Wednesday, December 7, 2011

An Unsuccessful Execution of Strategy-USPS

Though my group and I will be doing a more elaborate presentation of the United States Postal Services' strategic direction and position in the coming week, I thought I would use this post to comment on one specific fatal flaw in the setup of the organization itself. This week's readings gave us reason to consider the merits of decentralization by letting managers make operational decisions in organizations (most clearly stated in the Neilson, Martin, and Powers article "The Secrets to Successful Strategy Execution"). It is clear that those in charge of the postal service are not following successful strategic practices due to its stranglehold on the most important operational decision making.

The USPS is a very unique organization in that it acts and tries to operate as a ordinary business but is mostly regulated as a independent agency of the United States government. Its postmaster-general is confined to mostly making recommendations to the U.S. Congress in order to change its structure and operations. USPS' strategic fate lies in the hands of our elected officials. The one problem with this setup is that politicians are driven by elections and the livelihoods of their citizens. If something happens that would harm that livelihood, they would not only hear about it but perhaps lose their job as well.

In this sense, I would argue that the American people are the pseudo-shareholders, board members, and corporate executives of the USPS. The problem is that we are not performing well at our jobs. The postal service is headed towards a state of great insolvency and due to our demands that our politicians not do anything to lose jobs, we may lose one of America's most historic institutions---an organization with a longer history than the Constitution! In our desperate attempt during these rough times to save ourselves, we might just make our entire country worse off by making the post office unable to function any longer.

USPS' issues are well documented and it comes during a time when the world is changing too rapidly for them to keep up with the situation it currently finds itself in. I would suggest that Congress needs to take time to read some of the same articles this class has been able to study in order to find the benefits of decentralization and the perils of not being able to let go. The USPS needs to be able to function like a business just as their major competitors (FedEx, UPS, and DHL) are able to do. This means that politics should be taken out of the equation and the business will need to do its job to get out the rut. This will of course involve tough choices like closing some post offices and laying off workers. In order to save the greater institution that still holds an important place in our society, however, sacrifices will need to be made; sacrifices that elected officials would not be able to make under the pressures they find themselves in.

I hope that the preceding text would not be misinterpreted as though I am saying the USPS should become a separate firm completely out of control of Congress altogether. Instead, what I am alluding to is Neilson, Martin, and Powers' idea of clarifying decision rights and encouraging higher-level managers to delegate operational decisions. In this case, Congress should give any power it needs to to the postal service and its chief in order to bring USPS out of insolvency and make it a competing firm in the future

Sources:

Neilson, G., Martin, K., & Powers, E., "The Secrets to Successful Strategy Execution", Harvard Business Review (June 2008).

Greenhouse, Steven, "Postal Chief Seeks Ability to Cut Costs to Stem Loss", The New York Times, (November 21, 2011), http://www.nytimes.com/2011/11/22/business/postal-chief-seeks-ability-to-cut-costs-to-stem-losses.html?ref=postalservice

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