Companies racing to innovate drive a booming business

Singapore

THESE days, thinking like startups is not just a matter of being trendy for large corporations - some believe it is a matter of necessity.

The surge in corporate innovation and venture investment has brought with it an expansion of the market for advisory services, with companies springing up to help organisations innovate, partner startups or invest in them. These firms offer a range of services, from organising hackathons to building startups within the client corporation that can eventually be spun off.

The common denominator across these services is the provision of a platform that both corporates and startups can easily tap into to connect with each other.

Homegrown open-innovation firm Padang & Co, for instance, joined hands with Unilever two years ago to launch a co-working space for startups that is connected directly to Unilever's Singapore office.

Unilever has been working with about 35 per cent of the startups in the co-working space, called LEVEL3, which is managed by Padang. Corporate partners the likes of Microsoft and Japanese bank MUFG are also plugged into the ecosystem, which now houses 72 startups.

Barbara Guerpillon, the director for innovation unit Unilever Foundry, told The Business Times that the company went into partnership with Padang because its team was not initially structured to operate a co-working space.

"Our main mission is to be the link between startups and Unilever, and that's where we focus our efforts on. We thus needed a partner that not only shares the same mission, but also the experience in facilitating corporate and startup collaborations," she said.

"Padang & Co was the key choice and the star contender when we were evaluating partners to work with and to run LEVEL3 because they have deep relationships with various startup communities in the region, a good understanding of Unilever and a solid experience in running programmes including workshops and events that can foster meaningful corporate and startup collaborations."

Padang's chief executive Derrick Chiang said that the startup-corporate model of innovation works because while corporates are excellent at repeating tried-and-tested processes on a large scale, startups have the singular advantage of wanting to solve a specific problem.

Padang has seen the market for innovation services grow significantly in the last three years, with more competitors turning up the heat. After recording a 62 per cent rise in revenue in 2017, it chalked up a 91 per cent surge in revenue last year, in part due to LEVEL3 filling up with members, and corporate partners joining in. It now plans to replicate the co-working model in other Asian cities.

As the market for innovation advisory blooms, traditional players are venturing out to set up shop and offer services of their own. Singapore-based Futurelabs Ventures, for one, was founded by former partners of McKinsey Ventures. Besides investing in B2B tech startups, the firm helps multinational corporations collaborate with them.

Even the Big Four audit firms have dipped their toes into the space. KPMG and PwC launched their innovation platforms within months of each other in 2016. KPMG's Digital Village is aimed at advising corporates and startups from the outset; PwC's Venture Hub used to focus on supporting those within the startup ecosystem, but has since evolved to include supporting corporates as well.

Venture Hub leader Patrick Yeo said that when it comes to investing in startups, common pitfalls for corporates include unclear objectives and making decisions based on their emotional attachment to certain ideas.

"We always start with ascertaining the objectives of companies that want to invest in startups, whether it be for capital gains, exposure to new technologies, or finding complementary technologies. It is also important to agree on the industry sectors and map out the investment strategy," he said.

EY does not have a standalone business unit offering such services, but it has invested in a global network of 24 innovation centres called wavespace, which taps multidisciplinary teams with the necessary sector knowledge and technological expertise to advise corporates.

Joongshik Wang, EY Asean digital strategy and M&A leader, said: "The most common roadblock to innovation in a business is cost effectively prioritising ideas and turning them into offerings in the market that deliver returns on investment. To that point, EY's end-to-end model supports our clients from ideation, while adding validation, through to strategy and technology implementation with an approach that covers business, design and advanced technology skills from collaborative teams."

As local innovation companies look to expand outwards, more foreign consultancies are eyeing Singapore. Thailand's RISE, which has several partnerships with the Thai public sector, is poised to deepen its Singapore presence after having opened an office here last year. RISE says that it has worked with companies that, when combined, contribute to a quarter of the market capitalisation of the Stock Exchange of Thailand.

Its founder, Supachai Parchariyanon, said Singapore was chosen as the company's first location outside Thailand because it is where many large corporates are headquartered.

RISE runs an accelerator programme, immersive programmes and a venture fund, but its fastest-growing business arm is the corporate innovation academy, where it helps clients to build "startups" within the organisation; it also trains members to think like entrepreneurs. Since 2016, RISE has helped spin off three startups from companies.

Mr Supachai added that a collaboration with the Singapore government is on the horizon. More details will be announced soon.

The Business Times is the official Singapore media partner for the RISE Corporate Innovation Summit 2019, which takes place from March 28 to 29 in Bangkok. To save US$200 on the standard ticket price, enter the discount code CISSPH at cis.riseaccel.com until March 15