28 April, 2022
What Swedish logistics and construction companies are required to do to survive
During my working life, transport management and similar logistics management will be automated. The machines and vehicles that are led will drive themselves. Skanska, Cramo and NCC will need to become technology companies in order to maintain their leading positions.
Through the 00s, technology companies were still their own category. They were the ones who made hardware consisting of processors and memory devices, they were the ones who sold the software. Apple, IBM, Microsoft, Google and Ericsson are given examples. Among industry categories such as finance, construction and the steel industry, there was also the category of technology companies.
What has happened in recent years is that the category of technology companies has eaten its way into other categories. Avanza and Klarna are two fast-growing banks that are snatching market shares from their competitors at a rapid pace and inventing new market shares. Avanza and Klarna are also two technology companies. Their operations differ from Swedbank's, Handelsbanken's or Nordea's in that the former have development teams of largely staff with technical competence in the very core of the organizations, while the latter are service companies in both first and second hand. For technology companies, customer-focused product and system development is at the heart of the strategy.
If banking is an example, there are many more. At a global level, Amazon - a tech company - has become the leading player in commerce. Uber in passenger transport. Spotify as a music and radio distributor. Tesla as a car manufacturer. They all run their businesses as tech companies.
Okay, so what does it mean that they run their business as tech companies?
In a blog post that dates back to 2012, the entrepreneur Alex Payne set out to try to define what a technology company is for something. He concluded that far too many companies are described with that epithet, that it in fact requires the company to use scientific knowledge to develop completely new technologies. Pretty understandable but still not completely waterproof. Payne admits, however, that there are seemingly no terms to describe companies that operate in a specific industry but have IT as part of their core and use it as an advantage to get ahead of their competitors, such as the previously mentioned Avanza. In the long run, however, he believes that the term will be unnecessary as this is how all companies will work, he compares it to the fact that during the industrial revolution all winning companies would be called factory companies.
I agree that our business industry is in such an extensive shift, but since we are in the middle of the change, we still need a way to describe the activities that run it and those that will be left in history. For many industries, the large companies that make technology and product development a central part of their entire business will be the ones that may continue to be large companies. Those who only have IT as a support function for the operational activities will fade away.
These tendencies are also clear in Swedish industry. The upstart H2 Green Steel has received 25 billion kr to develop tomorrow's steel production at a plant in Boden and SSAB, LKAB and Vattenfall respond with their own billion investment in the HYBRIT technology to be developed in Gällivare. On the roads in Stockholm's inner city, Volvo and Toyota compete to offer alternative ways of having access to a car via their respective technology platforms M and Kinto.
All this is still just the beginning. For our target groups, the construction companies of the future will have software as both a critical and selling part of what they deliver. Large parts of all planning and management will be done by a computer. For example: The optimal logistics solution around a given construction project will be calculated by artificial intelligence after engineers have programmed the project's conditions. The supply chain will be automated so that the material arrives at the project just when it is needed.
The challenge lies in everything from a company's macro strategy, to the organization's readiness for change and to the recruitment's ability to attract competent staff. The companies that in the next 10-25 years succeed in applying the technologies that are under development today in e.g. AI and automation will be able to see gains in productivity that have not been seen since the advent of mechanical engineering in the 50s, 60s and 70s.
/ Rebin
PS. The development not only make demands on our companies but also on how resources are distributed in terms of education. If Swedish companies are to be equally competitive in the future, we must be able to meet the dramatically increasing need for computer engineers, researchers, designers, project managers, etc.
