Digital Transformation – In it for the long haul!!

It was inspiring to participate in the MSC Connexions Forum 2019 Panel on “Driving Maritime Singapore’s Digital & Workforce Transformation”. While the discussion itself was exhilarating, the icing on the cake was the myriad of discussions off the stage with various industry stakeholders which were really enlightening. I wish to put down my point of view on the three major points that, according to me, were crucially brought up. These points are:

1.     Where and how does one start with the process of Digital Transformation?

2.     How do you get the buy-in from the existing mid-level and senior staff into this process?

3.     How do you attract and retain the young talent who are so vital in this journey?

Before we even start to answer these questions, we have to address the more fundamental question – why transform? Things are going well right now so why change it? These are natural questions and also the ones that any management team should be asking. The answer is multi-fold. One, technology is changing the basic job structure of the commercial shipping department. In the past, the shipping companies were dominated by the family members controlling the company and they were in effect the “deal-makers” and the chartering managers in these companies were essentially running voyage estimates and negotiating the contracts. This has meant that the knowledge of systems and processes has become the benchmark of expertise for chartering professionals – an end in itself. As the companies have become more professionalized and the technology is now quickly taking over these systems and processes, these chartering managers are expected to take over the task of deal-making and that is far more fruitful activity. This is one of the key reasons why digital transformation is essential – to unlock the true potential of the chartering professionals. Two, the power of data and the impact of its objectivity is unparalleled. Gut feel and memory are usually behind decisions taken but they are limited in scope, extremely subjective in nature and linked to an individual. Same data can be interpreted in multiple ways, is objective and is the foundation of a sustainable process, which can also be scaled up successfully.

So now that we have established that Digital Transformation is a necessity and not an optional add-on, let us turn to the question on where to start with this process. It is important to remember that technology is not the end point but only an enabler which allows you to get to the end point – which is to solve real pain points. The process, though, must start from the top. The vision of digital transformation must be laid down by the top management and communicated in clear terms to the entire organization and possibly written into one of the broad goals of the company. As an example, one of the key goals of Klaveness is to build the leading digital operator in the Dry Bulk space. This meant that the entire organization is aligned towards this goal. While this clarity helps, the rest of the top management’s contribution is crucial too. As I mentioned in the forum, the digital transformation must be brought into the organization in the same fashion as traffic from two lanes merge into one in an expressway. The main elements of this merging of lanes are setting of traffic rules (Chief Executive Officer – CEO – sets these rules), the cars themselves (Chief Digital Officer – CDO – provides these technology vehicles and products) and finally the drivers who are driving these cars (Chief Human Resource InnOvators – CHRO – ensures that the personnel using these products are adequately skilled). Thus CEO, CDO and CHRO have to combine their energies to build this vision and implement it. This only re-emphasizes the importance of the CEO, CDO and CHRO forums recently launched by Singapore Maritime Foundation and Maritime and Port Authority. Once the vision is in place, the starting point now has to move to the ground level. It is important to ascertain real pain points faced by the people on the ground and develop solution to these in bite-sized projects. In Klaveness, we started with a specific pain point, collaboration between chartering and operations department to evaluate the deviations between budgeted and actual voyage results. We succeeded in creating a dashboard with standardized deviation silos for all the voyages shared by both the departments. Everyone had the “same version of truth” and that avoided a lot of duplication and inefficiency. The buy-in followed quickly as the results were there for all to see. The key parameters to evaluate are:

-       Does this solve a pain point i.e. helps the ease of doing business?

-       Does this improve efficiency i.e. helps in doing the same job better?

-       Does this increase productivity i.e. helps is doing more deals with same resources?

-       Does this increase profitability i.e. helps in earning more money on the same deal?

-       Does this help the customer i.e. help us in becoming the preferred service provider?

Working with these simple rules, you can start quickly and firmly on this journey of Digital Transformation.

The next question on how to get the buy-in from existing staff is crucial. Not only are the existing staff a reservoir of knowledge and experience, they are also, most likely, the biggest revenue earners in the team. They need to be on board. Their obvious questions are – why do I need to transform? What is data analytics about? I know my business well and am making good money for the company, so why change? The key here is to break down the digital transformation process into concepts which are more digestible for them. Remember, they are most likely not digital natives but more like digital converts. Digitalization is not second nature to them. So how do you do that? Let us ask them a simple question – Can you please show me how you book the hotel for your next vacation to Thailand? What are the steps in that process? You would start by searching a website like Trivago.com and getting a list of the hotels. Maybe the criteria you will use are the price of the room, is it a 4 star or 5-star property, the rating given to the hotel etc. You will then ask if any of you friends have stayed there in past and any other info you can find. My friend, this is nothing but Data Analytics. Rather than go on a pure gut feel (like “Marriott is usually a good hotel!”), you are evaluating the hotels on objective criteria and then supplementing those with some subjective assessment. Data Analytics also involves the same thing – you crunch the data on the contract performed and assess how many days did you lose due to bad weather, what was the port costs you paid on average etc. and then ask the operations department to supplement with performance information and the ease of dealing with them. You are now expanding the number of factors you are taking into account and also creating a sustainable process. The beauty of this is that you are getting much more time to spend on closing the deal and meeting the customer rather than remember what went right or wrong in the last deal done with these customers. Another key use of technology with the existing staff is to vault their knowledge by creating videos and presentations on various topics of expertise and disseminating them across the organization. Remember to give them full credit to them, which is obviously well deserved and will motivate them even more.

Then comes the question that is becoming more and more relevant – how do you attract young talent and more importantly retain them? Elsie Ng from LinkedIn gave a fascinating presentation at the MSC Connexions Forum where she mentioned that the younger generation are looking for colleagues that they enjoy working with and also a sense of purpose. Believe it or not, Digital transformation ticks both these boxes. The Digital transformation journey is as exciting as a treasure hunt. You have been given the destination and a set of clues and it is up to you to solve the riddles and reach the treasure. When you make this an exciting process and involve the younger talent, they will simply love this process. Often, the younger talent is not given credit for their ideas and in some cases, not even given a voice on the table. This has to change. In Klaveness, we have a Synergy and Communication lunch for the whole office on the first Monday of every month where there is a structured first half of sharing what the teams did last month and their plans going forward in the current month. The younger talent gets a chance to put their views forward on equal footing. The second part of the lunch is unstructured and involves sharing of the latest initiatives being looked at by various people in the organization and soliciting comments and inputs from all. The young talent are digital natives with very little baggage from past and that should be seen as a positive attribute to bring about Digital Transformation.

I truly believe that technology is a great leveler. Eventually, we will move towards standardization and more of the shipping products will become “homogenous” in nature. The only differentiating factor will be the people and the service they are giving to their customers. All things being equal, the team that offers a better service and value to their customers will win and the focus will move back to adding value to the customer. However, for all other things to be equal, the companies need to also catch up on digital transformation and technology. Thus, it is essential to embrace this for all companies. Remaining static in an ever-changing world in nothing short of suicide.

Remember the example of merging lanes in an expressway – the same rules apply to a Ferrari and a Truck and at the time of merger, the Ferrari and the Truck will both slow down as they adjust to be combined/merged lane but once the traffic starts flowing again at the usual speed, the Ferrari can choose another lane to speed up. The traffic will keep flowing and thus the journey continues!

Good luck and avoid fatal accidents as you move along!