In order for the Philippines to see a transformative scenario in corporate innovation, there must be a mandate for innovation championed by top-level executives, whether nationwide or within a company, according to a study released in September by global innovation consulting agency Embiggen Consulting.
“The Future of Corporate Innovation in the Philippines,” which looked at signals of the future and drivers of change in the current business ecosystem, presented three different scenarios of how corporate innovation may look like in the country in the next 10 years.
“Signals are not trends yet. Some of these are more advanced than others, but these are just nuggets or seeds of how we can imagine different scenarios using the generic foresight process,” said Rolan Marco U. Garcia, chief executive officer and managing partner at Embiggen as well as an author of the study.
He also explained that, for all the scenarios, uncertainties such as regulations, political landscape, and corporations’ appetite for risk must be taken into account.
INNOVATE TO SURVIVE
Republic Act No. 11337, or the Innovative Startup Act, was signed into law in 2019 to strengthen, promote, and develop an innovative and entrepreneurial ecosystem and culture in the Philippines.
“The government has established policies like this Innovative Startup Act, which includes removing certain constraints so that startups can innovate more freely,” said Carlo Q. Lopa, research and development associate at Embiggen Consulting and another author of the study.
However, without improvement and with relying simply on continuing the status quo, the state of corporate innovation in the country will only stay the same, he added.
On the weaknesses of the current ecosystem, Embiggen CEO Mr. Garcia suggested that policies, including the aforementioned act, have to be implemented better. He also said that the labor market had to be more prepared to further the Philippines beyond innovating just to survive.
STRIVE FOR CREATIVE DESTRUCTION
The second scenario is the transformative one that the study portrays as “a thriving Philippine economy through the improvement of innovation practices in the country,” competitive enough to go head-to-head with Silicon Valley. Here, the authors posit that the Philippines’ current place at 51st out of 132 economies in the 2021 Global Innovation Index could improve to 36th by 2030.
To do this, Mr. Garcia explained: “[There’s a] need to invest in the labor market, a need to give importance to innovation, to also highlight how essential private-public partnerships are.”
He highlights that the private sector, the government, and the academe are the three main actors in the Philippine innovation ecosystem that need to work together.
R&D associate Mr. Lopa described the seed that must continue as a trend: “In the past years, start-ups in the Philippines have been getting increasing support through government policies, investments, incubators, and venture capitalists. This will improve the startup ecosystem as a whole.”
STICK TO TRADITIONS
Finally, Embiggen’s study warned against the bleakest scenario, which is a collapse — if government and corporations “stick to traditions.”
This is characterized by a lack of a skilled workforce and lengthy bureaucratic processes, both of which stifle innovation, according to Mr. Garcia.
“We’ve observed a decreasing lifespan of corporations in the S&P (Standard & Poor) 500,” he said, citing the 2021 Corporate Longevity Forecast published by S. Patrick Viguerie, Ned Calder, and Brian Hindo. “In 1965, corporations stayed in the S&P 500 index for about 30 years. However, in the next four years corporations will only have a lifespan of 10-15 years in the index.”
Attributing this to lack of innovation and wariness of start-ups, Mr. Garcia stressed: “Innovation doesn’t come from a specific department. Innovation lives with a CEO. A CEO must be committed to innovation.” — Brontë H. Lacsamana