The big changes forcing PostNord to digitally restructure

Digitization is changing business models, particularly at PostNord, where it’s seen a continuous reduction in national letters sent that’s in line with the long-term digitization trend. For over 20 years, the volume of letters has dropped by 65%, which has led to delivery now only taking place every other day. By contrast, the growth of e-commerce has exponentially increased the number of packages. 

“We’ve gone from being a postal company that also handles parcels, to a parcel company that also handles mail, and the customer journey for parcels is mostly digital,” says PostNord CIO Jörgen Hellberg.

In order to compensate for falling letter volumes but still maintain reliable distribution, it’s necessary to become sharp on the package side. 

“The digital customer journey must be frictionless,” he says. “We process 245 million packages a year.”

Replacing the production platform

Right now, PostNord is undergoing multiple transformations simultaneously to achieve its projected business goals. In addition to reduced costs and efficiencies, the strategy is to be a leader in the highly competitive parcel market, and become the first choice in the Nordic market. 

One of the transformations is technical and about getting an entirely new production platform in place. 

“When I joined three years ago, we were left with a highly fragmented legacy landscape with many self-built systems, as well as different systems in our four countries: Sweden, Denmark, Norway and Finland,” he says. “And there we look at what we buy and develop ourselves.” 

The starting point is to buy products where you can, and develop parts internally where they’re not available on the market. It’s also crucial that there should be common systems throughout the Nordics. 

“If one system is better in Norway but another works best in the Nordic region as a whole, we always choose the one that benefits the region as a whole,” he says. 

Adopting an agile approach

Another major transformation is to introduce an agile approach throughout the organization. But Hellberg is clear he’s pragmatic that how one tackles tasks matters more than the actual meaning of the framework. 

“For me, agile is not a tool or process but an approach,” he says. “You can be agile with waterfall projects too; it’s about short lead times, running proof of concept and delivering a small product to test a hypothesis, and then build from it. Those are the important principles.” 

Running without deadlines is not part of the agile he subscribes to. 

“It doesn’t work for a company,” he adds. “It must be possible to make a plan where you know when different things will come. And I think that along the journey, in three to four years, we’ll see we’re working agile loosely based on frameworks in a way that works for us.” 

And in parallel with these things, the company is also carrying out another major business transformation, where joint Nordic products are being developed on the package side. 

“We must succeed with all of these transformation parts at the same time,” says Hellberg.  

Data platform in place

Central to all of these initiatives succeeding is the quality of data Hellberg and his team can access and utilize.

“Data is perhaps the area where we’ve come the furthest,” he says. “We’ve set up a data platform, have a strong central team, and a center of excellence in analytics. We also have data and analytics teams to support our various business units. With the platform now in place, we bring in data based on different use cases of the business needs.” 

A challenge along the way is to identify which areas will be topical in the future in order to get a jump on collecting relevant data. 

“What kind of data do we need now and what do we need later, and how does it produce the data?” he asks. “When we know that, we have to change the production process to get it because quality data is one of the most valuable assets companies have. 

Focus on the simplest fix

In the midst of all the work with transformation, the question is how to also manage working with innovation and test new technology. 

The first thing Hellberg points out is that many people start at the wrong end — with the tool and what you can do with it. Instead, it’s better to start from the problems that need to be solved or see how to take care of the opportunities you have. 

“Then it’s about finding the simplest method,” he says. “It can be with paper and pencil, Excel, or machine learning. Whatever is easiest should be used. When it comes to gen AI, we must first fully understand it in order to use it properly.”  

An example of where PostNord innovatively uses technology is a solution to monitor the degree of filling trucks, using surveillance cameras and a digital twin used in a sorting terminal to simulate changing flows. 

But even if PostNord’s IT department gathers once a year to test ideas and think creatively, Hellberg believes it’s vital to maintain a culture of innovation. 

“The most important innovation is the one that takes place on a daily basis when we constantly make things a little smarter,” he says. “This is what happens between the business and IT, between the store and our specialists. It’s not about finding silver bullet projects. Successful companies advance incrementally every month.” 

A culture of safety

At the same time that PostNord is building for the future, there are ongoing cyber threats in the background. PostNord is a socially critical company, so it does feel exposed. 

“We’re aware that we as a company are very visible,” he says. “We have a large surface to the outside world. For us, as for all companies, security is high on the agenda, but we have a dedicated people in all our development teams. But should any bad actor strike, you’re exposed. That’s how it is.”

In addition to protection against the attacks themselves, he thinks it’s important to also work on restoring the systems.

“How quickly can we come back with the systems and limit damage?” he asks. “In addition to the shell protection being strong, you must have a strong ability to come back.”

And PostNord has a clear ambition to be around for a long time. 

“There’s a pride for our history among those who work here,” he says. “Our CEO says we’ve existed for 400 years, and what we do now we do to exist for another 400 years.”

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