Global supply chains were impacted early and badly by the COVID-19 pandemic. The fact that the pandemic started in China – the leader in the Manufacturing industry – meant that many enterprises globally had to re-evaluate their supply chain and logistics. This was compounded by the impact on demand – for some sectors the demand went down significantly, while in others, especially for items required to fight the crisis, there was an unexpected spike in demand. There was also the need for many manufacturers and retailers to shift to eCommerce, to directly access the market and sustain their businesses. These sudden shifts that were required of the industry, opened up the need for a global supply chain that is more integrated, agile and responsive.
Last week, global heavyweights with a stake in the global supply chain, joined a consortium to work on creating that agility. This includes PepsiCo, BMW, Shopify, DHL, and the United States Postal Service and some emerging tech companies. The alliance will actively work on solutions to embed automation and digitalisation in the logistics and supply chain systems. While this consortium was formed last year, recent events have accelerated the need to fix a global problem.
Co-Creation and Innovation
LINK is a collaborative ecosystem, co-founded by Innovation Endeavors and Sidewalk Infrastructure Partners (SIP) to bring together emerging tech start-ups, institutions and global organisations to innovate and make supply chains resilient. The tech start-ups involved include the likes of Fabric, that has large automated micro-fulfillment centres for faster deliveries, and Third Wave Automation, that has developed automated forklifts with enhanced safety measures.
LINK aims to transform global supply chains, with the use of technologies such as automation, IoT, AI, and Robotics. The solutions developed by the start-ups will be tested in real-life situations, often in large organisations with complex operations. On the other hand, the start-ups will have access to the internal systems of these large organisations to understand the data and their organisational needs.
Ecosystm Principal Advisor, Kaushik Ghatak says, “COVID-19 has brought the need for supply chain agility and resilience to a completely new level of criticality. Companies in the ‘New Normal’ will need higher levels of nimbleness and flexibility to be able to recover from this crisis quickly and sustain in an increasing disruptive world. Increased ability to sense and respond to disruptions will be key to success. It will require better visibility of their entire supply chain, increasing efficiencies, building necessary redundancies (in form of inventory and capacity) where they are required the most – redundancy comes at a cost – and being flexible and innovative to cater to the rapid market and supply-side changes. Rapid digitalisation to build such capabilities will be a key to success.”
“Managing such rapid changes is usually a struggle for organisations with large and complex supply chains, because of the years of past practices, systems and culture. For them Innovation is a must, but the path to innovation is difficult. The LINK collaboration model is the right step towards addressing that challenge. Collaborating with start-ups can infuse new ideas, more innovative ways of solving a problem and rapid testing of use cases in the areas of IoT, AI and automation.”
Involving Start-ups for Innovation
This initiative is a great example of how larger enterprises are looking to leverage innovations by the start-up community. The Financial Services industry has been an early beneficiary, when it stopped competing with Fintech organisations, partnering with them instead. Other industries have started to recognise the benefits of fast pivots and the role start-ups can play.
Ecosystm Principal Advisor, Ravi Bhogaraju says, “Bringing together companies that have complementary and unique capabilities to solve industry issues is a great way to speed up experimentation and innovation.”
However, he recognises that forming alliances such as this, comes with its own set of challenges. “One of the key things to recognise in such a construct is that the team members from different possessions bring with them their unique belief systems, organisational and country cultural constructs. Expectations on how things should work, can become quite tricky to navigate. The talent and expertise in such an environment need to be facilitated be able to deliver high quality outcomes.”
Talking about how these constructs can work successfully, delivering what started out to deliver, Bhogaraju says, “An agile team setup can help tremendously as it uses two key principles – People and Interactions over processes; as well as Working models over documentation.”
“A clear expectation setting through contracting at the beginning of the project cycle can help establish the ways of working and rules of engagement. Increased regular feedback and problem solving should continuously fine tune the ways of working. This way teams can get through the norming process at pace and scale and eventually focus on outcomes, rather than fumble over each other and/or have ego flareups.”
“The key is to get to creative problem-solving working cohesively – the intent being to challenge the status quo – stepping outside the box and using all capabilities within the team. Blending the subcultures together using agile way of working and principles, can be a fantastic way to make that happen – failing which you have the challenge of trying to somehow bring together different work products, people and preferences.”
Innovation is quite an apt subject to write about – given we are coming to the close of an extremely innovative decade. Contrary to popular conception however, the word innovation is not limited to startups – corporates have ample opportunities to innovate and there are plenty of examples to inspire us.
In the technology industry, the turning point was the rapid scale-up of Amazon Web Services (AWS) – originating from the mothership, they defied all odds and forever changed the way we consume technology, making it more accessible through their cloud offerings. While AWS took the world by storm, most competitors have struggled because they are slow to adapt and transform. For them, this age of innovation has become a burden. The one exception is Microsoft – perhaps the true giant of the industry – that pivoted, and now constant innovation is seeing them consistently jostle for the leadership position. The underlying success factor for innovations is speed – it is of the essence when innovating.
Most companies are unable to promote a culture of innovation into their system, fast enough. Mainly because they are afraid of stumbling on the classic difficulties: “cannibalisation” of the existing business, impossibility to predict with certainty the results of innovation, lack of funding, internal conflict and one-upmanship, lack of understanding of technologies or the challenges of innovation management. Not to mention that taking risks isn’t well regarded in most companies. Most leaders fall in the long-standing tradition of annual P&L management. It’s that temptation of getting by another year of achieving targets. In the end, we are what we measure. The final metric always has to be increased profitability – but it’s all about defining the timescale. Once that’s sorted, the milestones and metrics make Success easier to measure.
The reality is also that the one rarest commodity for innovation is the vision and managed risk-taking ability of the leadership. For this reason, many companies prefer to create a dedicated independent team of corporate mavericks, specifically aimed at innovation. But eventually, the success of these teams is based on rapidly incorporating the innovations into the business – it must reflect in the core corporate ethos of the organisation. Experts debate the benefits of centralised versus decentralised innovation, but what’s most important is to have a dedicated capacity. If innovation is 10% of 100 people’s responsibility, you can rest assured that little innovation will take place. But if it’s 100% of 10 people’s jobs, things will start to happen. Speed is partly born of the priority that is put on it, so assigning - and incentivising - a dedicated team with the job of moving fast is an essential organisational step to innovation.
Easier said than done you say? It becomes even more challenging when you’re trying to achieve this in a large corporate environment. What AWS achieved is world-changing, and one cannot comprehend the vision, capabilities and execution par excellence of the leadership and the team. However, they were building from scratch with a blank canvas – they had the capital, a proven organisational culture of building and arguably one of the strongest leaderships in our generation. But for Microsoft, the storyboard was different. In order to innovate, they had to change the status quo. Yes, they had capital – tons of it – however, they also carried tremendous ‘baggage’. Ironically, it’s this baggage that corporations strive to achieve and only some manage – it’s called ‘legacy’. It can come back to bite you and hold you back when you need to rapidly adapt and innovate. But that is what Microsoft achieved – they overcame the fear of cannibalisation, put aside all the internal posturing and one-upmanship and more importantly, built a culture of innovation. Something that was led impeccably by Satya Nadella who allowed rapid innovation and ensured that the entire organisation got behind the ‘cloud-first’ vision.
Companies that are built for speed react more quickly to competitor moves or market shifts with their own product innovations. Fast innovators test prototypes with customers, worrying less about the imperfections that they know are there and focusing more on the insights they may gain from consumer reactions and feedback. They also fail several times – but they fail fast and cheap.
To sum it up, organisations that innovate successfully are fast to respond to the market, are led by a vision, have a culture of innovation, are not afraid to fail and they don’t ever let perfect get in the way of better!
As published in the tabla! (An SPH Publication)