3 keys to successful digital innovation

Digital innovation is high on the agenda in many board rooms and subject to many headlines. But what is it really? To the bone, the purpose of innovation is to make a company future proof – through extending the life span, and ultimately, by either lowering costs or adding new revenue. The latter can be done in many ways, and in this context we look at digital technology as a tool for innovation more than a solution in itself.

Digital technology can be used to digitize internal processes to become more cost effective. In combination with new business models these technologies can create new revenue streams or even businesses that are scalable without heavy asset investments, that have higher multipliers and thus a higher valuation potential.

In times where many core industry offerings are increasingly commoditized, supply/demand challenging, and company valuations trending towards asset book value, it makes sense that we’re seeing investments like never before in digital innovation, from inside and outside the industry.

1. Working with Startups

When digital innovation comes up, the talk often goes towards startups. But why, when mostly they have no assets, limited capital and industry insights, plus nine out of ten fail?

The easy part of the answer is that they may have the capabilities (in the broadest sense, technology, skill or other) that a traditional industry corporation does not. As such they may be interesting partners, or investment opportunities.

But beyond that a startup is by definition a team searching for a scalable repeatable business model. Learnings from the nine that fail enables de-risking one’s own efforts, and understanding the one that succeeds tell us what combination of technology / business model / team skills is the best to monetize a solution to a certain problem.

In our work with corporate partners we screen and understand more than 10,000 startups per year, and as a result, startups become valuable insights on where to invest, build and partner to achieve real impact.

2. The case for collaboration

Much air time is given to a fearful picture of disruption, while I would argue any industry corporation is in possession of hundreds of untapped opportunities to complement their core offerings and make them future proof. But why should they share them with others?

Firstly, each opportunity is hard to spot, truly understand, and requires knowledge on what to build or invest in, as well as a blend of different capabilities to succeed. Whereas one opportunity may require ship assets, an insurance license, deep blockchain knowledge, and entrepreneurial capability, another might require AI developers, access to retail customer data and IOT sensors. And most will likely call for the ability to attract and retain young top talent from outside the industry.

We do not see many, or any, entities that possess all the necessary attributes to unlock each opportunity. This goes for corporations and startups, inside and outside the industry.

Secondly, unlocking real value from the hundreds of opportunities is now a race to get there first. All companies have resource constraints, whether regarding budget, time management, or human resources. No matter how large or successful a company, if it goes at each opportunity alone, it will likely be the last to the finish line.

Thirdly, the maritime industry is an interconnected and fragmented one. Just calling a port involves multiple parties to work together – i.e. shipping line, port, terminal, towage, government, trucks and many more. The same is true of operating a ship, from owning, to crewing to maintaining.

Each party in the chain possess unique knowledge, assets and data that is only a piece of the supply chain. Many have tried to innovate or standardize one part of the process, but got stuck in the rest of the eco-system that they do not have the power to change themselves.

Many other industries have faced similar problems. When analyzing these industries and how they have developed in the last five years, we see radically different landscapes of players working together in order to win, in models that are well-know and proven there, and now coming to maritime.

3. How to collaborate

Many will by now have heard of or tried to participate in a hackathon, accelerator, or other process to get concrete results, but few will have succeeded in obtaining concrete results from this.

The main reason behind this is often lack of clarity as to what to achieve, a wrong choice of the vehicle is applied for desired outcome, and many poorly designed and executed offers in the market that are hard to differentiate until after having been tested and tried.

Further to this, organizational ambition is often mistaken with readiness when it comes to innovation. Consequently, companies are not setup optimally to reap the benefits when it comes to legal, governance, decision making, data etc.

In workshops hosted earlier this year jointly by Global Maritime Forum and Rainmaking, we explored different problem spaces and models to collaborate. We began to explore the pros and cons and the applicability in maritime of vehicles such as labs, shared infrastructure, venture building and commercial pilots. With this goal in mind, we explored a dimension of innovation horizons to create a common language among all stakeholders for incremental and transformative innovation.

It was amazing to see industry executives openly explored new ways of working together. Judging from the openness and willingness industry leaders brought to the discussions, opportunities are plentiful for industry players, and the first concrete ideas have already been formed during the workshops.

The future is bright in maritime if collaboration takes speed. Platforms (composed of people, not tech) that enable this are proven to have been instrumental in other industries. We believe that, in the years to come, this will be the case in the maritime industry as well.