Shipping systematic innovation as a tool for sustainable

Shipping systematic innovation as a tool for sustainable business performance

Definition of innovation Basic definition: introduction of new ideas/changes that add ‘value’ to a firm’s activities • introduction of a new product (service) or a qualitative change in an existing product (service) • process innovation - new to an industry • the opening of a new market • business model innovation • . . .

Invention, Innovation, Diffusion • Invention: conception of an idea to do / make something (profitability not yet verified) • Innovation: new product/ process commercially valuable i. e. successfully developed inventions • Diffusion: the spread of an innovation throughout society or market segments – full benefits – ‘spillovers’ or ‘positive externalities’

Product and process innovation Product innovation q product used by consumers ü smart phones, etc q products used by firms ü Shipping containers, robots, AGVs etc Process innovation q Used by consumers ü E-government q Used by firms ü TOS enabled cargo handling, e-customs

Defining an innovation • Can be defined as new to Ø Firm Ø Market (industry) Ø World • Radical vs. incremental § Radical (steam engine, internal combustion engine, unmanned ship, offshore ports) § Incremental (containers? - constant improvements) § Both important in driving economic growth

A typology of innovation

Knowledge and Technology • • • Discover knowledge by research Disseminate knowledge Knowledge as a public good Universities, government labs, large firms R&D departments Triple Helix: Academia-Business-State Basic and Applied Research, Research and Development (R&D) Technology • Application of knowledge to ‘production’ • Firms driven by profit incentive • Private good: investment (R&D) projects, appropriation, intellectual property

Conceptual framework of innovation

Linear models of innovation

Interactive model of innovation

The chronological development of models of innovation

Overview of the Innovation Process

The innovation process

The new service development cycle

Industry Life Cycle: the S curve Performance Maturity Discontinuity Takeoff Ferment Time

Tools for Managing Discontinuity Entrants Suppliers Rivals Substitutes Porter: Strategy-Value Chain Buyers

Tools for Managing Discontinuity Entrants Suppliers Rivals Substitutes Porter-Strategy-Value Chain Buyers

Systematic innovation capabilities model for shipping • A combined systematic innovation capabilities and innovation process model, developed by Lawson and Samson (2001) and Ota et al (2013) • Validating and refining the above generic, reference innovation process (IP) framework as an appropriate tool for shipping management/strategy • Pertinent model elements, as relevant for shipping companies

Systematic innovation capabilities model for shipping • Based on management of both dynamic capabilities (DC) and IPs. – Our model revisits and combines the model by Teece (2007), of routines existing in the innovation management process and further models contextualized in the shipping sector. • Proving a comprehensive systematic innovation capability model for shipping, in particular. • Unit of analysis: the shipping company

Teece, D. (2007)

Systematic innovation capabilities

Systematic Innovation Capability Components Strategy and Leadership Innovation Performance Measurement Resourcing for Innovation Process Components Technology Management Organizational Intelligence Structures, Culture, Climate

Innovation in Shipping: the context • “the reform of services, operations, and organizational methods to bring about economic and quality benefits for companies, their customers and supply chain collaborators”. • incremental / radical shipping service innovation • i. e. improved service frequency • i. e. capacity sharing: 2 M, Ocean three, and more shipping alliances • market innovation, accounting to a shipping company’s move to a new market • process innovation, accounting to improvements of the shipping or ship operations based on ICT or naval enginnering/technology • e-navigation, e-chartering, e-procurement, e-manning, port community systems for ship formalities clearance, voyage management systems etc. • new financial management instruments for new investment management and governance approaches • business model innovation

Innovation in Shipping: the context • a unique business operations specialization (i. e. chartering, technical management, safety and security management, rules and regulation compliance), also • market segmentation (i. e. bulk, container, tanker, liquefied natural gas etc), and • a distinct role played by international governing bodies, such as the International Maritime Organization (IMO) setting rules and regulations for the markets

Innovation in Shipping: leadership and strategy • innovation in shipping entails a firm, insightful expression of the strategic direction üboth autocratic and participative, team-based and collaborative leadership styles are observed, • not necessarily /explicitly connected to innovation, but instead to excellence or sustainable, competitive operation • Leadership is a central parameter in strategy formulation and implementation, whereas champions of innovation initiatives are commonly active in important and interrelated roles, i. e. officers of technical departments, finance experts etc.

Innovation in Shipping: resourcing for innovation • effectively orchestrate and develop tangible resources (i. e. fleet, financial resources), also knowledge resources within the firm but also through their operation and close ties with their maritime network/cluster/ecosystem collaborators • successfully manage new ventures, not always recognized as innovation initiatives per se, thus accumulate experience and learning abilities, supporting still further improvements, (enable SC to sense and shape opportunities and threats) • to lever, combine and recombine financial resources from disparate sources

Innovation in Shipping: resourcing for innovation • employ e-business tools and practices to both optimize operations (i. e. e-maritime, e-navigation) but also • better coordinate and enable knowledge management as a fundamental source of competitive strategic (innovation) advantage, • within the firm but also through operation and close ties with their maritime network/cluster/ecosystem collaborators.

Innovation in Shipping: organizational intelligence • “the capability to process, interpret, encode, manipulate and access information in a purposeful, goal-directed manner, so it can increase its adaptive potential in the environment in which it operates” ”. • use this information to reduce the inherent uncertainty and ambiguity of innovative business operation. • identify new avenues for investigation and to more quickly eliminate unprofitable options. • proactively used environment scanning, technological forecasting and competitive analysis toward this goal. • learning from customers and collaborators in the supply chain, and also learning about competitors.

Innovation in Shipping: structures, culture and climate • considerable differentiation of perceptions and values exists between individuals and roles ashore (managers, employees at SC’ offices-white collar positions) and seafarer positions and work environments onboard • only partially cultivated a culture that praises tolerance for ambiguity, failure and encourages risk–taking • employ and support the professional development and well being of satisfied and empowered employees and managers, also seafarers • not necessarily explicitly linked to a conscious innovation-oriented strategy but often to a competitive human resource management strategy • rather a predominant, strong seafaring culture onboard and the white collar maritime culture may foster innovative behavior, through professional/scientific MS methods

Innovation in Shipping: management of technology • naval engineering, green shipping, and digital shipping technology are core technologies for shipping • Shipping is a supplier dominated industry (Pavitt, 1984) also features of scaleintensive industries, with specialized suppliers • development and adoption has constituted a critical factor for contemporary effective technical innovation management in shipping, both radical also incremental • SC follow to some extent formal methodologies that allow them to conduct scientific/professional technology forecasting and explicitly align core technology strategies, with innovation strategy and business strategy. • SC participate in technical innovation (platform) -management of technology within the company and innovation ecosystem • influence of external networks and its relationships with the corporate knowledge base and issues like technology oriented alliances and agreements.

Innovation in Shipping: innovation performance measurement • SC moderately follow formal methodologies for business performance management, which are weakly, linked to innovation performance measurement • Key Performance Indicators (KPIs) oriented view • e-analytics business process management approach

Innovation in Shipping: a systematic innovation capability model • variations of the role, relative importance and causal relationships between six main components of the systematic innovation capability compound construct • variations in different markets, regions