Thinking About Tomorrow

October 28th

In 2000, I was the leader of Strategic Planning at the USPS when the agency was required to write a Five Year Strategic Plan.  The Board of Governors was extremely interested in this requirement and I soon found that the effort to write the Strategic Plan at the height of the Internet Revolution was a controversial task that was debated at the highest levels of the organization.

For me, predicting a dramatic mail volume decline seemed to be a no brainer.  But there were many smart people who had seen predictions of mail volume decline before and they remembered that the earlier forecasts had all been proven to be wrong. I had a good deal of analytic support.  Focusing on the coming loss of First Class Business Mail (businesses sending one another bills and making payments) alone explained a good deal of of the pending loss of volume.

But the opposition view was strenuously held.  There were a significant number of individuals and businesses who had a lot at stake .  Private companies in the mailing industry who had to defend their businesses to Wall Street every 90 days clearly did not want to hear about the predictions of decline.

Postmaster General Bill Henderson wanted me to find a more persuasive basis for anchoring the Strategic Plan.  He directed me to go up to Harvard to meet with one of our advisors, Professor Anthony Oettinger, the well known Harvard Professor of Computer Science.

I laid out my case.  “OK,” Professor Oettinger responded, “But how do you know that this is going to happen? It’s the future.”

I recognized that he had a point and we put three alternative scenarios into the Strategic Plan.  The graphic to the left was presented to a conference of Mailers in 2009 by the former Chief Financial Officer and me.  The Red line represents our baseline.  The Green line was the worst case.  We left the optimistic case off of this chart when we presented it in 2009 because it seemed to be a distraction that increasing mail volume could have ever seemed to be a reasonable forecast.  The actual mail volume (Blue and Purple) showed that we had been pretty close in 2000.  We were correctly forecasting the decline.  (I still don’t believe that this was rocket science given what was happening in the world in 2000.)  The purple line shows that following the financial crisis, mail volume collapsed.

One of the problems with putting scenarios into the forecast was that everyone could find their favorite theory and it didn’t force anyone to act differently.  Acceptance of the baseline prediction of mail volume decline would have allowed the USPS to construct a far softer landing than it is struggling with today and to see transformation of the institution as much more of an imperative.

But i don’t think that those who continued to have faith in growth were Neanderthals.  What the curve that represents “actual” volume (Blue) shows is that after 9/11 there was a decline that was associated with the recession.   The recovery restored volume but it left open the question of whether to interpret the growth curve as a short term reprieve or sustaining a long term growth trend.  The pattern is clear today.  But to have understood the strategic framework sooner  would have been valuable and important to the future of the institution.

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