DP World: General Information
Dubai Ports World (DP World, here: DPW) is a port operator company that offers a number of services through the ports that it owns; its core business is container handling, which produces more than 75% of the company’s revenue (DP World, 2015a, para. 2).
The creation of DP World (2015d) was a logical result of the economic growth and trade development in Dubai. The relevant infrastructure that is required to suit the needs of Dubai has been developing since 1972. In 2005, DP World (2015d) was established in an official way to inherit the results of this development by merging Dubai Ports Authority and Dubai Ports International Terminals. Nowadays, DP World (2015a) has “a portfolio of more than 65 marine terminals across six continents” (para. 1). As a result, it is among the largest port operators in the world (DP World, 2015a).
The success of DP World (2015b) is proved by the awards that the company keeps receiving for its high-quality service. For example, in November 2015, DP World (2015b) won the “Terminal Operator of the Year Award at the Maritime Standard Awards 2015” (para. 1). Awards also prove the excellence of the company in its core business as well as the significance of the company’s Jebel Ali Port for the world. The port is the oldest (since its merger with Mina Rashid), the biggest and the most valuable facility of the company (DP World, 2015e).
Indeed, Jebel Ali Port is among the few things that can be seen from space, which is why it can accommodate any ship, its sea connectivity is unrivaled, and the company prides itself on turning this facility into a most innovative and technology-driven one (DP World, 2015d; DP World, 2015e). It is not surprising that the Port has been winning the Best Seaport – Middle East Award every year of the past two decades (DP World, 2015b).
Among other awards of the company are those that demonstrate its outstanding achievements in the field of corporate social responsibility, which, for DP World (2015a), presupposes the commitment to its stakeholders. For example, the responsibility of the company with respect to its workers is clearly illustrated by the promotion of education and training, the level of which brought the company an award in this field at the Seatrade Middle East and Indian Subcontinent Awards 2015 (DP World, 2015b). The company is committed to its stakeholders and sets an appropriate vision and mission. The vision of DP World (2015a) consists of providing excellent services and proceeding to develop and grow; it is obvious that all these aspects appear to require innovation.
Apart from that, innovation is an important component of the company’s mission (DP World, 2015a). It should be mentioned that DP World (2015a) develops and grows indeed, for example, through the new terminals that are under development in Africa and Europe. Apart from that, it is proud to point out its innovative achievements like the implementation of the Gate Automation system or the usage of the Dubai Trade online platform (DP World, 2015e). According to the company, these innovations have greatly contributed to the development of the company and improved the quality of its services. In other words, the company acknowledges the importance of innovation and intends to use it to stay competitive as it has been doing throughout its history.
The current paper is focused on the topic of innovation in the company. Here, the seven sources of innovation as defined by Drucker are going to be described and analyzed in the context of the company. Apart from that, the most significant and applicable source will be discussed separately in relation to the company and its opportunities, and a conclusion will be made about the relationship between DPW and innovation.
Drucker’s Seven Sources of Innovation and DP World
According to Drucker (2002), “entrepreneurs innovate” (p. 30). In other words, innovation is a particular, most significant tool of entrepreneurship that does not create wealth directly but instead creates the sources of wealth, which is much more valuable. Drucker (2002) has been describing innovation (as well as entrepreneurship) as a discipline: something that can and should be studied and turned into a consistent, organized discipline. In the view of the author, innovation can be systematic: it needs to search for and exploit “new opportunities for satisfying human wants and human needs” (Drucker, 2002, p. 14). Therefore, to successfully innovate, one needs to monitor the sources of “innovative opportunity” that reflect these wants and needs and utilize these opportunities, preferably, before the competitors (Drucker, 2002, p. 30).
The first four sources that Drucker (2002) has singled out can be described as internal, provided that the internal environment is characterized by the words “business,” “industry,” and “market.” The rest of the sources are external to these environments, which defines the scope of phenomena that needs to be monitored.
Source One: The Unexpected
The unexpected, as defined by Drucker (2002), can include both failure and success. While both of them offer an opportunity for change, the reaction to them is different, and different management would be expected. In the case of unexpected success (a sudden development in the field that is not supposed to be developing), this factor should be regarded as a symptom of changing the environment, possibly, of a change in the customers’ needs and wishes. The situation should not be rejected (even though it is unexpected): instead, it needs to be explored to define if the company can use it to access another resource of wealth.
As has been demonstrated above, DPW can definitely be termed as “successful,” but the success corresponds to the criteria of the expected, at least for the time being. Indeed, if the core business brings the company most of its revenues and a number of awards for its quality, it can be suggested that the company was right in its choice. If an unexpected success does occur for DPW, it is important that the management does not neglect it in favor of the well-known and well-developed core business but at least considers innovation.
Failure is not likely to be neglected, but it requires particular attention and caution. At the same time, it needs to be regarded as a potential source of innovative opportunity since it may signify change (in relation to the company’s expectations and understanding of reality). In this respect, Drucker (2002) makes the following remark: the failure of a planned, carefully executed action can signify a change. Otherwise, there is a chance that the failure was caused by poor planning or execution.
DPW does not exhibit signs of approaching failure, but to ensure the possibility of exploiting failure, as it follows from Drucker (2002), the company needs to be careful with its services to ensure that no internal cause may lead to failure. So far, it seems, the company does its best to achieve that exact result.
Source Two: Incongruities
Incongruity is “discrepancy, a dissonance, between what is and what “ought” to be, or between what is and what everybody assumes it to be” (Drucker, 2002, p. 57). The four types of incongruity include the discrepancy between realities (the example is the rising demand that does not result in better performance of a product); the discrepancy between the reality and the assumptions concerning an industry; that between the efforts of a company (industry) and the customers’ expectations; and an internal discrepancy of a process.
It is not necessary to understand the reasons for the incongruity, but it is important to notice it as fast as possible. Indeed, the person who first sees an outward discrepancy has the opportunity of exploiting this knowledge before others notice it. In other words, the practical advice for DPW would consist of monitoring the industry (the first and the second incongruities) and the market (the third one) while paying particular attention to inconsistencies that could signify a change, which can be turned into an opportunity and exploited.
The customers are also capable of providing information concerning the final incongruity that happens when the processes that are related to the product or service are not logical. Drucker’s (2002) example dealt with the failure of fertilizer, seed, and pesticide producers to understand the need for a tool that would facilitate the process of distributing their product in the right quantity. While the logic of a process may elude the producer, the customer is always aware of the flaws of service and can make suggestions about the things that could improve it and make it more satisfactory.
Therefore, the opinion of customers concerning a service should also be monitored by DPW with the aim of encountering an opportunity for innovation that will make it more satisfactory. Naturally, the corporate social responsibility views of DP World (2015c) suggest that the company is quite attentive to its customers, but, in this respect, the importance of Drucker’s (2002) suggestion lies in the inclusion of innovation as another aim of customer relations of the company.
Source Three: Process Need
Even though the need per se was described as the essence of innovation sources, this source deals with a particular kind of need, that is, the process needs. To make the term more concrete, it signifies the need for the improvement of a process that is most often the result of its weak point or an absent necessity. The specifics of this source lie in the fact that the people involved in the process, especially the employees, are almost certainly aware of the need, and they can inform the innovator about the opportunity. Unlike the previous source, the need has to be understood, and the solution must be achievable and suitable for the process.
Source three will be discussed in detail in the last section.
Source Four: Industry and Market Structures
Drucker (2002) starts the description of the fourth source by pointing out that industry and market structures are not as unyielding as they seem. The change in these structures demands action from all the players involved: sticking to the previous line of action means working within an outdated framework and presupposes a failure. At the same time, the impetus of a changing environment can be regarded as an opportunity for innovation that will discover a new advantage or will keep the company competitive in the new conditions at the very least.
Drucker (2002) points out the exceptional opportunities suggested by the change in the industry structure and mentions that regarding such a change as a threat limits the responsiveness of the insiders and can invite outsiders to take the opportunity for the change instead. He also notes that the arrogance of a successful businessman can hinder the change. Apart from that, the author describes the four signals of the industry that is being restructured: they include its rapid growth, obsoleteness of the existing definition of the market, the convergence of previously separate technologies, and the rapid changes in the way the business is done within the industry.
Naturally, the practical advice concerning this source also includes monitoring the industry and the market. Apart from that, Drucker (2002) mentions the possible signs of change that can facilitate the monitoring process. The advice concerning the proper response, that is, regarding the change as a challenge or opportunity and not as a threat, appears to require some training for the managers. It is natural to shy away from change, in particular when a company is successful, but to ensure that no opportunity is lost, DWP needs to develop an innovation culture that instructs managers to treat change properly.
Source Five: Demographics
The fifth source simply describes the changes in the targeted population, for example, the changes in its size, various structures (age, race), the level of literacy and employment along with the income, and so on. Given the fact that the customers are among the most important company’s stakeholders that define the demand, these aspects are of primary importance for any business. Demographics are predictable to an extent: for example, the people who will reach the retirement age in the next couple of decades are most certainly part of the working population at the moment.
The trends and dynamics defined by demographics have an impact on the economy and industry opportunities that can also be predictable (for example, youth is more likely to buy fashionable things while elder people prefer comfort). At the same time, a relatively unpredictable and rapid change can occur in this field as well. Drucker (2002) uses the baby boom years as an example of such a change and demonstrates how the outcomes of this change (that are predictable: children need toys and playgrounds, for example) can be used as an opportunity.
As demonstrated above, DPW is most committed to its customers, and it cannot be said that the demographics of the market are not going to affect the company at all. Still, the specifics of the company’s field of operation, as well as its core business, make this particular source somewhat less appealing than others. Still, it would be expected that the company needs to monitor the market, so demographic change opportunities should be noticed as well.
Source Six: Changes in Perception
The needs and wants of the customers are subjective. In other words, it is the customer’s perception that defines the necessity of a product, and the perception can change, opening new opportunities for innovation and development. Drucker (2002) provides an example of the trends that developed in the food industry in America, including the fad for healthy food, gourmet food, and fast food. According to Drucker (2002), there is no need to define the reasons for this kind of change: it just has to be discovered in time and used before the competitors. In other words, the key practical suggestion for DPW consists of monitoring the customers’ needs and desires in the terms of the services that already exist as well as those that can be developed in the future. The increasing demand for a product signifies the necessity of exploiting this opportunity before a competitor turns it into their advantage.
Source Seven: New Knowledge
The innovation that is powered by new knowledge is the cliché of the innovation field. This kind of innovation is most durable (much time passes before another piece of knowledge can be implemented), and it is very eclectic: it includes the elements of various types of knowledge that can belong to different fields (not necessarily scientific and technological) and that are supposed to be blended to achieve the uniqueness of truly innovative competitive advantage. Drucker (2002) also points out that occasionally innovation drives knowledge by identifying the issues that need to be resolved.
The implementation of knowledge-based innovation requires a careful strategy that includes the analysis of all the factors that can be relevant, a clear position in terms of strategy and demands consistent risk management. Indeed, this type of innovation tends to presuppose significant risks. The opportunities include the possibility of dominating the field, finding a niche with the help of market focus, or developing a strategy that ensures a position in the market (for example, the control over the resources). It is obvious that the opportunities are most attractive and appear to be in equilibrium with the significant risk.
As it has been mentioned, DPW realizes the importance of this type of innovation and utilizes it when necessary (an example is the Gate Automation system). It is expected that the company will keep up the good work and will invest in research and development enough to make use of this most significant innovation type.
To sum up, Drucker’s (2002) innovation sources are mostly concerned with the advice to monitor the internal and external environment with the intent of searching for opportunities. The author also provides some general guidelines that can assist in the process of opportunity search. It is obvious that this suggestion is most sound, but one could be concerned with the fact that the attention of an entrepreneur might get dispersed due to the scope of the sources to be monitored.
Actually, such an approach can turn out to be rather unwholesome: as Leiponen and Helfat (2009) point out, companies tend to regard innovation in the narrow sense, which, in this case, may result in a lost opportunity. Still, it is apparent that for various situations and environments, one or another source might be considered most applicable. This is why the source number three is singled out and discussed as a most significant and applicable one for DPW, in the opinion of the author of this report.
Innovation Based on Process Need and DP World
Source Three, the process need is going to be described in detail due to its importance and applicability in terms of the company. As has been mentioned, this kind of innovation requires a process that is somehow deficient and the understanding of the fact that the change is necessary. The mechanism of defining this innovation requires providing a clear outline of the problem, searching for an acceptable solution, and implementing the innovation.
It should be pointed out that the primary source of the information in this respect is the employees of the company. In other words, to achieve results in the terms of the third source of innovation, expert opinion is of primary value. Therefore, the employees, as the source of the relevant knowledge and understanding, need to be involved in the process of innovation.
What is more, this kind of involvement is typically regarded as a beneficial action for employees: it can be considered an element of empowerment. In turn, if the company’s employees can see that their opinion and suggestions matter, the chance of their participation is higher: empowerment has been proven to improve knowledge exchange (Xue, Bradley, & Liang, 2011). As a result, such an initiative is beneficial for all the parties involved: it presupposes the empowerment as the positive outcome for the employees and the increased knowledge flow as a positive outcome for the company as a whole.
To sum up, for the sake of implementing source three in an organization (including DPW), it is important to ensure that its leadership can be defined as empowering. DP World (2015c) claims to take corporate responsibility seriously and to recognize the people (the employees) as an important part of stakeholders in need of a safe and supportive work environment. It can be suggested that innovation involvement as a part of empowering initiatives will not receive any resistance in the company. Therefore, certain means of innovation involvement can be proposed in this report.
Employee involvement can be encouraged in various forms; an example may include specific employee forums or internet communities created for this purpose. These forums would provide the opportunity of leaving comments, suggestions, and other information concerning work processes and relevant issues that the employees are willing to discuss. This form of involvement would also result in the initial evaluation of the significance of the problems discussed and would be used to spread the understanding of a problem that exists and needs a solution. In such a way, the first stage of this kind of innovation can be accomplished, although, obviously, other opportunities in this respect should be discussed.
The second stage consists in the fact that upon discovering the need, it has to be understood. In other words, it needs to be articulated in a way that defines the problem itself, not its outcome. This requirement of innovation opportunity search may be fulfilled during the previous stage, but there is a chance that additional research will be needed. This is not the only difficulty involved in this kind of innovation: upon defining the actual reason (problem, weakness, lacking element) for the situation, the solution needs to be sought out, and this solution has to be both attainable and exploitable in the context of the process. To sum up, this kind of innovation requires a noticeable amount of resources (human resources, time, effort, funding).
The thing that makes this kind of innovation particularly important and worth all the trouble consists in the fact that the processes of a company cannot afford to be deficient. While the expenses connected to this kind of innovation (as well as to any other innovation, in fact), may seem enormous, the potential loss from a deficient process threatens to be much more punishing. A competitive company needs to improve its quality on a continuous basis, and the innovation of processes is among the ways of achieving this effect.
Apart from that, in the changing environment, new opportunities arise to improve the processes that might have seemed satisfactory before but quickly become obsolete under the onslaught of changes. Similarly, global change may assist this kind of innovation: while there is a chance that, at a point of time, a need cannot be efficiently satisfied with the existing knowledge or technology, as time passes, new opportunities may arise. In other words, it is worthwhile to document the process difficulties that have been singled out and actively seek ways of eliminating them.
It is also noteworthy that this kind of innovation may actually include the knowledge-based innovation as well, and this fact means that the result of this innovation may possess the advantages (and risks) of the latter. In fact, research and development are indeed regarded as the engine for innovation, so implementing new knowledge in this respect appears to be logical (Clausen, Pohjola, Sapprasert & Verspagen, 2011).
The process of implementing the solution might be considered the final stage of the innovation process, but it is not. The process of innovation is cyclic in many cases, and this kind of innovation may be the case. The so-called persistent innovators, in fact, tend to innovate continuously (with every new innovation heightening the chance of consequent innovations), and, in the light of the information presented above, such a strategy appears to be most appealing (Clausen et al., 2011).
When the correction of the process proves to be useful, it needs to be widely spread, but as time passes, new opportunities or challenges may arise. That is why it is important to keep monitoring the crucial processes, and this is where the emphasis on employee involvement comes forth again. Employees will be the first to notice a flaw in the process, and there is a greater chance of them having insights about its improvement. Indeed, managers lack the experience and practical knowledge required for this. Therefore, by involving employees in the process of management, we ensure a relatively quick diagnostics of the situations.
At the same time, this process is relatively resource-saving as it does not require outside research. It does not mean that this kind of research is not to be carried out at all; and still, turning the employees into a primary diagnosis tool of innovation opportunity appears to be most appealing. The evaluation of the problem, however, as well as the process of implementation, needs to be led by managers and executives because they have a better understanding of the big picture. In such a way, by working together, the company’s members will be able to ensure the process needs innovation successfully.
References
Clausen, T., Pohjola, M., Sapprasert, K., & Verspagen, B. (2011). Innovation strategies as a source of persistent innovation. Industrial and Corporate Change, 21(3), 553-585. Web.
DP World. (2015a). About DP World. Web.
DP World. (2015b). Awards. Web.
DP World. (2015c). Corporate Responsibility. Web.
DP World. (2015d). History. Web.
DP World. (2015e). Performance. Web.
Drucker, P. (2002). Innovation and entrepreneurship. London, UK: PerfectBound.
Leiponen, A., & Helfat, C. (2009). Innovation objectives, knowledge sources, and the benefits of breadth. Strategic Management Journal, 31, 224–236. Web.
Xue, Y., Bradley, J., & Liang, H. (2011). Team climate, empowering leadership, and knowledge sharing. Journal of Knowledge Management, 15(2), 299-312. Web.