Torgeir Willumsen, resident partner at Simonsen Vogt Wiig in Singapore and founder of Assentiri, with some advice for shipping on the industry’s digital path.
Earlier this month I discussed some key obstacles to digitalising shipping transactions: the complexity of the shipping industry, the human element and security concerns. These are all valid reasons for why digitalisation is difficult, but they should not be seen as reasons for not getting started. Lack of digitalisation is likely to hinder innovation and efficiency, compromise safety and result in higher costs.
Thankfully, industry leaders no longer question the need for digitalisation, but rather how they can do it most effectively. Below I will suggest three approaches to overcome obstacles to digitalisation, especially in light of the human element that is very prevalent in a conservative industry such as shipping.
Bottom-up approach
In an industry with much complexity where standardised solutions are lacking, it is important that innovators don’t try to do too much too soon by applying a very wide top-down approach. It is a natural ambition for an entrepreneur with vision and foresight to create something that maximizes impact and reach by covering many stakeholders, products and revenue streams. This can result in an ambitious “masterplan” for the industry segment, detailing such elements as functionality, pricing and user interface, before actually launching a product.
However, the ambitious innovator can quickly become his own worst enemy. Trying to build a whole ecosystem or capture most of a supply chain from the start is hard and requires large upfront investments, resulting in a long time to profitability and with corresponding risk increases. Even more importantly, it becomes hard to know if you are doing the right thing along the way.
Instead, I would suggest that innovators pay attention to the more specific work tasks and processes in the day-to-day work of industry professionals and do their utmost to identify real pain points that require solutions. Such an approach requires close collaboration with relevant industry people, which will ensure resources are directed where needed, instead of dispersing them too widely to create more complete offerings for a broader audience.
For example, in a shipping transaction it may be a natural end-point to use technology to facilitate the back-and-forth negotiations of various contractual documents from recap stage to signing. However, a much lower hanging fruit is to use tried and tested automated document assembly technology to provide a solid first draft of the relevant documents. This doesn’t solve all issues, but it may solve one issue well and create momentum for the next pain point to be addressed. This kind of step-by-step approach allows for course corrections underway and reduces the risk of entrepreneurs trying to solve the wrong problem. Moreover, when we want to reduce human resistance and uncertainty, we should not ignore the benefits that a gradual approach can bring to individuals in terms of enhanced sense of control, mastery and security – which can result in increased motivation and improved outcomes.
User-centric approach
The biggest competitor of most entrepreneurs is “business as usual”. Old habits die hard and it takes effort to make a change. Consequently, any alternative to the current work process must provide some form of clear benefit, be it in the form of cost reduction, time saving or ease of use. When it comes to digitalisation efforts, where technology is front and center of the value proposition, user-centric solutions have to be top of mind. The product being created and marketed must be seen by the users to ease their tasks, and thus improve their work lives.
If digital solutions provide sufficient benefits to the intended users, much of the human resistance is likely to fall away. Common technologies such as credit cards and e-mail are not the most secure ways of payment or communication, but their ease of use ensures that they are widespread and difficult to replace. Likewise, security concerns about new digital tools – which might be more because of their novelty rather than their vulnerability – are likely to lessen if it significantly enhances the work life of the user.
But entrepreneurs must keep in mind that the user experience is strongly connected to the current work processes. If innovators design solutions that demand a radical change of how things are done, they will face immediate opposition from their prospective users and struggle to gain traction. Unless you are Apple or Google, you might want to try a more gradual approach, concentrating on real issues in the existing work process, where specific solutions can be applied without disrupting the current workflow. Naturally, such an approach requires that the innovators have or obtain good knowledge of the relevant work processes. Which leads me to the third point.
Augment the human expertise
People have always felt both hopeful and fearful about how technological advancements can reduce human involvement in various work tasks. A historical example is the use of machines in agriculture which reduced the US population living on farms from 40% in 1900 to around 1% today. Nevertheless, farmers still exist and are essential for both running the machines and handling many other farming tasks. My point is that technology cannot completely replace human abilities and any technological invention should not begin with that goal in mind. The goal should rather be to develop digital tools that skilled humans can use to improve their work output.
It follows that innovators must have intimate knowledge of the industry and its workflows. This can either be achieved by the innovators possessing the relevant domain knowledge themselves, or by collaborating with industry experts when creating the appropriate technology. The ideal would be a mix of both.
Key takeaways for successful digitalisation
Digitalising the maritime industry has the potential to stimulate innovation, increase efficiency, improve safety, and cut costs. The path to accessing these advantages is nevertheless not straight-forward.
When introducing digital technologies in a conservative industry which is “asset heavy and people light” with many established business and work practices, it is essential to consider the human factor and innovate accordingly. People are generally resistant to change and introducing digital innovations that require too much change too soon, will result in an uphill struggle.
Hence, I would recommend adopting an incremental and iterative approach that actively seeks input from industry professionals. This ensures that innovators constantly test their hypotheses against the existing work processes, something which is vital for successful implementation.
All of this might seem challenging, and it is. But entrepreneurs should be encouraged by the fact that if digitalisation was easy, everyone would be doing it already.
