BC Business
Change is a constant in today’s business environment, but leading that change can be a precarious undertaking.
It’s a fine balance between being innovative and finding yourself too far ahead of the market – the proverbial “bleeding edge” instead of the sweet spot just ahead of the masses that offers the best chance of success. Perching on this bleeding edge means convincing customers to change habits and adopt innovation. It’s not always easy. PROBLEM Canada Post’s Electronic Post Office, or ePost, was created in 1999 to bring the 150-year-old postal system into the modern age. The idea was that ePost would be the new century’s virtual post office, delivering online all those bills, letters, flyers, etc. that it currently delivered by hand. With the rise of the Internet, it was a no-brainer that people would start to use the new channels to correspond and communicate. The phone giant Telus thought so: it was an early investor along with Canada Post and Bank of Montreal. To give Telus (which is no longer an investor) and Canada Post their due, they were probably far ahead of the world in recognizing this opportunity. It was a great idea and ePost became a kind of guide and consultant to countries around the world that were considering similar strategies. Problem was, the concept didn’t work because the market wasn’t ready for it. Consumers didn’t really see a need for it and it wasn’t all that convenient. ePost apparently wasn’t ready for this brave new world of electronic mail, either, because it hadn’t really focused on how to make the concept work in the trenches where it counted. To understand why, you have to understand how the mail system works. Most people think of postal services as delivering personal correspondence back and forth, much like it did 100 years ago. But the reality is that the majority of mail delivered is bills and other communications from institutions such as banks, utility companies and other regular billers. In Canada and the U.S., more than 19 billion paper bills are mailed annually to businesses and consumers as part of the billing and payment service industry that Canada Post dominated in the old snail-mail days. The rise of email put an end to any dreams ePost had of delivering much personal correspondence, so it increasingly focused on converting its traditional billing and payment market to electronic missives. But after three years in the market, ePost had signed up less than half a million Canadians for the digital service. Billers didn’t join because consumers hadn’t indicated any tremendous demand for it; consumers weren’t signing up because the billers weren’t making it very easy. Also, there was a rival for the business that had grown out of online banking. The Webdox system, financed by CIBC, Mouvement des caisses Desjardins, National Bank of Canada, RBC, Scotiabank and TD Bank Financial Group, had pretty well locked up the banks’ own online billing and payment system. SOLUTION The two rivals struggled until 2004, when the well-funded ePost made a bold strategic move. It would concentrate on the billing system and make it the heart of a new electronically oriented Canada Post that would apply the Internet’s communication power where it was really needed – to make shipping and information transfer easy and convenient. EPost bought Webdox, a system some banks used for bill payment and collection, for $14.5 million, effectively creating the most consolidated Electronic Document Presentment and Payment (EDPP) service in the world. In 2005, ePost began actively courting billers throughout the country. In B.C., it focused on a few major utilities and the credit union system that services a third of the province. “When we bought Webdox in 2004, it really took off because we had a very powerful system,” explains Michael Garrity, ePost’s VP of marketing in Toronto. “We had 700,000 registered users and now we have 3.2 million.” Some of those extra customers came from the banks, but most came one biller at a time from Union Gas, Ontario Hydro, Terasen and others as more and more consumers started to use the Internet to pay bills. Part of this new strategy was manifested last year when ePost became a secure Internet site: by signing on as a member, consumers could have a free and secure electronic postal box that would store bills and make payments to more than 200 Canadian billers and financial institutions. Further, ePost would only deliver mail that people had agreed to receive, such as bills, a move that forestalled the fear of electronic junk mail that has become the scourge of the personal email system. ePost now handles 65 percent of the electronic billing volume in Canada; the rest is done by companies that have their own in-house bill-payment services. Those companies will likely drop their more expensive services soon and outsource to ePost, because it’s much cheaper. In B.C., the volume now includes records and bills from eight credit unions, several banks and department stores, utilities such as Terasen Gas, Telus and Bell Mobility, and municipalities including Vancouver, Nanaimo, Burnaby and Richmond. Some 450,000 B.C. residents have registered to use the service, a number that proportionately leads the country. Meanwhile, ePost is expanding out of the billing space and attempting to make itself the storehouse and purveyor of all things electronic that must be sent in a secure atmosphere. It already offers documents such as pay stubs, tax forms and trade confirmations. In B.C., we know all about adopting change. It might be the California influence or simply the fact that most of us, having come from somewhere else, have already embraced change. We’re comfortable with it and we’re generally known as Canada’s early adopters: that small percentage of the population that embraces new products and services soon after they hit the market. We’re especially keen to accept the latest electronic technology, recognizing that it might then be more convenient or cheaper than what we had before (20 years ago, when the rest of the country hated it, we readily accepted – and loved – the ATM). That’s why we have so many small innovative tech and science companies here: They breathe the same air. While all this indicates a market that seems to be fulfilling the promise first glimpsed by Canada Post more than five years ago, it hasn’t been conquered yet. We may be ahead of the curve in B.C., but that hasn’t yet made ePost profitable. It’s a matter of educating the market and when you’re way out in front, you have to be patient, says Garrity. LESSONS • Leaders need deep pockets. It can take a long time for the market to catch up to the leading edge, so you’re going to need lots of capital to operate while you’re waiting. • Own the space. Want to be known as the innovator? Then ensure – somehow – that there aren’t rivals around claiming that they deliver the same thing. • Focus on a useful product or service. Innovation for innovation’s sake is quixotic and usually fatal. The real money is made when that innovation is applied in a way that’s useful to customers. Click here to read Tony’s blog.