Logistics Innovation: Where’s the Value?
I remember the first time I tracked a package online. “This is amazing,” I thought. The geek in me was impressed by the technical wizardry of it all, I was even more impressed by how effectively the solution solved a real problem. Before online tracking, I didn’t know when my package was going to arrive. After online tracking, I did. That’s a pretty simple value statement.
Recently, I was reading Eye For Transport’s The State of Logistics Technology 2017. When they asked, “What is primarily driving your increased spend?” the number one answer was “Creating a differentiator for our business.”
In the same report, 39% of respondents replied that they would use innovation as the primary driver of new business over the next 18 months. that shows a lot of optimism. When the same group was asked what drove new business in the prior 18 months, innovation dropped off to 28%. “Expanding to new industry verticals” dropped off an even steeper cliff, with 19% predicting it would drive future growth to 4% recognizing it as a past driver. Added together, that makes a combined 26% gap between past performance and future predictions.
This leads to one of two conclusions. Either we’re about to see some incredible innovation in our industry, or we’re full of 💩. Thankfully, the EFT team was kind enough to include the 2016 results for comparison. (Spoiler alert, we’re headed for 💩.)
The gap on the same metrics for 2016 was 22%. Basically, we’re consistent in overestimating the role of innovation and change in driving new business. In case you’re curious, the difference is mostly made up by “Outbidding or winning contracts from competitors.” I’ve sat in enough “this year will be different” budget meetings where we’ve said “we’re finally going to stop competing on price,” to confirm these findings.
Also, keep in mind that these are self-reported numbers from the same people who justify budget increases by “creating a differentiator for our business.” Do you want to bet whether the gap would be bigger or smaller if we had empirical metrics of past performance? I know which way I’m betting.
Please don’t misinterpret my tone. I don’t believe that these gaps represent cynical attempt to build budgets and fiefdoms. In fact, I believe they are driven by optimism. Technologists (even those of us in the C-suite) are natural optimists. We can see the future, and it’s incredibly cool. There’s so much amazing tech out there. Things like AI and blockchain have the potential to remake large swaths of our industry. Add in drones, the Internet of Things, and sharks with laser beams attached to their heads and the future looks pretty awesome!
What many technologist CIOs lose sight of in their enthusiasm is that none of these technologies will be a differentiator for their businesses. They won’t be differentiators because customers don’t care about tech. They might be wowed in a demo, but when it comes time to sign on the dotted line, they’re going to pick the company that they trust to solve their problems.
If you build a faster, cheaper, and more reliable logistics service with fax machines and carbon paper, no customer is going to walk away because it “needs more blockchain.”
I wasn’t amazed by my first package tracking experience because of the innovative use of wide area networks and barcode scanners. I was amazed because I knew when my package was going to arrive. The technology enables the solution, but the customer appreciates the value.
Also keep in mind that applying buzzwords does not lead to differentiation. Differentiators are, by definition, different. Remember, they’re not “different than what I did last year.” They’re “different than what my competition is doing right now.”
The reason something becomes a buzzword is because everyone is doing it. If everyone is doing it and you’re doing it, is it making you different?
If we as technology leaders are overly optimistic about our role in driving growth and inserting buzzwords won’t magically close the gap, then how do we differentiate our businesses?
Focus on business value first. Then apply technology. Are you a cold-chain service provider? Is there a way to reduce failures using IOT sensors combined with a permanent block chain ledger? Are you in fast fashion? Can you help your clients shift inventory as trends move from urban hubs to the suburbs by leveraging AI and big data?
No matter your industry or segment, innovation will come when you focus on your customers’ problems and then look to technology for solutions.
At Chain.io, we are using some cutting-edge tech including things that haven’t even become buzzwords yet. We absolutely love to geek out on Serverless, blockchain, etc. However, when we describe what we do to our clients, we tell them that we “make supply chain integrations faster, more reliable, and easier to manage.” There’s no magic tech needed to describe our differentiator.
At the end of the day, the tech doesn’t matter, it’s the value you bring to your clients.
