Sunday, 14 July 2013

Knock Knock ; Who's there ? Nobody !


By any reckoning, this should be an extremely successful business. You have a fantastic distribution set up - reaching every nook and corner of your geography that nobody else can - in what is essentially a distribution business. You have an envious relationship with the consumers. In many places your representative was a trusted friend and confidante. People looked forward to his arrival. You had a state sanctioned monopoly. You have a significant price advantage. You enjoy innumerable fiscal benefits that no competitor enjoys. You have a great brand , so great that collection of your merchandise was a major hobby with an English word specifically only for this. Songs have been written about you that have reached the top of the charts - here (this is the first version - the Beatles and the Carpenters came later) , in case you are musically inclined. 

With such advantages. you should be roaring away to glory, shouldn't you ? And yet you are a colossal failure and a sitting duck in almost every country. I am referring to the business of postal services. Everywhere in the world, the Post Office is a massive white elephant and a complete dinosaur, if you'll pardon the mixed metaphors. When was the last time you licked a stamp and sent something by post  ?

Popular perception is that the business has been made obsolete because of technology. The advent of E Mail and then subsequently, the mobile phone has made postal services. fit only for a museum. Nobody writes a letter any more. So goes the wisdom. Nothing could be farther from the truth.

The postal services have failed because they have a been a government monopoly, have never considered themselves as a business and have been the best example of the worst management in history. That's why they have failed. If you need any further proof of it, simply consider the number of courier companies, who essentially offer the same services and who are thriving.

There is actually a colossal increase in the volume of physical mail. The amount of commercial mail is massive - just consider the amount of stuff, you may consider as junk mail, but which still arrives at your doorstep. Just as the advent of computers actually increased the amount of paper consumed, the advent of email has done nothing to reduce the volume of snail mail. Yes, you may have never written an inland letter for a decade or more, but consider how many times you have couriered something. 

Postal services in every country, and especially so in India, have been subjected to such bad management that it must be considered almost a crime. There is a bloated workforce. There is very poor management talent working in the organisation.  There has been no modernisation and investment whatsoever - just peep into the local post office, in case you can find it, and you will be looking at the 18th century. Governments have contributed by keeping prices of some products ridiculously low - for example to send a post card anywhere in India costs 50 paise (provided you can find a 50p coin which is almost not legal tender nowadays).  If ever there was an example required of the grossest inefficiency of the public sector and a shameful case of a proud organisation brought to its knees, this has to be it.

Why is this so. There have been other government monopolies which have been threatened by technology, but which have still done reasonably well. Why is the Post Office an universal failure ? I can postulate, but I shall leave it to Distinguished Academics (at least two members of this species are readers of this blog) to perhaps present their research findings.

23 comments:

Sriram Khé said...

The chief peon in the Eugene offices of the Travel Writers Guild of the World reporting for duty here ;)

A universal failure because governments mandate that universal service. A universal service it is that we cannot even eliminate the Saturday delivery feature of a "business" that lost 15 or 16 billion dollars last year, on top of gazillions lost over the previous years.

But, here in the US, I wonder if we are afraid to overhaul the system because, ahem, the employees might go postal .... muahahaha!

ps: the wiki entry for "going postal": http://en.wikipedia.org/wiki/Going_postal

pps: let us see what the "Distinguished Academics" have to say about your post!

ppps: how can we not be reminded of The Carpenters!
http://www.youtube.com/watch?v=AHfddvbKb4w

Ravi Rajagopalan said...

@Ramesh: I heaved a sigh of relief when I got to know the Indian postal system well. At one point I could see them killing IMT. There is no danger of that happening. Ever. You are right about the poor management, the complete apathy with which this wonderful franchise has been treated. Royal Mail has been turned around by good management and is now about to get privatized. The same should be happening to India Post.

Six weeks ago I purchased some records from a jazz specialist in Berlin and made the huge mistake of giving it to DHL. They sent it via Deutsche Post, who then sent it to India. I have made fifteen trips to clear the shipment. You feel like taking a torch to the fucking place each time you visit one more office and speak to one more babu.

Ramesh said...

@sriram - Hahaha

ps - didn't know that. Thanks

pps - That won't work - you can't escape away like that

ppps - The Marvelletes were the first.

@Ravi - The news of the proposed privatisation of the Royal Mail was my trigger for this post. The Royal Mail is no example for anybody to follow. Equally a dinosaur, 150,000 employees, wafer thin margins, equally appalling service and militant unions. Good luck with the flotation. Moya Greene is good, but it is hardly going to be a stock market star. The government has to arm twist various bodies to pick up the 60% they want to sell - even after pricing at just above 0.5 times revenue. They are giving 10% free to the employees - a blatant bribe and anywhere else, virtually a crime.

Perhaps the only example of a good privatised postal service is Deutsche Post.

UA! said...

Not a perfect parallel, but this post reminded me of an NPR show that I had heard on the social contract for universal telephone service in the US based on copper wires and the main sticking point in the discussion was how to deal with the rural and poor customers for whom the Internet based telephone services would not be an option and the industry guys were suggesting that there should be a government fund to subsidize them to get Internet based telephone. Similarly in the case of postal services, if the contract, say in the US, is to provide mail service at 44 cents (or whatever the rate is now) to customers regardless of location then how could they compete with private companies who can charge the right price. But I guess the problem is that this valid disadvantage that government postal organizations face then becomes the excuse for not keeping an eye on the bottom line. I wonder if any postal organization can say how much money they make, if any, on services where they directly compete with private companies and how much they lose on non viable services that they provide for social reasons. If they were accountable for this they may have greater incentives to shape up.

Ramesh said...

@UA- Touche. The UA was a touch of class :):)

Yes, if the subsidy for the uneconomic areas which are driven by social compulsions is made explicit, that could help. But I don't believe that is a real reason for their poor performance even in economic areas. Governments meddle by fixing tariffs too low; unions are militant, and innovations are virtually absent. Its back to poor management as the cause.

Sriram Khé said...

Hey, I talked with my parents a few minutes ago. Father said he was at the Pondy Bazaar post office to mail a couple of letters. Apparently the clerk joked with him that he is the only one anymore who mails letters ;)
Father says that the post office seems to handle more packages than letters anymore ...

On a different note, with the news of the Bose speaker/sound system guy's death, I wondered whether Ravi as a music freak, er, aficionado, and Ramesh as the business freak, er, whatever, will have anything to comment on the technological innovations of Bose and on the business success of Bose. I thought I would toss those your way. I am, after all, a mere chief peon in the Eugene offices ;)

BTW, Ramesh, did you chase Nancy away with all your politically incorrect blogging about Rajalakshmi's weight? muahahaha ;)

Ramesh said...

@sriram - Thanks for the idea of a post. Maybe maybe ... :)

You are creating great trouble with teasing "Nancy". First of all there is a real Nancy who comes once in two months and reads the last 4-5 posts and comments. She's going to be bemused as to why you are pulling her leg.

The nicknamed Nancy is actually a slim kiddo - so she'll join me happily in poking fun at the Rajalakshmis. She's a new mom - so amazed that she finds time to even come occasionally to this blog.

Aravamudhan Srivatsan said...

Recently some of my friends posted message that the Telegram service is stopped and that they have sent the last telegrams to their loved ones.

I completely agree with your point, If at all they would hav reinvented tin the way they operate they could make something of worth.

I could think of many ways of promoting snail mails/ and making the service more coherent with current lifestyle.

Ravi Rajagopalan said...

@Sriram - am busy with Indian bureaucracy, so will provide a short comment and may be if Ramesh permits a guest post will follow.

Dr Bose (BTW he is only half Indian) is the perfect example of a modern man. Music lover, thinker, possessed of a curious mind, gifted teacher and most important - a superb engineer who backed his instincts. Most audiophiles hate him, and I don't like his stuff. But he realised very early on that perception of music is what makes a listening experience enjoyable and backed his engineering skills to produce sound systems that incorporated the concept of psychoacoustics. Whether you like his stuff or not is subjective. The fact remains he built a great consumer brand by concentrating on superb engineering, great design and excellent marketing.

Incidentally all the Bose stock was donated to MIT. And he also used his own money and skills to prove that the cold fusion experiments were fake.

Ramesh said...

@Sri - Lovely to see you back here. Honoured to have a budding creative genius frequenting these boring pages.

Want to apply for the post of Chief Creative Officer - Postal Dept ?? :)

Deepa said...

The nicknamed Nancy does read every single post without fail. Its usually on her smartphone with a baby-devil wrestling to break free from her clutches of her other arm! (The joys of parenting) :D

Your post couldn't be better timed. The USPS has lost our package worth $700 which was mailed to a town 30 miles away (thankfully we had it insured). Its strange that the government sits on these virtual cash cows and sees them rot away. With the price that they offer and the coverage that they have only a fool would have used a Fedex/DHL. However, they try hard to drive customers away.

Ramesh said...

@Deepa - Wow Baby in one arm - smartphone on the other ; much impressed !!!

USPS is not very different from the others. I need to sample Deutsche Post which has been touted as the best in class.

Sriram Khé said...

Hey, Ravi, thanks for your quick take on Bose.

Nancy, er, Deepa, you are back. Yay!!!

Ravi Rajagopalan said...

@Ramesh: Most things German are best in class, because of qualities uniquely German - pride in work, deep consciousness of quality, and dedication to the service. But I picked Royal Mail for a deliberate reason. When I first went to live in England Royal Mail was a travesty. However, over the years it improved out of sight. In that sense, there is a comparison to be made between India Post and Royal Mail, though the latter has advantages because local communities have deep affection for Royal Mail. In England today I can still post a letter First Class and it will reach anywhere in the United Kingdom next day with reasonable certainty. I sent myself a telegram on Saturday - it has still not reached. If even a reasonable improvement could be made in India Post the experience for the ordinary man would be palpably different.

Given today's poor economic environment UK Government has to bribe people to buy shares in Royal Mail. But that does not mean the service improved leaps and bounds due to good management.

Un Armed said...

Postal service in gulf countries are still likeable. cheap, competitive & time efficient. I think other countries has restriction to use thier own infrastructure and network only, thats a big drawback on time. they must try to use several private network.

Dr. Abdul Kalam has spoke once about using postal network for social reform. A strong netwrok build over many decades must be used in better ways rather than privatizing & destroying it.

Sandhya Sriram said...

I booked my taxi today morning @ 7.15 to get to manchester airport. the taxi lands at 6.15 and the driver calls me to my room when i am still brushing my teeth and tells me, sorry, my booking is @ 6.15. i will wait for another 15 mins. if you dont come down, i leave you and go. some miscommunication at the agency.

but know what, i learn today to get ready in 15 mins and then, now i have managed to fulfill my long outstanding desire, being a part of your blog!!


you know what Ramesh, sometimes, these really badly managed services also help :-)

Privitasing postal services (not sure if anyone will buy) is not the solution. maybe, giving it a scope makeover? maybe an engine for door to door rural marketing -- supported by a backbone infra overhaul maybe. i still wouldnt write it off for not being able to change, but would probably write it off for wanting to think.

Ramesh said...

@Un Armed - Welcome to this space. Indeed, the network is very valuable. The problem is that it has been grossly mismanaged and its value is now questionable.

@sandhya - That is a curious piece of logic - badly mismanaged services teach us to cope !! Privatisation is not the solution indeed - what is needed is good management and sensible unions, whether in the public or private sector. Its just that the probability of achieving this in the public sector is infinitesimal.

Vishal said...

Isn't part of the problem due to lack of vision in the first place and then equally backed by resistence to mobilise the resources in the forward direction? Perhaps, mindset drags it towards a worse situation.

By the way, there are a few things for which I still need to go to a post office and I don't mind that. As long as the job is done within reasonable satisfaction levels, I would be happy as a consumer whether technology involved or not. Sometimes, emails do not reach the desired destination too! :) just a perspective! :)

Ramesh said...

@Vishal - Absolutely - no vision and no action. Surprisingly, many other arms of the government have done quite well. Surprising why the Post Office, universally, has gone to seed.

And yes, of course. Even emails don't reach sometimes. Well said !

The Million Miler said...

If you look at state owned enterprises across the globe (Not just India) they probably sit on trillions and trillions of dollars of real estate assets. What if say, the Chennai Central Railway station were to build a 30 floor office complex which is state of art etc and lease it out to corporates. You could potentially avoid a number of issues like road congestion, parking etc as people could literally ride into their office on a train. But alas, our Ramamruthams will have to go through an elaborate tendering process, despite which we will hear of scams and corruption with mind numbing number of zeros!

Ramesh said...

@Kiwi- True of course, but please don't suggest this too loudly. The only open spaces that exist in any city in India are all public sector or defence land - if they took your advice and built there too, future generations will never see a blade of grass or a tree or be able to play anything more than hopping in one place !!!!

Reflections said...

Here I was all ready to comment intelligently on the post when I see my name being thrown about;-S.

I take great offense at the 'once in 2 months' line.....
...huh...
....I very faithfully/dutifully/religiously find my way here every month to find out whats news in Ramesh's corner and ofcourse to update my GK;-D.

And like usual I found the post & all the comment very interesting;-D????

Ramesh said...

@Reflections - Sorry Sorry Sorry !!!!!!

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