Oil tanker versus speedboat

struggling to innovate

In today’s rapidly digitalizing world, companies can be divided into two categories based on their speed and agility. On the one hand we have the traditional firms and large multinationals that, just like oil tankers, need a lot of time to change course. On the other we have very agile companies that, just like speedboats, can deftly weave around the waters and even accelerate if necessary.

By Martijn Lofvers, publishing director & chief editor 

Research and advisory company Gartner has developed an analogy for these two operational speeds, calling them the Mode 1 and Mode 2 approach. According to Gartner, Mode 1 is the traditional approach with a lean and efficient supply chain. Mode 2 revolves around innovative, agile strategies such as the 3D printing of spare parts and the use of intelligent robots.

Gartner also works with a five-stage supply chain maturity model which includes a matrix with the targets (from costs to service) along the horizontal axis and the mindset (from internal to external) along the vertical axis. A company moves through the various phases, starting from the bottom right as a fragmented organization and then progressing towards the top right, in the shape of a sideways letter ‘U’, to become an agile, fully customer-driven supply chain. In effect, this describes the route of a cumbersome oil tanker which will take years to complete the five stages of this model – if the company manages to reach the ultimate end phase at all, that is.

However, some companies can’t afford to take this long way round. At Adidas in Russia, things reached crisis point a couple of years ago when the local economy crashed and the franchisees went bust. Adidas itself acquired these stores including the extremely immature supply chain organization and, as quickly as a speedboat and with a pragmatic approach, succeeded in reaching the fully customer-driven phase in the space of just two years. In actual fact, the company headed upwards from Stage 1 to Stage 5 in a straight line.

Global brewing giant Heineken launched a start-up called Beerwulf earlier this year. Beerwulf aims to become the worldwide equivalent of Booking.com for the online sale and home delivery of specialty beers. Since this start-up will supply all brands of specialty beer, it is in effect competing with Heineken. Adidas and Heineken are two practical examples of how, despite their size, large companies can still move as quickly as a speedboat.