Since Harvard Business School’s Clayton Christensen coined the term ‘disruptive innovation’ in the late 1990s – a principle whereby incumbent businesses can be unseated in the market by small, more agile rivals offering solutions more simply or at less cost – disruption has become the ultimate Silicon Valley buzzword.
The notion of enabling monumental shifts in market dynamics by means of innovation has inspired generations to question the status quo and think outside the box, opening up whole new market segments along the way and giving birth to a thriving venture capital industry.
Traditional industries like heavy manufacturing and commercial road transport have long managed to avoid confrontation with the ‘new economy’, but with the advent of change catalysts like autonomous driving and the Internet of Things (IoT), they too are now facing the risk of being disrupted.
But, there’s good news. According to William Barnett, Professor of Business Leadership and Strategy at the Stanford Graduate School of Business, disruption is an inherently democratic process and not exclusive to Silicon Valley’s burgeoning start-up scene.
While some may think of entrenched businesses thinking outside the box as “the Czar creating a bureau on revolutionary thinking,” he says, there is no indication that the establishment is less innovative than the average start-up.
In a capital-intensive space like truck and trailer design, warehousing or logistics, that realisation could lead to a dramatically different disruption dynamic, he argues – if big business is ready to face one important structural issue.
“Consider this idea from a small team of rule breakers,” he explains. “Provide a way to instantly share digital photographs with others anywhere on Earth – but only with those who you want to see the photo. You are thinking Instagram, the tiny company acquired in 2012 by Facebook for $1 billion (€844 million).”
He continues, “I am [however] describing a project launched in 1996…by a group at Kodak’s Brazil headquarters in São Paulo. Yes, Kodak – everybody’s favourite example of a company that failed by being too slow to innovate.”
According to Barnett, Kodak’s country head in Brazil, Jarbas Mendes, and his team were already trying to find innovative ways to help customers share their digital photographs in the age of dial-up Internet access. “The team understood that the Internet, brand-new at the time, could enable such sharing,” he says. “So they designed a system where one could upload photographs to a server in the cloud – though nobody yet used the term cloud – and send a code to another person, who could then view the photographs. What we now call Instagram was actually invented by Kodak 14 years earlier.”
The issue, he says, was not the “slow-incumbent myth” whereby success at a well-honed strategy leaves companies blind to the value of new technology. It was organisational in nature. “[As opposed to common belief,] big, established firms often do a great job of rapidly adopting new technologies,” he says. “With success, leaders are often more willing to innovate – even when such innovations are out of step with their traditional organisations. And therein lies the problem – we misread our success at one game and so readily launch into another, whether our organisation is suited for that business or not.”
The lesson for the transport and logistics industry? Tesla-esque disruption is not just about technology changing, Barnett says, it is about “changing the logic” of a business. “Success with a new technology requires organising for a new logic, and organising in new ways requires that you forget the successes of your past.”
Awareness of that ‘success bias’ may well change the game for incumbent businesses in capital-intensive industries like truck and trailer manufacturing, which have been increasingly challenged of late – not just by Elon Musk’s omnipresent Tesla project, but also by less prominent start-ups such as Otto, which is now owned by the struggling Uber organisation, Embark or TuSimple.
Volvo Trucks, for example, is considering a dramatic strategic shift to ensure it will be able to manage the future of mobility. At the 2017 Brisbane Truck Show in Queensland, Australia, Hayder Wokil, the company’s Director of Mobility and Automation, told Global Trailer that the company’s is “thinking in every direction” when it comes to the next generation of commercial vehicles – including the very concept of vehicle ownership.
“We have a long way to go as an industry, but as an organisation, we have to think about these structural challenges today,” he said. “Will autonomous driving eventually lead to us waiving the notion of a driver cab altogether? Who will provide the energy needed? Who will own the vehicle, and who will operate it? It’s an exciting time and we know we need to open our collective mind to understand how big the shift could be.”
The same is true for Europe’s second-largest trailer brand, Krone. In a recent Global Trailer interview, Managing Partner, Bernard Krone, revealed that the company is keeping a keen eye on electric mobility, knowing that the humble trailer could one day serve as both load platform and transport unit. To do so, the OEM will have to reassess the very foundation it has been built upon to avoid a ‘Kodak moment’ and ensure the right structure is in place should the shift eventually become a reality.
“We’ve invested heavily in our European service network last year, as well as a new paint shop, a new warehouse and a new validation centre, which is a huge project. Many of these decisions have been made with the future in mind,” he told Global Trailer with view to success bias.
“It will be close to impossible to solely compete with the standard trailer portfolio in the future. There is no alternative to investing in digital technologies and value-added services if you want to grow both sustainably and profitably in a low-margin market such as trailer manufacturing.”
In a move to channel that new, less biased way of dealing with disruption into an accessible, relevant format, Melbourne will host a new kind of multi-modal logistics show next May. MEGATRANS2018 will assemble all stakeholders involved in the global supply chain – from manufacturing through to regulation – and provide industry with a unique opportunity to approach innovation in warehousing, logistics, road transport, rail, port, sea and air freight from a holistic perspective.
According to Show Director, Simon Coburn, MEGATRANS2018 is a direct response to the disruptive pressure coming from megatrends such as population growth, urbanisation, congestion, demographic change and sustainability. “Transport and logistics are not about transporting freight from A to B anymore – they’re evolving constantly and involve much more complex services,” he explains, indicating that overcoming the success bias Kodak experienced calls for a new way of processing innovation. “Where previously, the industry segments have been operating in isolation, MEGATRANS2018 will bridge the gaps and foster communication, connections and learning.”
MEGATRANS2018 makes its debut from 10 to 12 May 2018 at the Melbourne Convention and Exhibition Centre, in the heart of the one of Australia’s major logistics hubs and the world’s most liveable city – Melbourne. Connecting the Australian and international supply chain, the three-day expo, delivered in partnership with the Victorian State Government, will bring together those who plan, implement and control the efficient and effective forward flow and storage of goods, services and related information between point of origin and point of consumption.
Four main sections comprise the show’s 30,000m2 of space – Logistics & Materials Handling/Warehousing & Storage; Road Transport, Air, Sea & Rail; and Infrastructure – with an emphasis on technology throughout. “The age of disruption has arrived in the transport and logistics space,” Coburn explains. “MEGATRANS2018 is a unique opportunity to prepare for the tectonic shift that is to come and be an active part of the solution.”
Fast Fact
MEGATRANS2018 is supported by Isuzu Trucks as a Platinum Sponsor, Port of Melbourne as a Supporting Sponsor and DB Schenker as the official Logistics Partner of the event.
Fast Fact
MEGATRANS2018 is supported by a range of association partners, including the Australian Logistics Council (ALC); the Australian Peak Shippers Association (APSA); the Australian Road Transport Suppliers’ Association (ARTSA); the Freight & Trade Alliance (FTA); the International Cargo Handling Coordination Association (ICHCA); the National Transport Commission (NTC); TCA; and the Victorian Transport Association (VTA). The event will host the Global Shippers Forum, the ARTSA Global Leaders’ Summit, the Logistics & Materials Handling Mercury Awards, a Ministerial Breakfast delivered in partnership with the Victorian Government and Transport Certification Australia’s (TCA) Technology Hub.