• Clearly stated mission, linked to performance plans
  
• Sophisticated business forecasting
  
• Balanced scorecard with integrated planning
  
• Outcome-focused measures
  
• Reliable data
  
• Strong workforce planning
  
• Information Technology planning integrated with mission and strategies
  
• Budget, spending, and asset planning linked to strategic and performance goals

The FY 2001–2005 Strategic Plan focused on three major strategic challenges resulting from an increasingly uncertain economic environment. These challenges were:

1. The increasingly difficult task of maintaining postal prices at competitive levels as postal workload (mail volume and delivery points) and associated costs increase, while the Postal Service is restricted from making major structural changes associated with the universal service obligation (such as closing post offices because of unprofitability);

2. The limitations on the Postal Service that reduce its ability to generate new revenue in an increasingly dynamic and competitive market; and

3. A need to become more flexible, innovative, and responsive to customer needs while improving labor–management relations and employee commitment to results-oriented performance.

The Strategic Plan stated that the Postal Service would continue to focus on improving service performance, customer and employee satisfaction, and productivity, but that incremental improvements would not meet the needs of the public or postal customers. Significant change required adjustments to the regulatory and legislative framework established more than thirty years earlier by the Postal Reorganization Act of 1970. The Board of Governors then requested Congress to consider changes in the Act. The General Accounting Office agreed that the current framework required transformation, and placed this issue on the government’s “High Risk” list.

        b. The Transformation Plan
As a result of this review and subsequent congressional oversight hearings, the Postal Service was tasked with developing a comprehensive transformation plan that would address these issues and outline alternative strategies. A cross-functional Office of Transformation Planning was established within the Strategic Planning Department, and the Postal Service published “Outline for Discussion: Concepts for Postal Transformation” on September 30, 2001. This document was intended to serve as background for an extensive program of outreach to postal stakeholders. A comprehensive Transformation Plan, representing an integrated discussion of options on the major issues facing the Postal Service, was originally scheduled to be published on December 31, 2001. Congress extended the deadline to March 31, 2002.

        c. Stakeholder Outreach
The Postal Service and several of its key stakeholders have been involved for several years in discussions about legislative reform. The Postal Service Five-Year Strategic Plan, FY 2001–2005, incorporated additional specific comments about many of the issues facing the postal community, and the Postal Service formed a task force with the mailing industry to discuss short-term opportunities for change. A request for comments on the policy questions related to transformation raised by Congress and the General Accounting Office was published in a Federal Register notice, posted on the Postal Service website, and was mailed to major mailers, suppliers, the mailing industry, and postal unions and associations. The Postal Service held a number of meetings with stakeholders and conducted surveys and focus groups to gather extensive data on the subject of postal transformation. These results will be incorporated into the Transformation Plan.

        d. Annual Performance Planning
The annual planning cycle (see Table 1.1) begins with an assessment of the postal business environment. The preliminary assessment, circulated to the executive committee in June 2001, indicated that the U.S. economy was not expected to grow as fast in FY 2002 and 2003 as in the recent past. However, these preliminary forecasts, comparable to the best government and private sector forecasts, did not predict the dramatic decline of the U.S. economy. The Business Environment Assessment (BEA) did suggest that direct competition and technological substitution for traditional postal services would continue to increase and would adversely affect mail volumes and revenues.

The BEA noted the need for increased transportation flexibility and independence from scheduled airlines as mail service suffered from problems in that industry. The disruptions to the national air transportation system as a result of September 11 and subsequent actions were exceptional, but the Postal Service had already begun making alternative arrangements — most notably the arrangements with Federal Express and the strategy to replace air service with ground service wherever possible. These actions minimized the disruptions to mail service.

The BEA also noted that American consumers indicated that security and safety were increasing concerns — not just for mail, but as part of their overall needs not completely satisfied in the economy and society. Unfortunately, those fears were justified by the terrorist attacks on the United States, including the use of anthrax in the mail.

The FY 2002 Annual Performance Plan, published in October 2001, did not include the impact of the dramatic reduction in economic growth or the disruptions caused by the response to terrorist attacks. The full impact has not yet been assessed, and the Postal Service has advised Congress of the levels of assistance to cover the costs of terrorism and related issues.

Chapter 5 of the Comprehensive Statement on Postal Operations, 2001 provides a report of postal performance during FY 2001, as required by the Government Performance and Results Act. Chapter 4 provides the preliminary performance targets for FY 2003, as the Postal Service begins the planning cycle for that year. Following the acceptance of the Integrated Financial Plan by the Board of Governors, the final targets will be published in the Annual Performance Plan in September 2002.

The planning documents and associated information are distributed to internal and external audiences in a number of formats and are available on the Strategic Directions website of the Strategic Planning Office.

        e. Strategic Analysis
The Strategic Planning Office, usually in partnership with other functional departments, participates in a number of conferences and conducts several studies focused on long-term changes that will affect the Postal Service. In FY 2001, Strategic Planning sponsored the following:

• Postal Service Household Diary Study Trends
  
• Future of Global Mail
  
• 2010 Market Scenarios
  
• Assessment of Universal Service Research and Trends
  
• Consumer Decision-Making in the 21st Century
  
• Trends in Household Penetration and Use of Internet (Mail Diversion Studies)
  
• Case Studies in Organizational Transformation
  
• Customer Value Analysis and Brand Equity Measurement
  
• Balanced Scorecard and Performance Measurement