Kickstarting a new innovation strategy

Kickstarting a new innovation strategy
Photo by Kelvin Han / Unsplash

Asia's share of global GDP will most likely exceed 50% by mid-century, double the percentage at the start of the millennium. The region has the potential to leapfrog in technological development based on the scale of its markets, its openness to technology adoption, and its high volume of intellectual property creation.

Many Asian governments have implemented policies to attract projects and cultivate dynamic ecosystems. Despite recent travel restrictions and lockdowns due to the pandemic in the last couple of years, over 100 MNCs have launched new innovation programs in the region.

Fueling local innovation efforts has been part of the MNC growth strategy for decades, along with the push-and-pull aligning between European and US HQs and their regional teams. Yet bolder steps coupled with a culture of risk acceptance and experimentation are needed for Western MNCs not to fall behind.

Innovation is a high risk, high reward proposition... innovating in a high growth region far from headquarters is even more so.

To facilitate more conversations between Asia teams and colleagues at HQs in Europe on the Asia innovation challenge, I worked with my strategic partner, IoT ONE, augmented with insights from Pawlik Asia and Excubate, to publish our first iteration of the Innovating in Asia Playbook, which serves as roadmap for planning new initiatives.

We'll use the playbook as a kick-off for a series of peer-to-peer exchanges in our "invite-only" Asia Growth Exchange to check on common challenges and practical solutions.

Executives with deep experience running large regional businesses in Asia know their operations must constantly evolve to realize opportunities and address new challenges by embedding agility, speed, and market insight into their teams and processes. They are looking to free up time and resources to decipher the latest market trends, customer behavior, and competitive dynamics with a constant eye on the bottom line.

A game of high risk and reward means balancing opportunities for action with potentially conflicting interests. The lack of local capabilities to systematically plan and execute innovation initiatives leads to declining competitiveness when launching new projects without local market trend validation and P&L impact.

“Our innovation approach is not focused, even chaotic, because the future could be everywhere – so we’re also trying to be everywhere.”

Insufficient data to cover Asian markets and make decisions based on the needs of local customers and internal teams. Execution gets stuck due to missing know-how, experience and capabilities to transition from idea to MVP to scale.

“I can't even tell whether KPIs and targets for our venturing programs exist - but I wouldn't be surprised if it was mostly gut feeling.”

The Innovating in Asia Playbook addresses a checklist of six questions that will guide the process of planning and implementing innovation localization in Asia.

1) Why is innovation localization in Asia important?

This playbook begins with the premise “If you wish to remain competitive in Asia, you must innovate in Asia”. There are 3 reasons that localization matters: Growth Opportunities, Ecosystem Capabilities, and Market Access.

Four megatrends will have an outsized impact on Asian markets: Digital Trade, Future Mobility, Manufacturing Transformation, and Energy Transition. Understanding trends that impact your business is critical.

3) How do you define your local innovation strategy?

Innovation management begins by defining your organizational ambition and scope of activities in Asia. Will you balance development of the core business and exploration of new opportunities, or prioritize one focus area?

4) Where do you locate your innovation footprint?

Asia is home to 6 of the top 10 science and technology city clusters and is home to 60% of the global population. Selecting the right innovation hub location is a function of proximity to internal teams, customers, and talent.

5) What organizational structure suits your goals?

Six elements must be aligned between global and regional stakeholders to maximize the probability of accomplishing innovation goals, while operating within organizational constraints.

6) What common challenges should you anticipate?

Although most executives agree that innovation is critical for business growth in Asia, very few are satisfied with outcomes. We look at common challenges related to vision, structure, team, and processes.

Members can download the full report below: