Collaborate or be disrupted: How large corporations and startups can adapt to technological change to keep growing

Kickstart Ventures President Minette Navarrete at Arangkada Philippines Forum 2017. Also in the photo are: From L-R (partly hidden) Erika Legara, Associate Professor at the Asian Institute of Management; David Hall, Chief of Party of the USAID STRIDE Project; Paulo CAmpos III, CEO of ZALORA Philippines; and Jubert Daniel Alberto, Head of Operations at IDC Philippines.

With the emergence of new digital technologies, collaboration between large enterprises and agile startups becomes essential for industries to build continuous growth while adapting to the changing economic environment and mounting social pressures.

This was pointed out by Minette Navarrete, President of Kickstart Ventures, Inc., the corporate venture capital subsidiary of Globe Telecom, during a panel discussion on Disruptive Technologies at the recent Arangkada Philippines Forum 2017 which was supported by Globe Business.

Navarrete noted that while large enterprises may espouse innovation, the largest, most significant, industry-defining innovations in the last 20 years have originated from startups such as Google, Facebook, Amazon, and Netflix, among others. The absence of legacy investments frees startups from artificial constraints and gives them agility to adapt to even convulsive changes.

Innovations in artificial intelligence (AI), bots, and robotics, among other technologies, have massive potential to disrupt entire industries, with many jobs at risk of being replaced by technology solutions that can be trainable, predictable, and easily controllable. In the previous year, the International Labor Organization (ILO) estimated that 49 percent of all labor in the Philippines is at high risk of automation in the next two decades. Another Arangkada 2017 panelist Jubert Daniel Alberto of International Data Corporation (IDC) Philippines shared a belief that the rise of AI would definitely affect the BPO industry that employs about 1.2 million Filipinos.

“The key is the early preparation and the re-orientation of businesses to take a broader view, investing in AI while retraining people to do higher-level jobs that require human insight and judgment. This is not a guarantee that there will be no disruptions. But through collaboration especially between enterprises and startups, they can accelerate ecosystem-wide innovation that improves business performance while continuing to develop and invest in human capital,” she said, a view that was further emphasized by panelist Erika Legara of the Asian Institute of Management’s Department of Analytics, Information and Operations.

According to Navarrete, established industries have the necessary scale and momentum. Large enterprises are good at driving innovation through a controlled environment but they are less successful when there are higher, often unquantifiable degrees of uncertainty and risk and where the innovation development process requires experimentation and rapid iteration.

Smaller companies and startups, while initially lacking scale, are faster to harness the potential of new and emerging technologies to create new businesses. Business and consumption models such as Uber and AirBnb which created the sharing economy, are changing the way assets are used and how industry players compete.

However, Navarrete said there is a way to marry the resources of large corporations and the risk-taking nature of startups just like what Globe did with Kickstart.

“At Globe, we take the perspective that we are not the only smart kids on the planet. We accept that innovation both inside and outside the company are important. We work together across ecosystems, to create value that improves the company’s business results while helping Filipinos achieve their dreams, and build up the nation as a whole,” Navarrete said.

She added: “Kickstart itself operates like a startup -- independent, experimental, disruptive, personal. Our grassroots presence and hands-on approach helps build a robust startup ecosystem in the Philippines, bridging into large corporations here, and across the Southeast Asian region. We are disrupting Globe from the outside-in, and the industry is beginning to understand that that can be a very good thing for business.”