At a Conference on Research into Regulated Industries I presented the attached paper that argues that this is a good idea that will be rendered ineffective by the current thinking that would seek to “regulate” innovation initiatives on a case by case basis.  To ask a government regulator such as the Postal Regulatory Commission to review market research that sought to “prove” that a new product or service was in the public interest or that the public wanted to have the USPS deliver the service in advance is a standard that even the great innovators of Silicon Valley could not meet.

To give innovation a chance, there is a need to think about it more broadly, to see its interconnections and to better define the mission of the USPS in the modern marketplace.  If the purpose of the postal service is to “bind the nation together”, as the law says, and to “provide service to all communities” there will be a need to give the institution the opportunity to pay for this service.  Innovation should be a core part of this aspiration, but the vehicle should be opened up to public-private partnership and restructured to make it successful.

The myth that leadership is some mystical quality that rises above the ebb and flow of short-term popular interactions is not something that most people who have lived around politics believe to be true. The late pollster, Bob Teeter, who was my teacher on these topics, believed that there was a special need to get the polls right and when they were surprising. to spend time helping the candidate’s family understand what had happened.

He referred to the “candidate’s wife” problem. To be surprised by an outcome on election night was worse than any other time. And understanding the end game was always one of the most insightful times.

(As a practical matter, today the professional pollsters can cushion the risk by aligning their final analysis with scenarios of likely voters and election day exit polls. So it’s harder now to miss by a mile.)

The point is equally important on the front end. To understand what happens on election night there’s also a need to go further back and to begin with an accurate baseline at the starting point. There is a point in virtually every election, even the blow out elections, when the voters essentially start the major candidates at parity. This was especially true in 1984 (Reagan – Mondale) when in spite of what later appeared to be an overwhelming base of popular support, there was a time in June 1984 when the two were almost equal. The shift can come quickly and decisively so that it appears that there was always a significant difference. But this masks the real baseline that can be seen at the starting gate.

What’s more as Bush v. Gore demonstrated, the Presidential races are not popular vote contests, they’re decided in the Electoral College (or the Supreme Court and the Electoral College.) Today red states and blue states are so polarized that elections are likely to be decided by a handful of swing states. So the starting gate is really the positioning of the two candidates in 10-12 specific plaes.

For Obama and Romney the election is likely to be decided in a dozen swing states. (There is never complete agreement on what these states are. Sometimes Wisconsin and Michigan are seen more as Democratic than swing.) As Romney gets the nomination Obama has nearly a 4 point lead in the Real Clear Politics poll average. But the interesting thing about the swing states is to see where they are and where they have been.

In 2011 Time Magazine published the following summary of the swing states and their approval ratings. What is clear is that while Obama may be leading nationally, his support has been soft in the key states.

This table shows the Gallop approval ratings and the way that they slipped in key states.

The table suggests softness in the Obama lead even if there no clear moment of parity yet.

The game is afoot. The moment of parity will come soon and then what may be the most the most import definitional moments of the election. Without watching the polls it may not be easy to recognize this inflection point.

So there may be leaders who do not pay attention to the polls, but they should.

To create a systematic discovery process will require that future leaders organize appropriately (Redman describes this as creating a laboratory). Learning to manage the lab and to manage the people will be the challenge of making this work. Yet even though the practice is now unfolding, Redman has succeeded in highlighting the key challenge of the new era.

As we discover data resources that were never practical or even reachable in the past, the next question will be how to make use of the new resources – in short, where will the thinking take place?

For me personally the most interesting thing that is likely to emerge from this prodigious output will be to see whether the subject engages the interest of an audience.  What often happens in cases like this one is that high visibility initiatives (Transformation of the Army, Transformation of the USPS) consume all of the oxygen in a debate.  When the smart people call them a cliche they become a dead zone of discussion and even if there is nothing to replace them conceptually they become a subject to be avoided.   Here, in interview after interview I talked to the leaders of initiatives who told me that they had no “new” word, that the concept of transformation was an important one to them.  So the question becomes: even if it isn’t news is it valuable to seek to learn what did the leaders of effective transformation efforts find to be most important?

The core concept was to create a “playbook” from the comments that were made by a variety of high level interviewees – ideas and concepts that they had found to be valuable.  Scheduling interviews was maddening.  But once in the room a wide variety of government leaders were more than willing to talk about what worked.

Our concept was that from such a playbook someone could assemble a specific gameplan that would fit the particular setting of the agency and the opportunities they could see before them.

There is no better example of the need to individualize a gameplan than the issue of the timing of the launch.  Leaders talk about the value of a “burning platform” to contribute a sense of urgency to an agency.  Having a compelling reason to act (the platform on which you are standing is burning) makes it easier to encourage action in a typically recalcitrant bureaucracy.  But the problem is that in spite of the heat of the moment, the right time to launch a transformation initiative may be more a function of the needs of the customers and the competitors than the ability to encourage movement from reluctant government managers.  Having the right play to call may make the difference between optimal timing and a lesser choice.

The mantra of the modern Harvard Business School “thinking, doing, reflecting” may be a useful way to think about what comes first and what after that?   The working papers page contains a deck titled “The Transformation Leadership Process.  The concepts are simple.  But that’s the point.

• Thinking – there is a great deal of justifiable excitement that surrounds the discussion of analytics today.  In part, this stems from the possibilities that technology has created for measuring performance on a real time basis.  But analytics start with knowing what should be measured and why?
• Doing - Even with direction that is aligned strategically and an information architecture that can deliver performance information in a reliable, timely manner there will be a need in the modern marketplace to make decisions and to act collaboratively.  Here the “open swaps” decision model is shown to demonstrate an approach to decision-making that can be opened up to stakeholders.  The open swaps method compares multiple options with multiple decision criteria.
• Reflecting – Here five questions that leaders should be asking about their effectiveness are offered as a starting point.

A “way forward” concludes the deck: do you want to consider strategies that emphasize cost reduction and efficiency to make improvements or are they focused on top line growth, on service and quality improvement.

What’s most interesting about revisiting the basics is seeing how important it is to begin by understanding where you are.  Just asking whether you are considering what to do, trying to do it or reviewing what happened offers an accessible starting point.

For me, a crisis in government is now an extremely broad and far reaching concern.  While the concept might have once been limited to natural security crises or the emergencies that are the mission of FEMA.  But today this has been considerably broadened as crises in our lifetime and recent memories range from the Arab Oil Embargo to the financial crisis and from Japan’s Tsunami to Katrina to the BP oil spill.

Crisis in government that generally does not respond with agility is any event where a critical parameter changes by a factor of 10.  The events that occur in the life of any company or government agency that Andy Grove of Intel called Strategic Inflection Points are now the crisis for which we are training future leaders.

The Playbook had at least two important points of intersection where leadership issues and the definition crisis becomes a critical leadership issue:  first, in the case where launching a large scale change program would clearly be suboptimal and second, where being in a crisis mode inevitably leads to a process that will repress innovation.

First, there is the point in time. There has been no comparable time in the past 44 years of government. In January of 1969 Lyndon Johnson, the father of the Great Society left office but by many measures the age of “big” government had not even arrived.

A combination of technology (because we can), natural resource and economic crisis (Arab oil embargo) and political and constitutional crisis (Watergate & Ralph Nader) would conspire to make the government much larger than the Great Society Planners had ever contemplated.

By most estimates, however, we have now met a time of constraints in which the bills for global leadership, resource dependence and our lifestyle are coming due. Government will have to “right size”. There will be federal managers who have to drastically cut their programs but they aren’t going to have constituent groups coming in and showing them how they can do more with less.

Many will know where they need to go. But they will need a pathway to get there.

Yet a review of the 1997 strategic plan shows interestingly that the problems that are creating the crisis today were anticipated years ago.  The plans forecast that mail volume would decline and there was an imperative to rethink the nature of the mission of the agency and the means with which it delivers service.

In the introduction to the 1997 five-year strategic plan the Postal Service presented a vision of the future the follows.

As certain and clear as this path is, the future is not. Ten years from now, this same environment may be transformed by technologies in their infancies today. Ten years from now, the United States Postal Service mission responsibilities may be met only by a new understanding of universal service, access, and how best to deliver them. A decade from today, the Postal Service may have embraced technologies and systems as dramatically different as jet airplanes and robotic package sorters would have seemed to the 19th-century letter carrier.

Because this five-year plan is a living document, conceived to be flexible and adaptive to such environmental shifts, these challenges and external factors will be examined, weighed and — where appropriate — addressed in the years ahead. Ultimately, the philosophy underlying this plan, these goals, and their strategies is to create unique customer value as the Postal Service grows, improves and strengthens its financial foundation. This is a philosophy that embraces change. Because, in change, there will be opportunity for the United States Postal Service to serve its customers better.

Ultimately, government leaders and for that matter, leaders in every sector, are necessarily limited in their capacity to reshape markets, to alter macro economic trends or to change the nature of their agency missions.  Leaders cannot anticipate that their actions will be judged failures if their plans are undercut by massive societal and market shifts.

In coming years there will’s most certainly be frustration with the need to realign government service and to downsize its presence.  Yet, seeing in a larger context, the requirement to publish a formal strategic plan offers an opportunity for proactive leaders to create markers, waypoints on a journey long journey of continuous improvement.

With these simple words the Kansas City Star took on the issue of the future of the Postal Service.
The point that has been lost in many conversations about the future of the Postal Service – and there have been many in the past 2 decades – is that the basic business model of the USPS is not working any more. The postal reform debate has focused on pensions and retirement costs (we will get to that). But the issue of first principles is

• How will the postal business model be sustained in a world in which customers are choosing to communicate differently?

The question facing the USPS – that is currently urgently imploring Congress to address the issue of a pending multi-billion dollar payment that it cannot make - is simply how can future revenues exceed future expenses? Without an answer to this, there is no sustainable business model and someday soon there won’t be a Post Office unless something changes.

The debate over arcane pension and retiree health benefit topics is about whether the law should be changed to reduce the expenses that the USPS is required to pay. The costs are simply too high.

The discussion over regulation, monopoly, universal service and a host of questions that economists like to discuss is all about what rules should guide the generation of revenue? The revenues are too low.

Television ads from the American Postal Workers Union say that no taxes support the USPS, only stamp revenues. There are three reasons why they are presenting a misleading picture. First, the Postal Service receives “implicit subsidies” as Congressman Darrell Issa points out. The Federal Trade Commission recently detailed the way in which the USPS has advantages that a private competitors do not enjoy. (And, to be fair, it has unique burdens too.) Second, the USPS does actually receive appropriation support, although it is admittedly in the form of “reimbursement” as apposed to classic “appropriations”, and in permissions to charge customers. But most importantly, the USPS is running in the red. It’s losing more than $8 billion and stamp revenues are not going to pay for all of the current costs.

So the post office and Congress are going to have to do something because stamp revenues are not enough to afford the labor costs and the current infrastructure. This is why the Kansas City Star is right on target.

The business model is broken and must be fixed. But to do this, America is going to have to face difficult choices about the mission of an institution that is historically at the core of our culture and our economy – but not so much any more.

The law says that the mission of the Postal Service is to “bind the nation together with the correspondence of the people”.

But in an age of electronic communication and social networks its reasonable to ask whether this is a mission that it can fulfill. (Whether it should extend its reach with electronic services like secure email is another question. But the law would have to be changed to permit it to do so. This was put out of reach in 2006, just as the recession and the electronic invoicing and bill payment was about to hit.)

So what should Congress do? Change the business model or change the mission? Something is going to have to give. In an electronic age in which America’s oldest communications infrastructure is now prevented by law from offering electronic services it is not possible to be “businesslike”, to sustain the old ways of doing business, and to bind the nation together – something is going to have to give.