Strategic Changes and Strategy of Changes

02 May 2019

Igor Smilyansky, national postal operator’s CEO talked to the SE MBA class.

The Ukrposhta, national postal operator is being transformed. 95% of management team, the sixth of car fleet has been changed. Even the most distant branches are being computerized. However, a lot still needs to be done. Igor Smilyansky, Ukrposhta’s CEO discussed the changes with the SE MBA class.

“I don’t think that bottom-line is the only criteria of success when we talk about Ukrposhta,” he said. “The company runs outdated infrastructure. It is time to update it rather than focus on the profit only. It will pay back in the future.”

Since 2016 facilities renovation has become one of the company’s priorities. Since that time, UAH 400,000,000 has been invested in the renovation. This year, UAH 60,000,000 is allocated. “We are having 20,000 computers. Its average lifespan is 5 years. Most of our computers are older than 10 years,” Igor Smilyansky explained.

This quarter the Ukrposhta is in black for the first time. “Regardless of our revenues increase we suffered UAH 500,000,000 losses. We deliver pensions as one of our services. The rate did not change since 2004. Now we are reimbursed for the delivered service and have profits,” Igor explains.

 Raise of the minimal wages deteriorated financials. “When I joined the Ukrposhta, the postmen were paid UAH1,550 per month. In 2019 they are paid UAH 4,173. The services rates did not change at all,” he mentions.

Before joining the Ukraposhta Igor worked for the KPMG in New York. He says that everything is different here and even minor detail requires attention. For example, when services require senders to pay for any element of the delivery it is not very popular. Igor thinks it is a result of the low level of trust in Ukraine.

However, main hopes are with the modernization of services and post offices. “I am always asked about drones. But the reasons for delivery is often more important than the careers. People need their things when they need it. For example, they are mostly at home at 6 pm – 9pm. What does Amazon do? They install automated parcel lockers. In a couple of years they will install fridges there because food delivery is getting more anf more popular there,” Igor tells us.

When discussing competition, it is worth remembering that competitors are less regulated. Unlike courier delivery companies Ukraposhta is a member of the Universal Postal Union. It means that if a letter is sent from the most remote village in Ukraine to Australia, it shall be delivered. Moreover, all Ukrposhta employees enjoy all the benefits of the official employment. Not all the private companies do that. However, he believes that the ground should be even for all players. “I want all of us follow the same set of rules,” Igor concluded.