With the UK forging closer business ties with China, we look at what UK plc can learn from the Chinese approach to innovation.
Last month’s state visit by China’s president Xi Jinping was heralded by George Osborne and David Cameron as the start of a “golden decade” for British-Chinese business relations.
With more Chinese businesses investing in UK firms and infrastructure projects, we’re likely to start experiencing the Chinese approach to innovation at first hand. So what does that look like, and is there anything UK firms can learn from it?
China’s new-found culture of innovation
China was not always considered a hotbed of home-grown innovation. For a long time, it relied on copying Western products and producing them more cheaply.
That’s all changed in the past 10 years. In his 2014 book The End of Copycat China, Shaun Rein portrays Chinese firms as being relentlessly focused on innovation, primarily to meet the needs of an enormous domestic market that’s rapidly becoming more sophisticated, picky and demanding.
What’s interesting about this, according to Frein, is that the innovations in consumer services aren’t coming from startups, as they might do in Silicon Valley, but from established companies. This is partly because there’s no culture of venture capitalism in China. Another key feature is China’s focus on “incremental” or “small-i” innovation, which concentrates on making business models or services more efficient, rather than inventing brand new products.
Established companies are able to innovate quickly because of the way the new product development process tends to happen in China, according to a 2013 article by McKinsey & Co. They notice that “there is a greater willingness in China to go directly from development to manufacturing and shipping products. Circumventing the traditional (create, test, refine, develop, produce, market, sell) innovation process of many Western companies breeds speed.”
“Anything is possible, we can make it happen”
In the same article, McKinsey sees the innovation culture in China speeding up, driven by a sense of potential and drive to be a global player in emerging industries:
“Our sense today is that the pace of innovation is quickening and that a new spirit of innovation is spreading across sectors into universities and even into key departments of the Chinese government. John Oyler, CEO of the three-year-old Chinese biotech company BeiGene, for instance, underscored the attitude—“anything is possible, we can make it happen, there is no challenge we cannot conquer, we will surprise the world”—that he’s now seeing among Chinese scientists at his company.”
What can UK plc learn from China’s example?
In order to innovate faster – we must first learn how to innovate better. This requires us to embrace the culture of experimentation and lose our fear of failure. In the past we have, all too often, attempted to be perfectionists. We use sophisticated portfolio tools to measure risk, cost and ROI – making sure we only approve the initiatives we believe are most likely to succeed. Then, we invest vast sums of money and resources in waterfall development projects to provide complete solutions. If we can find ways to reduce the risk and cost of development this can finally become achievable.
Innovating at hyper-speed with a Low-code approach
One way of doing that is to adopt a Low-code approach to developing new digital services. By using a Low-code development platform like our own, MATS, organisations can very quickly prototype new apps and digital services, get feedback on them, refine them and put the popular ones into production in a matter of weeks.
It’s an extremely fast, low-cost, low-risk approach to innovating new business models and services, and it’s already working well for companies across many different sectors.
Thomas Cook, for example, used MATS to build a prototype of a new customer relations system in less than 2 months, side-stepping a considerable IT queue. The new service was trialled with 40 reps in Lanzarote and the customer relations team in the Falkirk contact center. During a three month “Test & Learn” phase, the system was refined based on user feedback, after which the system was ready to roll-out to over 800 reps in 90 destinations. An unthinkably short period of time compared to most corporate software development projects.
Nationwide Building Society is also using Low-code to roll out new, customer-oriented services ahead of competitors, including easier account opening, and tailored banking alerts delivered to customers’ mobile phones.
And at a top 3 UK bank, an EU-mandated branch sell-off meant the bank urgently needed a system to handle the process and keep customers updated. Using MATS, it built the entire system in less than six weeks, including testing and auditing.
In the UK, as in China, a fickle and fiercely competitive consumer landscape means that the winners will be those who can innovate new services quickly. A growing number of established UK businesses are using Low-code to ‘power’ experiments that shorten development timescales and lower the cost and risk normally associated with technology projects. The results – happier customers and competitive advantage as successful service innovations are released sooner.