Digital Transformation, Business Models and the Postal Industry
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Digital transformation, business models and the postal industry THÈSE NO 7560 (2017) PRÉSENTÉE LE 9 MARS 2017 AU COLLÈGE DU MANAGEMENT DE LA TECHNOLOGIE CHAIRE LA POSTE EN MANAGEMENT DES INDUSTRIES DE RÉSEAU PROGRAMME DOCTORAL EN MANAGEMENT DE LA TECHNOLOGIE ÉCOLE POLYTECHNIQUE FÉDÉRALE DE LAUSANNE POUR L'OBTENTION DU GRADE DE DOCTEUR ÈS SCIENCES PAR Nandkumar Harshan KOLLARA acceptée sur proposition du jury: Prof. D. Foray, président du jury Prof. M. Finger, directeur de thèse Dr S. Di Renzo, rapporteur Prof. E. Portmann, rapporteur Prof. Ph. Wieser, rapporteur Suisse 2017 To Mom and Dad ii Acknowledgements I would like to thank the following people whose support and patience have made my PhD journey possible: I am indebted to my supervisor, Professor Matthias Finger, for providing me the opportunity to explore the postal sector. I deeply appreciated his valuable feedbacks and encouragements. He has been a tremendous help in facilitating the data needed for my thesis. He has helped me significantly to develop my skills as well as to broaden my knowledge. The feedbacks from MIR colleagues and the presentations during the brownbag seminars have also been very insightful. In addition, I would like to thank the various professors at the CDM institute such as Professor Thomas Webber, Professor Dominique Foray, Professor Chris Tucci, Professor Gaétan de Rassenfosse and many others for their invaluable support. It was also a great honour to spar intellectually with Professor Edy Portmann from the University of Bern as well as the CDM students at the EPFL on different theoretical concepts. Professionally, I am very grateful to Mr Hans Gurtner and Dr. Stefano Di Renzo for their incredible support during my time at the Swiss Post. I have had the wonderful opportunity to meet many amazing people during my work. I would like to give special thanks to Mr. Christoph Bürki and members of the E-Post Office project team, Andre Mauer and members of the Harmonised Logistic Network project team, Mr Emannuel Jud and his colleagues, the PostMail department, the E department, the Swiss Post Solutions department, the Information Technology department, and Dr Bernhard Bukov and colleagues at the UPU agency. The above-mentioned people have been instrumental in helping me to assimilate and to apply existing and new skills in the management area at Swiss Post and also at EPFL. I am also immensely grateful to the six postal companies: Poste Italiane, New Zealand Post, Swiss Post, Deutsche Post, La Poste and Norway Post for their generosity in providing the data for the case studies. In addition, big appreciations to the UPU and the 100+ postal companies around the world that helped in collecting the data for the survey studies. The support of my family, my brother Ramu and my friends have been very vital. They had faith in me throughout the PhD process. My wonderful parents Harshan and Suma have helped me in gaining the best education and have always believed in me. The latest addition to my family i.e. my beautiful wife Elena provided great support during hard times. In short, the journey for my PhD has been remarkable and I will cherish this time for the rest of my life. iv Summary For many decades, the postal industry offered postal services and in parallel, had a monopoly over the national postal markets. Recently, the postal industry endured a phase where their national postal markets were subjected to liberalisation by the respective nations. This was due to various reasons such as inefficiencies of the postal services, ambiguous monopoly legislations, mounting pressure from competitors, and changing nature of customer demands. The liberalisation of the European Union postal markets is an example of a liberalisation that was based on the unique requirement of harmonising the postal services across the whole European Union. Other nations outside the European Union liberalised their postal markets either completely or partially based on their own unique requirements. After the liberalisation phase, the postal industry faced a significant challenge from digital services. Digital services were responsible for the constant declines in profitable letter service volumes. In response, the postal industry started developing digital postal services. However, therein lies the problem. The postal industry is unaware of the steps needed to develop digital postal services and has not had a great deal of financial success in this area. I address this problem by referring to “business models”. Business models have been a recent area of interest in management literature and, as such, offer an innovative perspective on the postal industry’s development activities in digital postal services. The main goal of my dissertation is to provide recommendations for the postal industry’s development of digital postal services via business models. The four sub-goals of the dissertation are as follows: (1) determine the business model framework, (2) determine the different types of business models for digital postal services using the business model framework, (3) determine the antecedents to these business models, and (4) determine the performance effects of these business models on the postal industry. The targeted research methodology involves multiple exploratory case studies and explanatory survey studies on the digital service activities of the postal operators. I initially developed a business model framework from the literature review. The business model framework has four components that help identify business models within firms: value proposition, resources, network and finance. Subsequently, I conducted case studies on the digital postal services activities of six postal operators, in order to investigate the different types of business models for digital postal services. I identified four types of business models for digital postal services based on my developed business model framework: traditional add-ons, digital add-ons, hybrid ecosystem and digital ecosystem. vi Summary I then conducted survey studies with postal operators in a number of countries, in order to investigate the antecedents of the business models described above, as well as the performance effects of these business models on the postal industry. The findings suggest that dynamic capabilities have a statistically significant impact on the business models that are in synergy with the postal operators’ physical postal services. In addition, the business models that are in synergy with the postal operators’ physical postal services have a statistically significant impact on firm performance. My dissertation makes an important academic contribution to the literature on business models. I contribute empirically by linking the business model framework and business model typologies with the postal industry through case studies. I also contribute to the interdisciplinary research between business models, vertical industrial policy and resource-based view through survey studies. My results will also help managers to develop digital postal services by providing them with a generic business model or ready-to-use business models. The results will provide insights into the antecedents needed for development of business models for digital postal services. In addition, insights into types of business models for digital postal services that have an effect on the financial impact will be beneficial to managers. Keywords: business models, postal industry, digital services, case studies, econometrics, dynamic capabilities, vertical industrial policies, synergies, business model typologies vii Résumé Pendant de nombreuses décennies, l'industrie postale offrait des services postaux et, en parallèle, détenait un monopole sur les marchés postaux nationaux. Récemment, l'industrie postale a connu une phase où les marchés postaux nationaux ont été soumis à une libéralisation par les pays respectifs. Cela s'explique par diverses raisons telles que l'inefficacité des services postaux, les législations monopolistiques ambiguës, la pression croissante exercée par les concurrents et la nature changeante des demandes des clients. La libéralisation des marchés postaux de l'Union européenne est un exemple de libéralisation fondée sur l'exigence unique d'harmonisation des services postaux dans toute l'Union européenne. D'autres pays en dehors de l'Union européenne ont libéralisé leurs marchés postaux en totalité ou en partie selon leurs propres exigences. Après la phase de libéralisation, l'industrie postale a dû faire face à un défi important des services numériques. Les services numériques ont été responsables de la baisse constante des volumes de services de lettres rentables. En réponse, l'industrie de la poste a commencé à développer des services postaux numériques. Cependant, là réside le problème. L'industrie postale ignore les étapes nécessaires au développement des services postaux numériques et n'a pas eu beaucoup de succès financier dans ce domaine. Je m'occupe de ce problème en me référant aux "modèles d'affaires". Les modèles d'affaires ont été récemment un domaine d'intérêt dans la littérature de gestion et offrent donc une perspective novatrice sur les activités de développement de l'industrie postale dans les services postaux numériques. Le principal objectif de ma thèse est de fournir des recommandations pour le développement de l'industrie postale de services postaux numériques via des modèles d'affaires. Les quatre sous- objectifs de la dissertation sont les suivants: (1) déterminer le cadre du modèle d'entreprise,