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10 Ship-Management Companies Business Model Transformation through Innovation Culture and Leadership Abstract Business transformation is a Paragliding idea for rolling out significant improvements to the way a company or organization operates. Business transformations are powerful, transformative changes that organizations are making over conventional gradual advances to drive change and develop. The assortment, for example, progressing to new business or operating models, is huge and strategic. Given the intensive investigation of the essayists of the literature, little has been recorded on the internal factors inside the ship management company that influence Business Model Innovation (BMI). This paper is an endeavour to help ship management organizations manufacture a theoretical understanding of BMI. An exertion was made to clarify BMI's current remaining in scholarly literature. Moreover, the examination has grouped internal variables that can put ship-management organizations innovations into BMs. Furthermore, the size and naiveté of the firm are mediating factors that are presented in this BTP. However, literature carries out procedures, entrepreneurship, and innovation to coordinate theoretical development. The rest of the paper unfurls BMI fabricate, research methodology, the setting of the different internal factors and theory creation, trailed by the end, with the audit of the suggestions and characterized holes. Key Words: Innovation, Leadership, Innovative behaviour, Organizational Culture, Business Model Innovation, Ship Management Companies Structure This BTP offers an analysis of the ship management companies within maritime market, including the literature part, which includes theories of creativity in the business model, corporate culture and leadership in the transformation. After the literature review, presented a structure in which the researcher has established assumptions about case study results based on the literature that had been reviewed and the analysis of the maritime industry. The scheme has been provided based on the discussion that enabled the study to address the research questions. The survey had also been conducted in different ship management companies, including 28 participants. Later, the topic is addressed where survey preferences concerning the results are explored. Ultimately, it offers closing remarks. Implications for managers have also been presented, and limitations with corresponding implications for future study. Table of Content Chapter One: Introduction6 1.1Background6 1.2 Ship management companies8 1.2.1 History and development8 1.2.2 Industry overview and trends 1.3 SWOT Analysis11 1.3.1 Overview11 1.3.2 Small Size Ship Management Company SWOT Analysis12 1.4Aim & Objectives13 1.4.1 Aims13 1.4.2 Objectives13 1.5Research questions14 Chapter Two: Literature Review15 2.1 Business Model15 2.2 Business Model Innovation And Theory16 2.3 Business Model Components, and Business Model Innovation Type18 2.3.1Business Model Components18 2.3.2Business model innovation types20 2.4Impact Of Organizational Culture On Business Model Innovation23 2.5Organizational Innovative Culture and Transformational Leadership26 Chapter Three: Research Methodology29 3.1Research Philosophy29 3.2Research Design29 Chapter Four: Research Findings31 4.1.Overview31 4.2.Understanding Business Models within ship management companies31 4.3.How to ship management companies innovate their business models32 4.4.Organizational Innovation Culture and Leadership34 Chapter Five: Conclusion and Recommendation35 5.1 Research questions answeared35 5.2 Recommendations36 5.2.1 Implications recommendations36 5.2.2 Managerial implications37 5.3 Limitations and further research References38 Number of Tables Table 1: Shipping Industry cycles7 Table 2: Top 10 ship-management companies in 2019 by managed fleet size21 Table 3: SWOT Analysis19 Table 4: Business Model Components19 Table 5: Types Of Innovation21 Chapter One: Introduction 1.1Background The maritime organizations around the globe to realign and innovate is constantly growing, owing to the increase in worldwide political risks and technological developments that have both industrial and environmental consequences and stagnating growth (UNCTAD, 2019). According to Jenssen & Nybakk (2009) to handle the changes, cope with increasing competition and to achieve innovations it is necessary to collaborate with alliances. Business models have come up illustrating a new concept of utilizing innovative ideas for enhancing the performance of the companies within the industry. A survey presented by IBM back in 2006 illustrated the benefits of business model innovations, revealing that companies concentrating on such innovation surpassed their rivals. A similar study also made it clear that creating the model of business more innovative can also be a prime tool in fiscal reduction and in enhancing strategic flexibility (IBM, 2006). The CEO of Wallem Group Mr. Frank Cole in the recent interview with Lloyds list expressed an opinion that the traditional shipping business model is outdated and soon will be replaced by more sophisticated and innovated models that will be presented by the industry-leading companies that are looking for new ways to innovate and enhance their current business models (Meade, 2018). The shipping industry is highly cyclical and operates in various cycles like short, long and seasonal business cycles, further challenging the innovative ideas of the companies (Stopford, 2009). Table 1: Shipping industry cycles Source (KPMG, 2018) Amit and Zott (2017) have argued, innovative business models go beyond innovating just product/service and processes. Researchers have also stressed the significance of intended usage of business models to obtain competitive advantages. Therefore, it’s believed that innovative business models are appropriate for maritime companies. The theories that relate to business models and their innovation are still very popular topics of research and widely mentioned in literature below. The business model concepts given to the maritime sector by Fiksdahl and Wamstad (2016) to a massive range addressed to different types of maritime organizations within the industry. Therefore, the link between small firms like small ship management companies and how they “innovate” with limited resources available yet to be explored. In the research conducted by Fiksdahl and Wamstad (2016) they found that the shipping company’s ability to innovate depends on the resources available which is the case of small size organizations are limited. They also found that the radical implementation of the business model innovations by large enterprises is the most favourable in respect of profitability. The reason stated by small businesses for not innovating and transforming their existing business models is mostly due to the lack of time, or the lack of qualified employees and resources, while larger companies spend a huge amount of money on their R&D departments and their external consultants to stay ahead of the game. On the other hand, American researcher Kreitner describes the management as the process of working along and by others for attaining organizational goals in a changing atmosphere using the limited provision of resources efficiently (Kreitner, 2003). This research is based on the above insights concerning business model innovation by studying some large industry players and small-medium scale ship-owning and management companies within the Greek maritime sector and will further propose an improvement to the existing business model that will benefit the small ship management companies with limited resources. In addition, due to the lack of existing research that evaluates the link from the fields of business model innovation to traditional business models of ship management companies I would further like to elucidate this area. 2. SHIP MANAGEMENT COMPANIES 2.1. History and development The ship management industry has been experiencing rapid growth in recent years. In addition to basic ship management operations and crewing, the companies offer chartering services, S&P, insurance, legal cases handling, as well as ship maintenance and new building projects supervision. The number of services grew due to the market requirements and ship-management companies sensibility to provide the same services that traditional ship-owning companies were handing internally (Panayides et.al 1997). The definitions of ship-management companies are emphasized to be the operational and technical service provided for a ship that is provided by an independent company (third-party ship management (Panayides et.al 1997). The ship-management companies would thus be portrayed as the rendering of administrations connected with the association of the financial assets and resources (labour, land, capital) that are necessary to support the ship operation and gaining income (Mitroussi, 2004). The demand for third-party ship-management companies flourished in the late 1960s. As a result of tax reduction on ship venture the oil majors created capital from acquisitions, rendering the management of ships to the third - party management companies. Then again in the mid 1970s due to the depressed freight rates the traditional ship-owners were unable to cover ship’s daily running cost expenses with addition to the devalued S&P market the ships were confiscated by creditors and banks who rendered the management of the ships to the third-parties (Spruyt, 1994). Recognizing the benefits and incentives provided by third-party management, conventional ship-owners too had delegated control, further increasing the third-party ship management industry’s viability (Quest,1988). The increase in demand further advanced during the 1980s, when numerous conventional ship-owners considered ships to be budgetary ventures. By delegating the management to the third-party, they were increasingly occupied on the S&P profit estimation rather than in the daily ship-management operations. One of the main reasons that have been depicted as being fundamentally liable for the demand of the third party management companies are the reductions of ship’s annual running expenses and obtain economies of scale. In addition, newly established open registries gave access to cheaper workforce (seafarers) (Spruyt, 1994, pp. 29–59). Apparently the inexorably powerful nature of shipping sector has held the third party ship management to flourish many decades. Cutting on cost is one of the main reasons that the ship-owners dedicate management to third parties, but not the key reason. The key reason is that third-party ship management companies created a strategic distance between ownership and the owning company. Although, most of the ship-owners are the ship-managers themselves the separation created an opportunity to bypass taxation, claims and legal obligations. This created disorientation within the industry as to the type of the ship management companies such as ship-owner with internal-ship management or third part ship management company (Mitroussi, 2004). 2.2. Industry Overview & Trends The ship management sector enjoyed a lot of initial growth, however, the path forward does not seems to be as easy and prosperous as it was in past years. The success of the sector depends on how ship manager and financial owner of the vessel largely (Gunton, 1997). Apart from this, there are certain major technological concerns of the ship management industry (Gunton, 1997), such as technically advanced, computer-based management and maintenance systems. It also includes, new measures for fuel efficiency, cyber security, global sulphur cap regulations. Increased integration of modal with shipping ventures, which constitutes to be an important part of any logistic system (King, 1997), exponentially increasing pressure from legislations related to environment and safety and increased attention towards safety standards and continues improved quality. Most of the leading ship management companies have realized that dependency on external conditions and factors will not help them anymore to stand in the market. Market growth of the third-party ship management depends on the level of client satisfaction through advantages, benefits, competitiveness and profitability. Some of the most commonly prevailing issues in this sector are feeling of prejudices and weakened relationship among the ship members due to disbelief, which have an adverse impact on underwriters