You are on page 1of 14

Vol.

2 | Issue 3 | 2014

Value Chains and the "Postal DNA"


As postal operators venture into new markets and
expand their service portfolio along their customers
value chain(s) the identification of the postal DNA or
their core identity becomes increasingly relevant. How
far can posts go and what are the opportunities as well
as the risks involved?

Mark the dates and see last page for more information

In partnership with the


Postal Innovation Platform

March 10-11, 2015


Washington, D.C.

Postal Innovation Platform (PIP)


Conference 2015
10 - 11 September 2015
Geneva, Switzerland

contents

Editorial

Dossier

As postal operators venture into new


business areas the question on what the
limitations to this diversification are arise.
Are there any limitations or should posts
do whatever they consider as another
business opportunity?
For most postal operators ICT
developments offer great opportunities
and we can see postal operators around the
world developing new service offerings and
entering into new markets. Sometimes we
ask ourselves whether these new services or
products still have anything in common
with the traditional role and know-how
postal operators have. But what exactly
is the traditional role of postal operators?
Can these opportunities transform into
business success? And are there any key
success criteria that posts need to follow
in order to turn opportunities into a real
business profit?
This new edition of our Postal Industry
Newsletter dwells on these questions and
will analyze what the so-called postal
DNA, their core competencies or their
Unique Selling Propositions (USPs) are.
It builds upon our recent events, including
the PIP session at PostExpo in Stockholm,
our involvement at the Internet of Postal
Things Forum at the UPU and on our
cooperation with other postal industry
stakeholders in the recent months.
As usual, share with us your views and
let us have your feedback and comments
on these questions. We may publish them
in the next edition of our Postal Industry
Newsletter.

3 Limits to Diversification or How Far Shall Operators


go?
Matthias Finger

5 Reinventing the Post with Technology - and People


Derek Osborn, Whatnext4u

7 Interview with Peter Somers, Former Member of the


Management Board of bpost and Independent Strategy
Consultant
Interview conducted by Bernhard Bukovc

8 The Internet of Postal Things


Adam houck, IBM

10 Smart Cities and Opportunities for Postal Operators

Ralf Grfe, intel Labs Europe, IoT Lab Munich


Charles Sheridan, Director Intel lot Systems Research Lab
Jrgen Hairbucher, Program Manager Strategic Technology
Partnership VW Group

12 Partnerships and Strategic Control of the Postal Value


Chain
David Williams, Inspector General, U.S. Postal Service

the Postal Industry | The Postal Industry newsletter provides original analysis, information and opinions on current
issues. The editor establishes caps, headings, sub-headings, introductory abstract and inserts in articles. He also edits
the articles. Opinions are the sole responsibility of the author(s).
the Postal Innovation Platform (PIP) is a unique open platform and forum that focuses on innovative postal services
and studies the future of the postal industry with a solution oriented approach. It provides a conference, think tank
and research platform that is unique in the postal world and shall ease the implementation of new and innovative
postal business solutions.
Subscription | The subscription is free. Please do register at <http://mir.epfl.ch/newsletter> to be alerted upon
publication.

Bernhard Bukovc,
General Manager and Chairman of the
Postal Innovation Platform

Letters | We do publish letters from readers. Please include a full postal address and a reference to the article under
discussion. The letter will be published along with the name of the author and country of residence. Send your letter
(maximum 450 words) to the editor-in-chief. Letters may be edited.
Publication director | Matthias Finger

<bernhard.bukovc@epfl.ch>
http://postal-innovation.epfl.ch/

Editor in chief | Bernhard Bukovc


Co-editor | Toni Mnnist
Founding editor | Matthias Finger
Publisher | Chair MIR, Matthias Finger, director, EPFL-CDM, Building Odyssea, Station 5, CH-1015 Lausanne,
Switzerland (phone: +41.21.693.00.02; fax: +41.21.693. 00.80)
email: <postal-innovation@epfl.ch>
Website: <http://postal-innovation.epfl.ch/>
Published in Switzerland

Dossier

Limits to Diversification or How Far Shall Postal


Operators Go?
Matthias Finger*
The recent PIP session at PostExpo in Stockholm (25.9.2014) on the topic of Merging value chains: possibilities and
limits of industry collaboration highlighted, once more, the fundamental dilemma of postal operators in the age of both
declining mail volumes and fierce global competition in the parcels segment of the market. This served as an opportunity
to discuss the possibilities as well as the limits of diversification, as historical postal operators are not only extending
their value chains both up-stream and down-stream, but are furthermore trying to become part of value chains of
other firms, such as e-retailers, pharmaceutical companies and even governments. The question however remains as to
whether such forms of hyper-diversification can ultimately turn into profitable businesses or even become innovative
business models on their own.
My position, in this contribution, is, for once, rather normative, as I ask the question of the limits to diversification,
i.e., the question of what historical postal operators should
or should not do in terms of diversification. Are there
some basic principles to respect, and, if yes, which ones?
In order to answer this question, let me introduce the
terms core identity or DNA of historical postal operators, something also called, in modern business language,
Unique Selling Propositions (USPs) or core competences. I for myself would prefer the term core identity (or
elements thereof ) and this for the following reason: unlike core competencies or USPs, core identity is a rather
negative term. It means that if historical postal operators
diversify their activities beyond their core identity, they
not only lose their soul (to stay in the psychological language framework), but, more importantly, they will fail,
because the corresponding business activity is beyond the
historical postal operators abilities and capabilities.
So what are a historical postal operators core identity
elements, or, in other words, what are their limits to diversification beyond which failure is certain? 20 years of experience working with historical postal operators have led me
to identify three such core identity elements, namely (1)
intermediation, (2) the importance of keeping connected
to the physical, and (3) the last mile (or contact with the
recipients).
Postal operators have always been and will always be
intermediaries, more precisely, trusted intermediaries. In
other words, they are not service providers in the traditional business sense of the word, i.e., they are not selling prod-

ucts and services that they have developed themselves.


Rather they deliver things (including information) that
have been generated by senders to recipients. This is
what they are good at and it is this business model that
postal operators have perfected over time. I personally believe that if postal operators go out of this role, they will
simply not be good at it and probably fail. On the other
hand, intermediation, understood as mediating between
someone who wants to deliver something and someone
who wants to receive something opens up an almost
unlimited number of business opportunities, especially
in the digital age where the distance between producers
and consumers has become ever bigger. And by distance
I do not only mean the physical, but also the emotional
distance.
Postal operators have, traditionally, operated in the
physical world. As such, they have delivered tangible
things such as letters, parcels and money. The advent
of the information society, i.e., in our context, the substitution of the physical delivery of information by an
electronic delivery, has led many postal operators to think
about leaving the physical world as well. This would, in my
opinion be a fatal error. Rather than leaving the physical
world, historical postal operators have a unique opportunity to linking the electronic with the physical world. This
is an opportunity almost no other industry has. It is my
firm conviction that postal operators must build on their
physical expertise (core identity) and find unique ways to
link their physical expertise with all the possibilities that
the information and communication technologies are

* Professor Chair MIR, EPFL


the Postal Industry | Vol 2 | Issue 3 | 2014

dossier

offering today. In that sense, historical postal operators


should increasingly understand themselves as vectors of
digital-physical intermediation.
The third core identity element follows from the above
two: indeed, historically, postal operators have been the
only ones with a last mile presence. In the digital age,
any ICT company can connect directly to the recipient
(to use the postal concept which, I think, is more appropriate than the concept of consumer). But no firm or
industry is capable to also reach the recipient physically
in such a systematic and comprehensive way. It would be,
in my opinion, fatal to give up this unique possibility to
reach out physically to the recipient. In other words, the

third core identity element of the historical postal operators is their ability to reach the recipients also physically.
This last mile presence, of course, has to be modernized
and adapted to the (much more) mobile and global lifestyles of the recipients. Yet, losing the physical connection with the recipient probably leads to losing the postal
operators core identity and ultimately to failure on the
market.
I am not sure whether all three principles always need
to be respected or whether two principles are enough, but
I am sure that if posts do something that does not respect
at least one of these principles, they will inevitably fail.

the Postal Industry | Vol 2 | Issue 3 | 2014

Dossier

Reinventing the Post with Technology - and People


Derek Osborn, Whatnext4u*
Whilst editing recent books on the Future of the Post and on Reinventing the Post, I have been asking questions like:
What will secure a strong future for the postal sector in the digital age? Will it depend on innovative technologies, clever
strategic decisions, smart marketing campaigns, exciting customer solutions or inspiring top leaders? How should a
sector which is heavily rooted in the past with traditional products and services, navigate the turbulent waters of the
digital age? One of the answers is quite simple and low-tech namely, having people in the organisation with the right
attitude and mind-set.
Are digital technology solutions the route to new
business opportunities for the post?
New applications through advances in digital technology
are appearing daily and it is tempting for posts to seize these
novel and often innovative solutions and immediately try
to build a profitable business proposition around what
the technology can do. Whilst there are clearly many
opportunities, being led by technology also has some
dangers. So before getting carried away on the latest tide
of technology it is worth considering the following points.
1. Technology solutions alone may not be meeting
a real or potential need in the market. Basic needs of
businesses and consumers do not tend to change as much
as innovators and marketers might imagine. Rather
than try to meet a new, often unquantified need, a better
approach may be to consider an existing product or
service that can be enhanced i.e made quicker, easier,
cheaper by the use of technology, for example, digital
touch points such as QR codes or using a smartphone to
improve access to a service that previously took longer,
was more difficult or expensive. This is one way to design
service improvements and worthwhile to consider as a
potential business development proposition.
However, by contrast, if the new idea is purely a digital
service to address a supposed new need then this should
be no different to any new product development and
needs to be tested first to verify demand in which segment
and at what price - in the traditional way. The pace of
technology developments has sometimes meant that these
basic business disciplines have been over looked in order
to maximise speed to market.
2. The pure digital space is vast and some would
say a virtually unlimited market space across the whole
internet. But this means it is also very crowded with
numerous small, medium and large players from across
the globe competing for attention, particularly as there are
few barriers to entry and actual costs of delivering digital
solutions are often quite low. Basic economics suggest
that, in this kind of highly competitive environment, it
is hard to achieve high profit margins on digital services
alone - unless there is a very big take up and significant
market share is achieved.

However, recent experience has also shown that, with


the exception of some of the very big and well-known
companies in the digital world, success can be transient
and new apps can attract large numbers of users very
quickly but equally lose them almost as fast when the next
new idea begins to trend. The digital environment is very
volatile for business activity and there are relatively few
proven examples of business models that have delivered
durable and profitable success.
3. Digital only solutions are also vulnerable to the
obvious dangers of breakdowns in connectivity, power
outages, cyber theft, poor data integrity or security, viruses,
hardware and software incompatibility - and any number
of technical glitches so much so that any of these which
result in breakdowns in service, with no physical back up,
can have major and sometimes fatal consequences for a
business model which is built on a digital only service or
solution.
In the volatile and turbulent seascape of digital
technology it is important to bear these kinds of avoidable
business hazards in mind. Indeed, they are strong reasons
why traditional posts should think carefully before
launching headlong into the digital domain with all its
uncertainties and instead explore opportunities to build
on their current strengths, competence and capabilities in
the physical domain for which they have a proven market
with known demand to meet many and various consumer
and business needs.
A sensible approach is to exploit the impact and
power of new digital solutions to provide better, easier,
and cheaper access to many existing postal products and
services, so enhancing them for the next generation.
Building on traditional strengths but wrapping it up
in new digital clothes
Comprehensive address information, granular locational
knowledge, being a trusted intermediary, the ability to
authenticate and verify, door to door delivery ability,
security, coverage and reach, logistics expertise, presence
in all the communities and with all customers, small and
large - all represent strong positions on which to build
new service offerings and they are just some of these

* derekosborn@whatnext4u.com
the Postal Industry | Vol 2 | Issue 3 | 2014

dossier

attributes that enable the post to be the perfect anchor for


more risky and transient digital solutions on the market
most of which will come and go but are not as durable as
the physical post.
In the rush to be on the digital market, posts should not
neglect their key strengths and the opportunity for which
they are uniquely positioned which is to be the solid and
stabilising anchor, not just for themselves but for others.
Indeed, the vulnerabilities of e-mail, data security, power
sources, internet connections, technology failures and
incompatible systems make it extremely prudent to have
a tried and tested durable back up for business continuity
a strong anchor for difficult times.
There are many examples of new technologies that
have been used to help posts to reinvent themselves
and ensure that they stay relevant and ensure that their
services are improved and more easily and widely available
24/7 on-line and off-line. This should be viewed more as
expanding their reach and improving their accessibility
than essentially changing the nature or ethos of their
business.
In both direct marketing and e-commerce for example,
digital solutions are important enablers but posts still hold
the keys to vital parts of the value chain which are part
of their DNA. If posts position themselves well in these
strategic spaces, they should ensure that they continue
to have critical roles to play and a pivotal place in the
market, alongside the purely digital players.
Posts have always been in business for hundreds of
years to provide a platform that meets the connection
and logistics needs of people, supporting networks that
enable seamless flows of messaging, information, goods
and money across the globe. These flows continue to be
in great demand and, as we know with e-commerce, they
are rapidly growing, fuelled by improved accessibility of
consumers to suppliers and vice versa, in B2B, B2C and
C2C segments.
Posts have the opportunity to continue to fulfil
important roles in this space, as a network of networks,
with connecting platforms, but using digital technologies
wherever and whenever appropriate to enhance or
augment their physical services.
People liability or asset?
It is tempting for executive boards and postal leaders,
especially those mostly concerned with finance, to view
people (employees) in this traditional labour intensive
industry as a liability or a cost (to be reduced) rather

than an asset to be invested in. So, when addressing the


difficult decisions about the strategic space to occupy, it is
equally important to consider how existing strengths (in
terms of capabilities) can be effectively leveraged and how
future strategies will not be undermined by a negative
culture. This is particularly important when the post is
trying to re-position itself as modern and technologically
enabled. A big obstacle to this can be when employees do
not reflect this in reality and appear to be unreformed
and often unwilling.
Key opportunities are not so much what strategies to
adopt but how to deliver services in a customer oriented
way. This means that vital issues to address are motivation
and engagement of the workforce, their attitudes and the
culture of the organisation. The right kind of investment
in these elements will be a key enabler that will liberate
talent, energy and potential to quite simply change the
perception of the whole nature of the business both
internally and externally. The reverse is also true: lack
of investment in people means they will be disabling the
organisation and probably be more of a liability.
Motivation and engagement is about alignment to an
exciting vision which needs to be clearly articulated by
the top management this can be done by road shows
and listening exercises to really capture all their concerns
but also their ideas. This helps to roll out new thinking
around the company internally and externally. It should
be emphasised that most people are keen to be working in
a successful business and mailman, postal clerks and many
others will be energised and inspired if given the right
support and opportunities. In that case, an organisation
with so many people distributed throughout the country
and in every community can be extremely powerful. In
some ways, the brand is the employees.
Attitudes and culture can take time to change and
need to be addressed directly. In many cases they can
be improved through well-designed and appropriate
workshops and team based customer focused activity.
The aim of culture change activity, which must also be
supplemented by tangible, visible changes (eg brand,
uniform, equipment), is to engender an attitude of cando not the traditional bureaucratic cant do. This kind
of change, along with innovation workshops to leverage
ideas from all parts of the organisation, can give all
employees the important feeling that they are valued and
empowered. If this happens, then the organisation really
starts to move.

the Postal Industry | Vol 2 | Issue 3 | 2014

Dossier

Interview with Peter Somers, Former Member of the


Management Board of bpost and Independent Strategic
Consultant
Interview conducted by Bernhard Bukovc
Peter, in your former position as member of the
management board of bpost you were responsible for
the parcels and international business. Over the last
years e-Commerce opened considerable opportunities
for this business area. However, there are also
considerable challenges to overcome in the context of
cross-border activities.
This is correct. There are tremendous growth opportunities
for the global cross-border parcel business as studies reveal
that within this decade we will see a growth of about 75%.
In particular in Europe this will be important because the
e-Commerce turnover is currently the highest here in
Europe, followed by North America and the Asia-Pacific
region. However, international e-tailers want to capture
this growing cross-border e-Commerce market, but they
face various hurdles they need to overcome.
What are these hurdles?
E-tailers are faced with complicated distance sales
regulations and potentially unforeseen additional foreign
investment requirements, for instance when a local
representation is required. Then there are often complex
customs clearance procedures, different VAT rules and
regulation and even in Europe the legislation on EU level
is changing rapidly. All these elements have implications
for online buyers who might have unpleasant surprises
upon delivery due to unpaid duties and taxes. There can
be delays due to long customs clearance procedures and
sometimes also fear of fraud, which could refrain buyers
from testing new products.
What role can posts play to overcome those hurdles?
Posts are ideally positioned to provide the necessary
solutions. Posts need to offer an integrated E2E service

the Postal Industry | Vol 2 | Issue 3 | 2014

offering along the e-Commerce value chain, including


fulfillment, transport & customs services, and of course
the delivery of the goods with the flexibility to choose track
and trace, choice of delivery options and the handling of
returns. Most of these services can be offered by the post
itself, which means that the post should own the key parts
of the value chain in order to control the process and
value. For the remaining parts a subcontractor or broker
should be used, for example air transport.
Why are the posts so ideally positioned or in other
words, what are the key assets of posts?
In general, posts are already the leading logistics and postal
service provider in their respective home country. They
usually have solid financial backbones, an established
know-how and expertise in handling parcels and packets
as well as in B2C operations, customs handling, sorting
and fulfillment solutions. Moreover, they have access to
the international postal network and rates. Some posts
also have access to fully owned non-postal European
parcel distribution networks. This makes posts very strong
in the cross-border parcel business if they make use of
their skills and assets.
What strategic approach would you suggest posts to
take?
Postal operators should focus on intra- and intercontinental
cross border B2C parcel logistics with two main objectives.
First they should fill their home network with packets and
parcels and second, they should grow a profitable B2C
cross border packet and parcel business thus avoiding
that these volumes are taken over by the integrators. The
success factors for the deployment of this B2C cross border
parcel strategy are a clear roadmap, the right products,
a local presence, an experienced team and the right ICT
solutions.

Dossier

The Internet of Postal Things


Adam Houck, IBM*
The Internet of Things (IoT) refers to the explosion in the number of instrumented, interconnectable physical objects
and the potential of the associated data to reveal a richer picture of a physical system. The IoT is gaining currency
due to recent advances in sensor and mobile communication technologies, combined with falling price of sensors and
actuators. In reality, IoT is a concept that has existed for the better part of 20 years under other titles such as Machineto-Machine (M2M) communications, yet recent forces and trends have pushed IoT to the forefront of discussion within
myriad industries that possess large numbers of physical assets.
At this point, IoT occupies a promisingand potentially
perilousposition on the technology hype curve. With
regard to the promise, especially for the public at large,
current IoT research and initiatives confirm deeply held
beliefs about the significant benefits that neighborhoods,
cities, states, and countries can realize as a result of
becoming more instrumented, interconnected, and
intelligent. With regard to peril, it has become clear that
the full potential of the technology will only be realized
through identifying the right use cases and selecting the
right avenues for cost-effective implementation.
We believe that postal operators can offer the unique
value proposition required to propagate the adoption of
neighborhood-level IoT devices and provide the basis
for the associated data collection and distribution. For a
decade, posts have been facing mortal challenges resulting
from the erosion of physical letter volumes. They have
been searching for ways to redefine their value and role in
society and leverage their network of ubiquitous, mostly
mobile, physical assetsa network that no other industry
or organization can reproduce. This network includes
physical buildings, mailboxes, postal vehicles, even the
postman herself, and can be used to the posts advantage,
especially in an IoT world.
Equipping postal infrastructures with IoT technologies
to create an Internet of Postal Things (IoPT) would create
an ecosystem of sensor and communication assetsboth
stationary and mobilethat would exist in and / or travel
through neighborhoods as many as six days per week. On
one hand, this ecosystem would help postal operators
transform existing business models in delivery and retail;
on the other hand, it could also provide a platform for
collecting and communicating data to benefit city, state,
and national governments and increase citizen safety and
value.
A recent Universal Postal Union (UPU) conference
on IoPT revealed that postal operators and technology
thought leaders across the globe are arriving at similar
conclusions the overall potential for IoT to transform
the postal industry is significant and extends beyond
innovative parcel delivery models. Dr. Jose Anson best
illustrated this point in his comments on the importance of
network centrality within the IoPT ecosystem. Posts must

seek to position themselves as the hub of the ecosystem


not the spoke thereby becoming more essential to every
citizen. Becoming more essential can imply a change
in brand image for the post and, as discussed by Elmar
Toime, there is a significant implication of posts pursuing
such IoPT applications. By acquiring new technologies
and redefining its role in society, the post is signaling
to citizens that it is actively participating in the future,
critical to shaping the posts value proposition to citizens
for years to come.
This new ecosystem would include core postal
operations and non-traditional offerings such as a fully
instrumented and interconnected supply that would equip
posts with the data required to move up the analytical
evolution curve towards predictive and prescriptive
analytics. It would also include real-time event-driven
operational corrections based on fully integrated, open
data as well as a connected mailbox that delivers greater
certainty and value for both senders and recipients.
Further, it could include the post creating a mobile
information platform other agencies, ministries, and
private firms could utilize to increase citizen safety and
value in society. Mobile air quality data collection, video
analytics helping cities manage traffic flows, analyzing the
changing flows of vehicles and goods to better plan needed
infrastructure, and aiding emergency organizations on
more granular disaster planning in the event of natural
disasters are just a few areas where IoPT can contribute to
citizens, cities, and governments. Currently, the potential
benefits and impacts are only limited by the extent of ones
imagination.
There will be significant challenges, many of which
were considered during the November UPU IoPT
conference. Identifying the most promising business
models will require experimentation which might
involve changing the DNA of some posts. Serving as
information brokers for other agencies and for cities is
neither a traditional nor a comfortable business model for
traditional posts. Many posts likely do not possess the
required technical capabilities in-house and must seek to
partner with technology firms and others to address the
challenges of scale, data capture, analytics, and privacy.
Indeed, the importance of partnering in the larger IoPT

* Senior Managing Consultant, IBM Strategy Analytics


the Postal Industry | Vol 2 | Issue 3 | 2014

dossier

endeavor cannot be underestimated. Success will require


leadership, a clear vision, and an entrepreneurial spirit to
assume the risk of experimenting with these technologies
and business models. Customer adoption remains the key
challenge in propagating IoT applications into additional

the Postal Industry | Vol 2 | Issue 3 | 2014

areas of citizen lives; might an IoT-connected mailbox or


other postal-related citizen service be the gateway drug
that paves the way for the proliferation of additional
IoT products and services across multiple sectors and
industries?

Dossier

Smart Cities and Opportunities for Postal Operators


Ralf Grfe*, Charles Sheridan** and Jrgen Hairbucher***
Why do cities have to become smart? Why do we see the development of Mega cities? Trying to assess these questions
we can ask ourselves why we want to live in a city. It is not difficult to come up with a list of advantages. First there are the
job and business opportunities. Jobs or customers can easier be found in large cities. Hospitals and a variety of medical
specialists are concentrated in large cities, too not to forget the abundant offerings for education and entertainment.
Since cities existed they held promises like these and
therefore were ever attracting more people resulting in
a shift from rural areas into cities. But only recently an
important shift happened. Since 2007 more people live in
cities than in the country side. In 2030 world population
is expected to exceed 8 Billion with 60% living in mega
cities.
But with this rapid growth it becomes more and more
difficult for cities to keep their promises to the citizens.
Traffic is for instance one of the major challenges. Shanghai
today has already 2 million locally registered cars1. 700,000
of them need public parking lots but only 390,000 are
available2. On top of that 40,000 taxis 300,000 mopeds
and 5.7 million bicycles compete for room on the streets.
In summary cities need to manage growing complexity
in a number of areas like transport and logistics, building
management, energy systems, environmental monitoring,
citizens and community interaction, healthcare or water
and waste management, safety and security.
To cope with these many challenges cities try to
become smarter. What we see in most of these areas is
that the existing management systems often require a high
manual effort they are island solutions or there is simply
not enough reliable data to make optimal decisions.
What we envision is a city that functions as an organism
similar to the human body with sensory organs, a nervous
system, a central brain, manipulators that can take action
and means for interaction. The nervous system is currently
best developed in form of fixed and mobile networks and
well established Internet protocols. Control mechanisms
are also there in many cases but often disconnected from
each other and lacking a central intelligence to reach
maximum efficiency. So what is mostly missing is detailed
real time data in high quality, a central intelligence to
make sense of it and well defined APIs to share and reuse
the data. The main task of the central intelligence will be
to correlate different data sources and react on or even
predict important events and creates the correct actions.
This in fact means we are talking about an IoT (Internet
of Things) architecture for cities.

The city platforms of the future need to accept that


data may be inaccurate due to lack of precision, or loss
of calibration, and build systems that understand this
and either overcome this problem or at least recognizes it
exists and acts accordingly. Future platforms will require
moving beyond existing central mission control systems
to a more adaptive highly distributed environment that
intelligently directs data from a variety of fixed, mobile
and participatory sources, in the format required by each
of the interested parties (utility managers, emergency
services, road network maintenance). It will need to do so
with a metric that indicates its trustworthiness so that the
destination services know how to treat the data.
In order to afford such a large scale system and achieve
maximum interoperability we envision for each of these
data sources a reusable middle layer for security, device
management, analytics tools and databases as well as
service creation software and API management. This will
hopefully take 60 70 % off each new Smart City / IoT
implementation.
But important questions remain. What are the business
models and who starts building the infrastructure.
To answer this lets first look at the core component of
a Smart Cities architecture the central intelligence.
Will this central intelligence be a monolithic brain? The
authors belief we will see more of a modular approach
where the individual modules share information through
well-defined APIs and can be dynamically combined into
virtual applications. What could such an API look like?
Probably very similar to online shops where data sets are
offered for free or at a certain price depending on intended
usage, data quality or granularity, frequency of use or
others. It will be very important that these data sources
are openly available and functioning reliably. This will fuel
wide spread use of these data sources and innovative new
combinations of several such source into new applications,
not only by the originally envisioned users like certain city
authorities but by a large community of commercial and
private developers. Examples of these types of APIs exist
today like http://openweathermap.org where weather data

* Program Manager, Intel Labs Europe, Manager IoT Lab Munich


** Director Intel lot Systems Research Lab
*** Program Manager Strategic Technology Partnership VW Group
1 http://www.shanghai.gov.cn/shanghai/node27118/node27818/u22ai66213.html
2 http://www.shanghai.gov.cn/shanghai/node27118/node27818/u22ai69063.htmlu22ai66213.html
3 See http://developer.ean.com/
the Postal Industry | Vol 2 | Issue 3 | 2014

10

dossier

is offered for free or at a certain price depending on the


number of calls per minute and the update frequency of
the data. Another example is the Expedia Affiliate network
where partners in the travel business can reuse Expedias
travel related data3.
Following this modular approach further we can imagine
multiple layers of data sources where the offered data is
in different stages of enrichment. The lowest level could
consist of raw sensor data reads. Selling these through a
brokerage system or an online shop should cover the
cost for providing the necessary infrastructure to collect
the data in the first place. At the next level different data
sources could be correlated to create consolidations or
even forecasts while the final level combines everything
into end user applications. These are just examples and
the number of levels and their functions can be different.
In such a scenario the Smart City would be only one of
many users of these data sources but of course if the data
is security sensitive or privacy related the access would
not be public. These security features would be part of a
professional service creation and API management system.
Postal companies are in an excellent position to
provide data to contribute real time city telemetry data
on a regular basis in high quality and in turn benefit from
applications that use and enrich that data to build new
applications.
Possible use cases are collecting data on traffic
conditions, weather and air quality using postal vehicle
fleet that repeatedly drive along the same routes. Potential
new business models where postal data is sold or brokered
to city managers and / or 3rd party data service providers.
The same could be done using postal buildings and offices.
Furthermore damages or hazards could be reported to city
authorities or the general public. Since postal companies
usually operate in several countries this could provide
valuable input in developing a reusable Smart Cities
middle layer that is not limited to one or a small number
of cities. Postal operators might even decide to provide
such a middle layer as a service to the cities.
Benefits would include being able to use data to
optimize own processes, become a trusted partner for
cities and government thus extending the traditional
services, being able to market part of the data and in turn
benefitting from applications that 3rd parties created with
this data. In order to stimulate the modular approach

described earlier in this article we encourage making all


data available openly through APIs.
Intel is a potential partner for these types of projects.
It will deploy a wide scale IoT demonstration platform
in Dublin to enable environmental monitoring detecting
important city parameters such as air quality and microclimate conditions. Under the co-innovation project,
Intel will adapt its technology, and work with Dublin
City Council to come up with new and innovative ways
of engaging citizens. The project will also involve the
management of data to support decision making and the
development of a community of co-innovators drawn
from national and local stakeholders.
Intel4 and The City of San Jose, CA are collaborating
on a public-private partnership project which implements
Intels IoT Smart City Demonstration Platform to
further the Citys Green Vision initiative5. The project,
titled Smart Cities USA, will help San Jose drive
economic growth, foster 25,000 CleanTech jobs, create
environmental sustainability and enhance the quality of
life for its citizens.
By installing a network of Air Quality, Sound &
MicroClimate Sensors, Intel and San Jose are creating
a sustainability lens for the City. The sustainability
lens uses IoT technology to measure characteristics
such as particulates in the air, noise pollution, and traffic
flow. City Management will use this information to
drive improvements in air quality, noise, transportation
efficiency, environmental sustainability, health, and
energy efficiency. The Smart Cities USA public-private
partnership, as part of the Smart America Challenge, will
demonstrate how cities can use IoT to measure and act on
critical data to improve life for its citizens.
At London-based Intel Cities Research institute6,
Intel principal investigators (PIs) are collaborating with
world class researchers from University College London
and Imperial College London. Using a quadruple helix
innovation approach involving Government, Industry,
Academia and city dwellers we hope to catalyze and
drive a new vision for sustainable cities. Our approach
is interdisciplinary, combining methodologies from
computer science, engineering, the social sciences,
interaction design, architecture, and design science
to collectively research and improve cities in terms of
resource efficiency, new services and ease of living.

4 http://www.intel.com/content/www/us/en/intelligent-systems/iot/internet-of-things-starts-with-intelligence-inside.html
5 http://www.sanjoseca.gov/Index.aspx?NID=1417
6 http://www.cities.io/

the Postal Industry | Vol 2 | Issue 3 | 2014

11

Dossier

Partnerships and Strategic Control of the Postal Value


Chain
David Williams*
Digital e-commerce platforms and other new technologies are bringing powerful changes to the postal value chain.
Integrated end-to-end solutions are becoming increasingly important, and the individual segments of the value chain
and their traditional owners are under intense pressure. As Matthias Finger described in the last issue of this newsletter,
platform providers that control the information flows between buyers and sellers are already capturing much of the value
from e-commerce transactions. The critical physical functions of transportation and delivery are at risk of turning into
mere commodities. Now, platforms such as Amazon are extending their business into logistics, even last mile delivery.
The battles resulting from coming value chain conflicts
will create new opportunities for partnerships, as players
seek help to assert strategic control over the value chain.
Partnerships, as a kind of specialized alliance, are a very
effective tool in these conflicts. Partnerships can help
players fill vacuums, enter new business areas, or defend
their territory from other entrants. They provide obvious,
rapid solutions to fix new problems and seize perishable
opportunities all along the value chain.
Where Are the Partnership Opportunities?
The value chain for e-commerce is surprisingly long with
many areas for opportunity and partnerships:
Product invention, adoption, or innovation
Design and testing,
Production,
Packaging,
Warehousing and staging,
Marketing and sales,
Transaction (identification of customer and seller,
the agreement, and the exchange of currency for
purchased item),
Entry of item into delivery stream,
Notification to recipient of shipment,
Sortation,
Transportation,
Delivery to recipient,
Recipient acceptance or return, and
Return to sender, repackaging, or destruction.
How can players in the postal value chain decide which
areas are right for partnership? The first step is to
deconstruct any area of the business into its component
parts, assuring that each piece is in its lean, optimal state
and then querying each link. Should this component be
built or can you buy it off the shelf? Can you contract for
it rather than own assets at all? Can you somehow even
control it without getting further involved? The answers to

these questions will determine whether posts will benefit


from a partner and which partner is best suited.
Postal services have several models for the division of labor:
Keep mission areas and give away support activities.
Keep incremental improvements to ongoing
operations, but partner to achieve transformational
change.
Use partnerships to enter, defend, or move along
other parts of the supply chain.
Keep strategic control, but outsource tactical efforts
into adjacent value chain links.
Outsource labor intensive, low profit elements, and
keep the best, if you can find a partner.
Divide the work according to who is best qualified
to conduct that component of the operation most
efficiently and at the lowest cost.
Keep traditional mail and logistics, and give digital
services or the Internet of Things to a specialized
partner.
In making these decisions postal operators should ask
themselves if the task is familiar or foreign and how the
partnership changes their relationship with their partner.
Is the partner already a business client or customer?
Perhaps the partnership simply institutionalizes that
relationship. In some cases, it may be easier to partner
with a government, leveraging existing links and a
common culture.
Working with Partners
There are many potential partnership structures: a
full partnership agreement, franchises, joint ventures,
and discounts or other incentives to perform the
desired task, creating a de facto partnership with
fewer entanglements. And there are a range of less
traditional partnership opportunities that may make

* Inspector General, U.S. Postal Service. The views expressed are those of the author alone.
the Postal Industry | Vol 2 | Issue 3 | 2014

12

dossier

it easier to enter digital markets such as incubators to


foster innovation and hackathons and other vehicles
that allow experts to build solutions using postal data.
Choosing between these options depends on the task to
be shared, the partner, and the posts own goals.
All forms of partnerships have advantages and
drawbacks, and partnership in general is not always
easy. Partnerships are powerful, but they are also very
difficult to operate, and in some cases posts are new
to them. Partnerships can be indecisive and ineffective.
There is a famous quote that has been attributed to
General Foch, I was always so impressed with how
Napoleon was able to defeat the combined strength of
allied nations, until I became part of such an alliance.
Partnerships can also feature very lopsided profit and risk
propositions. Remember the classic advice to gamblers,
since partnerships certainly are a gamble. Whenever you
sit down to play poker, always look around the table to
find the sucker. If you cant find him, leave immediately.
Experienced users of partnerships keep a keen eye on
limiting the downside risk.

the Postal Industry | Vol 2 | Issue 3 | 2014

Postal DNA
Finally, when partnering, posts should carefully
examine the business areas they want to retain for their
own. What is the essential postal DNA? Are parts of
the value chain important to preserve, or should posts
dispassionately look at each component as a commodity?
These key questions require careful consideration so
posts can determine which partnerships best preserve
their control over the vital customer relationship, assure
their reputation, and ensure the universal obligation is
left intact. They are largely unanswered today, and that
knowledge gap will haunt all of the players in this value
chain as we enter the world of strategic partnerships.
Public-private partnerships can be very attractive for
posts just recovering from the economic downturn.
Where challenges are novel, a partnership is very
appealing. We just have to remember that the people
across the table from us may be very experienced. Our
maddening task is to keep up with a rapidly changing
environment; partnerships, if executed carefully, are
one way to meet that goal.

13

M a r k t h e d at e s

Mark the dates

PostalVision 2020 will convene for the fifth time on

March 10-11, 2015 at The Ritz Carlton,


Pentagon City, Washington, D.C.
to consider how the forces of Customers, Connections and
Collaboration are driving radical transformation and constructive reinvention of a dynamic and sustainable global postal ecosystem.
The PostalVision 2020 Initiative is the thought-leading conference platform, where the American Postal
Ecosystem of the Future is being discussed and re-invented. Since 2011, PostalVision 2020 has been engaging stakeholders in critical discussions about what future generations should have in the way of Postal
Services in America and is expanding the conversation in 2015 into the global postal-parcel-logistics ecosystem with PIP.
Fulfilling its mission to serve as an independent transformative cause that inspires imaginative thinking,
stimulates provocative conversation and influences the reinvention of American Postal Services in 2020
and be-yond PostalVision 2020 has become the leading postal visioning conference in North America.
PIP is proud to partner with PostalVison 2020 in 2015 for the first time and together we will strive to engage
the postal world in thought inspiring discussions on innovation and the future of the postal industry.
Find more information on PostalVision 2020 and register before Nov.30, 2014 for a US$300 discount
on the full conference rate of US$1495 at http://postalvision2020.com/

Mark the date of our


Postal Innovation Platform (PIP)
Conference 2015
10 - 11 September 2015
Geneva, Switzerland
You will receive more details
on content, focus, speakers and practical details very soon

the Postal Industry Regulation | Vol 2 | Issue 3 | 2014