Redefining Pos Indonesia's business

Redefining Pos Indonesia's business

Many people think there is no need for Andy Grove and Intel
Corporation to worry about the future of Intel, which, as a
standard-setter in the computer industry, has had high brand
equity and controlled a large share of the market for a long
time. You are wrong because Grove does worry.

In his book Only the Paranoid Succeed, Grove says he cannot
feel secure despite Intel's amazing achievements. Why? While it
is true he does not feel disturbed by his direct competitors, he
does have apprehensions about indirect competitors. Almost every
day, a new product appears that could not only replace Intel-made
microprocessors but make them lose their relevance. Intel could
easily change from being untouchable to being a loser. To avoid
this disastrous possibility, Grove continues to keep alive the
"ghosts", namely his indirect competitors, which pose a threat to
Intel's survival.

Grove's fear may be an extreme case because Intel is part of a
high-tech community marked by a rapid progress in technology. You
must believe that the survival of your business -- whatever it is
-- will depend on whether you have Grove's fear.

For the past five years state postal company PT Pos Indonesia
has been carrying out what Grove says in his book. It has secured
a strong position in its core business. However, as with Intel,
Pos Indonesia has been worried by the presence of indirect
competitors that are likely to make its long-running businesses,
such as mail or money-order services lose their relevance.

E-mail, previously confined to academic circles and major
companies, is now widely used with the increasing popularity of
the Internet.

The International Data Corporation revealed that e-mail users
in 1996 rose by 730 percent, and the Computer Business Almanac
states that the number of people with Internet access is expected
to rise by 800 percent in the next three years.

This may be bad news to a provider of conventional postal
services. One may say that communications activities through e-
mail will be what Andrian Slywotzky, author of best-selling Value
Migration and Profit Zone, calls value outflow: large-scale
migration of conventional postal services users to e-mail as a
result of a shift of value from and to these two communications.
E-mail promises comfort, practicality and low cost. So, while e-
mail services are rapidly gaining more users, conventional postal
services are in decline.

Another problem is that the value outflow Pos Indonesia is
undergoing does not concern mail services only. A similar decline
is also seen in its other traditional core business, postal money
order service. As banking services become more and more advanced,
people have more choices in how to send their money. They can now
transfer their money through an ATM anytime, anywhere, involving
a much less time and much lower costs, if any.

What has Pos Indonesia done to anticipate, and keep a check on
the adverse impacts of value migration? If consumers find a
better value in e-mail and ATMs, why must they be loyal to
conventional mail and postal money order services? Fortunately,
Pos Indonesia is well aware of this tendency.

Pos Indonesia has made rival services part of its new
business. It has put into practice "co-opetition" (cooperation
and competition). This will not result in a synergy of the two
originally competing businesses unless it is properly handled.
So, it has redefined its businesses and markets.

Pos Indonesia has defined its business in a narrow manner
placing too much emphasis on products, namely the dispatch of
letters, goods and money. What is the adverse consequence of
this? An emergence of tunnel vision, or, to borrow Ted Levitt's
term, marketing myopia. Because of this nearsightedness, latent
competitors such as e-mail and ATMs, which originated in other
industries, will be difficult to detect.

According to the new concept resulting from the redefinition
of its business, Pos Indonesia has widened its business scope
from dispatching letters to communications; from sending goods to
logistics; and from sending money to financial services. This has
given it more leeway to carry out its business development
strategy and anticipate changes in technology as is the case in
its two lines of business, mail and postal money orders.

As Pos Indonesia now also concentrates on communications, it
can freely enter various segments of the communications business,
including those with an electronic basis. With its own ISP, i.e.
Wasantara-Net, Pos Indonesia has drawn up an ambitious plan to
enter the segments of the communications business offering wide
opportunities and considered an emerging business.

Pos Indonesia has begun providing Internet-based
communications services, including e-mail, hybrid-mail, fax
gateway, pager gateway and voice-over IP, a telephone service.
This new concept has allowed it to launch services based on the
technology of the future, such as the virtual office, e-commerce,
tele-working, e-wallet, e-polling and even e-democracy services.

In its business redefinition, Pos Indonesia has obviously
changed its orientation and viewpoint: it is now customer-
oriented, not as product-oriented as before. Before this
redefinition, it determined its businesses more on the basis of
its own products. This was inward-looking, without much heed to
what consumers needed.

The redefinition has made Pos Indonesia adopt an opposite
viewpoint. It now considers its business more in the interest of
its customers and what they really need. To ensure they always
find a solution to their communications problems, Pos Indonesia
offers various communications media as referred to above. But,
these media choices must be made carefully, based on the core
superiority and competence of Pos Indonesia itself.
(Taufik/Yuswohady)