In This Issue:
New Ventures--Just Because You Can, Doesn't Mean You Should
New ventures can be a tremendous opportunity. But, not all new ventures are worthwhile investments. Some can be ongoing money sinks requiring endless financial resources. So, it’s important to evaluate potential opportunities and to be selective about which ones to pursue.
Thus, start-up entrepreneurs need to pay attention to whether their new venture is right for them. Likewise, businesses experiencing a downturn or stagnation, and considering a pivot into new ventures, must evaluate whether or not proposed new directions are a good fit. Fortunately, there are effective ways to evaluate potential new venture options.
Furthermore, businesses are especially vulnerable to aggressive pursuit of ill-fitting new ventures when their industry is newly deregulated. Suddenly permitted to pursue new businesses, management in newly deregulated industries often does not want to miss out and gets excessively enthusiastic about the allegedly tremendous potential for new opportunities. Consequently, no one thoroughly evaluates how well or how poorly the new ventures fit the business and how likely they might be to bring about financial disaster.
The United States Postal Service (USPS), which has faced financial challenges as email and online sources replace traditional paper mailings, is at a point where the above kinds of issues need to be considered. A book review in the January 14, 2022 Wall Street Journal discusses “First Class,” a book by Christopher W. Shaw about the Postal Service, its challenges, and suggested solutions. According to the Wall Street Journal review, the book recommends that the USPS expand into new areas such as delivering groceries, banking, home nursing, and creating “an online platform where small businesses can ‘market their products’”. The book advocates changing the regulations that do not yet allow this.
However, the reviewer disagrees with the book’s recommendations and points out that “the Postal Service has no competence in these areas.” According to the review, making the Postal Service “a conglomerate hawking non-postal services“ leaves it “no safer from financial ruin than it is now.”
I agree with the reviewer. But, as someone who has been researching business success and failure patterns for over 25 years, I would take it even further. In my view, if the Postal Services tries to become this kind of conglomerate, it will likely experience financial ruin much faster than it might now.
As an organization facing revenue challenges, the USPS is clearly in a situation when it can be tempting to pursue many new areas. It is not unusual for companies facing revenue stagnation to pursue what I call a new products/new ventures phase, where they enter a variety of often ill-fitting new businesses that end up with huge losses and eventually have to be shut down. Furthermore, if regulations change to allow non-postal ventures, the USPS will go from not only being financially challenged, but also to being newly deregulated, and both of those situations often tempt organizations to enter a disastrous new products/new ventures phase.
So, hopefully, the USPS will recognize its vulnerability to a new products/new ventures phase temptation and will strive to avoid pursuit of ill-fitting opportunities. If regulations ultimately let the USPS move into new areas, the Postal Service needs to be selective about what new ventures it pursues. After all, just because you can doesn’t mean you should. All potential new opportunities need to be carefully evaluated. And, only those that are right for the organization should be pursued.
La Grange Park, IL