In 2006, my business school alumni held their annual dinner with then NAB CEO Ahmed Fahour as guest speaker. Not yet in his 40s, the eldest son of Lebanese immigrants, Fahour delivered an inspirational call to action for MBA graduates: “the MBA gets you to the door, but it’s up to you to walk on through”.
I have followed his career with interest. For the past three years he has been CEO of Australia Post, a dying industry you might imagine in these times of email, social media and instant messaging. Not so. To see and read about the turnaround in the organisation when everything seemed to be stacked against it, is in itself inspiring… and there are lessons to be learned here for all businesses faced with a rapid technological threat which is systematically destroying your core business.
Five years after the invention of the smartphone, a majority of Australian adults own one. 90% of Facebook’s billion users have joined in the last five years. Today, 340m tweets are sent everyday. It took radio and TV over 30 years each to had 50m users. Twitter did it in 9 months.
Fahour argues that all this connection is only the start. How can we make this a benefit for Australian people, businesses and rural dwellers? Look at how retailers, newspapers and video stores are grappling with this change. Look at those that famously failed, such as Kodak.
Unsurprisingly, mail delivery volumes are declining across Australia and the world. From 1809 (when the first post office was opened) to 2000, mail volumes rose and fell almost precisely with GDP. Mail volumes then flatlined to 2008 (5.6b items delivered) from where they collapsed. Deliveries are falling 20% a year. $400m in delivery revenues have been lost. And this trend will continue.
Australia Post under Ahmed Fahour has rethought its strategy. “We are not in the letter business, we are in the communication business”, says Fahour, “physically and digitally.” A new digital mailbox will allow Australians to securely send and store documents, and make payments. “98% of email is spam, it is not secure.”
With more online purchases, so Post jumps in. 70% of parcels delivered are sourced from online shopping. This business is growing 10% a year and has a long way yet to go yet. 75% of deliveries are from domestic web sites – it’s not all Yahoo and Amazon. Australian eBusinesses are growing. As Fahour puts it, “the Internet has broken the ‘tyranny of distance’ in Australia, and we underpin many online businesses around the country.”
Smart parcel lockers now get around the problem of people not being at home when parcels are delivered. A text is sent to your mobile when the parcel arrives and you can then pick it up whenever you like (not just when the post office is open).
“For the first time in 200 years, our parcel revenues has overtaken mail revenues”, says Fahour.
It’s a fascinating case study of an iconic Aussie business that has taken up a huge challenge and forged a future based on the current reality and future trends. A lesson to Kodak and others who might otherwise wake up too late to the massive changes going on in our world.
quotes taken from A-PAC lecture given to Australian-Israeli Chamber of Commerce