Collaboration and digitalization for balanced economic and societal capital creation by shipping

CDES: A New Paradigm for Navigating an Increasingly Complex World

Collaboration and digitalization are widely discussed topics in transport and logistics because they are critical drivers of economic and societal value creation. We advocate that these drivers must be mutually reinforcing to generate synergistic gains. Digitalization promotes collaboration through swift and efficient digital information exchange enabling effective coordination. Simultaneously, digitalization requires collaboration. Otherwise, it is destined to fail or produce suboptimal results. We make this dire pronouncement mindful of the reality that seven out of eight digital transformations fail.[1]

In the biological world, many species have symbiotic relationships, mutual dependencies, with other species to increase their ecological fitness. There is a symbiotic relationship between digitalization and collaboration. Neither can exist without the other, because they co-determine economic fitness. Successful partnerships co-evolve their collaboration through cooperative digitalization to contribute to an emerging era of digital symbiosis.

Freedom of association is an important feature of most developed economies. Essentially, any organization is free to create a partnership with another to fashion a symbiotic relationship. Digitalization turbocharges the benefits of free association by increasing the ease and gains of collaboration.

Consequently, we assert that all industries need to place greater emphasis on the interrelationship between?collaboration?(c) and?digitalization?(d), as this powerful duo impacts?economic?(e) and?societal?(s) success through enhancing human and social capital and preserving and restoring natural capital. Focusing only on one of both dimensions of each pair, either on collaboration or digitalization, or on economic or societal value, leads to suboptimal results. A conscious, holistic approach addressing all four components of the?cdes?formula ensures durable wealth and well-being for humanity. A?cdes?mindset can take supply chain management and logistics practices to higher levels of digital symbiosis.

Why the world needs a new approach

In particular, the shipping industry has much to gain from a?cdes?approach because, as a?self-organizing ecosystem , it exemplifies massive freedom of association. Still, it is blighted by a slow evolution of digital symbiosis. This lag is not surprising as a global self-organizing ecosystem faces many hindrances to digital collaboration, such as cultural differences and operations spanning many jurisdictions.

The Earth’s natural capital is a mix of renewable (e.g., plants) and finite resources (e.g., water). Overpopulation and economic growth strain both, and we must respond collectively to the existential threat of global climate change. Actors across the economy and transport ecosystem need to collectively take responsibility for creating a sustainable economy while competition remains intact. An unresolved quest is thus to balance where to compete and where to collaborate. What are the?global commons ?that the actors in the ecosystem should collectively preserve or restore while competing?

Supply chain networks, the backbone of the global economy, require large-scale collaboration, but they can still be highly fragmented. While industry cooperates to create a dynamic self-organizing ecosystem, where freedom of association permits, collaboration for positive change has not demonstrated its full potential. This lack of deep cooperation might cause slow digitalization, which handicaps coordinated action to address global challenges.

Our 21st-century world needs large-scale, deep collaboration. Closer cooperation would increase visibility and situational awareness across global supply chain networks by closing the many digital gaps that create information black holes. For example, the decarbonization of shipping requires a higher level of alignment between industries and their critical value chains, such as?the marine fuel, shipbuilding, and shipping operational value chains . Collaboration is conducive to minimizing greenhouse gas (GHG) emissions, pollution of the oceans, the destruction of marine life, and global wealth inequities. Trade, greatly facilitated by shipping, is the global grease that enables nations to exploit their natural advantages or find a niche for economic and societal growth.

A new paradigm for balanced development

Hardly anyone questions the importance of collaboration and digitalization for the good of the economy generally and the shipping sector specifically. Neither would anyone deny that there are significant obstacles hindering a highly collaborative and digitalized world. We have the choice to collaborate and structure the outcomes or risk replicating in the digital space the current operational fragmentation and challenges.

Collaboration (c) powered by large-scale digitalization (d), in combination?cd, might be the path towards a better balance between economic and societal goals. Advancing collaboration vertically along supply chains, horizontally between peers, and diagonally across the broader ecosystem requires a shift in mindset and behavior to subvert today’s predominantly competitive attitude. We need a cooperative approach to solve the dominating problems of common interest, such as climate change. We need those who direct the levers of change to realize that in today’s highly complex world, with a population approaching 10 billion, little is achievable without broad goal alignment facilitated by collaboration and digitalization.

The combination of collaboration (c) and digitalization (d), we aver, can drive economic (e) and societal (s) advances (Figure 1). The?cd-duo provides the opportunity to rebalance our approach by accelerating the growth of economic outputs while more rapidly increasing the quality of human and social capital and preserving and restoring natural capital. The outputs?e?and?s?stand for a broad range of benefits.

Both pairs?cd?and?es?are interrelated. They can be deployed and generated in isolation. Still, the most effective way to drive balanced capital creation is through combining collaboration and digitalization strategies to drive business models that simultaneously address economic and societal value capital creation (Figure 1). The?cdes?model is a general guideline for public and private sector actors in their quest to deal with today’s significant challenges.

?Figure 1: The cdes model: Rebalancing economic and societal value by the combination of collaboration and digitalization

Every organization is in the business of capital creation.[2] ?But the targeted output is not always economic capital. For example, universities enhance human capital, and service clubs, like Rotary, create social capital. Creating economic capital, the goal of most businesses requires a recipe that blends economic, human, symbolic, social, organizational, and natural capital. The winners are those organizations with a recipe that generates the highest level of productivity within their competitive sphere. A pure short-term focus on profits that neglects a balanced broader stakeholder view can jolt the share price but inflict long-term damage.[3]

Translating CDES into the world of shipping

The new?cdes?paradigm, with its emphasis on digital data sharing,?supports the implementation of?virtual watch towers ?to provide situational awareness of vital assets (e.g., cargo). Collaborative planning and action across multiple watch towers in the global supply chain network can facilitate?es-outputs, such as supply chain resilience and safety. Beyond that, the digitally assisted networked approach yields enhanced delivery precision and reduced transport emissions. In the typical transport chain, the many independent operators own data that could be relevant to connections for planning and forecasting. A virtual watch tower can gather “public data,” such as the traffic flows of different transport modes and “private data” from network participants to fashion a shared situational awareness among a chain’s participants. When aggregated and analyzed at a network level, these data can improve the accuracy of arrival time forecasting and identify potential congestion hotspots. A higher level of shared situational awareness can also increase safety across the supply chain.

The?Clydebank declaration of COP26 ?emphasizes the creation of national, regional, and international green corridors. Their establishment will require collaboration across marine fuel supply, shipbuilding, and maritime operations value chains. Uncoordinated transitions between modes at transport hubs are typically less energy efficient. Ideally, green corridors cover an entire supply chain, and coordinated digitization should be used to extend gradually tendrils to all non-green corridors.

Complex systems increase the need for data sharing?

Complexity often results in actions in one cluster of value chains impacting other clusters. These transitive or domino effects require a higher level of data sharing to ensure sufficient situational awareness across related chains to enable effective collaboration to resolve unanticipated interactions.

A navigational matrix

Navigating the diverse landscape of challenges collaborators face requires that stakeholders engage in different forms of digital symbiosis or persisting partnerships (Figure 2). The complexity of any option is determined by the scope of the relationship, from actors along a chain to an industry-impacting collaboration to the breadth of an ecosystem, and the degree of integration, from vertical in a chain to diagonal across all key partners.??

?Figure 2: Generic Partnership Framework (Based on?The Maritime Decarbonisation Partnerships Matrix )

A canvas of possible partnerships can’t tell the whole story. Most of the members of existing partnerships are the more prominent industry players who are generally adept at increasing their productivity because of their managerial depth and financial resources. Overall industry productivity gains, however, require a balanced and inclusive approach to ensure that the long tail of small participants operating along chains and across industries and ecosystems can benefit from enhanced digitalization and collaboration. This necessitates a change in the way partnerships are operated and data are shared so that thousands of ports and tens of thousands of ships have the chance to prosper as members of an efficient and low-emissions global shipping industry that has extensively implement maritime informatics principles.[4]

Pivoting to a more balanced future

The world needs a new paradigm. The?cdes?model, focusing on collaboration and digitalization for balanced economic and societal value creation, is intended to guide industry action. While currently, it might be a voluntary business model shift, new regulations, particularly in Europe and North America, will make this new way of thinking and operating a prerequisite for economic survival. We have elaborated on the advantages of?cdes?and the possibility of accelerating economic and societal capital creation. Practitioners, public sector experts, and academics are invited to explore and challenge our way of thinking and embrace relevant?cdes?in their practices, policies, and educational programs. The new paradigm leverages the opportunity to build better digitally and deliver a more efficient industry while advancing vital societal goals.

[1] ?Wade, M., & Shan, J. (2020). Covid-19 has accelerated digital transformation, but may have made it harder not easier.?MIS Quarterly Executive, 19(3).

[2] ?For a comprehensive coverage of capital creation, see Watson, R. T. (2020).?Capital, Systems and Objects: The Foundation and Future of Organizations. Singapore: Springer

[3] ?For a detailed analysis of the consequences of myopic profit maximization, see Gelles, D. (2022).?The man who broke capitalism: how Jack Welch gutted the heartland and crushed the soul of corporate America-and how to undo his legacy. New York: Simon & Schuster.

[4] ?Lind, M., Michaelides, M. P., Ward, R., & Watson, R. T. (Eds.). (2020). Maritime Informatics Springer.

Contact the authors:

• Mikael Lind | Research Institutes of Sweden (RISE) & Chalmers University of Technology |?[email protected]
• Wolfgang Lehmacher | Anchor Group & Topan AG | [email protected]
• Richard T. Watson | The University of Georgia |?[email protected]

This article was originally published at UNCTAD