The Port of Rotterdam
2011/2013 – INSCOPE – Research for Innovation, Erasmus University Rotterdam was approached by the Port of Rotterdam (PoR) to assess their strategic value and contribution to the international competitiveness of the Netherlands. The conducted research, led by Prof. Dr. Frans van den Bosch, addressed two main questions: (1) what is the strategic value of the PoR for the Netherlands and, (2) how can the strategic value of the PoR be increased? By answering these two questions the research report attempts to draw a clearer picture of the strategic value of the Port of Rotterdam for the Netherlands and provide a helping hand to preserve the competitive position of the Netherlands in the top-10 of the world’s most innovative economies.
Strategic value of the Port of Rotterdam
The direct and indirect added value of the PoR was estimated by the researchers to be approximately 22 billion Euros (ca. 4% of the GDP), while providing employment for 145,000 persons (Van den Bosch, 2011). Nevertheless, the researchers suggest that the strategic value of the PoR can grow to even greater heights.
The importance of social innovation to further enhance the strategic value
The researchers state that strategic renewal and continuous improvement are essential to remain competitive in the global market. This means that the PoR needs to continuously adapt and innovate itself (so-called business model innovation) to keep up with their environment, especially in a hyper turbulent and competitive environment in which changes occur frequently and at a fast-pace. The research report emphasizes that the PoR could increase their strategic value by allocating a bigger role to workplace innovation. That is, a less leading role for technological innovation and investments in the physical infrastructure, and a more dominant role for innovating the organisation of labour and the optimalization of competencies that emphasize both the improvement of the company’s performance and the talent development of employees. The researchers therefore suggest that innovation can be stimulated by the adoption of new managerial and organizational structures at the companies within the Port of Rotterdam.
The same researchers further elaborate on these non-technological determinants of innovation at the PoR in the article “Business model innovation of the Port of Rotterdam Authority (2000-2012)".
From a ‘Landlord business model’ towards a ‘Port developer business model’
The above mentioned article describes the transition of PoR’s business model in the period between 2000-2012, as their old ‘Landlord business model’ evolved in to a new ‘Port developer business model’. In the so-called ‘Landlord business model’ the PoR initially focused on the exploitation of land (lease and maintenance) and shipping traffic handling. These activities were mostly of an administrative nature. The business model was characterized by a hierarchical organizational structure, reactive management and a focus on the exploitation of current activities. The PoR subsequently developed the ‘Port developer business model’ complementarily to the existing ‘Landlord business model’. Which means that in addition to executing the PoR’s existing ‘Landlord’ activities, a focus on entrepreneurship, co-creation with external parties and innovation-driven port development also emerged within the company. This new business model, the ‘Port developer business model’, is characterized by the decentralization of decision-making, pro-activeness and the focus on both the exploitation of current activities and the exploration of new activities. This new business model also emphasized the increase of the PoR’s international competitiveness by stimulating the strategic value creation for the PoR, the region and the country as a whole too.
Transparency and flexibilisation of the organization
The article mentions the changes in the organizational structure and the management of the PoR as examples of social innovation within the new business model. Moreover, the PoR’s aim is to become more transparent both internally (eg. intranet) and externally (eg. publication elaborate annual reports and updates).
The changes in the organizational structure of the PoR to stimulate innovation include: the reduction of management layers; more autonomous decision-making (ex. within the marketing department to get closer to their customers); and the transition to a more project-based conduct of business by setting up cross-functional teams (such as the new Innovation Board and Port of Rotterdam International business units). Eventually a more flat and flexible organization can be realized, bringing the company closer its customers. A flatter and more dynamic organizational structure also facilitates the anticipation of changes in the environment. Additionally, more autonomy and responsibilities are gained by the employees in this new business model as well. This might encourage employees to further develop their talents and obtain broader experiences across the company by changing positions at different departments.
Moreover, due to significant changes in the management, the company’s decision-making process also changed. In order to find new strategies and break from status quo, a large number of the top 20 managers were replaced in 2005. Also a new top management structure was implemented by appointing ‘direct report managers’ whom on their turn reported to the three top executives (CEO, CFO and COO) directly. Finally the new business model emphasized the importance of the PoR’s external stakeholders. ‘Structural dialogue sessions’ were initiated with representatives of other harbour companies, NGO’s and trade unions for example. By also encouraging co-creation with customers, a more entrepreneurial mindset was stimulated which could ultimately strengthen the international competitiveness of the Port of Rotterdam.
Van Den Bosch, F.A.J., Hollen, R.M.A.,Volberda, H.W., Baaij, M.G. (2011). The strategic value of the Port of Rotterdam for the international competitiveness of the Netherlands: A first exploration. Rotterdam: Erasmus University Rotterdam / INSCOPE.?ISBN 978-90-817220-2-5. (www.inscope.nl).
Hollen R.M.A., Van Den Bosch F.A.J, Volberda H.W. (2013), Business model innovation of the Port of Rotterdam Authority (2000-2012). In: Smart Port Perspectives: Essays in honour of Hans Smits, Kuipers B. & Zuidwijk R. (eds). Erasmus Smart Port Rotterdam: 29-47. The article (pdf) is enclosed in the attachment.
Theme: flexible organisation
Source type: Research report; article