Our clients live in a vastly different world today than six or seven months ago. The coronavirus pandemic has changed how they think about the future and the business they are in.
But what was true about seizing growth opportunities before COVID-19 is even more pressing today: Many large businesses in Asia are finding it difficult to grow here.
What’s going wrong?
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In the 10 years between 2009-2019, most large economies in Asia grew quickly — exceeding the global GDP growth rate of 2.5%. China’s GDP, for example, grew at 6.1% and Indonesia’s at 5%.
It’s true that they’re facing stronger competition from start-ups. Venture capitalists are keen on Asia, and entrepreneurial activities are booming. Venture capital funding has grown from US$14B to US$33B during the short span of five years for China, India, Japan and Indonesia combined in 2019.
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The dangers of falling back on “known answers”
We’ve found that when confronted with a perennial problem, large companies often ask something along the lines of: “How can we solve this?” That’s a logical question, but what they are actually asking is “How have we solved this before?”
So the company may identify a solution, apply it, and indeed solve the problem. But by framing the question in this way, the search for a solution hasn’t broken any new ground. It’s a leading question and it inevitably focuses the company on improvement rather than discovery.
Better questions to ask
We tell our clients to put the question they think they want to ask to the side, deliberately, and consider the greater context. The most successful new-economy companies do this as a matter of course.
Malaysia-based Grab began in 2012 by matching demand and supply for transportation through an app, similar to other digitally driven ride-hailing services. Instead of asking “How can we improve and expand this successful offering?” company leaders asked, “Where could our capabilities be applied to meet other consumer demands?”
That question led to launching delivery services for food, groceries, and healthcare products, and then to a mobile payments service, GrabPay. (This in addition to expansion in the arena of getting people from point A to point B, including bicycle rentals and shuttle bus bookings.) And although the COVID-19 pandemic has affected Grab’s performance, its drivers were able to transition to on-demand deliveries thanks to the company’s service infrastructure. For example, the company launched GrabCare, a dedicated round-the-clock, on-demand service for healthcare professionals to travel to and from over 14 medical facilities seamlessly in Singapore. Over 10,000 driver-partners support this service.
At this point, you might think it’s easier for young companies to think in this way. For one thing, they’re not encumbered by legacy systems that influence their perception of what they can consider. But framing questions that force a consideration of context can also help bigger and older organizations better understand how their legacy systems must evolve to respond to new opportunities.
Inspiration from large businesses
Here are three examples from large businesses that show what’s possible when you ask new questions.
- The easy question: How do we expand more quickly (again)?
- The ground-breaking question: What don’t we know about our Chinese consumers?
L’Oréal became the number one beauty player in China in 2017, and China has become L’Oréal Group’s second-largest market.
The company began investigating the Chinese market as if it didn’t have a wealth of global consumer preferences to draw on. They gained three insights:
- Potential customers couldn’t turn to their families for advice because older relatively hadn’t grown up with beauty products.
- They were hesitant to buy beauty products without trying them out.
- Trying products in-store was considered unhygienic.
In response, L’Oreal tailored its Makeup Genius app for its 2015 launch in the Chinese market. Thanks to the app’s augmented reality feature, consumers could try makeup products virtually, share the results with friends and family for feedback, and even purchase the products through the app’s integration with popular online stores like Taobao, Alibaba, JD.com or VIP.
The app garnered 4.7 million downloads in China shortly after its launch and has played a significant role in driving demand for L'Oreal there.
- The easy question: How can we tweak the current process without breaking it?
- The ground-breaking question: How can we get in front of the problem — before it happens?
The need to deliver better quality and higher production output at lower costs is a perennial concern for manufacturers. Coke (a distilled type of coal) is critical input to the blast furnace for hot metal manufacturing. A blast furnace fed with high-quality coke requires less coke, in the first instance, and results in better end quality steel. Coke “strength after reaction” (known as CSR) is an important parameter for determining the grade, quantity and costs of steel.
Tata Steel had an issue with a wide range of variability in the quality of CSR it produced. The old way to manage the quality of coke was simply to add higher-quality coal to reach the target CSR. However, this approach inflated costs of both the raw material (the company needed to keep a large inventory) and conversion operations.
Then Tata leaders came at the problem from a new angle. They created a model that allowed them to predict and produce a consistent level of quality in the CSR. This enabled them to attain a higher quality end product with a lower cost of operations. Applying advanced analytics to the prediction of CSR resulted in US$15 million of savings in sourcing and conversion costs (over a cost base of US$391 million).
Siam Commercial Bank (SCB)
- The easy question: Can we dig deeper in our networks for new leads?
- The ground-breaking question: What do our prospects really want from us?
Facing heightened competition from competitors, SCB sought new customers for its commercial lending division.
Instead of pleading with prospects to engage, the bank studied how its commercial customers wanted to experience banking. One particularly important insight? Potential customers wanted to be able to see the concrete value of a relationship with the bank upfront. Armed with this knowledge, the bank mined and analyzed third party data to pre-qualify credit for commercial customers so relationship managers could approach them with a concrete offer in the first meeting.
To build out its services for clients with fewer than 20 employees, SCB also launched a mobile-friendly ecosystem called Businesslinx that allows them to offer their products and services and helps them find business partners.
In the first three months of its new approach, SCB successfully onboarded 30,000 small and medium-size business clients. Thirty percent of these were new to the bank and 60% had been retail customers and not previously recognized as potential commercial clients.
The National Environment Agency (NEA) in Singapore had been trying to tackle the spread of mosquito-borne dengue fever with education. Efforts were directed at informing citizens about preventing breeding grounds and telling them how to protect themselves.
In 2019, instead of asking “How can we do a better job of educating people about dengue?” the NEA approached the issue from a completely different angle. The result? The country infected male Aedes aegypti mosquitoes (the breed that can carry dengue) with a bacterium that renders them incapable of transmitting the virus. When they mate with an uninfected female mosquito, the resulting eggs will not hatch, thereby controlling the spread of that mosquito population.
By reframing the question, the NEA positioned itself to explore bolder solutions, ultimately breaking ground.
Not “again” or "before"
We know it’s not easy to recognize leading questions and put them aside. But it is worth the effort for big companies to avoid the implied “again.”
Where would Fujifilm be if in the early 2000s its leaders had “How do we protect our position in the photography industry (again)?” Probably not where it is today, leveraging its chemical expertise through FUJITAC, which owns 70% of the market for LCD polarizer films.
Probably not touting cosmetics and healthcare as its most profitable divisions, contributing more than US$4..5 billion of revenue to the company each year.
In Asian markets, it’s an exciting and lucrative time to be a problem solver — if you are willing to ask context-driven questions and demanding groundbreaking answers.
Acknowledgments: We would like to thank Regina Maruca from Accenture Research for her contributions to this post.