BUSINESSES should sit up and take a good, hard look at the "disruption" coming to their industries - or risk becoming obsolete and having no part to play in Singapore's future economy.
It's a message that's getting some traction, as the government-formed Committee on the Future Economy - via its Future Corporate Capabilities and Innovation subcommittee - sets out to help firms and industry clusters use technology and new business models to create value and stay competitive.
"The possible impending downturn, the definite huge trends sweeping businesses and (the fact) that multinational corporations are laying off staff in droves are really focusing people's minds on how to work in new ways," said Hugh Mason, chief executive of JFDI, a startup accelerator that also advises on corporate innovation.
This is unlike the recent past, when the MNCs Singapore hosted as a regional hub had perhaps a lot more time to "plod, ponder and get fat", Mr Mason observed.
Today, more companies are realising that if they don't create the forces that will kill off their existing business, someone else will. Said a recent corporate innovation report by 500 Startups and INSEAD: "Corporations sit on more cash reserves than most venture capitalists will ever have, and can deploy assets that could cause some serious disruption of their own. Surely, not every corporation is content to just sit on all that capital, watching the world go by?"
In recent years, JFDI has been approached by a record number of MNCs wanting to discuss "disruption". Telcos were first in line, followed by financial firms, postal services and, most recently, energy and maritime companies, said Mr Mason.
"They have been very direct. A typical opening to these meetings goes like this: 'My company is 100 years old and I want to make sure it's still here in 100 years' time. This ship is not going down on my watch.'"
Opportunely, Singapore is well placed to support large corporations making this change. By virtue of the Republic's compactness, it takes little effort for businesses to reach out to other MNCs, large local enterprises (LLEs), small and medium-sized enterprises (SMEs) or startups to acquire new skills or explore new sources of partnership and innovation, said Mr Mason.
Arthur Fong, managing director of 3M Singapore, agreed: "Unlike before, where best practices are often passed down from MNCs to local firms, there is invaluable information and local market intelligence that SMEs can share to sharpen the ecosystem for better synergy and productivity."
Moreover, the fact that many of the MNCs here are regional headquarters makes it easier for them to change course. "For the corporate centre to make a change in direction is like asking the captain of a supertanker to pull a handbrake turn," said Mr Mason. "It's much easier for an officer a few levels down the ladder to send out a speedboat to explore what could be a treasure island."
Only that spotting "disruption" has become more complex for industries. In this increasingly tech-driven and intertwined world, there is no knowing what could muddle them next, noted Isaac Ho, a partner at private investment firm Venturecraft, which helps Singapore tech enterprises commercialise in China.
The insurance industry, Mr Ho ventured, is primed for full digitisation, with policies to be integrated with healthcare data to determine premiums, and cross-border plans for global citizens. The travel sector needs to embrace free independent tourism. Small manufacturers ought to start embedding software into their hardware (for example, smart locks) to stay relevant in this Internet of Things (IoT) Age. Banks should bet more on product design to appeal to style-conscious millennials.*
Even the government must re-evaluate its role and be prompt to regulate disruptive technologies such as crowdfunding, ride-sharing and online payment - which have been dominated by startups, said Mr Ho.
Pharmaceuticals, telecommunications and banking are the top industries when it comes to engaging with startups, according to the 500 Startups and INSEAD report, which is based on the world's 500 largest public companies in the Forbes Global 2000 list.
Pharma companies reach out to startups through corporate venture capital, with most of them found to have an investment arm to fund external startups. Telcos use a wide range of ways to connect with startups - almost half have an accelerator or incubator programme, while close to a third organise startup competitions.
Merger and acquisition, providing support services and co-working spaces are other ways corporations can engage startups, stated the report. Said Arnaud Bonzom, corporate innovation director at 500 Startups: "The five Singapore companies in Forbes Global 500 - DBS, OCBC, Singtel, UOB and Wilmar - are already engaging with startups, as do several unranked companies such as Singapore Press Holdings, MediaCorp and StarHub."
Beware of "innovation wayang" though, cautioned JFDI's Mr Mason. "Hiring a few ex-Googlers, giving them e-scooters and putting artificial grass up on the walls of an old office all looks a bit Dotcom 1.0 - and it won't fool the analysts for long."
He added: "Whatever happens to our economy in this next period, the most inspiring thing is to see people start to engage with entrepreneurship - because that agility and ability to see opportunity when things are changing is what makes the 'creative destruction' of economies a long-term positive, even if it is painful in the short term."
The subcommittee on Future Corporate Capabilities and Innovation will recommend strategies to enable companies and industry clusters to develop innovative capacities, making use of technology as well as new business models and partnerships. It will examine these in relation to MNCs, LLEs, SMEs and startups, and the interaction among them within and across industries.
- This story is part of an ongoing BT series on Singapore's future economy.