Deepak Chopra is chief executive officer of Canada Post.
Five years ago, I was barely 30 days on the job when I found myself reading a proposal to downsize a small innovation team. A yellow sticky note on the cover said, "Sorry, this proposal got caught in the transition, please sign and return back to me. Thanks."
I was tempted to sign and move on. After all, Canada Post was still recovering from the recession and accelerating digital substitution was cutting off oxygen to our mail business. Rationalizing costs was necessary. But I decided to meet with the so-called innovation team before I signed.
It turned out they were working on an iPhone app. It would allow customers to track parcels, look up postal codes and find the nearest post office. This small team had two temporary and two permanent employees housed in an old office in the basement. They didn't even have a company-issued iPhone. They brought their own to work to test the app because the iPhone was not an approved device for employees. They had no idea their department was on the chopping block.
Despite their lack of resources, they were full of energy and enthusiasm. I was instantly impressed with their passion and desire to haul Canada Post into the 21st century. With mail declining rapidly, I knew parcels and e-commerce held the greatest promise for our future. Demonstrating our capability to provide a more convenient delivery experience for online shoppers would give us a competitive advantage.
I asked how I could help. Their answer? "We need $30,000 and a company-issued iPhone to finish the project." I approved their request that day.
The result? Last year, Canadians tracked their online purchases more than 425 million times with Canada Post – and almost 70 per cent were on that app, which has been downloaded by more than 1.5 million Canadians and has consistently ranked among the top 10 free business apps on Apple's Canadian app store.
It was more than a success story. The fact that we almost quashed it was symptomatic of a wider problem. Inability to innovate was not the biggest threat to our future – it was a failure to recognize the need to innovate. The first step was identifying the right path – then, persuading our senior leaders to walk it.
In the late 1990s, two models of innovation and growth were introduced to business leaders. Almost 20 years later, they are relevant as ever. First, in their 1998 book Every Business is a Growth Business, Ram Charan and Noel Tichy argued that most businesses define their market too narrowly. To keep growing, you must expand the circle you play in. They pointed to Coca-Cola's legendary 1980s CEO, Roberto Goizueta.
Everyone believed that with a dominant 35-per-cent share of the soft-drink market, Coke's growth days were past. But Mr. Goizueta fundamentally changed how the company viewed its market. He looked at its share of the daily per-capita consumption of all fluids. His executives were surprised to discover that Coke represented less than two ounces per capita against 64 ounces of all liquids consumed by an average person. By expanding into other fluid categories, including water, Coke launched a new era of growth.
Clayton Christensen's 1997 book The Innovator's Dilemma described another approach. He argued that to truly innovate, companies need to create a safe zone for ideas-driven teams. These teams would operate away from head-office bureaucracy, without the burden of being accountable for revenue growth and profit. This would create the conditions for breakthrough ideas to blossom with the potential to become the new growth engines.
While several success stories emerged from this model, it has not been the panacea business leaders hoped for. For every Kindle, there have been dozens of failed experiments with separate groups operating in posh offices benefiting from large budgets and different compensation plans – including free gourmet lunches and barista stations – and producing absolutely nothing. But these innovation labs can thrive when they have a clear sense of purpose, governed by a central idea that has survived the rigour of asking "What business objective are you trying to solve?"
Which model is right? In the real world, the answer is rarely either/or. Rather, it often is a well-reasoned "and," where companies need to redefine their market, then innovate to seize the opportunity. At Canada Post, we began to recognize this balance in 2011 when I met Harley Finkelstein, the energetic and dynamic chief operating officer of Shopify, then a small Ottawa-based e-commerce software company.
Mr. Finkelstein was eager to create a seamless experience for merchants to ship products without having to deal with Canada Post separately. At that time, Canada Post had a handful of customers using a clunky online platform to process parcels. Shopify was keen to move them to their more customer-friendly platform.
But this was not a simple task. Mr. Finkelstein had spent months navigating our bureaucracy. Finally, he got tired and picked up the phone. He challenged me directly: Was I serious about e-commerce? It was a turning point. I took the time to visit his office. We spent hours discussing Shopify's business model and strategy. I eventually engaged other Canada Post executives. It was abundantly clear that companies like Shopify had a lot to teach us not just about e-commerce, but about how we could innovate our core services to become a key enabler of it.
We partnered with Shopify with the goal of putting the customer at the centre. This partnership has grown every year and now thousands of Shopify merchants ship products seamlessly using fully integrated Canada Post parcel services.
It motivated us to collaborate with more e-commerce companies, which helped to inspire a string of innovations, including new parcel delivery options and groundbreaking customer-convenience features. These new-economy enterprises have brought us into the digital economy – sometimes kicking and screaming.
But it's not only our services that we have innovated. Each of these ideas came from passionate employees. Identifying these ideas and allocating capital and resources required a whole new way of thinking. We had to innovate our culture.
In a large, complex and bureaucratic environment, however, innovation is not the natural order of business. To thrive, new ideas not only need the usual executive sponsor and a safe zone free from the corporate hammer, they also need an informal route to senior executives, where they can be debated, improved upon and funded.
Not everyone in our senior management jumped on the bandwagon. Senior executives told me, "All this is nice, but we get paid to deliver mail." (With each passing year there is less of that.) And anyone attached to a past failure didn't want to risk being associated with another, worried it would stall their careers. So we had to build confidence. This meant celebrating our innovation successes, as well as recognizing the value of trying, which sometimes meant failing.
Rather than elevate an elite few to the task of innovation, we launched a program with the Rotman School of Management for all senior leaders that tasked cross-functional teams to tackle real strategic issues. That created a safe environment to freely address issues that otherwise might have been taboo.
Extracting the maximum value from innovation is more art than science. By thoughtfully incorporating innovation into our culture, we have enabled ourselves to acquire the needed skills to engage some of the savviest tech people on the planet, including the most demanding entrepreneurs in the digital space. For us, innovation is about more than a new product or solution – it's about a new way of doing our business.
I'm often asked whether old-economy businesses can reinvent themselves. In a large, complex and (dare I say) successful business, it requires real, impassioned commitment from the top. But even then, forces make it difficult. The inability to shed legacy costs, lack of entrepreneurial conditions and risk-taking, pressure to produce earnings and halfheartedness often lead to innovation theatre rather than innovation culture.
I would argue that reinvention is best inspired from the very idea or role that made the company successful to begin with. For us, that has been parcels.
Five years ago, Canada Post had three lines of business: letter mail, direct marketing and parcels. Parcels, the smallest, had been at the centre of the postal service when it was founded 253 years ago, thanks to the mail-order revolution of the late 19th century. Yet a decade into the 21st century, our focus was on prudently managing steady volume declines in what had become our highest-margin but monopoly business, letter mail.
Our focus has changed utterly. After we green-lighted one small team's app, we saw the value of innovation. Now, we are ambitiously reorienting our business. We are aggressively moving from a mail-centric to a parcel-centric model. And, in the process, we are breathing life, purpose and future into an old-economy business that has quietly become the No. 1 parcel company in the country. We may not be a startup, but we have demonstrated we can innovate like one.