USPS OIG Audit Report: Postal Service Pilot Programs

Evolving customer needs, constant technological advancements, and growing competition are influencing the postal marketplace. The U.S. Postal Service is continuously seeking ways to improve operations, identify new products, and enhance existing services through innovation. It needs to successfully innovate to maintain and grow its position in the competitive domestic and international postal marketplace.

The postmaster general has stated that her core focus is advancing transformative strategies by accelerating the pace of innovations and creating a strategic initiative to maximize revenue and profit. The Postal Service reported $3.4 billion in revenue from new products and innovations over the last 3 years and estimates continued efforts could contribute up to $10 billion when fully implemented. Recent innovations involve digital enhancements to delivery and direct mail.

Employees, customers, and mailers all propose new ideas and innovations, which postal departments often test through pilot programs. For example, the Operations group piloted gopost® lockers for sending and receiving packages and the New Products and Innovation group piloted the Next Generation Mailbox, a larger mailbox that can hold packages for residential customers.

Our objective was to assess the Postal Service’s process for developing and implementing pilot programs related to new products and services.

What the OIG Found
The Postal Service has a comprehensive process for developing and implementing pilot programs; however there is not a streamlined process conducive for the New Products and Innovation group to quickly test new ideas on a smaller scale. The Postal Service would benefit from developing a streamlined process for preparing potential pilot programs and their support structures, such as information technology system updates and engineering changes, for the more comprehensive pilot process.

The Postal Service’s initial funding processes focus on high‑profile ideas and projects that have the opportunity to earn the most revenue, as they have to compete with other departments for funding throughout the organization. The current process limits the Postal Service’s ability to rapidly fund, create prototypes of, and test new ideas in advance of the pilot process. For example, the idea for Informed Delivery was initially developed before 2011; however, partially because of a lack of data on potential additional revenue, support for the idea wavered. As a result, it is still in the pilot testing phase.

If the Postal Service had a streamlined process for funding, prototyping, and testing this idea prior to undergoing the full pilot process, it would have more data to support the profitability of the idea and it might have already been implemented.

In addition, New Products and Innovations has identified ideas that could be tested in early developmental stages — such as refrigerated mailboxes or computer packaging — to more quickly capture the data necessary to evaluate whether the ideas warrant full pilot testing.

Leading research shows that rapid change efforts (such as innovations and pilots) can be more timely and effective if they are granted flexibility and independence from traditional enterprise processes. Related research also notes that companies with leaders who can fund and test new ideas through an experiment or rapid product prototype move much faster and increase the probability of success.

Developing a streamlined process to test ideas on a smaller scale may help the Postal Service prepare for full-scale pilot testing and achieve its aggressive revenue targets.

What the OIG Recommended
We recommended the Postal Service develop a streamlined pilot process to rapidly fund, create a prototype of, and test new ideas on a smaller scale.

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Source: USPS Office of Inspector General

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