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Strategic Planning within the USPS
ASP Annual Conference
“Strategy is Global: Global Challenges, Global Solutions”
May 2015
Keith Ross Butler
Strategic Initiatives Program Manager
USPS Office of Strategic Planning
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Introduction
The United States Postal Service has a strong and seasoned strategic planning and
execution process, which has a long history within the organization.
 This session will focus on the USPS strategic planning process, challenges facing the
organization, and trends that highlight the future of the USPS.
 Participants will learn about the following:
A. Key elements of USPS strategic planning
B. Legislative mandates and long-term liabilities affecting the organization
C. Portfolio management and strategic initiatives
D. Emerging trends facing the USPS
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Key Elements of USPS Strategic
Planning
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Mission & Vision
Mission:
The mission of the Postal Service is to provide a
reliable, efficient, trusted and affordable universal
delivery service* that connects people and helps
businesses grow.
Vision:
The Postal Service is dedicated to improving its
services, products and capabilities to adapt to the
changing needs of customers in the digital age.
*While not explicitly defined, the Universal Service Obligation (USO) is broadly outlined in statute to include: geographic scope, range of
products, access to services and facilities, delivery frequency, affordable and uniform pricing, service quality, and mail security.
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Strategy Defined
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Strategic Choices
Strategy is about making choices to best meet our
customer’s current and future needs…
Source: Playing to Win: How Strategy Really Works, A.G. Lafley & Roger
Martin, HBR Press, 2013
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Office of Strategic Planning
Purpose: Operate a world-class enterprise strategy office that enables USPS leadership to
achieve business outcomes. We accomplish this by providing key insights and analysis,
coordinating the implementation of the highest priority strategic initiatives, and maintaining the
confidence of key stakeholders in postal strategies.
Primary Functions and Services
Organizational Structure
Chief Financial Officer
Joe Corbett
Office of Strategic Planning
Emil Dzuray, Director
Strategic Management
Office
J O Smith, Manager
Strategic Business
Planning Office
Preston Finley, Manager
Strategic Insights &
Analysis
Strategic Portfolio
Management
 Executive strategy, planning
Support initiative teams with:
& ideation workshops
 Planning and Chartering
 Roadmap Development and
 Executive Business Insights
forums


14 in-house staff members comprised of Strategic
Project Managers, Strategic Planning Specialists and
Strategic Program Managers
Manage Enterprise Project Management Office
which employs 60-100 contractors who support
corporate Project Management Offices (PMOs) for
strategic initiatives
 Insight & analysis
whitepapers
 Corporate insights
management system
Program Planning
 Risk Assessment
 DRIVE Status Reporting
 Stakeholder Engagement
Corporate Strategy &
Performance
Reporting
 Five Year Strategic
Plan
 Annual Report to
Congress
 Comprehensive
Statement of Operations
 Annual Performance
Plan
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Focus Areas
• Strengthen our Business-to-Consumer Channel
Four
Key
Strategies
(2012-15)
by keeping USPS
costs low and
service
levels
high for mail senders
and
promoting high quality experiences for receivers.
• Improve our Customer’s Experience
at all touch points in ways that matter most to customers – both
senders and receivers -- and in person and online.
• Compete for the Package Business
by building a world class package platform that offers affordable,
simple, fast, visible and secure package delivery services.
• Become a Leaner, Faster, and Smarter Organization
by removing excess capacity, improving efficiencies, achieving 100%
customer, product and employee visibility, building competitive
workforce, and strengthen financial liquidity and risk management
The four focus areas align all strategic initiatives with ƒcorporate and unit performance goals (NPA), as well as staff pay for performance
goals (PES).
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Strategic Capabilities
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4 Innovation Platforms Key to Future Success
First Mile



Physical Network
Boost the demand for mail
and packages

Expand and simplify
induction points

Integrate emerging digital,
big data, and consumer
trends to grow

Last Mile
Leverage market-leading
physical assets

Expand delivery solutions

Capitalize on the
expansion of
E-commerce and
technology
Incorporate evolving
logistics solutions
Develop a structure that
fosters agility and
innovation
Digital

Leverage USPS’s brand,
trust, and reputation to
drive profit

Provide digitally-enabled
security, authentication,
tools, and insights to a
broad range of customers
Optimize route flexibility
and productivity

Enterprise
Cross-functional enablers that strengthen the Platforms
People
Technology
Operations
Marketing
Finance
Legal
Communications
Foundation
Requirements for growth and innovation
Brand
World-Class
Customer Experience
Culture of Delivery
World-Class
Reliability and Visibility
Security
Simplicity
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Legislative Mandates &
Long-Term Liabilities
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PAEA
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• In 2003, the President’s Commission on the Postal Service made
several recommendations in their published report.
• In 2006, legislation was proposed within Congress which was later
passed as the Postal Accountability and Enhancement Act (PAEA).
• This law separated USPS products into two categories:
– Market Dominant (ex: First Class Mail, Standard Mail, Periodicals)
– Market Competitive (ex: Priority Mail, Express Mail)
• The law also required the USPS to pre-fund retiree health benefits.
This prefunding required the service to pay $75Billion from 2007 to
2017.
• The financial impacts of PAEA and the 2008 economic recession
severely damaged the financial viability of the USPS and its business
model.
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Long-Term Liabilities
The USPS has made major strides to improve its finances. However, legislative and
regulatory action is needed to address outstanding financial difficulties.
$56.7B or
roughly 80% of
total liabilities
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Portfolio Management &
Strategic Initiatives
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Portfolio Management
DRIVE Portfolio Governance Structure
SMO track/report portfolio
status/issues/portfolio risks
to ELT using
standard tool/process
Standard Processes
ILs track/report program
status/issues/initiative
risks to SMO/ELT using
standard tool/process
Project Managers
track/report task
status/project risks using
Detailed Project
Management Plans
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Portfolio Reporting
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SMO produces 4 standardized reports:
Report name
Information reported
Portfolio Summary
Dashboard
•
•
•
•
Portfolio
Performance Chart
• Portfolio KPI performance variance
• Financial and non-financial impacts
• Actuals v. plan-to-date and v. plan
Initiative &
Roadmap
Performance
Dashboards
Initiative
Roadmaps
•
•
•
•
•
Screenshot
Initiative milestone variance
Initiative impact variance
Initiative risk status
Initiative update status
Key milestone variance
KPI status and variance
Risks status
Key issue and corrective action status
Status of interdependencies
• All milestones and KPIs status and target dates
and performance
• Log of risks, issues, comments and corrective
actions
• List of cross portfolio interdependencies
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The Financial Crisis
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As a result of growing challenges to its business model, the USPS faced four years
of dramatic financial decline.
Major Challenges to the USPS
RHB
prefunding
mandate
Steadily
declining
mail volume
Economic
recession
Rising
labor costs
Large fixed
cost base
USPS Financial Situation: FY2007- FY2011
($) Billions
$76
$74
2008
economic
recession
$72
Without fundamental change, cumulative
losses were projected to reach $238 billion
by the end of FY2020.**
$70
So how did the USPS turn things around?
$68
$66
Revenue
Controllable Cost*
$64
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Fiscal Year End
*Before RHB pre-funding and non-cash adjustments to workers’ compensation liabilities
**As stated in the 2010 USPS Action Plan
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Emergency Initiatives
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USPS management realized that legislative reform would require time, and took
decisive action to ensure the organization’s solvency.
Key Management Decisions
Sought
legislative &
regulatory
relief
Prioritized
payments vs.
capital spending
Restructured
Headquarters
Generated
revenue from
sales & Last
Mile services
Created
strategic
management
framework
USPS Financial Situation: FY2007- FY2011
($) Billions
$76
$74
$72
$70
$68
$66
Revenue
Controllable Cost*
$64
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Fiscal Year End
*Before RHB pre-funding and non-cash adjustments to workers’ compensation liabilities
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Cost Reduction Initiatives
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To address shrinking volume, the USPS created efficiencies by rationalizing the
network and improving the use of data to inform management decisions.
Key Management Decisions
Consolidated 143
Mail Processing
Facilities
Adjusted hours for
9,700+ Post Offices
via POStPlan
Renegotiated
agreements with
Unions & suppliers
Introduced
Intelligent Mail
Barcode
USPS Financial Situation: FY2012- Present
($) Billions
$76
FY2015 Q1
$74
$72
$70
$68
$66
Revenue
Controllable Cost*
$64
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Fiscal Year End
*Before RHB pre-funding and non-cash adjustments to workers’ compensation liabilities
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Innovation Platforms
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While the USPS cut costs, management also focused on growing the package
business and engaging customers in innovative ways.
Key Management Decisions
Improved customer
interactions outside
retail locations
(e.g., online/mobile)
Enhanced
product visibility
and scanning
Piloted
innovative
products &
services
Enhanced Every
Door Direct Mail
(EDDM) product
USPS Financial Situation: FY2012- Present
($) Billions
$76
FY2015 Q1
$74
$72
$70
$68
$66
Revenue
Controllable Cost*
$64
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Fiscal Year End
*Before RHB pre-funding and non-cash adjustments to workers’ compensation liabilities
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Impact of Decisions
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Key management decisions have stabilized the USPS and created confidence in the
organization’s future.
Key Accomplishments
Returned to a
controllable
income profit
Regained
revenue growth
in FY2013
Expanded
innovative
products and
partnerships
Reduced
network and
labor costs
Grew package
market share
USPS Financial Situation: FY2007- Present
($) Billions
$76
FY2015 Q1
$74
$72
$70
$68
$66
Revenue
Controllable Cost*
$64
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Fiscal Year End
*Before RHB pre-funding and non-cash adjustments to workers’ compensation liabilities
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Sustainable Future
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Building on these achievements, the USPS is committed to remaining the world’s
premier mail and package delivery business.
USPS Future Priorities
Support product
growth through
network efficiencies
Engage and empower
employees
Invest in the future
Speed the pace
of innovation
USPS Financial Situation & 5 Year Outlook
($) Billions
How do we achieve
financial stability?
$76
FY2015 Q1
$74
$72
$70
$68
$66
Revenue
**Projected
financials
Controllable Cost*
$64
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Fiscal Year End
*Before RHB pre-funding and non-cash adjustments to workers’ compensation liabilities
**Projections based on 2013 USPS Five Year Plan
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Emerging Trends Facing the USPS
WE ASSESSED 23 EMERGING TRENDS IN THREE MAJOR
CATEGORIES…
…LET’S EXPLORE THEM
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“A good hockey player plays where the
puck is. A great hockey player plays
where the puck is going to be.”
- Wayne Gretzky
OSP endeavors to figure out where the Postal Service’s
‘puck’ will be in the future
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Social Trends
Social trends capture the patterns of human interaction,
movement, and preference
Technology Trends
Technology trends include the application of scientific knowledge
and engineering in the digital age
Industry Trends
Industry trends are new developments shaping how businesses
are organized and how transactions take place
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8 Social Trends
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8 Technology Trends
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7 Industry Trends
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Scenario Planning
What strategies will position the USPS to thrive in
any Future Scenario?
Capability 1
Capability 2
Capability n
Capability 1
Capability 2
Capability n
Capability 1
Capability 2
Capability n
Capability 1
Capability 2
Capability n
Capability 1
Capability 2
Capability n
Capability 1
Capability 2
Capability n
Build out capabilities that exist in all
scenarios, identify triggers for outlying
scenarios, and be nimble!
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Conclusion
The United States Postal Service has created momentum for future success,
despite its financial challenges.
 The Postal Service is recovering from a crisis caused by the economic recession of
2008 and the prefunding requirements in the Postal Accountability and Enhancement
Act (PAEA) of 2006.
 USPS management improved the Postal Service’s finances by cutting costs and
pursuing a growth strategy for the future.
 The Postal Service reported revenue growth of $800M and $1.1B controllable
income in the first quarter of FY2015.
 Legislative and regulatory action is essential for the USPS to become financially
sustainable and cover its $46B in unfunded liabilities.
The United States Postal Service needs legislative and regulatory relief
to achieve long-term sustainability.
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Q&A
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