DHL’s Open Innovation Contest And The Quest For Radical Decentralization

By: Gianluigi Cuccureddu

DHL Solutions & Innovations (DSI) is aiming to gather ideas and input from academics, politicians, IT experts and others, to further develop their existing concept for City Logistics in a collaborative and innovative way. With several innovations such as the Consolidation Center, the DHL Smart Truck, the Packstation (24/7 Service Point) and other “green” ideas, DHL is at the cutting edge of the market when it comes to urban logistics.

Steffen Frankenberg, Vice President at DSI said:

“With growing cities all over the world, the challenges of city logistics and urban living are becoming more and more demanding. Solutions for decreasing traffic and getting cities greener are crucial for the future. DHL knows that the logistics industry plays a significant role and we want to broaden our approach to City Logistics by also inviting people outside the company to contribute their perspective. With the views of others we can better identify the challenges and generate ideas for new logistics solutions. We are asking participants to really think outside of the box.”

Three categories

The Open Innovation competition focuses on three categories:

1. Logistics efficiency in urban areas (operational solutions),
2. Green city and urban living (regulations) and
3. Digital logistics (software and IT solutions).

By asking academics, politicians, public authorities and citizens in big cities, DHL will bring together specialists from different fields to discuss challenges and ideas.

Future logistics

One of the other “green” ideas DHL in a collaboration with a group of German design students is bring.Buddy.

On Forbes the following is mentioned on bring.Buddy:

It postulates a system in which people who already move across the city could carry parcels. After all, thousands of people move through cities every day – by bike, by car, by bus, or by tram. If a parcel needs to be picked up or delivered on their way, they could do the job. In the context of this concept, mobile phones work as information and documentation tools. Social networks become real networks. Bring Buddy makes dedicated delivery vehicles and the additional CO2 emissions they produce superfluous. Streets would be less congested, emissions would be reduced, and the environment, our climate in particular, would benefit.

Trust

The author of the Forbes article questions the value trust logistics inhibit:

People who consign packages to the big logistics companies factor in not only time, cost and efficiency, but also, most ineffably, trust. There’s an expectation when you hand a package to FedEx or UPS or DHL that it will for the most part be professionally handled, and subject at every step to the rigorous controls of a process developed over many years.

And

The idea and its intentions are good, and yes, it’s just an idea out of the skunkworks. But even at this stage it feels a little too blue-sky for the very earthbound arena of global logistics. More significantly, by devaluing an asset — trust – that’s every bit as important as its trucks and planes, DHL chases the future at the cost of the present.

From the service and offering perspective, trust is an important asset, defining the offering and reflecting brand perception.

However from a societal marketing approach, integrating issues and anxieties about health, green and better environments, DHL is pushing its boundaries to find –collaboratively- solutions. People demand that type of involvement. Kotler defines this beyond-economic-growth and societal interference the socio-cultural transformation.

Alter to intrinsically integrate these matters into business models. DHL would shift to a platform business, providing hubs, main logistics, to work on sustainable cities. Not only has the supply side has to change, consumers have to as well. Without a shift in thinking, beliefs and putting different values first, putting group interests first is hard.

Radical decentralization

Bring.Buddy is an interesting example from a radical decentralization point of perspective.

An example of radical decentralization is energy:

The process of generating decentralized power is not only more durable but (often) more efficient than the traditional methods, which are centrally organized and based on fossil energy: decentralized power generation can do without the traditional transport of energy and the associated unnecessary loss. If the people who generate their energy can return their surplus to the power grid, they might even earn some money. Also, a decentralized generation democratizes the energy system: people become less dependant of energy-producing powerhouses and competition between energy providers is encouraged. And finally, decentralized energy generation can strengthen the social cohesion, certainly in the case of a neighbourhood initiative.

Radical, because rapid and dramatic. Decentralized, because it’s not ‘top-down’ but ‘bottom up’ and ‘horizontal’: the citizen/consumer is becoming more important, consumers and citizens are increasingly in charge of networks, often locally based.

In the decentralized energy example, the supply side, the organizations are the platform, the enablers.

Another example is Honda’s Home Energy Station, creating less dependancy and a Do-It-Yourself economy. The fourth-generation experimental unit is designed to provide fuel for a hydrogen-powered fuel cell vehicle, as well as heat and electricity for a home. The new system is more compact and efficient, with a lower operating cost than previous models.

Surplus of energy can be sold back to the net.

What do you think of the concept of radical decentralization and how does that affect collaborative innovation efforts?

By Gianluigi Cuccureddu