Port innovation and the power of the platform

A famous quote by Albert Einstein reads: “We cannot solve our problems with the same thinking we used when we created them”. This article explains how dominant designs continue to exist despite the persistent need to change. In a previous blog on logistics innovations, I envisioned that most promising breakthrough innovations in logistics will likely come from platform technologies. In the context of this article, platforms are considered to be the place where people, technology and business interact with each other to bring a rough idea from prototype, pilot, proposition to product launch and ultimately reach sufficient scale. New logistics innovations are progressing in such a fast pace that the port logistics industry is on the verge of undergoing disruptive changes. These developments are mainly driven by start-up companies, rather than the incumbent traditional companies who have difficulty reinventing themselves.

Question is what ports communities will have to do to turn these innovation platforms to their advantage.

Where dominant design and dominant logic meet

Utterback and Abernathy first introduced the concept of ‘dominant design’ in 1975. They suggested that the emergence of a dominant design is a major milestone in an industry evolution and changes the way firms compete in an industry and thus, the type of organizations that succeed and prevail. Examples are numerous in transport: a bicycle rather than a monocycle, a car still looks similar to a carriage (with a little imagination). We still compare a car’s power with a horse. The DC-3 in the ’30 revolutionised aviation as much as the Boeing set the industry standard in the ’70 with the 747 jumbojet airplane for long distance flights. System wise, the 20 and 40 foot container shook up international trade and transport system since the ’60 and enabled multinationals to go global with their fragmented supply chains.

In information and communications technology we see the same principles of dominant design. In the nineties when internet appeared there were several browsers and search engines who served the still inexperienced internet user to help them find their way through cyberspace. Now googling has become a verb in multiple languages around the world. Interestingly, existing dominant platforms reinforce themselves by adding new features, often by integrating innovations of acquired start-ups; Microsoft Internet Explorer took browsing to connecting with Skype. Facebook is taking the community to a live experience with Instagram, Whatsapp and Snapchat (but refused Facebook’s US$ 3 bn offer). Their dominance is likely to be broken by disruptive new development platforms.

From a management point of view, Bettis & Prahalad (1986) came up with the principle of ‘dominant logic’ to characterise how successful innovations outperform other innovations, once a new product or service has settled in. They addressed two key issues: 1) why many institutions find it so hard to change 2) why many institutions see change but are unable to act. 10 years later the authors added new insights to the dominant logic concept. Dominant logic can sustain competitive advantage for a long time, but also works as a filter in which relevant data are implicitly selected. It works as a linear function: if it fits the criteria, ideas are deemed useful, if not they are abandoned. Downside is thus that dominant logic can block the organisation’s ability to learn and innovate. This brings forward that it becomes even more difficult to unlearn this dominant logic the longer it has prevailed.

How to perceive dominant design and dominant logic in the 21st century? The power to prevail over others is no longer only for big business. Since the early years of the internet, software developers and internet users have joined forces. Think of Wikipedia which provides access to the world’s largest encyclopedia. Thanks to the global internet infrastructure it connects contributors to readers. Roles are even swapped within this active community. The great thing about such open source networks is the often voluntary basis of the developers. Other examples on the software development side is the open source platform of Android. If it wasn’t for this open source approach, Google would most likely not have been able to conquer Windows and Apple’s dominant market position. Open platforms offer an alternative to the dominant logic that could be a risk within big institutionalised organisations. Interestingly to see is that both dominant platforms now evolve in parallel: where Apple believes in closed shop design, while Android evolves as an open platform.

What makes platform innovation so appealing for ports?

History tells us that economic growth tends to concentrate around metropole cities and hubs. Many of world’s largest metropoles are also major ports, serving as trade hubs and have emerged into financial, business centres as well. They serve as platforms for trade, communication and doing business in more general terms. These places are hotspots for a variety of artists and other creative minds as well.

Create open source development platforms

Ports and neighbouring cities are ideal places for open development platforms: there is an abundance of trade, traffic and therefore also information and money flows. A surfer’s paradise for hackers, techies who love to ‘code’. the port becomes a breeding ground for startups when the software development community connects to the already omnipresent port and transport expertise.

Build upon existing port community systems 

Port community systems already provide a platform of business users. Many ports already have port community systems, that act as an independent platform to exchange shipment data and eliminate double data entry. Community members retrieve and add specific information to the shipment as goods move through the supply chain. With the further digitization, the difference lies in the flexibility of how systems, people and ‘things’ communicate with each other. The potential to eliminate empty truck loads, eliminate inventory holding costs or shift to alternative transport modes is waiting for partners to plan collaboratively.

Think in loops rather than linear connections

Ports are traditionally seen as a node in the transport chain. Again, there is an implicit linearity in this. If ports are serious in their attempt to build a sustainable port, this challenge cannot be approached through linear thinking. Emerging platforms show that loops are increasingly important:

  • In the sharing economy people and companies are using the same assets based on a pay per use. Once used, the unit is returned back in the pool. The côncept of returnable packaging such as pallets will be translated in other transport equipment as well.
  • In circular chains cradle-to-cradle products, rather than a linear ‘produce to waste’ principle, necessitate the need for cooperation within the circular chain. Also on the software side, there are companies who develop themselves as the information mediary to make information readily available to all companies in the circle simultaneously. Why circular chains are so interesting for ports is that goods and assets like ships come, go and return throughout its lifetime. Ports are therefore on the main arteries of the circular chain.
  • Also ship arrival processes can be approached as a circular process. Ships calling the port will be received on the basis of community circles. Ship’s agents, terminals, harbour centre, vts operators, tugboat companies and pilots join in a communication circle as soon as a ship is in reach. Same principles can be applied on a shipment level.

Create value through connections and interactions, less on ownership 

Everything is connected and will be connected. Social media have created already indispensable communities, however are mainly fed by the desire of people to feel connected. The value people perceive is thus not a matter of ownership, rather it is the connection. the same concept can be applied to port communities. Connect young people to inspiring ideas, let them work together on short scrum-like projects, share and celebrate new concepts and prototypes with the community.

Investing in learning circles

Learning circles are places where people bring expertise together around business challenges, fresh ideas, prototype testing or its commercialisation. Such an approach can also be applied to how people are assigned to participate in these learning cells and platforms. Especially students, education staff, researchers, freelancers and trainees form an important group of knowledge ‘migrants’, because of their job mobility, open minds and eagerness to develop new knowledge. Ideally, these knowledge assets could be put together and managed by leader firms on longitudinal innovation programs, so that funding and business drive is brought into the equation as well.

Setting tomorrow’s dominant design for ports

Megaports like Rotterdam float on 20th century dominant designs: oil and gas as the main source of energy, multinational trade and transport companies as their main customers, physical goods and assets in a spatial dimension. New technologies in the 21st century focus on community value: people, planet, partnerships, peace and prosperity, rather than primarily profit. If the port community wants to make breakthrough innovations and set tomorrow’s dominant design in port strategy and development, it is crucial to prevent being stuck in a dominant logic. Rather, the port society will undergo fundamental transitions, both in the energy mix, ways of communications and transportation. For the power of the platform to come free, we need both big business and startups. Start ups for their learning abilities thereby preventing a dominant logic and big business to scale up for the next dominant design. The role of people is to link up the community, sustain relationships, bring expertise around the table, experiment, experience and learn from and with each other. Fundamentally, the main difference is the open mind, open source and open platform thinking.

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