Last week at Fujitsu Forum 2016 I caught up with a man who knows more than a little about digital disruption: DHL’s Paul Richardson. Paul is Managing Director of Specialist Services, responsible for going out and exploring new markets and methods of approach.
Following some huge successes for Paul’s part of the business, I thought I’d sit down with him to find out what digital disruption means to him and DHL.
Check out the video below to see Paul’s full talk at Fujitsu Forum 2016…
Defining what digital disruption really means
In order to be disruptive you first have to understand what that actually means. The phrase has certainly begun to reach buzzword territory, with pretty much every business talking about it in one way or another. But what’s behind the hype?
Paul argues that digital disruption can be split into two camps:
“There’s radical disruption, which is what you’re seeing Uber doing – completely revolutionising the market. Then there’s non-radical disruption. You’re still doing the same job but fundamentally changing how you do it. While you’re not necessarily redefining the market you’re absolutely causing major shifts in the way you operate.”
But how do you know which approach is right for your business? According to Paul, it’s not enough to simply understand one or the other. You have to be aware of what both radical and non-radical disruption involves if you want to protect yourself in a fast-moving market. If you don’t, he claims, you could be disrupted yourself.
That said, it’s not all doom and gloom for organisations that don’t happen to be brand new start-ups.
“An awful lot of disruptive solutions fail because they lack the critical infrastructure of an established business,” explains Paul. “As long as the established firms recognise they have to keep shifting the boundaries of what they do, then potentially they could be just as successful as Uber.”
The challenge for established brands, he claims, comes in achieving the cultural shift needed to do something completely new.
“When you’ve always done things one way it’s hard to win people over and say there’s a different way of doing it.”
The impact of digital disruption so far
It’s fair to say that digital disruption hasn’t only affected the markets in which it has happened; every organisation has now been forced to take a deeper look at the way they do business and how that will change in the coming years. The days of complacency are long gone.
Paul argues that when it comes to the supply chain industry, people have become much more willing to share as a result.
“Historically companies might have thought about sharing supply chain information with their nearest competitors, but it would have been difficult to persuade them to do so. But digitalisation has brought better visibility – everything is more trackable – and organisations are increasingly relaxed about what they share.”
Obviously they’re not doing it out of the kindness of their hearts, but rather avoiding the significant risks of not being forthcoming.
“If they don’t share that infrastructure, the likelihood is they won’t be competitive,” said Paul.
How is DHL becoming a disruptor?
I mentioned at the start of this article that Paul runs DHL’s Specialist Services business, which offers supply chain solutions to sectors and industries outside DHL’s traditional customer base. This, Paul argues, is the key to being disruptive as an established business – creating an independent company with its own commercial models.
“Operating as a separate business unit allows you to push boundaries further and better understand how you can redefine marketplaces. Or even enter ones you’ve not operated in before.”
He urges other companies to do the same, allowing incubators to operate within them so they can actually engage with digital transformation in a way that matches their younger, smaller rivals.
“Doing digital disruption as part of the day job is costly, high-risk, and you probably won’t achieve everything what you want,” says Paul.
Paul talks about how DHL has been using automated analytics to track food products on aircraft, with the ability to work out precisely how many miles those products have flown and how many of them end up as wastage.
“As a result we’ve managed to reduce the amount of product on aircrafts by 30%,” he said. “If you consider that just one kilo of weight travelling 24/7 for a year costs €3,000, taking all that product off the plane translates into a significant saving for the airline.”
So what’s next in the logistics industry when it comes to disruptive technology? Paul believes wearables are set to have a massive impact on the way people do business.
“The key is how we start building it into workwear,” he said. “We’ve partnered with Fujitsu to start trialling wearable technology to track how tired our drivers are. “We can learn more about them – when do they get tired and how can we use that information to make their working environment safer and smarter, not just for them but for everyone else on the road.”
DHL has also been experimenting with wearable Google Glass-like technology in its warehouses, training people through augmented reality, rather than somebody else having to dedicate hours to it.
Paul believes the surge in wearable innovation will ultimately be consumer-driven. Only consumers, he argues, have the power to prompt a mass-market shift towards a particular technology.
“Look at how the smartphone revolutionised our lives,” he said. “The next big wave will come when we get rid of the smartphone and it will be built into everything we do – in your ear or on your wrist.
“We’ll have radar technology, where you can use your fingers to control a device without actually touching it.”
So when does Paul think we’ll get to the stage where all this becomes the norm in business? Sooner than you might think…
“It’s hard to predict,” he said. “But definitely within the next 10 years.”
Check our brand new research to learn how digital disruption is impacting companies across the UK.
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