To secure its future, family-owned Stena Line in Gothenburg has chosen to take digitalization seriously. Backed by the owner and supported by an active board, Stena Line strives constantly to become a “cognitive shipping company”, powered by AI. “Today we talk less about “digital transformation” and more about just “transformation”, says Jari Virtanen, Chief Transformation Officer, (CTO).
“Vision in 2015: Fully AI assisted freight”
The call for change came when Carl-Johan Hagman, then CEO of Stena Line, returned from an inspirational trip to San Francisco and Silicon Valley with new insights, declaring “These are new times boys and girls, we can’t wait!” This resonated with the owner and the board, and Stena Line embraced a vision to become the first “cognitive shipping company”, fully assisted by AI by 2021.
Importance of the involvement of the owner
Stena Line is Europe’s largest shipping company, with both passenger traffic and freight based in Gothenburg. The company is part of the family owned Stena AB. Second-generation owner Dan Sten Olsson, aged 73, is CEO of the group.
The fact that Stena is family-owned gives the company many advantages when it comes to digitalization, transformation and investments in new technology, Jari Virtanen believes. The owners have a long-term strategic view of what we need to achieve.
Dan Sten Olsson gave his full support from the beginning and set the strategic framework. “He has always been clear that shipping operations are “a commodity”, that we are not engaged in tourism but “freight” and “transport”, and that the only way to differentiate ourselves is to work more efficiently. That is where digitalization comes into the picture”, says Virtanen.
The owner ensures that there is always at least one person with high-level digital skills on the board of directors and in each management group.
“As a private company, we can have a long-term perspective and test and evaluate things. We do not have to worry so much about the next quarterly report”, says Virtanen.
The board’s contribution
“The CEO brought in new ideas to the board of Stena Line, which took the issues seriously without going completely overboard,” continues Virtanen. He gives special credit to one of the board members, Lottie Knutsson (with a background in the travel industry, editor’s note), who initiated discussion on digitalization from a consumer perspective.
The fact that Stena Line is primarily a shipping company influences its priorities. Since the core business is freight shipping, these will be different to those of a company whose main industry is tourism. The primary focus areas are efficiency and cost reduction.
“Nonetheless, we maintain customer focus and work with the customer experience on board. We are in the travel industry, but less so than the big cruise companies., We are more like a regular airline than a charter company”, explains Jari Virtanen
Stena Lina set up a group of four people, led by a start-up entrepreneur Amer Mohammed, to test ideas and concepts. This group inspired employees to look for cloud applications and initiated a number of projects. Stena Line was widely praised at the time for its forward-looking investments in AI, analytics, algorithms and chat-bots.
“What was initially a high-flying vision is now becoming more concrete as we try to implement solutions that clearly improve our business,” says Jari Virtanen. “The vision of the “cognitive shipping company” fully supported by AI 2021 is very much alive, although it has matured and sobered a little over time.”
Transforming the company
Transformation is the key word, and the board and management team strive to ensure that it permeates the entire company. “When you use the word digital, it immediately becomes something separate, technology-driven, outside the business and that is not how it should be,” he says.
It is important to be clear that this is all about improving operations. All projects are clearly linked to the core business. “New technology is used to lower costs and increase sales, i.e. to increase the margin”, emphasises Virtanen. “We go through every process from start to finish and examine how we can streamline and automate with maintained or improved quality to make the business as a whole more efficient”.
“AI, machine learning and cloud solutions are in fact the best tools we have to propel our vessels optimally. Fuel consumption has been reduced and maintenance has become more efficient. An efficiency improvement of 2-3 per cent in energy use generates 5 million Euros in savings per year, so the maths is simple.”
“Over 80% of all bookings are made online, so this has almost been achieved already. What we are looking at now is the whole operation, i.e. how we can streamline everything from logistics and proactive machine maintenance to the pricing of goods sold on board and recruitment.
Jari Virtanen’s job
As the CTO, Jari Virtanen is part of the management team and leads the transformation unit’s 150 employees with a mission to change Stena Line. He has a clear mandate to drive development and to initiate projects.
“Some companies choose to create a separate unit and give it an inspirational role with a close link to the CEO,” says Virtanen, “but we chose to integrate innovation and transformation while taking full responsibility for IT development and testing. We drive a push and pull operation challenging each function.”
He wants to make sure that departments are not siloed, developing their own solutions without being aligned with the whole. His unit is on the same floor as those in charge of running the business. “We work across the organization, prioritizing projects in the business. We give final approval to initiatives so that they fit our overall strategy and ensure that we do not develop several parallel solutions. That model works well, I think.”
“We aim to make the business as a whole more efficient, which is a much broader scope than selling tickets online in a mature travel industry. That is to say – we are striving to ensure that the company takes advantage of all the new technological opportunities that exist.”
In Jari Virtanen’s view, the challenge here is to act as a proactive, forward-looking force rather than a brake. Ultimately, it is a question of leadership, communication and securing buy-in.
“In order to succeed, it is vital that we work hard to include people on the journey to the overall cognitive goal. Everything is based on a purposeful strategy where we describe where we want to go and what it takes from each employee to get there.”
“We need to train our leaders in what we want from transformation and IT. We have reflected a lot on how to get our technology managers to really understand what we want to achieve, which is the creation of solutions that add value.”
Jari Virtanen’s takeaways
When Jari Virtanen talks to other mature companies, he finds that many raise their eyebrows when they understand that Stena has come so far and put things in place that work. So, what are the key success factors?
“Transformation is about a mix of governance, strategy and leadership,” he explains. “When working with change, the ingredients are 80% people, or what you usually call “culture”, and the remaining 20% is technology. And it helps a lot to have an owner whose motto is “To run a company is to live with change”
But it has not been painless. And sometimes you have to go back and adjust.
“Have a selling and collaborative attitude, and an open mindset paired with some mild violence. We have a Finnish expression: “management by perkele”. Add to that a large dose of honesty – and self-esteem enough to back out.”
• Clear mandate
• Deep competence
• Deep understanding of the business
• The “culture”
• Skills gaps
• Finding the proper balance between short-term and long-term priorities