Strategy, Change & Culture: Moya Greene Seems to be Delivering!

“Our strategy is delivering. The transformation of Royal Mail is well underway”.That’s the view of Moya Greene, CEO of Royal Mail, as she announced the full year results for Royal Mail to 31 March 2013 today.As students who attended our BUSS4 Exam Coaching Workshops will recall, I think that Royal Mail is one of the very best research case studies to use for both Section A (organisational culture) and Section B essays in the BUSS4 exam.The latest financial results of Royal Mail Group are packed full with useful insights and data which could be used effectively to support paragraph points in a BUSS4 essay.Here are just a few examples:

On the reasons for strong profit growth:

“Reported Group operating profit after transformation costs grew from £152 million to £440 million due to cost control and improved revenue generated by parcel volume and letter revenue growth”

BUSS4 interpretation: Royal Mail's change programme is starting to deliver significant improvements in profitability largely as a result of substantial reductions in operating costs and higher mail pricing. A more profitably Royal Mail Group increases the likelihood that the business will be able to achieve a successful stock exchange flotation and be able to raise additional external capital.

On the effect of less regulation of the letters & parcels business in the UK:

“As the transformation of UKPIL gathers pace, we are harnessing the benefits of the new regulatory framework, introduced in the UK in March 2012. Today, less than 10 per cent of UK revenue is subject to direct price control.”

BUSS4 interpretation: Royal Mail has benefited from a change in the regulatory environment in the core UK market which enabled it to significantly increase prices for letters and parcels. This is another reason for the improved financial performance of Royal Mail in 2012/13 compared with 2011/12.

On Royal Mail’s vision, strategic priorities and corporate objectives:

“Our vision is to be the most successful delivery company in the UK… we are well positioned to deliver our strategic priorities:

1. being a successful parcels business;

2. managing the decline in letters; and

3. being customer-focused.”

“We are creating a commercial, customer-focused company, offsetting addressed letter declines with revenue growth from parcels, which is expected to drive profitable growth. With the continued support and engagement of our people, we can deliver these objectives to help to ensure that we are financially successful and able to access the capital needed to deliver the ongoing transformation of our business.”

BUSS4 interpretation: Royal Mail has a clear strategic vision and a small number of focused strategic priorities. Royal Mail see parcel delivery as the main revenue/profit growth opportunity (link to increased use of online shopping) whereas letter volumes are expected to continue their decline (strategy = better productivity and lower costs).

On Royal Mail’s Modernisation (Change) Programme:

“Our modernisation programme, one of the largest of its kind in UK industry, is improving our productivity. Eight out of ten letters are now automatically sequenced into the order in which our colleagues complete their walks. Our delivery revisions programme is well underway, as we roll out new methods, processes and equipment to help our colleagues manage the fundamental shift in our traffic towards parcels.”

BUSS4 interpretation: Royal Mail's change management has been costly and complex - as you might expect for a business with tens of thousands of employees, deeply-entrenched working methods, culture and the need to invest heavily in automation. A key challenge is to persuade employees to view Royal Mail as a parcels rather than a letters business = a very different operating model.

On the importance of customer service in a highly competitive service business:

“We are aware that our customers have many options. To be their first choice, we must get the basics right and be easy to do business with. We gather customer feedback extensively across our business and use this insight to increase customer satisfaction, reduce customer complaints and improve the whole customer experience.”

BUSS4 interpretation: Royal Mail customers (key external stakeholders) are not much concerned with the internal effects of the modernisation process! They just want great service!

On engaging with staff during the modernisation programme:

“Our people are key to our transformation and, in particular, the successful delivery of our strategic priorities…..We are redoubling our efforts to communicate with our people about the challenges we face and our strategy to address them. We have provided managers with tools and support to help with action planning, allowing members of teams to feel more engaged in the business’ future. Alongside our broader engagement programme, we are undertaking a series of ‘town hall’ events, where members of our senior management team will address as many as 1,000 colleagues at a time.”

BUSS4 interpretation: A key learning point here on how to implement complex organisational change - communication is vital!

On opportunities for Royal Mail – the future!

“We are well positioned to continue to benefit from the structural change to e-retailing, which is driving increases in parcel volumes, and to manage the decline in letters”.