Why some Asian companies don't get technology development & integration
In the past few months, we are treated with a lot of major moves in the technology industry with Google's acquisition of Nest and Facebook gaining both Whatsapp and Oculus Rift. Just this week, we heard about the rumours of Apple acquiring Beats for US$3.2B (reported first by Financial Times) and the enthusiasm of Wall Street towards the upcoming Alibaba IPO. While we are waiting for the next disruption since the smartphone from the iPhone in 2007, all eyes will be on the wearables category.
It made me reflect on a couple of things working in the technology sector as a technology executive in a traditional industry. I want to talk about one of them, that is the danger of Asian companies which do not understand technology development and integration.
In the past few years with mobile becoming the front and centre stage for traditional industries to adopt and bridge their products/services to the digital age, I noticed that some traditional Southeast Asian companies where their core competency is not technology based, tried to develop or clone technology similar to the big hitters out there. For example, one of the largest conglomerates, Singapore Press Holdings bought a search engine (and renamed it ST701) years back and we knew that no matter how hard they try, they can never match Google, if not worse, Bing where countless resources are put into making them work. There was no strategic reason why they need a search engine. Of course, it baffles me when I encounter some traditional business in Southeast Asia who wants to reach consumers and tell me that they would rather create the hassle of letting users sign up the traditional way than leveraging on the social graph of Facebook. These Southeast Asian business cite the examples of Baidu, but Baidu makes sense because the Chinese government blocks Google being influential. If your economy is open to external competition such as Singapore, it does not make sense to build a Google, Facebook or Paypal, because the odds are stack against you.
Oftentimes, some Southeast Asian business owners tend to under-estimate the costs of technology development and believed that they are capable in building the same technology against those who has already global share of the market. Given that the business structures for some Asian companies are completely hierarchical, the business owners did not listen to their advisors and believed that they knew how to get it done. In the end, they answered wrongly the question of why technology can enhance their core competency of their industry and instead pursued the wrong type of technology development and integration for their companies. I have seen this happened even in a western business where the business owner ended up trying to build a Facebook instead of digital services focused on the company's core competency.
It may be simpler to give a concrete example, if my core competency is in making better cupcakes for my customers, why should I build a e-commerce engine similar to Amazon or create my login system for users to sign up? My focus is to use technology to enhance my offering and drive customers towards me, and hence just using a simple engine such as Shopify or Magento e-commerce will allow me to sell cupcakes and instead of making them creating an account, why not use Facebook/Google/Twitter connect to login the user? I noticed this kind of behaviour in some Asian companies (which I don't work for), and they ended up trying to build their own version of Paypal, instead of using Paypal to deliver a good checkout experience for the customer. I can get the technology done much easily and focus on making better cupcakes or experiment on a new flavour of cupcakes where my customers can get a good experience from tasting them.
Technology development & integration should complement the goals of the core business of a traditional industry and not end up in cloning something that is available out there. I often keep this on the back of my mind these days so that I know that the technology solution my team develop answers the question on why it is necessary and at the same time able to enhance the core business which we are operating on. Otherwise, I will say an immediate no to doing something else which has no effect to our core business.
Interesting articles I have read in the last two weeks:
- When the VCs ask about your hiring plan by @HunterWalk: It is interesting that how the founders of a company hires becomes a criteria on whether the venture capitalist should invest. In fact, I have been thinking about the hiring question for that future startup I want to build in the next 5-10 years time.
- Asia may have lagged the tech world in the past — but a different future is already here by @murli184: I have often hear about the rise of Asia for the past two decades, and it always ended up that they have moved one steps forward and then dropped two steps back. In 1980s, we heard the rise of Japan and the concept of Kaizen and within a decade, Japan fell off being a global powerhouse of innovation. Despite the otaku culture remained and strong appreciation of craftsmanship in Japan, the economy did not grow. Similarly, we are seeing the rise of China in the last decade. My view is that the hierarchical culture of China similar to Japan, will lead to the same problems which will plague the Chinese market at some point. If there is one consistent indicator, everything in Asia goes through cycles from being the next big threat to US market and subsequently fall. The author in this article tries to show that this time is different, but despite his views, my conjecture is that the future belongs to no one, and Asia will be similar to Europe being fragmented and the cost of doing business is always fragmented.
- The Long Reach of Reason by Steven Pinker and Rebecca Newberger Goldstein: This TED talk is amazing as it utilised the concept of socratic dialogues to discuss reason and why there is a backlash against reason given the brightest people have brought about the financial crisis and other related problems to our society.
If you want to get a sense on the pulse in Asia from a western perspective, Jon Russell from The Next Web is certainly one of the people I will recommend you to follow. He is currently based in Bangkok, Thailand and often travels around to give the latest news in the technology industry. Back in the days of "This Week in Asia" (a podcast which is currently on hiatus), Jon is one of my frequent guests, and I valued his perspectives and judgements on the news of the week in Asia. Of course, I made it a point that if Jon is in Singapore, I will try my best to catch him. Our conversations centred around the interesting happenings around Southeast Asia and we tapped on each other as we both monitor the latest startups sprouting around Asia, and also how the large technology corporations, not just your Google, Facebook, Apple & Amazon but also Baidu, Alibaba and TenCent (otherwise, known as the BAT companies in China).
Jon runs a weekly newsletter (or mailing list) called Asia Tech News Review where he collates the most interesting news or analysis that happened during the week. If you just need a brief update on how things have transpired. Also check out his personal blog "Inside the Noodle Bowl".
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