Biggest challenge for Malaysian based startups – lack of global connectedness
By Kiranjit Kaur Sidhu May 4, 2018
- Silicon Valley A3 Collider in partnership with Sunway iLabs to increase connectedness
- Open innovation model a key approach for large corporations to embrace
CHRIS Burry (pic), co-CEO of US Market Access Centre (USMAC) and the co-founder and partner of A3 Global Collider, a Silicon Valley Accelerator, spoke last week on ‘Corporate Innovation and Strategy – Lessons from Silicon Valley’ at Sunway iLabs.
A new initiative, A3 Global Collider aims to bring access to markets, access to knowledge and access to capital to innovators around the world.
The A3 Collider accelerator will be jointly set up in Silicon Valley and Sunway iLabs with Burry in ongoing conversation with Malaysian Digital Economy Corporation (MDEC), Malaysian Business Angels Network (MBAN) and Cradle, a fund mandated by the Malaysian government for high-calibre tech startups.
Burry tells DNA that A3 Collider is also looking to raise a US$60 million (RM236 million) venture fund that will allow it to not just bet on early stage companies but in the later stages as well.
Launched in late 2017 iLabs acts as an in-house incubator that is a partnership between Sunway University, Sunway Group, and its corporate venture capital arm, Sunway Ventures, to work closely together to foster entrepreneurship and stimulate market-driven innovations to help the Sunway Group become more competitive in the Digital Economy. It is also a Malaysia Digital Hub™.
The A3 Collider believes three types of access are essential for a startup to be successful. These are access to the right markets, right capital and right people. Out of the three types of access, Burry states that access to people in the ecosystem is one of the bigger difficulties for Malaysian startups to overcome.
“The biggest challenge in Malaysia is that startups lack connectedness to a global network of people within the environment for mentorship and advice,” Burry says. He explains global connectedness is not only important for startups in order to tap into knowledge and insight, but also affects its access to markets.
“Ultimately, it is people that make up the markets. Getting to know the right people can enable and facilitate a startup’s market entry,” says Burry, who was a founding partner of Avanade, a joint venture between Microsoft and Andersen Consulting established in 2000 to provide digital and cloud services.
Recognising the strong potential in Malaysia’s startup ecosystem due to the talent pool and cultural support entrepreneurs are given, he feels that Malaysians are generally more accepting of people venturing into entrepreneurship compared to other cultures he has seen. This support is one of the critical ‘soft factors’ that is hard to create but Malaysia has it.
The how-to for corporate innovation
With corporate involvement being another key ecosystem factor, Burry’s talk focussed on how corporates can innovate their products. He drew the audience in by talking about how established companies, that were once great and mighty, have today fallen prey to technology and ultimately cease operations. One example was of Blockbuster Entertainment, an American-based chain of movie and video game rental shops.
Blockbuster was offered to buy Netflix when the latter was struggling to grow, for US$50 million (RM195.8 million). However, Blockbuster turned down the offer. Fast forward to the present, Blockbuster no longer exists and Netflix is valued at around US$100 billion (RM392 billion).
Another similar example given was Kodak, an old film and camera-making business, which has suffered due to the advent of digital cameras and smartphones.
Burry explains there is a distinction between invention, which is creating something new and never before seen, and innovation, which is the process of taking an invention and finding a way to monetise it.
“You can innovate by making something better, faster, cheaper or create more value for customers. But innovation alone, without market diffusion, is not enough,” he says. In entering a market, it is most important for innovators to first convince the early adopters to use their technology before capturing the vast majority.
To illustrate his point on innovating pproducts that were already in the market, he calls Steve Jobs from Apple the ‘classic innovator’. While the idea of digital music, MP3 players and wheel control were not invented by Apple, the company found a way to combine a variety of different things together to create value making it one of Silicon Valley’s greatest success stories today.
Burry highlights the concept of Open Innovation that is already embedded as a useful innovation strategy especially among large tech players. Dell has its IdeaStorm, a website for its customers to share innovative ideas, and IBM, which has one of the largest R&D teams in the tech world has its InnovationJam, an online brainstorming session to crowdsource ideas from a select group of people.
Burry’s point being that local corporates need to embrace the Open Innovation concept as well.
Sure mistakes will be made in their journey as well. Among the mistakes which deter innovation include tight budget controls and low risk appetite. In entering a new market or radically changing its approach in the existing market, a company must increase risk tolerance and be willing to face uncertainty he says.
Addressing a question on whether government grants are the best way to spur innovative growth in corporations, Burry says “It depends on the maturity of the ecosystem. In countries where innovative culture is not as established, it is important that corporations receive incentives to start behaving differently.”
As part of the evaluation process before grant approval, he encourages the government to look into a company’s ‘absorptive capacity’, which is the likelihood that the company will use the innovation they come up with.
Burry states “It is harder for big companies to innovate compared to startups. That is why open innovation exists. It is difficult for large companies to match the creative energy produced by startups.” Yet with the pace of disruption in the Digital Economy, unrelenting, companies have no choice but to raise their innovative capabilities lest they want to go the way of Blockbuster and Kodak.