Understanding corporate innovation: Adam Lyle from Padang & Co

This entry is part of KrASIA’s collaboration with the event Experience the Power of Innovation and Collaboration (EPIC) jointly organized by Singapore’s Action Community for Entrepreneurship (ACE) and JTC.

As the economy undergoes a massive digital transformation, being able to innovate became a necessity rather than a “good-to-have”skill. Companies have adopted a variety of strategies to innovate, ranging from setting up internal corporate venture arms, to establishing innovation labs, to engaging in co-innovation with external partners.

In order to sustain this momentum, it is vital for the ecosystem to be as inclusive as possible.

KrASIA spoke with Adam Lyle of Singapore-based open-innovation firm Padang & Co to understand the ins and outs of corporate innovation.

KrASIA (Kr): What is the difference between digitization and corporate innovation? What about co-creation? 

Adam Lyle (AL): Corporate innovation is about producing new products and services and new business models.

Digitization to me is very much business-as-usual kind of innovation. It is important, incredibly important because unless we have those digital lines in places it would be very hard to build other applications on top of that. So a certain level of digitization needs to be done.

Innovation on the other hand is about connecting the dots, creating new value, new revenue streams, new opportunities, commonly known as disruptive innovation.

Disruptive innovation can be building a new business model or creating a product or a service that offers the same value at a much lower price. Or a product that provides many more features at the same price, or even provide more at lower cost. That is classic disruption.

Typically, when people think about co-creation, they think of corporates working with startups but it doesn’t have to be just them. Co-creation also happens when corporates work with either government agencies or even other corporates to develop solutions.

Kr: What drives innovation? 

AL: Innovation has been going on since the beginning of time but what has changed in the last 20 years or so is the speed of innovation.

Because of the computing power and connectivity of the internet as well as mobile-first type of innovation, we’re seeing things happening faster and more cheaply. All these is because it’s simply easier to innovate.

Take the agriculture sector for instance. It was seen as an industry that was a slow to innovate as well as to utilize data and new technologies. But all of a sudden, in the last two years it has accelerated dramatically. Even here in Singapore we now have quite vibrant food and agritech industries.

Kr: Why do some large corporates still seem to struggle with innovation?

AL: :Large companies are very good at repeating what they do and that is what gives them scale.

But innovation is about doing things differently. It’s about breaking the pattern. Corporates are not always used to breaking the pattern so for them to do something new and different, it is actually asking them to break with their paradigm.

So the biggest issue is people’s preparedness to experiment. People working in large corporations are busy. They already have their KPIs to meet and more often than not they are not going to put their work aside to focus on a new innovation project.

Kr: What’s the solution? 

AL: There is a need for a culture that says it is okay to experiment. You need to integrate the initiatives into the yearly plans and for this to happen, there needs to be proper stakeholder management to get these people on board and committed.

You can’t just say you want to innovate and become an innovation company overnight. You need to actually have plans and clear directions of what you want to do and how you are going to achieve it. Having a plan can be as simple as saying “we want to try some new things that we’re going to have x percentage of our time, or we have budget to do these things”.

Kr: Who are the key stakeholders in a company to drive innovation?

AL: I personally believe the leader is very important. The leader needs to make it very clear to the organization as to why they need to innovate, then the middle management needs to be on board and committed to the cause.

Also, we need the system to support innovation. If you want an innovation engine, you have to have a management system to support that.

Most importantly, from the experiment there must be some form of learning. Experiment is not just an end in itself. It needs to inform the company how they can build new opportunities. Failing an experiment is fine but what is important is taking away some learning that could be used to design the next experiment and next activity.

Kr: What are some common errors? 

AL: “Innovation” is destined to fail when a company says “okay let’s set up a lab and put a couple of people over in the corner” and there you have a few people trying to drive innovation across the orgnization independently of the company.

Labs are great, there is certainly a place for labs in corporate innovation but they need to be set up in a way that they make up a part of the overall structure. They need to be integrated into the right levels and right activities in the organization.

Otherwise, they will just be seen as something on a side and what follows is “organ rejection” because what they produce is essentially not what the business needs or is ready for.

Kr: Are co-creation and co-invention a common trend here in Singapore? 

AL: I wouldn’t call it common for large corporates. I couldn’t say for sure what percentage of corporations [have these initiatives] it but it is common. More and more corporations are engaging with startups in different degrees.

It ranges from the early stage of just staying aware of what the startup is doing and supporting them, to learning from their way of doing things and how they stay agile, to collaborating with them by piloting a project, to striking a business arrangement collaboration and finally to acquiring them.

Kr: Why would corporations want to work with startups? 

AL: There’s a lot of knowledge out there and the corporates are not going to have all the knowledge in-house. Therefore, they need to look outside to the appropriate potential partners that they can work with.

And why do they want to do that? Because they want to build new products and new services. Co-creation enables these corporates to get to the relevant markets faster. It also reduces the costs thereby increasing the number of new products and services.

Kr: What are some typical problems that come up when corporations and startups start to collaborate? And can they be avoided?

AL: Startups can be suspicious of working with corporates for a number of reasons.

First, they might find corporations slow to move and too on board their commercial relationships. Startups can become impatient with the long and tedious internal processes of these large companies.

Second, startups are concerned about getting paid. Large companies can be slow at times–that’s just how they operate. On the other hand, startups usually have a need for cash so that might clash at some point.

The third point is the opposite of the first. Startups might not have the depth of resources to deal with large companies in terms of being able to respond quickly.

Take for example, a pilot project worked out well and the corporation wants to scale in X number of countries and Y number of categories. The startup might not be able to respond and cope with the change immediately so conflicts and disagreement might occur.

The key is for the startup to have the maturity to understand that large company takes a little longer to move. Large companies can be bogged down by processes but there are good reasons why some of these processes remain in place so startups that want to work with corporations need to have the patience to wait for the large company to move.

Kr: What is the role of government in promoting co-creation and corporate innovation? 

AL: I think governments everywhere have got a role to play, especially in terms of providing the conditions that enable success. The kind of role can range from removing red tape and making the country business-friendly, to setting up sandboxes for product testing and to providing funds.

Funds are important as they increase the money supply which will then allow the companies to accelerate development. However, it is all about free enterprise. Companies have to get out there and do it themselves. True entrepreneurs are not going to wait to get government funding because they start, they bootstrapped then they get going.