Which sectors pop in your mind thinking of innovation? Aerospace, biotechnology or maybe chemistry? In my professional career, I have never met anybody mentioning logistics as an innovative sector. As a professional in the supply chain arena, this hurts. Why is our sector not innovative, or at least is not being seen as innovative?
To a large extent the dominant competitive strategy being followed within the sector is causing this image. This followed strategy being “Operational Excellence”, or compete on cost-levels and the tariffs linked to these cost levels. Competitive strategies based on “Customer Intimacy” or “Product Leadership” are scarce in our sector.
To me the choice for “Operational Excellence as the main strategy seems not to be so much a human made choice, but more a strategy companies have fallen into over the years. A strategy followed by accident rather then by design. By having made this “choice”, a lot of logistic players are now tied up in a constant battle with their competition on costs. This battle is having negative long term effects; lowering margins, limited or no room for important long-term investments such as training & development of employees, investments in equipment and off course innovation.
To turn the tide, I often use the formula making elements visible that are vital in realizing innovation:
INNOVATION = (CO-CREATION + CRAFTSMANSHIP) X ENTREPRENEURSHIP
Understanding this formula, you do not necessarily need large R&D budgets to realize innovation. Know what possibilities co-creation can deliver: Stimulate your internal organization and external partners, involve your suppliers, customers and co-workers in your effort to deliver innovations. Call it crowdsourcing, but get them involved. Craftsmanship is vital, it delivers deep knowledge of the subjects at hand, a feeling for the market and a vision on the future. In entrepreneurship the true promise is enclosed, the promise making innovation possible. Entrepreneurship tells us that innovation is not possible without risk, be it a calculated risk built on the earlier mentioned craftsmanship of yourself and your co-creation partners.