As with any hearty, home-cooked meal in the region, disruption in Southeast Asia is best served with freshly cooked RICE: reinvention, integration, cross-border, and elegance. And as with any bowl of rice, freshness is the standard, which in this case, comes with a startup’s speed of execution.
This disruption ethos rides on recent waves in the region: local unicorns on a buying and investment spree, Alibaba, Tencent, and Softbank deepening their foothold in the region, and economic slowdowns and tensions across the globe positioning the region as a serious destination for the world economy.
As these waves make the region more conducive to startups, RICE is what will keep the appetite for innovation going.
There’s usually no need to reinvent the wheel, until that wheel breaks on rough, unpaved road. Rocket Internet experienced this firsthand with their cloning approach in the region. Amazon launched to much fanfare in Singapore in 2017 with PrimeNow, but their expansion across the region has since been slow, and the reception lukewarm.
While reinvention may already seem like a learned lesson for Silicon Valley, it’s not simply an item on the “launching in Southeast Asia” to-do list. Constant reinvention keeps a company ahead of the pack and lubricates growth as it makes contact with the region’s rocky landscape. It can range from product offerings to business strategy. Grab’s featured partners and special discount variations keeps the platform relevant to each market, while Go-jek found its momentum acquiring key payment platforms across the region.
Integration is not a one-ring-to-rule-them-all scenario. Integration done for its own sake weighs on growth. Rather, it’s a process of linking up the business to the local market and along the value chain.
Disruption is not always about breaking things. In Southeast Asia, where relationships are paramount in local cultures, disruption often involves building partnerships. Localized operations are rooted in these connections, ranging from having people on the ground to ties with local conglomerates. Carro was initially positioned as an alternative to car dealers but faced resistance in an industry where they realized connections to incumbents were important. They pivoted their positioning, building relationships with dealers.
Working with partners across the value chain presents opportunities to develop value-add services for customers and serve as a tollgate for stakeholders to access captured markets. The game is no longer just about having the largest user bases but deriving the most value from captured segments. Aside from serving as an automobile marketplace, Carro added other services they knew car owners would need after using their platform, like car care, warranties, and even car financing.
Vietnam saw economic gains of 8% over the past year because of supply chain shifts, and the rest of the region is expected to see more companies like Apple join the bandwagon. UK appliance manufacturer Dyson made headlines earlier in the year relocating their headquarters to Singapore.
In the wake of foreign firms building inroads into the region, markets in Southeast Asia can no longer afford to identify as entities unto themselves. Cross-border will dictate business models in the next decade, as the demand to resolve inefficiencies across markets increases.
These foreign entries will be looking for the right partners in the region across a variety of services like logistics. Local players like Janio capitalized on this need by setting up four offices across the region and assigning locals as country managers.
When it comes to Southeast Asia, where customers perceive products like insurance and loans differently across markets, innovation is not as much in the technology as it is in customer-product interaction. Elegance is in the right mix of simplicity and effectiveness to make those interactions fluid.
The KYC of a digital wallet can have the most secure verification processes, but it doesn’t matter if users keep giving up halfway through. The user experience will also differ from market to market, which entails slight tweaks to how information is delivered through the product.
Elegance also fits familiarity with progress, best illustrated by Raymond Loewy’s “Most Advanced Yet Acceptable” principle. This is especially important introducing solutions to traditional markets in the region.
The difference between a cook and chef
RICE alone won’t cut it. Startups can have all the ingredients ready, but still fail to create impact. There is a specificity to disruption, where the right time and conditions are needed to reap the benefits. While ill-equipped to accurately predict these factors, successful founders are able to work with what they have, much like a chef.
A cook knows the recipe back-to-front, but a chef knows the best recipe to prepare at a particular time of day, for a particular type of crowd, with a particular set of ingredients. The same should be said for the next disruptors in Southeast Asia.