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Room for Startups in Your Business Model?

Posted by on 08 December 2017
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The digital wave and why we need to embrace it

Digital is becoming the new normal. It’s everywhere. There is no area of our lives that has not been touched by the last 20 years of digital revolution. Yet digital is becoming even more profound as a force for change with the most recent developments of digital technology in Artificial Intelligence, Blockchain and Internet of Things to name a few. Such transformation takes on a life of its own, very often disrupting entire industries from the outside. Should we wait and let it happen to Maritime or should we take our future in our hands and engage with the forces of change?

Digital needs a different innovation approach

Digital is allowing a totally new sort of innovation, which requires a different approach to the traditional R&D-led innovation of the last Millennium. It is not so much about structured investment in research, and then development, using a sequential, planned approach. It’s more about agile experimentation and learning to find the digital application that can solve a problem otherwise intractable. This is particularly true for the most recent digital technologies which allow a completely different approach to such problems.

So the question arises, if digital innovation is inherently different from traditional “hard” technology innovation, how should it be treated?

Start Ups are the answer BUT they need completely different management skills than an established company

During the first decade of the Millennium digital innovation had a massive impact on our society, driven by many new digital companies, mostly based in Silicon Valley. These companies developed a new way of doing innovation with digital – the ‘startup’ way. The traditional concept of how a company is built is linear and planned e.g. idea-business plan-funding-execution of plan – which does not guarantee success in an uncertain rapidly changing environment. Instead the startup way focuses on innovation through experimenting and learning.

“The fundamental activity of a startup is to turn ideas into products, measure how customers respond, and then learn whether to pivot or persevere. All successful startup processes should be geared to accelerate that feedback loop.” — Eric Ries, the Lean Startup

Addressing the corporate innovation dilemma

In an ideal world, an established company willing to innovate in the digital space should be able to use the same processes as startups do. The trouble is that it is very difficult to change an organisation and its established processes. Even worse, a startup mindset is in direct opposition to the management style of an established company and does not help to run existing processes smoothly. They do two different things in two completely different ways.

Aside from the ostrich approach masquerading as “We don’t do anything about this because it doesn’t affect us,” there are three strategies established companies can take to address this conundrum. The “Room for Startups in Your Business Model?” white paper describes these in detail and explores their relative merits and disadvantages.

In a nutshell, the three strategies are

  1. To acquire the capabilities to do digital innovation internally
  2. To create an internal lab to collaborate with existing startups and
  3. To collaborate with a Startup Accelerator.

Acquiring the capabilities to do Digital innovation internally

Some companies manage to do digital innovation internally, hiring staff and creating incubation space. This can work, but requires significant commitment and resources. An example is the Norwegian Shipowner Torvald Klaveness. In 2015 the company decided to create an internal Innovation Lab. They had the full support of the Board and CEO, who managed to gain the buy-in from the organisation. They scouted for digital talent to join the Lab, set up the Lab, defined the challenges on which to focus the efforts of the available resources and spent 2 years developing their innovative products CARGO and PERFORM, recently finalised. It was definitely a success for a Maritime company. Klaveness managed to defeat the stereotype of the company anchored to the past, and instead fearlessly focus on the future with positive implications on its ability to remain relevant in a rapidly changing environment through digital innovation leadership.

Creating an internal lab to collaborate with existing startups

Wilhelmsen, a Norwegian ships agent and ship management company, took a different approach and created an internal Digital Innovation Lab led by a digital expert with the objective to launch an internal startup development programme. “Digitalisation is changing the world and Wilhelmsen is ready to play a key role in shaping it. A new Digital Solutions team is ready to guide the group and transform the way we do business.” – Wilhelmsen say on its website.

This approach can work and does not require big investment in digital capability. However it requires the ability to fully understand and interact with and ultimately engage with startups. Companies may lack the specialised skills, resources and cultural understanding to do this effectively.

Collaborating with a Startup Accelerator

Startup accelerators are experts at developing start ups and helping companies engage with them to mutual benefit. They help companies keep in touch first-hand with digital developments, and they help startups focus their efforts towards the most pressing issues for the companies and to identify new business opportunities driven by digital.

Some companies contract startup accelerators to set up programmes of their own, requiring investment in excess of £1m. Other, smaller companies, collaborate in Accelerator programmes which partner with multiple companies at a time for a much smaller individual investment, but with the same opportunity to interact with startups and run pilots with them. It’s a highly cost-effective relationship and an excellent way to access digital innovation and learn the startup mindset, so much so that they look forward to running as many pilot programmes as possible during the programme partnership.

Organisations are exploring and trying different approaches to interacting with startups for digital innovation, each one with its merits and disadvantages. There isn’t a single best approach, rather each company has to identify what’s best for its own specific situation. It’s a complicated world, however we have the chance to take the Maritime sector’s future in our hands and engage with the forces of change rather than being disrupted by them.

Green Ship Technology GST - Shipping2030 Europe Copenhagen 2018
For more insights, join us at GST & Shipping2030 Europe in March 2018. Book now!

Leonardo Zangrando MSc Naval Architect, MBA is the CEO of London-based Startup Wharf, the first Startup Accelerator combining expertise in Maritime and Digital. Startup Wharf helps Maritime companies embrace Digital through events for Maritime executives and Maritime Startup Accelerator programmes.

Find out more about Zangrando in our interview with him here.

The author and KNect365 retains ownership of this content. Any reference to the materials above should be attributed to the author and KNect365.

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