Transport companies primarily adopt technology for three main reasons. First, to gain a competitive advantage over rivals. Second, technology is commercialized, imported, adopted, and used to improve efficiency – to make them more accessible, faster, cheaper, more accurate and other similar attributes. Thirdly, to follow other “first movers” and to join in the technology race due to pressures from its external environment.
While the application of new technology offers potential benefits, there are nevertheless commercialization challenges with any new product. One problem observed by researchers is that effective marketing strategies seem to differ across various industries. Gans, and Ster in ‘The product market and the markets for ideas: commercialization strategies for technology entrepreneurs,’ note that because of their youth and small size, start-up innovators face the challenge of usually have little experience in the markets for which their innovations are most appropriate.
The application of new technology contributes to three types of innovation:
- Incremental change features the introduction of a service involving some level of “newness” and some value creation.
- Substantial innovation is where there is a significant degree of service newness and important value creation for the customer.
- Transformational innovation is the least common and involves radical new products that create substantial value for the client.
To help stimulate thoughts and discussion about these difficulties this article will explore the attributes of the logistics and transportation sectors with the aim of identifying the management implications for commercialization initiatives.
Technology Logistics and Transport Services
Geisler, et. al. in ‘Commercialization and utilization of technology in transport: where we stand’ suggest that the unique attributes of services (intangibility, simultaneous consumption, and the role of customers) are crucial to understanding the role that technology plays.
The application of new technology in the logistics and transport industries influences three main areas of business. First, technology allows firms to operate complex systems that contribute to both scale economies and scope of operation in supply chains. Secondly, companies use technology to improve customer service and service quality. Technology also facilitates the process of new value creation activities can lead to significant innovations such as the business models used by various companies to service their customers.
Technology in the logistics and transport sector can be applied to either the front office or back office business functions. Front office refers to technology that is employed in the direct interaction with the customer. The back office is where the technology imported into the organization is utilized in creating and improving the process and activities which contribute to efficiency, cost-savings, cost-cutting, and re-engineering of operations.
For entrepreneurs seeking to sell their product into the logistics and transport market, the framework developed by in the chart below Geisler, et. al. is a useful tool for considering where a given technology might best be applied. The example below uses the findings from the Lloyd’s Maritime Global Marine Technology Trends 2030 for commercial shipping. The report identified technological innovation in advanced materials, analytics, robotics, sensors, communications, shipbuilding, propulsion/powering and smart ships as the leading driver of change along with big data analytics.
|Marine Technology Trends in Commercial Shipping
|Knowledge & Information Perspective
|Vehicle and Means of Transport
- Smart ships – digital ship to intelligent ship, to autonomous ship.
- Marine fuels & non-renewable energy source
- Prime movers & auxiliary systems
Instruments, Devices & Systems
Facilities & Apparatus
Advanced design and materials
- Self-cleaning & self-repairing finishes,
- High strength, toughness, malleability, corrosion resistance, self-healing material
- Graphene-doped anti-corrosion coating
|Procedures, rules & information
Measures of Performance
Sensors to monitor inventory condition
- Engine room
- Communications and navigation
- Stationary data collection and processing
Information on the Environment
- Meteorological and oceanographic data
- Sensors to monitor inventory condition
Outcomes & Evaluation
- Accidents or incidents
- Inspection and maintenance
While the above framework provides a first order way to consider where technology could impact commercial shipping, it is important to note that the ways various products can be combined to create new industry value chains and logistics improvements are harder to predict. The presence of both regional and global supply chains means that other factors are increasing important. For example, the growth of intra-industry trade and containerized shipping has resulted in port gateways and a network in inland logistics and transport services competing for traffic.
Lee, Y. and O’Conner, in ‘New product launch strategy for network effects products’ argue that the success of network products depends not only on the product’s intrinsic value – based on its features but also its extrinsic value. These are derived from the size of the system and its connections to other users and complimentary products.
In a network effects environment, while relative product advantage is significant, in the short-term, consumer’s purchase decision may depend more on the extrinsic value they gain from the size of the installed base rather than the product’s intrinsic features. The growth of the installed base (which increases, the extrinsic product value) is the priority performance objective in the short-term.
Having identified the area or problem that the new technology is intended to solve, it is important to consider who is responsible for managing the point of pain within an organization. In many instances, logistics and transport firms are typical of other service organizations in that they usually outsource their technology acquisition and process. Unlike manufacturers, service organizations often purchase their technology from external vendors.
The research by Lloyd’s Maritime Global Marine Technology Trends 2030 demonstrates that issue driving the need for discovery and innovation come from both a strategic and operational level. Thus, technology commercialization initiatives need to address more than just the technical dimensions of a product and include a holistic understanding of the market in which the target customer competes. Such a process requires training, and adoption on the part of the employees, management, customers and other stakeholders. Also, there is the process of integrating the technology with existing techniques in the company. As a result, it is important for technology entrepreneurs not entirely familiar with the industry developments in these sectors to include professionals who have an in-depth understanding of the market to assist with the commercialization strategies.