Archive for the ‘Innovation’ Category

Jumping the Shark

April 28th

So I was talking to a postal aficionado friend about the issues that the USPS is facing.  We were having one of those conversations that would have been intelligible to a about 50 people involving the timing of regulators, the implications for policy proposals, the effect on rates, the result for markets, the unintended consequences…then we would change an assumption and cycle through the variables again.   Scenario planning for wonks.

This particular colleague and I have been having these conversations for 10 years.   The problems of the posts are only getting worse.  Much worse.

I always listen to him carefully.  I had asked him the most baffling question of all about 5 years ago.  “Don’t the customers understand what they are going to do to the postal service, the drive train of their livelihood, if they keep going with these retirement payments?”  I had asked.

He said “well you saw it in the reaction to your talk”

[This was a then recent speech about putting the phrase “the regulator shall” into a law.  I was arguing that the customers should be careful about what they wished for.  If you start a regulator down the path of killing an agency, as the British and others have found, you eventually succeed.  And then what?]

He said.   “Maybe they don’t care,” to which I replied, “no one is that mad.”

“Maybe you are thinking about this wrong,” my friend suggested.  “Maybe they know what’s going to happen and they don’t want to be the last man holding the bag.  Maybe risking killing off the institution on which they depend is less of a problem than having it die slowly with enormous debts that they will have to pay off.”

I remember stopping in my tracks with one of those “of course…” thoughts.

So I always listen.

I was explaining that the Senate Governmental Affairs Committee had asked the Postmaster General what he would do with the $75 billion dollars and he answered that if they got the money “they would be OK for a long time.”

I explained in defense of his answer that various Senators had asked him a lot of the same questions and it was late in the afternoon.   I knew he had a better answer and he was being more polite than I would have been able to be.

“Do you think that Snailmail has just jumped the shark? “ he asked and I knew that I was at one of those moments of recognition again, but not for the reason that he might have had in mind.

Jumping the shark refers to the exact moment when you know that something (your television show or anything else) has gone past the peak and its all downhill from here.

“Fonzie”

From Happy Days

Paramount Pictures

In a 1977 episode that began the fifth season, Henry Winkler (“Fonzie”) water-skis in Santa Monica and encounters a shark.  The critics and the fans found this moment to be such a lame effort to save the franchise that they have agreed for years that this was the moment when they knew it was all over.

There is an argument to be made that when an industry can no longer envision how it would spend a windfall, (even if it deserves the windfall) it may well have jumped the shark.

For the record, it’s useful to note that it wasn’t over for Happy Days by a longshot. The studio owned Happy Days and once it ended its prime time run it made the real money in syndication.

Congress and the FCC had sought to protect “local access” by allowing local stations to have prime television time (technically the time just before prime time under what were called the “Broadcast Rules.”)  Local affiliates of the Nntworks discovered that they could buy rights to show favorite television shows like Happy Days as “counter programming” to the network television news and make a fortune in advertising sales.  The studios may have preferred to have a show end once they had enough episodes of a popular franchise to make serious money in syndication.

The result of this regulatory scheme (the Financial Interest and Syndication Rule’s multibillion dollar syndication market) was no doubt not exactly the consequence that had been intended.  But it was in it’s own way a market solution to the question of what should local television affiliate do for the citizen/viewers?

Is the lesson that there is life after jumping the shark and perhaps it’s time to get on with finding out what it is?  We can see that the current business model is not likely to be sustainable.  The postal service is already going through rapid, even radical change.  But so far, all with an effort to preserve the way things have “always been.”  Whether they have always been the same is beside the point.

Perhaps its time to anticipate what kind of a national institution we want to see, what services we want it to provide for our democracy and how we will pay for them; especially now that we have seen the shark.

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Design Thinking and 21st Century Leadership Skills

April 16th

Garth Saloner, the Dean of Stanford Business School was interviewed by Lenny Mendonca in the McKinsey Quarterly and explained that at Stanford Business School, as they think about educating the next generation of business leaders, that their focus in a world without borders has moved from the hard skills of accounting, finance and supply chain management to the softer skills related to leadership.

In a world without borders, where the management of global enterprise or even global projects is taken as a given, there is a growing need to train managers who are skilled in encouraging collaboration.

The harder skills are a given. Saloner refers to them as a type of “hygiene.” His focus has turned to leading groups in collaboration where analytic thinking is critical, to communications (especially writing) and to education in the global marketplace. Stanford requires students to work abroad in countries where they have no prior experience.

Innovation is especially prized in a world that is inventing new ways to do things.

The thing that is starting to blossom as an approach and as an idea in universities with business schools as a partner is a whole area of what folks call design thinking. And that’s really the creative process of identifying a need but then working with the customers, through a process of rapid prototyping, to figure out how to develop a product or to solve their needs.

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Collaboration, Innovation
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Double Counting in the Carbon Markets

March 26th

As the US gets closer to considering Cap and Trade legislation once again, in the Senate this time, a troublesome story appears in the Economist that would make even the strongest supporters of doing the right thing on Global Warming a little queasy. (“The Wrong Sort of Recycling” Hungary’s sale of used carbon credits damages investor confidence. March 25, 2010. The Economist)

No doubt the Hungarians would feel that they had been slandered – after all it was out of their hands. And it’s OK to sell credits twice in Japan. So its unfortunate that this sent the market in Paris into turmoil.

But perhaps we get ahead of ourselves…The Hungarian Ministry of Environment and Water issued 800,000 certified emission-reduction credits (CERs). As the Economist explains “CERs are generated by the Kyoto protocol’s “Clean Development Mechanism, whereby reductions in greenhouse gases in developing countries can produce a carbon credit for use in industrialised markets.”

What happened with this sale of CERs was that Hungarian firms had already put the CERs to good use offsetting their own emissions. The Economist explains that Hungarian officials reported that the credits were ultimately destined for a buyer in Japan and in Japan you can use credits twice, something that you cannot do in Europe.

The point of having a carbon market is to be able to price the right to emit carbon dioxide efficiently. The Economist quotes Yuichi Takayama of Tokio Marine Asset Managementas explaining, “In Japan’s view, so long as some environmental benefit has occurred, then the CERs have a value”.

Not so much in the view of the European carbon markets. The CERs were not simply sent from Hungary to Japan but instead found their way onto BlueNext that is an exchange based in Paris. “By the time that the European Commission realized what had happened, all hell broke lose. BlueNext temporarily suspended trading.” The price fell and investor confidence appeared to be shaken. Since this trade was not in a government’s hands no one broke the rules.

In Europe you are not supposed trade the same credit twice. There has been support for making different kinds of credits fungible. The market will be bigger if new entrants aren’t discouraged from coming in. But if the new players bring credits that are sold in Hungary and again in Japan and then on the European exchange there’s going to be resistance from investors and then there won’t be a market at all.

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Innovation and the Regulator

February 18th

What will be important to the future viability of the Postal Service in America will be to create a regulatory process that is agile, flexible and fair.  The goal should be to create a system where postal employees who may be carrying mail to households will bring their best, most innovative ideas forward, where entrepreneurs know that they can say “I have an App for that” and find a partner in the government’s monopoly postal system.

On February 17th 2010 the Postal Regulatory Commission held a hearing to receive comments on the Postal Service’s Annual Compliance Plan.  I participated in the forum and introduced Comments.

In my comments I noted that the Commission had been clear that it wanted to be judicious in “calling balls and strikes” but in a time of economic crisis where the future viability of the Postal Service may be in question its important for the Commission not only to do its assigned job, but also to work with the Postal Service, the White House and the Congress to widen the strike zone.

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Testimony on Capitol HIll

November 5th

Today I testified on revenue generating opportunities and the future of the U.S. Postal Service before the Subcommittee of the Oversight and Government Reform Committee that is concerned with the Postal Service.  See Testimony PDF

Overall, my argument was that the Postal Service and the mailing community can become a source of innovation that is an engine for creating new postal revenue through the creation of  public private partnerships.

To make the Postal Service viable will require making mail relevant to future customers.  This will mean connecting hard copy mail with the Internet so that it can play a key role in a multichannel marketplace.

But the new revenue for the public postal service is not going to come from making the USPS into an Internet services provider.  If that was ever an option, its time to say “that was then, this is now.”  Fortunately there are a number key opportunities for the USPS to create new revenue and new mail by creating partnerships with private firms. I describe three broad concepts - Enabling the Last Mile, Extending Democracy’s Reach and Promoting Green Routes.

Some highlights include:

By enabling the last mile I refer to the many opportunities that exist for putting technology in the hands of the Letter Carrier, in other words, on the doorstep of the mailing consumer.  One of the areas of greatest interest to mailers has been wanting to know where their mail is while its on route to its destination.  The USPS has been seen as a black hole compared with FedEx and UPS who have invested billions of dollars to enable their higher end services to “track and trace” and much more.

In addition, I argue that

A second broad theme that Chairman Ruth Goldway in particular has championed has been Vote by Mail.  The Postal Service can do this and provide many other government services as well.

Third, there are opportunities for the Postal Service to again serve the nation by carrying parcels that today cause three and four trucks to travel the same route.  We can reduce carbon emissions by creating Green Postal Routes.

What is needed is to create a pathway that connects the challenged Postal Service of today with a viable business model of the future.  The broad framework should be a public policy framework that encourages public private partnerships as the postal reform law of (‘06) and the President’s Commission on the Postal Service (‘03) proposed.

The details of new services to customers will depend on the trials and tests and an innovation platform that has yet to be invented.

The coming years could be an exciting time of transformation or they could be a train wreck.  The difference will be whether there is clear public policy guidance that can define the creative balance between what should be public and postal and what should be a public private partnership.

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Net Neutrality, Time to Take Sides

September 18th

In the modern equivalent of a story moving on the wire after the close of the stock market, The Wall Street Journal reported that the new FCC Chairman, Julius Genachowski, is expected to outline proposals on Monday to prevent Internet providers from selectively blocking or slowing Web traffic. In Washington buzzword speak this is a “net neutrality” bombshell.

This is one of those issues where someone throws a pebble into a clear pool and the ripples expand forever. You have to decide whether you are going to think about this in terms of this month (Asian nations joining China in limiting internet access), this year (Internet companies agreeing to make it possible for China to limit Internet use and even more insidiously hand over the list of users) or this decade or two.

There was the battle between the phone and the cable companies over who would control network email services (before Telecom Reform in 1996) and then there was the fencing that was taking place over data traffic versus analogue voice before Judge Harold Green had broken up AT&T (1984) or …

Reading the story in the Wall Street Journal can make it tough to figure out who the good guys are. Are the good guys the ones who fight heavy-handed network blockers? Or are they the ones who are fighting government intrusion in the private marketplace? Are the good guys protecting us from network slowdowns from mobile video file sharing? It can give you a headache.

Balancing equities and regulating bandwidth are of course what governments do. So it would seem that with due concern for the technical issues involved, it should be hard to vote against the opportunities that serious net neutrality would create. No doubt the companies involved have some issues here. But the extraordinary social value that gets created when Internet services are allowed to innovate has been demonstrated. Net neutrality could be the next milestone.

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