the US megabrand has been sending its best people to Manila to work out how to beat Jollibee—spending millions in research, testing, focus groups, McKinsey studies, the works. Agencies have been hired and fired and still they haven’t cracked it. Yet Edgar Sia, in just a few years, opened over 380 barbecue chicken stores across the country and recently sold to Jollibee for P3 billion. How did he do this? How did he capture consumer attention in such a way that the McMBAs and McExperts couldn’t? “All you can eat rice” was the answer. When you buy a barbecue chicken meal from his Mang Inasal outlets, you get a scoop of rice and then if you like, a second and a third, no problem—all you can eat. And that was the innovation. Combining love of fast food with the Asian love of buffet rice. Genius. The lesson here is one of insight. Insight into the needs of the local consumer is essential to innovation. And as the opportunities in Asia grow due to the economic boom and are boosted by government policy, entrepreneurs in Asia will have the local insight to create new products and services to match the needs of emerging consumers. Businesses may start in Asia by being “clones” of McDonald’s or Nike or Twitter, but they will now quickly morph into new innovations that will be driven by market dynamics. And there are entrepreneurs across Asia with the hunger to take on these challenges. In India, there are now more honors students than America has students. A generation of educated, hungry, tech- 24 savvy entrepreneurs who all want to make their mark in their home market. This entrepreneurial spirit will also become fused into corporations that hire and train these people into their organizations. Brands like Singapore Airlines show how this is possible. It’s one of Asia’s most admired brands and has based its reputation on a legendary quality of service. Yet it’s one of the industry’s most cost-effective carriers. This seeming contradiction—continuous innovation versus cost leadership—is, according to management luminaries like Michael Porter, impossible. But Asian brands like Banyan Tree, Samsung and of course Singapore Airlines think differently. They don’t see contradictions; rather dualities that tell the whole story. Singapore Airlines has no debt. Growth has been funded from revenues. It has a young fleet of aircraft—at 74 months, half the industry average. Expensive, you’d think. But balancing innovation in service, like being the first to fly the Airbus A380 superjumbo, with cost, takes more open Asian thinking. Newer planes mean fewer mechanical problems, fewer delays and cancellations, and better fuel efficiency. Singapore Airlines planes are in the air almost two hours a day more than the average airliner. New can cost less. Singapore Airlines spends twice as much on people. Basic training is double the norm at four months. Existing staff get over 100 hours of retraining annually. Asian sensibilities demand cultural sensitivity, so crews are trained to interact differently with Japanese, Chinese, European and American passengers. They learn to talk at eye level, not above their guests. SIA is able to brand according to different cultural tastes. Expensive you’d think. But balancing service with cost takes more holistic thinking. Who better to deliver training than former flight crews, rather than costly consultants. What better way of reducing marketing costs than innovating in-service to generate loyalty? Singapore Airlines can boast numerous in-air firsts. Book the Cook. On Demand Video. Dolby Sound. Superwide Business Class seats. All market-leading innovations that required heavy investment. And they are all customer facing. Internally it is a pragmatic innovator, particularly in cost management. Many of its backoffice functions are powered by off-theshelf software or outsourced altogether to suppliers in India. For SIA, truly an innovation trailblazer, breaking western management and branding rules comes naturally. Many global companies are now building “innovation” headquarters in Asia, including Unilever, Pepsi, Coca- Cola, GE, P&G and Estee Lauder. This is now a self-fulfilling prophecy. If you build it, innovation will come. It will attract people and processes, and generate ideas and an ecosystem around them. Innovation development in Asia, for Asia markets, by talent in Asia. For example, Clinique believes considerable advantages can be derived from using Asia Pacific as a testing ground for new mobile marketing strategies. In Seoul earlier this year it created a mobile app, the Clinique Forecast, providing updates about weather conditions such as pollution and humidity, while offering related skincare advice. “We believed it would be the ultimate litmus test to launch it with some of the most digitally-savvy consumers,” explained Emily Culp, Clinique’s VP. Huge Asian brands are also riding the innovation wave, with some notable examples: In 2010, Huawei was second only to Panasonic in terms of patents, filing almost 2,000 annually. The company is now making superaffordable smartphones under their own label and recently launched a $100 smartphone in London. Huawei is also responsible for much of the technological development in Africa, producing mobile base stations as a “kit” for microcredited local entrepreneurs. Li-Ning, China’s own Nike, may be an emerging player in the West, but it dominates Asian-biased sports like badminton and table tennis. That success has made it confident. Confident enough to plunge into the US market with several high-profile basketball sponsorships and an audaciously located flagship store only a short distance from Nike Global HQ in Portland, Oregon. Li-Ning has audacity, but the next few years will be a test to see if it can now apply innovation to regain momentum and become a true leader, not a Chinese copy of Nike. The time for clones is over. ■ Extract from The Asian Innovation Wave: Why it’s coming and how advertising agencies can ride it. By Matthew Godfrey 25
26 CREATIVITY IS... THE CAPACITY TO DREAM. INNOVATION IS… THE CAPACITY FOR ACTION. 27
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