Missed the boat.
The landscape of history is strewn with the detritus of bad decisions.
There was the Trojan War, Chamberlain’s appeasement, the Bay of Pigs, Ford’s Edsel, France’s Maginot Line, and Kodak’s denial that digital photography would replace film.
Even more unimaginably, in July 1962 Decca Records rejected the Beatles in favor of Brian Poole and the Tremeloes.
Passing through history, we step over the rubble of bad decisions. That’s routine. But once in a while we find a massive boulder, not of a bad decision, but (worse) of a non-decision that should have been made, that a first-year business student could have made. This is the story of one of those non-decisions, one of the greatest of all business non-decisions ever (not) made, if not the greatest.
Who are we, really?
On July 26, 1775, the Second Continental Congress established the United States’ postal system. Benjamin Franklin, the original American, was its first postmaster general. For the next 200 years or so, “neither snow nor rain nor heat nor gloom of night [stayed] these couriers from the swift completion of their appointed rounds.” That pledge remained a certainty, basically for one reason: the post office had no competitors to speak of, or at least, ones they could see. They saw no reason to examine their business; they just kept doing it. And they still do, despite the attempt by the previous administration to dismantle it.
The 1970 Postal Reorganization Act transformed the Post Office Department into the United States Postal Service, an independent agency. The problem was (although it wasn’t perceived as a problem then) that the government provided robust subsidies, making the USPS a quasi-public, quasi-private organization, and making it less clear how to run it. Profit? Or surplus? Big difference.
What business are we in?
The lurking danger was not from traditional mail carriers; it was from email! And then from newer electronic messaging modes. But who in 1970 could imagine that? Who could imagine that in 2020 there would be four billion users sending 306 billion emails a day (and counting)? Who could see cell phones coming, with 75% of all smart phone users sending an average of 42 texts per day? Who could have imagined two billion WhatsApp users by 2019, growing by half a billion every two years? Who could have imagined 65 billion WhatsApp messages daily? Really, who could have imagined?
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Queen Elizabeth for one, that’s who.
Throughout history there were precursors to email. The telegraph, the first time in history a message could be sent without having to physically deliver it, was the first telecommunications breakthrough. Telex, years later, was big. The first example of an email-type message in 1965 is on a computer at MIT. In 1969, an email was sent on the ARPANET system.
Then, in 1971, American computer programmer Ray Tomlinson sent the first email using the “@” symbol on ARPANET: a test to see if two computers could exchange messages. Success! Email was born – and the newly-reorganized USPS should have seen the opportunity, not to mention the threat. If ever there were a time for a SWOT analysis, that was it. Someone should have said, “We’re in the mail business and this is what mail will look like.” That would have been a breakaway slam dunk, but would have taken the kind of thinking done by a profit driven, market focused company, not the kind of provincial thinking of a quasi-government agency.
On March 26, 1976, Queen Elizabeth II, using the ARPANET, became the first head of state to use email for official purposes; Jimmy Carter’s presidential campaign used email later that year; and Bill Clinton became the first US president to use email in office, responding in 1994 to an email from Sweden’s prime minister.
Where was the USPS? Nowhere. At the same time, a parade of companies that saw things differently – Lycos, Netscape, CompuServe, AOL, MSN, Yahoo, Juno, Prodigy, Earthlink – got into the business. Many are gone, but that’s business. At least they were competing for the future.
Why the billions in losses?
The last USPS surplus was in 2006. Since then, losses have totaled $78B. These past 14 years of bleeding can be easily explained, and it’s not because the USPS is obligated to set aside nearly $6B annually for retirement benefits; many large companies do that.
No, it’s because the incalculable revenues that could have been theirs for the taking in the early years of email and during the subsequent advances in messaging, not to mention Tim Berners-Lee’s new world wide web, which would have more than covered those costs, were never remotely considered as a growth opportunity, let alone a new business model.
But what if the post office did make the decision to get into email 50 years ago?