Be the disruptor or become the disrupted

Digitisation is changing industries, forcing them to prepare for a tomorrow that is unpredictable

Updated: Sep 28, 2018 12:42:21 PM UTC

Navneet Kapoor is the Head of Maersk Global Service Center.

Image: Shutterstock
Image: Shutterstock

We live in times of unprecedented change. India, in particular, is rapidly being transformed by new technologies which are redefining the way we live and conduct business. Digitisation is changing industries, forcing them to prepare for a tomorrow that is unpredictable. Transformation, which is essentially about building agility to prepare and respond to these forces of change, is not an option anymore. Instead, it is the only way to remain relevant in the years to come as it continues to disrupt every industry and business around us. The rate of institutionalisation of disruption is at its highest ever.

Technology has changed how we shop, share, socialise and even travel. Which is why, existing business models, even the successful ones, need to evolve and disrupt before they get disrupted. This also applies to the industry of container shipping, ports, and logistics, which was disrupted in the last century by the invention of the container, as we know it today, but has since largely been focused on optimising how goods are moved.

Traditionally, this industry has operated like a brick and mortar establishment with a majority of the processes being managed manually and the use of technology being relegated mainly to backend operations. With endless paperwork and multiple layers of manual processing adding up to extra transaction costs, the Industry has been spending close to Rs 6,000 crore every year to keep the wheels turning seamlessly. The opportunity size for the industry and its customers is huge and any company that can leapfrog a slow, incremental change can shape the future.

Big data, analytics, and machine learning can help generate actionable insights for the shipping and logistics Industry, improve customer satisfaction, drive down costs, and offer a longer-term view of trends.

For example, having the ability to remotely track key parameters, such as temperature, humidity and so on, within containers can help shippers and customers take timely action to prevent spoilage while shipping fresh produce in refrigerated containers. Additionally, using technology and data, shippers can optimise their network, improving service reliability, reducing bunker costs and improve sustainability.

However, the odds of transforming successfully, i.e., finding a way to grow and be profitable on a sustained basis, are stacked up against companies undergoing a transformation. This is despite them having the will and even the wherewithal to transform. This becomes very apparent when one looks at the Fortune 50 mortality rate, only a handful of companies on that list from 10 years ago are still on it. A big reason for it is that change needs to happen across multiple dimensions for companies to be successful, and it is not easy for companies to recognise that.

Flavor of transformation may differ across industries
Based on my experience, here are the key dimensions across which companies need to drive change in order to have a shot at successful transformation.

Leadership: Change starts from the top. However, most existing C-suite leaders don’t have the expertise to drive this change by themselves. This is especially true when it comes to the mammoth task of creating a strong digital foundation for an entity. The C-suite then needs to include new members who bring expertise with transformation, data and technology. Often this may be via the appointment of a transformation leader or a Chief Digital Officer. Though not a must, most often this approach introduces expertise, focus and structure to the transformation journey and signals a sense of urgency.

Cultural: This is critical and perhaps the hardest to execute. Redefining the culture within an organisation is not easy, but a crisis, even if imminent, can become a rallying point for change. New values like agility, risk-taking and a learning mindset need to be introduced in order to build appreciation for the fact that it is impossible to rely upon five year strategic plans.

Operating model: Speeding up the decision-making process is fundamental to this transformation. This can be done only by reducing layers, especially in large organisations. Also, companies need to explore rolling out a product agile model instead of the traditional project management, waterfall approach to get work done. This brings the decision makers and do-ers closer and puts the customer needs at the center of the prioritisation process.

Prioritisation: Less is more. Reducing the number of projects and holding leaders accountable is fundamental to evolution. Moving to a constrained resource model and aggressively choosing what not to do helps draw focus to what’s most important.

Talent: The skills needed to drive this change are often different from those existing within an organisation. So, hiring top talent from outside, while up-skilling internal talent is key to driving the change. For example, if looking for technical talent, it is critical that companies look to bring in what are called the 3x-5x engineers who can push the development agenda forward at the pace needed. Average talent alone may not bring the “escape velocity” needed during transformative times.

Innovation and external focus: Companies can’t grow through just cost optimisation or by merely driving operational efficiencies. Innovation is the only sustainable way to growth. Many companies have set up dedicated verticals with a license to disrupt and look for new revenue streams. Additionally, partnering with the startup ecosystem and engaging externally with disruptors and researchers is a wonderful way to change the DNA of the company.

Only a holistic approach can reap sustainable results
Each of the dimensions detailed above is important for digital transformation. When implemented in a holistic manner, these can help companies succeed. However, as companies go through this change, they need to watch out for two pitfalls. Firstly, when change impacts individual leaders and teams, they tend to rationalise incremental as transformational. Not settling for incremental is absolutely imperative to drive a meaningful, sustained change. Secondly, there is an investment of time and money involved with any transformation, and this can be at odds with delivering quarter over quarter financial performance. Being transparent about the trade-offs and providing visibility to the key metrics that signal transformation progress is essential to bringing stakeholders along.

As companies think about transformation, driving change across multiple dimensions is key to enabling sustainable results. Having experts with a solid understanding of the process, data and technology and a real appetite for risk-taking, in key leadership roles could prove to be the elusive x-factor needed to accelerate transformation.

The author is a Head of Maersk Global Service Center.

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