28 Sep 2018

How MNCs are redefining innovation across APAC

In the previous chapter of ‘Leadership, Disrupted’, we highlighted how MNCs in APAC are changing their business models to meet a rapidly-changing market environment. However, as we now illustrate, the speed at which they need to react and change demands a much more agile approach than most large companies are structured to support.

From 70 interviews across APAC, we’ve examined how leaders are working to stimulate new thinking and create innovative new business models.

Staying relevant

It all starts with one big question.

“We are 130 years old. How do we stay relevant for the next 130?” Or, put another way: “We have been relevant for the last 50 years. As a leader, I need to make us relevant for the future. It’s a challenge and a privilege.”

A real area of concern for many leaders is that when their business is not challenged, most people focus on riding today’s wave of success and expect tomorrow to be the same. “Our share price is up 30%. It’s a dangerous time.”

Economic drivers have not changed

For all the hype about disruption, the business leaders we interviewed remain pragmatic about the need and purpose of all innovation. One executive explained how one big bet is paying off: “We can now increase our capacity by 80% with just a 15% staff increase because of a technology investment.”

And another leader set himself a goal that aims to leapfrog their sleepy competition: “I don’t want to know how we get from 1200 to 1100 people in a particular business unit. I want to know how we get to 80. We can reduce our cost base by 60 to 70% in three years.”

The fascinating part of this story is how he worked out where to start. “I tried something new and hired five smart and adventurous young people from outside of our industry. Each of them went into a different business unit on a six - month secondment. The first three months to get to know the business and the second to work out how they would do things differently if it was their own business. We now have 21 of these people and they all report back to me. These young people are attracting other young people and this has brought an amazing cultural change.”

He went on to explain that this has been a huge time commitment for him, but well worth the effort. When questioned about where this idea came from, he said, “Outside of my corporate role as CEO, I am involved in a venture fund that invests in start-ups and this has shown me that anything is possible.”

New models for innovation

Like the example above, many companies are investing in new teams and models to create or acquire innovative ideas and products.

“We have a formal disruption model on products. We took this from Silicon Valley and look at change from other industries. It’s constantly on the table.”

“We set up an innovation investment fund. We have looked at 100 companies in APAC and invested in six. They are there to accelerate us. We also have an annual prize for the best idea.”

Learning to let go

Overcoming the inertia that sits at the middle layer of most successful businesses is tough. The CEO of an industrial company explained how he is learning to let go. “We love governance. It’s a great way to kill good things. We have dissipated accountability so much that we have destroyed entrepreneurial thinking. For our digital team, we removed all guidance and governance. This is an uncomfortable feeling for me.”

A comment from an FSI executive in an area that is typically slow to change is telling. “If we don’t play in some adjacent spaces, we will not know what is coming.”

The word “play” is the key to successful innovation.

Finally, this comment from a company that is outpacing all of its competitors globally by a huge margin provides more insight. “Our products are critical, but not considered a high-level issue by customers, so we bring the innovation to them. We invest double our competition in R&D – It's part of our culture.”

Buying innovation

Technology companies from Silicon Valley are often talked about as the global hotbed of innovation, but much of the technology we see and use daily is acquired from start-ups. Even before they make their first dollar of revenue.

“The speed of innovation has increased beyond what one company can create.”

Some sectors are seeing little innovation to acquire in the APAC region. “We are always looking to acquire innovative small businesses. We are seeing innovation from Europe and Australia. Less from the US and nothing from Asia.”

Another company acquired a start-up in China before it could become a competitor. “We paid a huge sum for a company that had an innovation that would have killed our business. They were pre-revenue, but three years later we have turned them into a big business.”

Others have found that integrating a start-up into an established corporation can be a disaster of their own making. “We ruin the companies we buy. One visit from a corporate audit and we blow their minds.”

Distributed innovation

Historically, global companies had a single, centrally-controlled R&D team, and then a standard go-to-market model that was deployed globally, with little or no localisation.

Today, the business model is as important as the product and a single model does not work everywhere in the world. We’ll pick up this vital point in the concluding part of ‘Leadership, Disrupted’ Chapter Six. We’ll reveal how, increasingly, innovation from APAC is finding its way back to Europe and the USA.