Postal Innovation

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It’s the time of the year when we are deluged with packages, many of which are delivered by the US Postal Service (USPS).  The surge in e-commerce has resulted in challenges for the main delivery services, and the USPS has responded with creative solutions such as Sunday delivery.  I was in Atlanta on a Sunday recently and noticed a USPS truck delivering goods on a Sunday morning, with all of the packages sealed with telltale blue Amazon Prime logo tape.  While the topic of recent innovations in delivery services could be of interest for a future article, I’d like to take some time in this writing to relay some historical innovation lessons from the USPS, leveraging Winifred Gallagher’s book How the Post Office Created America.  Through Gallagher’s work we can unearth a number of interesting anecdotes about how the USPS evolved over the years to meet the changing needs of a growing country.

Services to handle communications of messages across great distances date back thousands of years.  The first postal systems appeared in the Middle East and focused on official government communications.  The great historian Herodotus (the “father” of history) wrote of a postal system established by the Emperor Darius I that ran over 1,600 miles and consisted of horses and couriers who carried messages on clay tablets across the Persian Empire.  Indeed, the famous motto of the USPS is derived from Herodotus’s description of these couriers: “these are stayed neither by snow nor rain nor heat nor darkness from accomplishing their appointed course with all speed.”  The Persian system had riders and horses spaced out according to the distance they could travel in a day to ensure the continuous flow of messages from point to point.

Innovation Lesson – An innovator should think about not just the two ends of a communication chain but also the steps in between.  It’s not just enough to consider the end recipient of a message (such as how a Senior Executive would react to a new idea), but also to think about the people in between who could be helpful in facilitating the delivery of that message to the Executive, including how those people will react to the new idea.

Like the Persians, the ancient Romans used a postal system to send messages across their far-flung empire, leveraging the famous Roman road system to facilitate the transport of messages (as well as government officials themselves).  The word “post” comes from the Latin “positus” which means position or station, signifying the various stopping points along the roads.  The term “mail” first appears from the Middle English “maille” which refers to the metal link woven bags used by couriers in the Hanseatic League to handle important communications from members of that commercial entity.  Mail was first opened to the public (and thus no longer exclusively the realm of the government) in the early seventeenth century in France and England, though with very high postal rates.  This limited the use of the post to typically elite users (as well as the government).

Innovation Lesson – Innovators should think about the importance of securing their information, just like the Hanseatic couriers secured their critical communications in chain-link bags.  In an era of great challenges from a cyber-security standpoint, valuable ideas generated by innovation teams need to be protected at all costs.

America’s Founders saw the post as a key tool in ensuring that the nascent United States would possess a well-informed citizenry that could keep track of what was happening in the country, covering a broad expanse of land.  George Washington wrote that “[t]he importance of the post office and post roads on a plan sufficiently liberal and comprehensive . . . is increased by their instrumentality in diffusing a knowledge of the laws and proceedings of the Government.”  The noted physician Benjamin Rush likewise spoke of the Post Office as “the only means of carrying heat and light to every individual in the federal commonwealth.”  Although the Constitution calls on Congress to establish a system of post roads, the more fundamental establishment of what we know now as the Postal Service came from the Post Office Act of 1792, which established a series of postal routes that would serve as the foundation of the future mail service.  One key attribute of this act was the Universal Service Mandate, which stipulates that all residents of the country, no matter where they live, are entitled to access to the mail for the same price, although this wasn’t fully enacted until the twentieth century.  The fact that a pioneer could venture into the wilderness with a reasonable expectation that he or she could establish a town and start to receive communications from the rest of the country increased the confidence of these pioneers and helped facilitate the expansion of the country.  The universal service mandate helped make this possible.

Innovation Lesson – This concept of universal service applies to innovation in two ways.  First, although innovations need to be protected, there is also value in seeking input from a broader constituency about a new idea, particularly if those reviewers could add value to the idea by suggesting alternative approaches to overcoming a challenge.  Second, the universal service mandate reminds us that we cannot always simply focus on the cost-benefit analysis of a proposed solution.  For example, USPS delivery of a letter from one end of the country to another has actual costs that may be higher than the standard postage applied to that delivery, whereas delivering a letter within a city may cost much less than the actual rate.  However, there are benefits from the simplicity of the overall solution (one rate for all letters for all distances) as well as the benefits of opening up communications across a far-flung country, thus aiding expansion and growth.  In other words, the actual innovation delivered by the universal service mandate is not readily apparent in the innovation itself.  Rather, one has to look at the downstream benefits delivered by the innovation to gauge its true value.

A key turning point in the expansion of the postal system to provide correspondence service to a larger percentage of the population came in the mid-nineteenth century in America, as the number of letters received per person increased from three per year in 1850 to seven in 1854 and beyond.  With lower postage rates, mail went from being solely an official means of communication to becoming something that was used for casual conversations.  This proved to be a boon for historians, as routine correspondence between individuals provided a snapshot of the life and times of different periods in history.  What was a simple, personal commentary for someone from 1860 provided to be extremely valuable for a historian in 2016.  Another innovation consisted of the widespread use of postage paid by the sender.  Originally, the recipient of a letter had to pay the Post Office for a letter and many times that person would choose not to pay the price of a letter unless it was something he or she truly wanted.  This led to various schemes to avoid paying for a letter.  Sometimes a traveler would send a letter to family members upon arrival letting them know that he or she was safe and sound.  The family would refuse to accept the letter (and thus avoid the postage), but the letter would have served its purpose by that point.  In one particularly famous incident, Zachary Taylor was not aware that the Whig Party had nominated him for President in 1848 because the letter notifying him of his nomination was sitting at the Post Office with a pile of other mail addressed to him that he refused to pay for and redeem.  The solution to this problem was a simple one – the stamp.  The stamp permitted a set amount of postage to be paid for easily by the sender so that the recipient would always be able to retrieve his or her mail.  Stamps were easy to purchase and apply to letters and greatly simplified the entire process of letter-writing, resulting in great benefits to the system overall.

Innovation Lesson – There are two innovation lessons here that can be discerned from the advent of increased personal correspondence as well as the use of sender-paid postage.  First, innovation can come in the form of taking something that previously was the domain of elites and opening it up to the masses, and such a process yields tremendous benefits well beyond the immediate effects.  Letter writing become nearly ubiquitous and in addition to benefitting the personal relationships between the correspondents, it also created a treasure trove of information for scholars of future generations.  One wonders if the more succinct communications of the modern era (e.g., Twitter), despite their ubiquity, will result in less information for scholars to examine about our era.  A second innovation lesson comes from the use of sender-paid letters.  Sometimes a process can benefit from a simple inversion of the steps.  Rather than having the recipient pay for a letter, the innovation here was to flip the process 180 degrees and have the sender pay.  Although this temporarily inconvenienced the sender (who might have been used to sending for no charge), the net result was a dramatic improvement in the efficiency of the entire process.

Despite the soaring number of packages sent as a result of e-commerce, the use of the basic postal letter has been in decline for years.  First class mail volume reached its peak in 2001 and total mail volume peaked in 2006, with both in decline ever since.  As far back as 1982, the Postal Service presciently foresaw some of these trends and created internal innovations to try to take a leadership position in the new electronic world.  Well before the advent of email in the general public, the Postal Service initiated a project known as E-COM, which was a service in which a computer in one Post Office could transmit a message to a computer in another Post Office then print and distribute that message to as many as 200 recipients within two days.  Some private companies, such as ITT, Graphnet, and Telenet, fought against this government-sanctioned service, whereas others, such as Merrill Lynch and Eastern Airlines, signed up for E-COM and saw it as a great way to deliver bills and other notices to their customers.  After some initial successes, E-COM ultimately was halted in 1984 despite having processed 23 million transactions that year.  Politics (Congress) and challenges from other marketplace players forced an untimely end to what was truly an innovative program.

Innovation Lesson – The lesson of E-COM is that even the best ideas, no matter how great their technical merit, can succumb to politics and competition.  E-COM was definitely ahead of its time and could have served as a pre-Internet foundation for rapid electronic communication.  However, other factors came into play that prevented the Postal Service from making E-COM a success.  This serves as a reminder to the innovator that he or she cannot rely alone on the power of his or her ideas.  Rather, the innovator needs to be aware of the political landscape in which the innovation has to operate in order to be ready to knock down the roadblocks that inevitably get in the way of people trying to make big changes to processes or technologies.