone will not ensure
survivaldiversification must be a
consideration in every postal
organisations strategy. By recognising
the importance of diversification, postal

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All rights reserved.
Accenture, its logo, and High
Performance Delivered are
trademarks of Accenture.

organisations can take action and target

the future aspirations for their business.
By establishing positive future goals,
based on a core ambition to succeed,
postal organisations can generate the
energy, enthusiasm and commitment
that is needed to emerge from this
difficult economic period with a
sustainable business that sets the
standard for achieving high
performance.

Want to Know More?

For a copy of the research findings
Achieving High Performance in the
Postal Industry, Accenture Research and
Insights 2010 visit accenture.com/postal
or contact the reports authors.
Brian Moran, managing director-postal
industry, Accenture.
brian.j.moran@accenture.com
or
Vineet Narang, program lead-postal
industry, Accenture.
vineet.narang@accenture.com

About Accenture
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consulting, technology services and
outsourcing company, with more
than 181,000 people serving clients
in more than 120 countries.
Combining unparalleled experience,
comprehensive capabilities across all
industries and business functions,
and extensive research on the worlds
most successful companies, Accenture
collaborates with clients to help
them become high-performance
businesses and governments. The
company generated net revenues of
US$21.58 billion for the fiscal year
ended Aug. 31, 2009. Its home page
is www.accenture.com.