Bruce's key message is that if postal organisations want to prosper in a liberalised market they need to start the behavioural change well before the market is altered by legislation. Customers who enjoy excellent service and have a strong relationship are far more likely to stay with the postal organisation despite other competitors entering the market.

We often define the "liberalisation of the postal market" as the removal of protection on letter products. But the reality is that, independent of their legal position, no postal organisation operates in a protected market for letters - technologies such as the Internet, email, globalisation and increasing cross-border activities are eroding traditional transactional mail volumes irrespective of the legal framework.

Building on a strong foundation

Getting the core or traditional postal business right is essential for future innovation. Operationally, it provides a basis on which to build more complex or enhanced services. Financially, it provides funding for investment in new products. And in the postal market, it provides a strong, reliable brand which will support future initiatives. Delivering on the traditional promises provides the base for new promises - why would customers trust the postal business to do clever new things if it cannot do the basics well?

Three examples of innovation

Growing volumes in a declining market - Developing the Direct Mail market

The Direct Mail market in New Zealand has been considered underdeveloped relative to many other countries. An opportunity existed to grow this market and to re-define New Zealand Post's role. As a result New Zealand Post developed a number of initiatives:

• Sponsorship of the Direct Marketing awards to reward innovation and creativity
• Trained its sales teams to be de facto marketing consultants
• Reviewed its pricing and operational constraints to encourage creative, effective Direct Marketing
• Developed market research and metrics around the effectiveness of Direct Marketing to position Direct Mail as an advertising medium in the same way as television or radio. This enables advertisers to make informed decisions about media selection.
   

Result: New Zealand Post is now seeing a defined up-swing in Direct Mail volume despite continuing volume declines in transactional mail. There are more creative, often larger pieces going through the mail. A recent Vodafone campaign sent a brick using ParcelPost service. Toyota sent a foot-long rocket, complete with red plastic fins and nose. The industry is becoming more sophisticated, more experienced and producing better Direct Marketing. Consequently, it's achieving better results and fuelling a greater ongoing desire to use the mail medium.

Providing solutions to the complex needs of customers - Exam Paper Administration for New Zealand Qualifications Authority (NZQA)

NZQA launched a new national examination system and wanted partners to facilitate the physical handling of exam papers, including: printing of exam papers; sending them to examination centres; re-distributing them to exam markers throughout New Zealand; then collecting them from markers and sending them back to NZQA for collation.

New Zealand Post established a joint venture with a printer and mailhouse to provide an end-to-end solution for NZQA. The service utilised traditional postal and courier networks and was ultimately strengthened by the combined capability of the JV partners. The solution met the NZQA's requirements for security, timeliness, privacy and accuracy (i.e. the right paper to the right person). The result? The joint venture was extended to a five year contract.

Converging solutions - a moving stamp, a new bank and a new service

A new stamp - Merging new printing technology with the emotional pull of the 2004 Olympics and the traditional media of the stamp, New Zealand Post developed a "lenticular" stamp, which displays multiple images in quick succession when the stamp is tilted, creating the illusion of movement.

In this case, it was the last few glorious moments of four New Zealand athletes about to win their gold medals in past Olympics. This showed customers the innovative face of New Zealand Post, as well as reinforcing pride in the achievements of all New Zealanders.

A new bank - New Zealand Post's Kiwibank has harnessed new technology such as the Internet, SMS (short message service) and GPRS (mobile computing) to create attractive and competitive structures for customers. Additional service capability such as mobile-technology enabled bank managers has combined with the traditional retail network and customer-focussed staff to make Kiwibank profitable with more than 250,000 customers, and more than NZ $1 billion worth of home loans in little more than two years in business.

A new service - New scanning and data technology combined with existing customer relationships and mail handling skills have developed into a service, VRetrieve, to customers wishing to out-source business processes such as document archival and invoice process management. For example, New Zealand Post and its subsidiaries can print customer bills, distribute them and collect funds through either cheques in the mail, online banking or the retail network and store electronic copies of all documents.

Innovation is about turning ideas into reality. It can take many shapes and forms - the important thing is to start now - no matter what your legal or regulatory status - and make it part of the way your postal business works.