As Philippines and Asia Pacific continue to deal with disruptions resulting from the pandemic, 88% of business decision-makers in the Philippines say that innovation is now a ‘must’ for them to respond quickly to market challenges and opportunities and ensure business resilience. This is more than average for all organizations in the region (74%) but still less than Asia Pacific culture of innovation leaders2, where almost all (98%) agree that innovation is a necessity to staying resilient during a crisis.
In six months, organizations in the Philippines matured in adopting a culture of innovation by 4%. The number of adopters (see appendix) with a culture of innovation rose by 5 percentage points, up from 0% pre-COVID. In comparison, Asia Pacific has almost 8% leaders and 12% adopters. Nonetheless, over 8 in 10 (82%) of organizations in the Philippines are speeding up digitalization to adapt to the new reality – from launching digital products and introducing digital payments to embracing ecommerce and automation.
“Innovation is no longer an option, but a necessity. We’ve seen how the recent crisis spurred transformation across the region, and organisations will have to integrate the ability to innovate into their core, to recover,” said Microsoft Philippines Country General Manager, Andres Ortola.
“Organizations in the Philippines have realized how much their ability to innovate fuels their performance and business resilience during the crisis. Since COVID-19, 56% of organizations in the Philippines, similar to leaders across Asia Pacific (64%), have found innovation to be easier. This demonstrates how firms in the Philippines are embracing a culture of innovation to become more mature and accelerate their transformation,” explained Daniel-Zoe Jimenez, Associate Vice President (AVP), Head of Digital Transformation (DX), IDC Asia/Pacific.
These findings were released by Microsoft in its latest study with IDC Asia Pacific which surveyed 213 business decision makers and 231 workers in the Philippines within a 6-month period, before and since COVID-19. The Philippines study was part of a broader survey among 3,312 business decision makers and 3,495 workers across 15 markets in Asia Pacific conducted over the same time-period. Titled “Culture of Innovation: Foundation for business resilience and economic recovery in Asia Pacific”, it uncovered how organizations can successfully fuel business resilience and performance through innovation.
“We originally commissioned this research to gain better insight around the relationship between having a culture of innovation and an organization’s growth. But now, more than achieving growth, we see that having a mature culture of innovation translates to resilience and strength to withstand economic crises and recover,” explained Ortola.
Assessing organizational maturity for culture of innovation
The study introduced the culture of innovation framework, which captures organizations’ approach to innovation. Through the research, organizations’ maturity was mapped against four dimensions – people, processes, data and technology. As a result, organizations were grouped in four stages – traditionalist (stage 1), novice (stage 2), adaptor (stage 3) and leaders (stage 4). Leaders comprise of organizations that are the most mature in building a culture of innovation.
Fig 1: Culture of Innovation Framework
The study found that in the span of six months, organizations in the Philippines have matured in a culture of innovation by 4%, an indication that they have increased their ability to innovate. In comparison, organizations in Asia Pacific saw an 11% growth in culture of innovation maturity.
Fig 2: Growth in Culture of Innovation Maturity in the Philippines (%)
Demonstrating their stronger propensity for resilience and adaptability, 2.7 times more leaders in Asia Pacific, as compared with organizations in the Philippines, expect an increase in their revenue and one in three of them expect to increase their market share despite the crisis.
The study also revealed that while significantly more organizations in the Philippines found innovation to be hard (77%) compared with Asia Pacific leaders (68%) before COVID-19, they have since changed perceptions with significantly less Philippines organizations (44%) and leaders (36%) having this sentiment now. This is because they were forced to accelerate innovation in response to the disruptions in the market.
Moving forward, to ensure resilience and performance, organizations in the Philippines say they will prioritize introducing remote work in the new norm and develop a contingency plan to mitigate future risk. Asia Pacific leaders plan to focus on investing in technology infrastructure that is robust and allows scalability and flexibility.
“We see amongst leaders a constant appetite for growth and evolution. During COVID-19, 45% of them said they think their business model will lose competitiveness in five years’ time, as compared to 21% of firms in the Philippines. This desire and urgency for continuous improvement through agility and adaptation to change will determine the success of businesses in this new normal,” said Jimenez.
Focus on people and technology in the Philippines
People was found to be the weakest dimension of the culture of innovation framework for organizations in the Philippines. When asked about their priorities for the next 12 months, they indicated that they will focus on people (25%) and technology (44%) as the most essential for business resilience and recovery.
Fig 3: Technology and People as the two focus areas for organizations in the Philippines (%)
“It is encouraging to see business leaders in the Philippines recognize that focus on people and culture, in addition to technology, is crucial to drive sustained innovation and realize the digital transformation ambition” said Ortola. “Achieving success in digital transformation requires both the adoption of tools and technologies as well as own people’s capabilities – what we term as tech intensity – a critical component of the culture of innovation.”
Culture of innovation – a success formula for resilience and faster economic recovery
Using the culture of innovation framework, the study revealed the best practices that organizations can adopt to progress across people, technology, data and process.
Specifically, organizations are encouraged to:
- Fortify resilience with technology
Strengthen the organization’s approach to digital transformation through resilient technologies allowing simplification, flexibility and agility – cloud, artificial intelligence and machine learning. At the same time, ensure that cybersecurity is infused into the organization’s digital footprint.
- Invest in people’s capabilities and skills
Create open and inclusive environment to attract the best and diverse talent. Integrate workplace innovation efforts that will be crucial to accelerate transformation, ensuring the right rewards and incentives to encourage innovation and upskilling to sustain the pace of innovation, by unlocking people’s capabilities.
- Leverage data to increase competitiveness
Capitalize on the value of data through developing new data-driven products and services and revenue streams for organization’s competitiveness. It will be key that data-driven insights are leveraged for enterprise-wide collaboration and decision-making to institute a knowledge sharing culture.
- Redesign processes to empower people to continuously drive innovation
Create a systematic approach to drive innovation – from ideation to commercialization and establish a centralized digital transformation budget, along with digital KPIs. Customer centricity should be at the heart of continuous improvements, and a feedback loop is necessary to capture learnings on an ongoing basis.
“It’s imperative that people are equipped to collaborate and encouraged to drive sustained innovation. Our goal is to realize an inclusive future where all organizations in the Philippines are dynamic and resilient – to recover well and thrive despite the crisis. At Microsoft, we are committed to working with organizations in the Philippines to make this happen, together,” concluded Ortola.
 Please refer to Appendix for full framework