Visiting InnovFest Unbound, a technology conference, was again a great way to gain insights on how large companies entered, or re-entered, the field of innovation.
The theory is now well established: multi-national companies have long been lazy to change their minds, and by sticking to the good old, long, process ridden R&D, they let open the field for fast moving, agile startups, and, as a consequence, feeling more or less strongly the wind of disruption on their necks.
“Corporate Growth Through Innovation” panel at InnovFest Unbound Singapore, 2016
We heard and talked with five different and insightful executives from General Electric (GE), Johnson & Johnson (J&J), Oracle, Nestlé, OCBC, UOB, and even Kodak, yes, that same Kodak which has been the best case study so far of how a giant leading company could lose it entirely in a few years by not adapting its business to a new digital age.
From survival to growth, the journey of corporate innovation
For Wouter Van Wersch, President and CEO of GE Asean, innovation is both survival, as “any company needs to focus on the improvement and betterment of their current operations”, and growth, “to look at the future and what will come”. Playing in those two fields, incremental and disruptive innovation, is necessary. For GE, this theoretical approach finds concrete examples in two different ways.
First, the cross-collaboration between the different business units help transfer technology to several use case, “for instance, when we design a new imaging system for our healthcare division, we know we can also use it to scan through pipelines in our oil & gas division”.
GE’s Predix platform for an industrial internet
Then, a little known fact at GE is that they generate $5bn in software sales, with an objective of reaching $15bn by 2020. The move, which GE says makes it a “digital industrial company”, has been made possible thanks to the development of a cloud-based platform, called PREDIX, that is gathering and analyzing data across the different divisions (again, thanks to cross-collaboration) and enables customers to be more productive and improve the performance of their assets.
Disruption from the inside: the stories of Nespresso and KodakIT
This disruption can happen successfully within companies before they are pushed to do so by aggressive and well-funded startups.
Vivek Dogra, who leads the Corporate R&D – Innovation Partnerships at Nestlé, shared how his company went from selling instant coffee (Nescafe) as a product to the well-known Nespresso coffee single-use capsule and machine system, innovating both on the product and a whole new business model, which is now worth over $3bn today.
Creative destruction @ Nestlé
This success story doesn’t go without challenges, as part of the 1700 patents owned by Nestlé on this product began to fall in the public domain in 2008. As a result, many competitors developed similar products, pushing the original innovator to move one step forward. Today, Nestlé is transitioning to a nutrition, health and wellness company, developing categories where other F&B companies are also getting active in.
In the alleys of InnovFest Unbound, as well as on the stage of the panel on corporate innovation, we also met with Eric Mahe, CEO KodakIT, a “startup” within Kodak. The story of this leading company in photography is famous and is summarised in this article from Forbes (it’s still amazing to read Kodak actually spent half a billion on successful prototypes to let them on the shelf…).
Kodak’s startup, KodakIT, a “Uber for photographers”
Eric actually got in touch with the new boss of Kodak a year ago, and suggested to setup a separate organization for innovation at Kodak. In March, they launched an app in Singapore called KodakIT. It is “a Uber for photographers”, to connect the demand of consumers of business with the supply or qualified and rated photographers.
“If you have a party next Saturday, you can find a professional photographer. But it’s actually the B2B side that has good traction. We have 3,000 downloads so far, and massive needs for quality photography at decent price for business all around the world. The best use cases we had so far were e-commerce, hospitality, travel” adds Eric.
Ingredients for corporate innovation: customer needs, organization change, and external partnerships
Lim Kang Song, Managing Director Singapore at Oracle, kicked-off the discussion on the methodology: if everyone knows well the end goal, the challenges abound in old, big companies not used to move so fast.
For him, the main issue is the job to be done: “it’s critical to understand the needs of our consumers, see the gaps, and provide a solution”. To do so, Oracle organised some 900 independent user groups, representing half a million customers.
As a result, and in combination with new cloud technologies, they managed to shorten the product cycle from two years to 3-4 months, while also freeing up a lot of resources internally.
Miao Song, CIO and VP IT for APAC at J&J, insisted on the role or organization changes for MNCs to innovate faster: “people need to be encouraged to take risks and fail, to think outside the box”. Innovation definitely is everywhere, adds Eric, “great ideas come from the C-level as well as employees, and different generations will have different initiatives”.
OCBC’s four available APIs for the launch of their data store
Pranav Seth, head of e-business and transformation at OCBC, insisted that banks need to go beyond the lending/keeping money paradigm: “it’s about keeping up in delivering the experience in the digital age, adapting our products, not just bank accounts, but financial info on a larger agenda. Right now, trends are about hyper customization for instance”.
Business banking face the same need for change, says Janet Young, Managing Director Group Channels & Digitalisation at UOB: “The game is now on the entire value chain of needs. SMEs typically need to address government regulation, overseas expansion, hiring and retaining talent. A bank should be a platform for all of this, and we have the capability to tie up with other stakeholders, from logistics to e-commerce or insurance companies”.
OCBC also began sharing a few APIs to open innovation to third-party developers, and UOB recently partnered with Infocomm Investment, a government agency in Singapore, to open a FinLab UOB and work with several partners, from Amazon to fintech unicorn Garena, on new topics.
The leadership must take action to foster an innovative environment
In that meaning, the role of leadership is to provide an environment where those ideas can emerge, and can then go onto prototyping and scale-up within the framework of the company.
“It’s important to encourage more ideas to be shared at an early stage in cross-functional teams”, shares Vivek, “as it’s the only way to increase the chances of success in later stages”.
He added that a structured way of collaborating with the external sources of innovation (industry and academic partners) helps drive innovation capabilities.