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)