THE FRENCH POSTE: TORTOISE OR HARE?
By IMD Professor Cyril Bouquet - November 2014
Over the last ten years, the entire French post office has reinvented itself. In addition to the traditional task of distributing mail, it has gotten into the express shipping business, banking, and more recently, mobile telephone services. The yellow giant, as it is known in the country, now does 73% of its business on the open market and makes 17% of its 22 billion euros worth of revenue internationally. These numbers paint a picture of an ambitious and successful transition, but there were numerous challenges along the way.
There are three lessons we can learn from the Poste's tumultuous strategic journey.
1] Create the future, without being a prisoner of the past
"The Poste has changed to stay the same," observed the Poste's former president Jean-Paul Bailly in an article published in the French newspaper L'Express. This paradoxical phrase struck me. In all businesses transformation is only possible if it draws upon the contradictory forces of destruction, creation, and preservation. The Indian Trimurti gods aptly illustrate this concept. Shiva, the god of destruction: the traditional mail profession has progressively shrunk by 5 to 6% per year. Brahma, the god of creation: the digital revolution has opened the doors to banking and mobile telephone services, and has contributed to reinventing the postal profession. Vishnu, god of preservation: he is the one who reconciles these opposing forces.
Balance is always is difficult to strike. Some businesses stay prisoners to a way of thinking, like Kodak, which abandoned digital photography after having invented it. Others evolve but lose their soul along the way, such as when Starbucks branched out into selling furniture online, only to quickly abandon the initiative. But the Poste has evolved while staying true to the ingredients which gave it its identity, almost as if it invited Shiva, Brahma and Vishnu to the same dinner party.
The Poste knew how to stay loyal to its public service mission while at the same time developing the quality and efficiency of a private company. Based on an internal philosophy, reminiscent of the concept of yin and yang, the Poste reconciled economic efficiency, the yin, with its public duties, the yang. In 2010 the Poste became a publicly traded company, also heeding the call of its yang side. In parallel, on the yin side, it campaigned to build the public's trust in its brand, a key asset of any customer-oriented service provider. Because the 80,000 postal workers employed by the Poste are part of the everyday lives of the French, the organization was able to develop more local services, such as care for ill or isolated people. It stayed the same while being different, following the guidance of our three Indian gods.
2] Build the future together
The transformation of the Poste also needed an ambitious training policy aimed at not leaving anyone behind as well as constant communication with unions, workers on the ground, customers and public authorities. This process is a good illustration of the 3S theory developed by Bailly, the Poste's former president– provide Sense, but also Support and Service. Bailly practiced what he preached; he was known for going into the countryside every Friday to meet local elected officials, postal workers, and customers to listen to the suggestions of some and the complaints of others. The future shouldn't be decided only in the CEO's plush office at headquarters. It is built by many, and by earning the trust and support of all.
Of course this transformation has shaken up the lives of a lot of workers. The jobs of some ticket salespeople are now more complex; employees who used to sort mail have become telephone platform operators, for example. In total, the group's workforce shrank by several thousand salaried employees under the leadership of Bailly, but the Poste avoided directly firing workers by not replacing those who left on their own. Despite these efforts, labor relations have remained tense, and the Poste witnessed a series of employee suicides in 2012 and 2013. A radical strategic transformation is a difficult path that few managers want to go down.
3] Keep the momentum
Bailly's decision to step down in September 2013, a year before the official end of his mandate, was met with surprise. The outgoing president said his departure was meant to create ideal conditions for a quick and harmonious transition. He wanted to avoid a loss of momentum, which usually precedes the end of any leader's mandate. "A succession should be like a relay: when it's done right, you don't lose speed or energy," Bailly said in an interview with L'Express. Keep the momentum: this is a crucial challenge for all business leaders. Bailly's choice to leave the reins to someone else was perhaps due to exhaustion after 12 years at the head of the Poste (and before that at the RATP, a public transportation operator). Whatever his motivation was, his decision came at a critical moment – at the beginning of the implementation of the group's new strategic plan. His actions were admirable and courageous because they allowed his successor, Philippe Wahl, to approach the future with energy and ambition. The transformation of a company can never be one man's duty. The challenge is to maintain a high level of motivation in the company despite a change of leadership.
Tom Malnight, a colleague at IMD, says that all businesses evolve in two ways. Companies have to sprint and to run a marathon at the same time.
A company's sprints consist of launching short-term initiatives in order to strengthen its competitiveness in its market. The Poste needs to find new ways finance its postal services – a series of cost reduction measures are underway. It needs to reorganize its workforce in order to ease labor relations. It also must face aggressive competition from DHL and others in the shipping market.
The company's longer-term marathon is about enacting deeper reforms. Benefiting from digital technology, the Poste is focusing on banking services and transforming how its employees work.
The Poste has to run fast to survive in the short term and pace itself to make the changes it needs to go further. In short, it has to be both the tortoise and the hare.
Cyril Bouquet is Professor of Strategy at IMD. His major interest is the interface between organizational psychology, strategy and leadership. He is leading a stream on how "Alien Thinking" can help your business at IMD's Orchestrating Winning Performance (OWP) program in Singapore on 17-22 November 2014.