03 April 17

Ports & digital innovation: playing to win or to lose?

1-768x432It was expected. It’s arrived. It’s creating a huge buzz. And it’s here to stay. Over the last few years, digital innovation has rapidly and deeply disrupted a wide array of industrial and consumer markets. Shipping, ports and freight more generally are relative latecomers. But now the game is well and truly afoot.

In the last 12 months, the uptake of digitalisation, data analytics and technology innovation has been quite remarkable.

A growing number of shipping and port stakeholders have a digital vision and strategy in place; the number of start-ups and hackathons is rising rapidly; and there are even incubators specialising in ports and shipping. The race is now on and competition in terms of digital transformation and data analytics is expanding exponentially.

But in the headlong rush to get on-board, have some established companies somehow overlooked what digital innovation is all about in the first place? Without deeply understanding the game being played, winning is always going to be a hit and miss affair at best.

The power of digital innovation lies in transforming and creating brand new industries and markets. To be really innovative you have to think extremely creatively, be agile and move fast, constantly challenge the constraints of defined policies and procedures, and operate in environments that encourage failure and risk taking. It’s not surprising that start-ups and innovation centres operate exactly along these lines. Their success derives from a “challenge everything” attitude, from nimbleness, and above all from speed.

Speed is the most important keyword in this new environment. There is no space for long lead times anymore. In a move that went viral, Tesla Motors recently took an idea to execution in 6 days, setting a new benchmark. Another critical dimension is focus; the ability to deep-dive and master a specific area like no one else. Finally, start-ups and innovation centres are predominantly technology organisations active in the shipping and ports industry.

For established shipping and ports companies, the game is far more challenging. Re-inventing is always far more difficult – and slower – than inventing. Embarking on a transformative journey is a long process for medium and large organisations that has to run parallel with daily operations while defending current position in the market.

Businesses put lots of efforts into establishing standardised operations, well-defined processes and risk-free operating environments to function smoothly. These are not exactly the ideal conditions for creativity and innovation to flourish – though vital to ensuring that in the next stage, innovative approaches can be turned into reality. The required scale of change for established companies adds further to the overall challenge.

Successful digital transformation journeys are meant to be horizontal and not vertical. Starting from customer analytics, asset management, procurement and going all the way to human resources, finance and compliance: disruptive digitalization is everywhere and has to connect everything. Powerful results are realized when digital penetrates the entire value chain.

However, all too often execution falls well short of unlocking the true value. For instance, there are multiple real-world examples of businesses investing in new digital applications to be used by customers, yet still feeding information manually into said applications. When results are not as expected, disbelief and disenchantment spreads and naturally an attitude of ‘let’s get back to what we know how to do best’ prevails.

What businesses often focus on is the means to an end and not the journey. But a digital application in this case should be the spear of a thoroughly redefined way to interact with customers and not just a tool replacing existing processes with some generous boost from new technologies. Replacing manual with digital processes, installing more sensors and collecting more data is significant progress, but is not innovation anymore.

The greatest challenge of all is about capabilities, culture and leadership. It is often underestimated that an effective digital journey aims to transform established shipping, port and freight businesses into technology and innovation businesses as well. Support from top leadership is essential and established companies also have to be equipped with talent that goes well beyond their traditional pool of employees. Experts in data analytics, Internet of Things, computer science to name but a few, have to be recruited and fit in a business environment that in most cases is largely unprepared for such a radical change.

Communication is difficult, culture is vastly different, clashes may be frequent and problems naturally arise. Here, a vital role is played by the ‘translators’ – people with exposure and understanding of both the digital innovation and the business worlds, who can marry complex technology concepts with real-world conditions.

Translators are the critical conduit between tech teams and the leadership. Overlooking and underestimating their value is not a good idea. Leadership needs to be actively involved in such a challenging transformation journey, persist with framing and communicating the overall vision and its necessity, and build support around the expected benefits.

Digital innovation is a team sport. Creativity sparks when conflicting and distinctive ideas do not fight to prevail, but synthesize to create something greater than the sum of the parts. For established business where ‘fighting to prevail’ is core to their DNA, collaboration will be very unsettling. But that’s the game to be played now

Failure to recognize this fundamental rule limits chances of winning. The race should be about developing new business environments that will at minimum be receptive to new ideas and innovation, generated either internally or externally. Access to innovative ideas and new technologies is now easier than ever for shipping and port companies. Successful start-ups are making an impact already and without doubt are seeking to work with established businesses. Hackathons provide access not only to new ideas but also to essential talent. Incubators provide deep expertise around disruption, entrepreneurship and growth. Innovation centres are fed by real world-problems.

Source: Porteconomics

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