Leap of Faith

By Constantine Komodromos
May 25, 2016

I have found myself wondering why there is so much fuss about innovation lately. Why is there so much noise about disruption in markets? Everybody seems to be talking about innovation, but what is it? Is it something new to us human beings, or just the logical way that human beings evolve and adapt their environment.

In my mind innovation applies to everything, because we change and our needs change. In response someone, somewhere in the world will identify that change and in response produce something which either didn’t exist previously, or improves on what went before. Without most of us even being aware of it this process is happening daily, and these innovations could be changing the way we live—perhaps in a few years, or even in a few months.

Innovation is nothing new for mankind, it’s been practiced since the first humans existed and it’s in our DNA to evolve and innovate

So in my view innovation is nothing new for mankind, it’s been practiced since the first humans existed and it’s in our DNA to evolve and innovate. The maritime industry is no stranger to this process, it has constantly improved and changed. It has been a late adopter, though. Its very traditional culture is responsible for it lagging in regard to innovation and change, so it always takes a few years for the industry to adapt to the kind of change that’s occurring in the rest of the world.

That’s not because it doesn’t embrace innovation though, but rather because it has a longer reaction time. As in every traditional market like financial services or insurance, the culture that is cultivated in maritime is more risk averse, focused on creating a safer environment rather than big shifts in strategy.

Some might argue that the maritime industry is walking a fine line as far as the sustainability of its operating model is concerned, and that its failure to adapt to the leaps of innovation that have taken place in recent years is partly responsible.

Many different steps are being taken in the industry to adjust certain aspects of their operations and bring them more in line with technological improvements, yet still there is resistance. Particularly when it comes to the fear of failure, something which is inherent in the industry culture. As an entrepreneur of an innovative start-up I meet this kind of cultural resistance head-on on a daily basis. VesselBot is an online chartering marketplace that digitizes the whole chartering process.

Although users acknowledge that VesselBot provides cost and operational efficiencies, and solves a problem maritime organization are faced with continually, still cultural resistance and the reluctance to use a new technology tool creates barriers to adoption.

Organizations are afraid to be early adopters because of the uncertainty this creates. In the maritime culture that word, ‘uncertainty’ causes unease, whilst in the lexicon of innovative companies it provides a thrilling opportunity.

I’ve lost count of the number of times I’ve heard people within the maritime industry tell me that what we’re trying to do won’t succeed, or that because something similar was tried ten years ago without success, the same will be true today. The truth is that ideas fail for a variety of reasons, but the important question is, does the idea solve a real problem for an organization? It’s crucial to understand the reasons that earlier attempts to solve the problem failed.

An example I often cite is LevelSeas—a very forward thinking innovation initiative led by industry heavyweights which didn’t manage to survive. What was responsible? Have any of those factors ceased to exist since then? Has the business environment changed since then? Has technology changed since then? Was the timing right for this initiative? And of particular importance, can big multinationals, given the intrinsic values, culture, and ways of operating they bring as a legacy, allow them to function like a startup?

Change may come as a result of internal innovation from the current incumbents—which in all honestly, I doubt—or via lean startups with totally different business models, more effective cost structures and agility.

A start-up is agile, quick to react to changes and what it learns, takes measured risks (usually), and undertakes a lot of experimentation until it achieves the best possible result. Does the culture of big multinationals with their big cost structures, internal politics and all those cultural barriers allow them to act freely, and innovate to create disruption in their operating models?

For me those are rhetorical questions. It may happen if there’s a total cultural shift, but did it happen in the case of the LevelSeas project? I think not.

That’s why I believe that the disruption will come from small, agile startups that don’t have all those barriers and are not afraid to make huge leaps of faith—particularly in the maritime industry. Innovation and technological changes will come sooner or later, this is the normal course of things, and maritime will not be exempt from it.

The organizations that realize this early in the cycle will adjust quicker and gain competitive advantage over their peers.  Those that don’t react as quickly may end up spending significantly more resources in order just to catch up, or risk becoming obsolete and completely out of the game. This change may come as a result of internal innovation from the current incumbents—which in all honesty I doubt—or via lean start-ups, with totally different business models, more effective cost structures and agility.

The only question that then remains is whether it will be one of those start-ups that comes to dominate the market, or becomes a target for acquisition of the current incumbents. In the end it’s all about the right strategy, and making the right decisions. Sometimes that will involve a leap of faith to get you from this side to the other.

Which side will your organization choose?

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