ASEAN'S TRANSFORMATION CHAMPIONS - Spotlighting 15 companies showcasing the power and potential of dual transformation - Innosight
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ASEAN’S TRANSFORMATION CHAMPIONS Spotlighting 15 companies showcasing the power and potential of dual transformation By Scott Anthony, Andy Parker, Utsav Bhatt, Aayush Surana and TY Tang
Executive Summary
» Executive Summary
The Association of Southeast Amid this growth, twin forces in Innosight calls this approach
Asian Nations (ASEAN) was the form of changing to both repositioning today
» Introducing ASEAN’s formed in 1967 by Indonesia, demographics and digitization while creating tomorrow
Transformation Champions
Malaysia, the Philippines, have shaped new industries and “dual transformation.”
Singapore and Thailand to challenged legacy business
» Three Transformation Themes promote regional stability and models across the region. This report spotlights three
political and economic Successful ASEAN companies categories of companies
» Future Champions cooperation. Over the next are responding to these forces undertaking transformation,
32 years, Brunei (1984), by finding new and different five success stories dubbed
» Conclusion: The Best Vietnam (1995), Laos (1997), ways to serve the needs of an “transformation champions,”
Time to Plant a Tree Burma (1997) and Cambodia aspirational and digitally savvy two airlines making the right
(1999) joined as full-time population. These companies moves but nevertheless
members. With a combined have strategically transformed succumbing to the industrywide
» Profiles: Transformation
gross domestic product (GDP) to ensure resilience against shock of COVID-19 and eight
Champions
of about US$3 trillion, ASEAN is disruptive change in their core high-potential “future
an economy equivalent to the business while simultaneously champions.”
» Profiles: Future Champions U.K. or 15% of the European pursuing new growth
Union. From 2000 to 2018, opportunities that smartly
» About the Authors ASEAN’s economy grew leverage core capabilities. As a
and Innosight steadily at an impressive result, these companies are
average of 5.3% year over year.1 better positioned for the future.
» Research Methodology
1 ASEAN Key Figures 2019. The ASEAN Secretariat, October 2019. https://www.aseanstats.org/wp-content/uploads/2019/11/ASEAN_Key_Figures_2019.pdf.
© 2020 Huron Consulting Group Inc. and affiliates. 2
Five Transformation Champions
» Executive Summary
Five companies have undertaken successful transformation in the past 15 years and, as a result, have
outperformed their respective market indexes. They are, in alphabetical order:
» Introducing ASEAN’s
Transformation Champions
DBS Bank (Singapore) This traditional regional bank transformed into a global digital platform
company, around a cultural vision of a "28,000-person startup."
» Three Transformation Themes
Singapore Post This postal services provider, commonly abbreviated as SingPost, diversified
» Future Champions
(Singapore) and transformed into a postal, logistics and property services provider.
» Conclusion: The Best
Time to Plant a Tree Singapore This telecommunications company, known commonly as Singtel, created
Telecommunications new businesses in cybersecurity, payments and digital advertising.
Limited (Singapore)
» Profiles: Transformation
Champions
Thonburi Healthcare This hospital operator ventured into senior care, managed services and
Group (Thailand) software development businesses.
» Profiles: Future Champions
» About the Authors VGI (Thailand) A traditional out-of-home media company, VGI transformed into an
and Innosight integrated offline-to-online solutions provider with an ecosystem of
advertising, payment and logistics platforms.
» Research Methodology
© 2020 Huron Consulting Group Inc. and affiliates. 3
Three themes emerged from studying the collective efforts of these champions:
» Executive Summary
1 2 3
They are They are harnessing They are governed
successful at dual fintech-enabled by long-serving
» Introducing ASEAN’s
transformation business models leadership
Transformation Champions
Consider the regional Consider the efforts of the Consider Thailand’s VGI,
» Three Transformation Themes telecommunications giant Singaporean DBS Bank (DBS). established in 1998 by Kavin
Singtel’s decadelong efforts More than half its customers Kanjanapas, who today serves
» Future Champions around two simultaneous and undertake their banking as chairman of the executive
fundamental transformations. predominantly through its committee. Kavin Kanjanapas
The first, to digitize its core digital channels. For DBS, these also serves as the chief
» Conclusion: The Best
operations around the delivery
Time to Plant a Tree digital customers are twice as executive officer (CEO) of VGI’s
of data, replacing voice and text
profitable as traditional parent company, BTS Group
messaging. The second, to
» Profiles: Transformation customers. DBS has also Holdings Public Company
scale a portfolio of new growth
Champions digital businesses in areas successfully launched digibank, Limited (BTS Group or BTS).
where its unique assets create a mobile-led, digital-only bank, His father, Keeree Kanjanapas,
competitive advantages, such in both India and Indonesia. founded BTS Group in 1968 and
» Profiles: Future Champions
as mobile advertising and DBS has not stopped there; in serves as its chairman today.
cybersecurity. 2017, it launched the world’s Their long-sighted vision and
» About the Authors largest application protocol governance guided VGI’s
and Innosight interface (API) platform transformation from a
allowing partners across traditional out-of-home
» Research Methodology industries to integrate DBS’ advertising company into an
banking capabilities into their integrated media services
systems. provider.
© 2020 Huron Consulting Group Inc. and affiliates. 4
» Executive Summary
Transformations of companies struggling to this economic downturn with
remain solvent. However, there bailouts happening in some
» Introducing ASEAN’s Temporarily is a silver lining for companies form or another around the
Transformation Champions
Grounded that built resilience and world. Our research identified
identified growth opportunities two ASEAN airlines, Singapore
» Three Transformation Themes We began our research into in advance of this market shock. Airlines and AirAsia, that made
more than 600 publicly listed They have a chance to innovate pre-COVID-19 moves to create
ASEAN companies in late 2019. in the downturn and create resilience in the core through
» Future Champions
By early 2020, the COVID-19 growth through the upturn. digitization while in parallel
pandemic had made its way seeking to diversify revenue
» Conclusion: The Best from China to ASEAN. At the
Time to Plant a Tree We believe the five ASEAN away from airfares. We
time of writing this report, it is recognize these efforts fall far
evident this period of profound transformation champions
outlined in this report are on short of offsetting the
» Profiles: Transformation uncertainty is, and will continue
fundamentally stronger footing devastating impact of having
Champions to, negatively impact many
in navigating this period of almost an entire fleet on the
ASEAN businesses and roil ground. However, having
financial markets. These types profound uncertainty because
» Profiles: Future Champions adopted a dual transformation
of global crises, which in the 21st of their efforts over the past 15
years to reposition for resilience approach affords each a
» About the Authors century include the dot-com glimmer of a silver lining against
bubble (2001-02) and the global and diversify around unique
and Innosight capabilities. The airline industry the downturn of COVID-19.
financial crisis (2007-09),
inevitably increase the number is experiencing the full force of
» Research Methodology
© 2020 Huron Consulting Group Inc. and affiliates. 5
» Executive Summary
Future Champions certain, their intent and potential UnionBank of the Philippines
to be future champions is (Philippines): A bank
» Introducing ASEAN’s The emergent characteristics of noteworthy. They are, in building products for other
Transformation Champions most ASEAN markets means alphabetical order: financial institutions
the headroom to expand the
Razer (Singapore): A gaming
» Three Transformation Themes core operations of many
ABS-CBN (Philippines): company seeking to increase
companies has been readily
A traditional media company the financial inclusion of youth
available for years. This leads to
» Future Champions creating physical experiences Sea Group (Singapore):
a broad observation that the
overall number of dual Axiata Group (Malaysia): A gaming company making
» Conclusion: The Best transformation efforts evident in A telecommunications provider waves in payments and
Time to Plant a Tree ASEAN is lower when compared launching new digital businesses e-commerce business
with our global transformation Central Group (Thailand):
» Profiles: Transformation research and market-specific Retail and services The full report details what
Champions studies in mature markets like businesses becoming a makes these companies ones to
Australia and Germany. For this digital-lifestyle platform watch and highlights key areas
» Profiles: Future Champions reason, we have decided to also Kasikorn Bank (Thailand): to monitor in their respective
highlight eight ASEAN A bank with ambitions to journeys to become full-fledged
» About the Authors companies in the initial stages of become a “lifestyle platform” champions.
and Innosight dual transformation. and fintech player
Siam Commercial Bank
» Research Methodology While the success of these (Thailand): A bank placing bets
future champions is far from to become a technology player
© 2020 Huron Consulting Group Inc. and affiliates. 6
INTRODUCING ASEAN'S TRANSFORMATION CHAMPIONS
» Executive Summary
“D.B.S. — World” (Global Finance) and Philippines, Singapore, Thailand
“World’s Best Bank” and Vietnam. The economies
» Introducing ASEAN’s Damn Bloody Slow!” (Euromoney). of these member countries are
Transformation Champions
at vastly different stages of
These were the words bellowed This report spotlights the DBS development; for instance,
» Three Transformation Themes Singapore's GDP per capita
in 2009 by a Singaporean taxi story and the stories of two
driver in response to Paul more ASEAN transformation is approximately 50 times that
» Future Champions Cobban’s request for a ride to champions from Singapore and of Myanmar and 25 times that
DBS’ headquarters for his first two from Thailand. Each profile of Laos.2
» Conclusion: The Best day at the bank. Paul is the chief outlines how these companies
Time to Plant a Tree data and transformation officer turned disruptive threats into As set out in the ASEAN
of DBS. Back in 2009, these transformation opportunities. Economic Community Blueprint
words were justified. DBS had 2025, its member countries aim
» Profiles: Transformation
the lowest customer satisfaction to develop a highly integrated
Champions
scores of any bank in Singapore. ASEAN and and cohesive economy.3
ASEAN has dramatically
» Profiles: Future Champions
Fast forward a decade, and its business outpaced the rest of the world
these words have lost all
meaning. In 2019, DBS became characteristics on GDP growth per capita since
» About the Authors the first bank in the world to Founded in 1967, ASEAN today the late 1970s, with average
and Innosight simultaneously hold the titles of encompasses ten countries: annual real gains of more than
“Bank of the Year” (The Brunei, Cambodia, Indonesia, 5%.4
» Research Methodology Banker), “Best Bank in the Laos, Malaysia, Myanmar,
2 ASEAN Key Figures 2019.
3 ASEAN Economic Community Blueprint 2025. The ASEAN Secretariat, November 2015. https://www.asean.org/storage/2016/03/AECBP_2025r_FINAL.pdf.
4 “9 Things You Need to Know About ASEAN.” Deutsche Bank, April 16, 2019. https://www.db.com/newsroom_news/2019/9-things-you-need-to-know-about-asean-en-11469.htm.
© 2020 Huron Consulting Group Inc. and affiliates. 7
legacy incumbent business
models.
» Executive Summary
» Introducing ASEAN’s
Approach to
Transformation Champions identify ASEAN
transformation
» Three Transformation Themes
champions
» Future Champions We analyzed 623 publicly listed
companies across ASEAN
Further, a growing middle urbanized and aspirational markets and assessed their
» Conclusion: The Best class and digitization has led population are continuously
Time to Plant a Tree transformation efforts and
to a vibrant startup ecosystem evolving. The region is home outcomes. This resulted in a
across the region: ASEAN’s to the world’s fastest-growing shortlist of 51 companies on
» Profiles: Transformation 11 unicorns had a combined population of internet users, which we conducted detailed
Champions market valuation of US$44 with more than 125,000 new qualitative and quantitative
billion in 2020.5 users forecast to come online research to understand the
» Profiles: Future Champions every day through the year dynamics of each
Despite the success to date, 2020.6 These forces are transformation. Following a
» About the Authors the needs of its increasingly fueling new digital businesses, methodology used in other
and Innosight which in turn are challenging
» Research Methodology
5 “What Is a Unicorn Startup?” CB Insights, April 2020. https://www.cbinsights.com/research-unicorn-companies.
6 Mahmood, Ishtiaq P. “7 Key Challenges for the Future of ASEAN — and How to Solve Them.” World Economic Forum, August 29, 2018.
https://www.weforum.org/agenda/2018/08/7-challenges-to-business-in-the-asean-region-and-how-to-solve-them/.
© 2020 Huron Consulting Group Inc. and affiliates. 8
Innosight research reports, a transformed into a global digital VGI (Thailand): A traditional
team scrutinized these platform company, around a out-of-home media company,
» Executive Summary companies according to the cultural vision of a "28,000- VGI transformed into an
degree to which they had person startup.“ integrated offline-to-online
» Introducing ASEAN’s repositioned their core business solutions provider with an
Transformation Champions while also creating new growth SingPost (Singapore): This ecosystem of advertising,
businesses and the company’s postal services provider payment and logistics
» Three Transformation Themes financial performance since the diversified and transformed into platforms.
year of transformation.7 This a postal, logistics and property
resulted in the identification of services provider. Each champion has
» Future Champions our ASEAN transformation outperformed its broader
champions. Singtel (Singapore): This market. Total shareholder
» Conclusion: The Best telecommunication company return (TSR) delivered by VGI,
Time to Plant a Tree Seven companies crossed our launched new businesses in for instance, is three times that
screen. We removed two airlines cybersecurity, payments and of the Bangkok Stock Exchange
» Profiles: Transformation that have seen their efforts digital advertising. of Thailand (SET) Index since it
Champions grounded due to the COVID-19 began its transformation in
crisis (see Dual Transformation Thonburi Healthcare Group 2016. Another example is DBS:
» Profiles: Future Champions in Airlines for more) to arrive at (Thailand): This hospital The bank has delivered TSR four
our five transformation operator ventured into senior times higher than Singapore’s
champions. They are, in care, managed services and Straits Times Index from 2013
» About the Authors
alphabetical order: software development through 2019.
and Innosight
businesses.
DBS Bank (Singapore): A
» Research Methodology traditional regional bank, DBS
7 See the About Innosight and Research Methodology sections later in the report for details.
© 2020 Huron Consulting Group Inc. and affiliates. 9
DUAL TRANSFORMATION IN AIRLINES: NOT ENOUGH TO OFFSET COVID-19
» Executive Summary We noted the transformation KrisFlyer loyalty program to build tones to the U.K.’s Virgin Group.
efforts of two regional airlines in an e-commerce business, a AirAsia is targeting a contribution
our research: Singapore Airlines digital wallet business, and a hotel of approximately 60% of total
» Introducing ASEAN’s and AirAsia. Both were on our and car rental business. With the revenue from its non-airline
Transformation Champions radar for their efforts to digitize introduction of these businesses, businesses in the next five years,
all aspects of their core airline miles redemption on non-airline up from the current contribution
» Three Transformation Themes operations while in parallel partners saw a year-over-year of 20%. It too has grounded
seeking to turn unique customer increase of 42% in fiscal year most of its fleet and is therefore
and loyalty data assets into 2018-2019. In response to pushing its logistics and
» Future Champions
new revenue streams. These COVID-19, Singapore Airlines has e-commerce businesses.9
attempts to diversify their focused efforts on promoting its
» Conclusion: The Best revenue base away from seat e-commerce business, KrisShop. These efforts provide welcome
Time to Plant a Tree fares offer something of a silver However, at the time of writing alternate revenue streams during
lining against the downturn of this report, 96% of Singapore COVID-19; however, they cannot
» Profiles: Transformation COVID-19, but not nearly enough Airlines’ fleet capacity has been come close to offsetting the
Champions to offset the devastating impact of grounded, a staggering figure that existential impact of the crisis.
grounding practically their entire cannot be recouped by a still- However, if Singapore Airlines and
fleets for months. emerging e-commerce business.8 AirAsia continue this journey and
» Profiles: Future Champions
push beyond offerings that are
Singapore Airlines has adopted AirAsia, the Malaysian budget inherently tied to “miles in the air,”
» About the Authors the Qantas playbook (See our carrier, is transforming into a then the next crisis could find
and Innosight report Australia’s Transformation digital corporation centered these two airlines increasingly
Champions for details on the around travel and lifestyle through diverse, resilient and ready.
» Research Methodology Qantas story). It is leveraging its its venture arm, which has similar
8 Kaur, Karamjit and Yong, Clement. “SIA Cuts 96% of Capacity as Virus Hammers Industry.” The Straits Times, March 24, 2020.
https://www.straitstimes.com/singapore/sia-cuts-96-of-capacity-as-virus-hammers-industry.
9 Yusof, Ayisy. “AirAsia Sees Non-Airline Segment as Top Earner.” New Straits Times, December 8, 2019. https://www.nst.com.my/business/2019/12/546214/airasia-sees-non-airline-segment-top-earner.
© 2020 Huron Consulting Group Inc. and affiliates. 10THREE TRANSFORMATION THEMES
» Executive Summary
Analysis of the transformation telecommunications company. across multiple ecosystems,
efforts of the five champions In 2010, Singtel found itself face and unique data such as
» Introducing ASEAN’s identified three common to face with a disruptive threat location data.
Transformation Champions
themes: as its core voice business
dwindled against a surge in Singtel had announced
» Three Transformation Themes 1. Transformation champions mobile data that enabled
are successful at pursuing different ways for people to
plans to spend US$1.6
» Future Champions dual transformation. communicate. Singtel tackled billion acquiring
Each champion pursued a this threat head-on with a companies specializing
specific approach to innovation decision to pursue dual
» Conclusion: The Best in relevant digital
Time to Plant a Tree known as dual transformation. transformation. Transformation
By undertaking the A has involved numerous efforts businesses.
transformation, they: to shift focus from voice to data
» Profiles: Transformation During the period 2015-2019,
• Repositioned their existing and digitize. For Transformation
Champions Singtel’s core business revenue
business for resilience B, Singtel has acquired and
scaled a portfolio of digital shrunk as consumers continued
(Transformation A).
» Profiles: Future Champions businesses in areas such as to shift from voice to data, and
• Created new growth pricing competition grew.
mobile marketing and enterprise
engine businesses However, two years earlier in
» About the Authors cybersecurity. The underlying
(Transformation B). 2013, Singtel had announced
and Innosight capabilities that link these
efforts to create competitive plans to spend US$1.6 billion
Let us consider the advantage include aspects of its acquiring companies
» Research Methodology
transformation story of Singtel, deep customer connections specializing in relevant digital
ASEAN’s largest and touch points, presence businesses.10
10 Ho,Victoria. “Singapore’s SingTel Wants to Pump Another $1.6B Into Startup Investments.” TechCrunch, May 15, 2013.
https://techcrunch.com/2013/05/15/singapore-telco-singtel-to-invest-1-6b-over-next-three-years-in-startups/.
© 2020 Huron Consulting Group Inc. and affiliates. 11As a result of this move, Singtel SingPost, resulting in a sharp reposition its core business by
partially offset this decline decline in its core mailing launching home-based
» Executive Summary through strong growth in its business. SingPost responded healthcare. In parallel, it has
Group Digital Life unit, which by launching new growth efforts invested US$110 million to
» Introducing ASEAN’s grew at a compound annual in logistics and e-commerce launch an assisted living real-
Transformation Champions growth rate (CAGR) of 37% fulfillment services. In parallel, it estate business.13 It has
through its digital marketing and doubled down on improving bolstered this with additional
» Three Transformation Themes data analytics businesses.11 operational efficiency of its core new growth initiatives that
mailing business. The company include hospital management
It is important to note saw its revenue grow at 8.4% services and software
» Future Champions Transformation B typically CAGR from 2004 to 2019, and development for hospitals. In
requires a portfolio approach, as by fiscal year 2019-20, its new 2019, THG’s new growth
» Conclusion: The Best some efforts to create new business efforts were businesses contributed
Time to Plant a Tree growth engines invariably fail. A contributing 44% to its overall approximately US$30 million
case in point is Singtel’s recent revenue.12 An example from (11% of the overall business) to
» Profiles: Transformation decision to liquidate its over- Thailand is Thonburi Healthcare the group’s overall revenue.14
Champions the-top (OTT) video business Group (THG). In 2014, the group
Hooq given persistent realized its core general hospital 2. Transformation champions
consumer pricing sensitivities business was reaching are harnessing fintech-
» Profiles: Future Champions
set against the costs of content. saturation in Thailand. At the enabled business models.
same time, Thailand’s ASEAN's payments landscape
» About the Authors has leaped from being one of the
In 2004, a similar wave of healthcare needs are shifting as
and Innosight world’s most paper-based and
disruption washed over its population ages. THG
therefore decided to act and cash-centric to an advanced
» Research Methodology
11 Innosight analysis of Singtel’s annual reports from 2015 to 2019. | 12 S&P Capital IQ; Innosight analysis.
13 Apisitniran, Lamonphet. “THG Banking on B3.7bn Retirement Home Project.” Bangkok Post, July 23, 2019. https://www.bangkokpost.com/business/1717067/thg-banking-on-b3-7bn-retirement-home-project.
14 “Thonburi Healthcare Group Annual Report 2019.” Thonburi Healthcare Group. https://thg.listedcompany.com/misc/flipbook/index.html?id=130581.
© 2020 Huron Consulting Group Inc. and affiliates. 12cashless society. This is being In Singapore, Singtel partnered Overall, DBS’ digital
enabled by a fintech revolution with Standard Chartered Bank
» Executive Summary using disruptive technologies to in 2014 to launch Dash, a mobile
customers are now 52%
turn cumbersome financial banking platform. Singtel has of total customers
» Introducing ASEAN’s processes into simple, since focused on growing Dash versus 33% in 2015, and
Transformation Champions affordable and accessible into a provider of a host of
are twice as profitable
payment solutions. A legion of financial services, including
increasingly progressive and payments and remittances. In as traditional customers.
» Three Transformation Themes
tech-savvy consumers is rapidly 2018, Singtel launched Via, its
adopting these solutions. cross-border mobile payments Unsurprisingly, financial
» Future Champions alliance, to allow mobile services incumbents are fighting
Several champions are payments through local wallets back against these
» Conclusion: The Best capitalizing on this trend by across Singapore and Thailand. encroachments into the banking
Time to Plant a Tree introducing fintech-driven Its latest move is a 2019 arena. Consider DBS, which
business models. Consider consortium bid with Grab for a launched its mobile-led, digital-
» Profiles: Transformation VGI’s 2016 joint venture with full digital banking license in only bank, digibank, in India in
Champions the Line messaging app to Singapore. It appears Singtel is 2016 and Indonesia in 2017. By
launch Rabbit Line Pay, an doubling down on establishing a 2019, digibank had scaled to
integrated e-wallet for online presence in the financial 3.25 million customers for
» Profiles: Future Champions
and offline payments. By 2019, services sector as its core everyday banking transactions
Rabbit Line Pay had grown to telecommunications offering from payments to investments.
» About the Authors Overall, DBS’ digital customers
serve more than 5.5 million continues to fight against
and Innosight are now 52% of total customers,
users, representing a more than commoditization.
80% year-over-year increase in versus 33% in 2015, and are
» Research Methodology twice as profitable as traditional
user base.15
15 “VGI Annual Report, 2018/19.” VGI Global Media Public Company Limited. http://vgi.listedcompany.com/misc/AR/ar2018-en.html.
© 2020 Huron Consulting Group Inc. and affiliates. 13customers. Further, DBS average tenure of an S&P 500 3. Curiosity to explore and
launched the world’s largest CEO.17 These seasoned CEOs find new paths through well-
» Executive Summary application protocol interface leverage deep institutional thought-out experiments
(API) platform in 2017, allowing knowledge sharpened by seeing with the goal to “test and
» Introducing ASEAN’s financial and retail partners to through the peaks and troughs learn” even amid failures
Transformation Champions invisibly integrate DBS’ of business cycles. As a result, and setbacks.
capabilities into their systems. they have invariably gained the 4. Conviction to persevere
» Three Transformation Themes By 2019, more than 400 trust of their boards and are in the face of predictable
partners were connected to adept at managing their crises.
DBS through its API platform.16 stakeholders. These
» Future Champions characteristics and experiences Consider Piyush Gupta, DBS’
3. Transformation champions enable them to demonstrate the much-lauded CEO. Gupta has
» Conclusion: The Best four leadership traits required
are governed by long-serving guided DBS’ transformation into
Time to Plant a Tree for successful dual
leadership. a technology-driven digital bank
transformation.18 These are the: since he took the helm in 2009,
The research behind the world’s
» Profiles: Transformation Top 100 CEO list published by some 11 years ago. A
Champions 1. Courage to take resources courageous decision Gupta and
Harvard Business Review (HBR)
revealed in 2019 that, on from the core business to his team made was to reframe
» Profiles: Future Champions average, the top 100 CEOs have build new businesses. DBS’ competitive set from
held their positions for 15 years. 2. Clarity to focus on a select compliance-focused banks to
» About the Authors This is more than twice the few strategic opportunities.
and Innosight
» Research Methodology 16 “DBS Group Holdings Ltd | Annual Report 2019: Pursuing the Greater Good.” DBS Group Holdings Ltd.
https://www.dbs.com/annualreports/2019/index.html?pid=sg-group-pweb-investors-cardtiles-pursuing-the-greater-good.
17 “The CEO 100, 2019 Edition.” Harvard Business Review, November-December 2019. https://hbr.org/2019/11/the-ceo-100-2019-edition.
18 The
four leadership traits are covered in detail in Innosight’s book on dual transformation. (Anthony, Scott D., Gilbert, Clark G., and Johnson, Mark W.
Dual Transformation: How to Reposition Today’s Business While Creating the Future. Harvard Business Review Press, 2017.)
© 2020 Huron Consulting Group Inc. and affiliates. 14entrepreneurially minded tech had moved two-thirds of its them how another bank had
companies. DBS decided to applications to the cloud to visited Netflix and had
» Executive Summary begin comparing itself to provide greater flexibility. The bemoaned the fact that Netflix
Google, Amazon, Netflix, Apple, curiosity that led Gupta and his clearly had an advantage in
» Introducing ASEAN’s LinkedIn (which was team to visit companies like attracting young, talented
Transformation Champions subsequently acquired by Netflix also played a pivotal role engineers. Cockcroft made two
Microsoft) and Facebook. It in its transformation. Adrian observations. First, he told the
» Three Transformation Themes didn’t pick those companies Cockcroft, then a development bank that the average Netflix
haphazardly. If you put DBS leader from Netflix (as of the engineer was 40 years old.
between Netflix and Apple, it writing of this report at Amazon Second, he noted that he had
» Future Champions forms the acronym GANDALF, Web Services), described to hired a good proportion from
the long-bearded wizard from
» Conclusion: The Best J.R.R. Tolkien’s The Lord of the
Time to Plant a Tree Rings series.
» Profiles: Transformation This created the clarity to
Champions fundamentally flip DBS’
approach to technology. In
» Profiles: Future Champions 2009, almost all of its
operations were outsourced. By
» About the Authors the end of 2017, DBS controlled
and Innosight 85% of its resources.19 It also
» Research Methodology
19 “DBS Group Holdings Ltd Annual Report 2017.” DBS Group Holdings Ltd. https://www.dbs.com/annualreports/2017/pdfs/DBS-AR17-full.pdf.
© 2020 Huron Consulting Group Inc. and affiliates. 15banks and had simply “gotten pure-play telecommunications Switching focus to the Thai
out of their way.” DBS took to a digital services business champions, we find a similar
» Executive Summary inspiration from this to drive an since it was first announced in story. Dr. Boon Vanasin founded
organizationwide culture change 2010.22 It took courage for Thonburi Healthcare Group in
» Introducing ASEAN’s effort, without which, Paul Singtel to allocate US$1.6 billion 1976 and serves as chairman
Transformation Champions Cobban has noted, DBS could in 2013 to fund its today some 44 years later. VGI
never have achieved its transformation efforts.23 Singtel Chairman of the Executive
» Three Transformation Themes business transformation.20 chairman Simon Israel has Committee Kavin Kanjanapas
Gupta’s achievements have noted this figure was arrived at founded the company in 1998 as
seen him listed in the because it was meaningful the out-of-home advertising
» Future Champions aforementioned HBR 2019 Top enough to signal intentions, but arm of BTS Group Holdings,
100 CEOs in the world. During not so meaningful that if they which was in turn founded in
» Conclusion: The Best his tenure, DBS has delivered failed it could sink the company. 1968 by his father, Keeree
Time to Plant a Tree 159% TSR, well over double the Singtel’s transformation journey Kanjanapas, who still serves as
62% return of Singapore’s has not been without its BTS Group chairman today.
» Profiles: Transformation Straits Time Index.21 challenges, yet Chua’s VGI’s first contract was to
Champions conviction to preserve has seen manage the advertising spaces
Similarly, at Singtel, Chua Sock Singtel deliver 89% TSR the and commercial areas across
» Profiles: Future Champions Koong has been group CEO past decade, compared with a the BTS Group train network.
since 2007. Chua has led 62% return for Singapore’s
Singtel’s transformation from Straits Time Index.24
» About the Authors
and Innosight
20 Youcan learn more about DBS’ efforts to build new habits and routines in a co-authored article. (Anthony, Scott D., Cobban, Paul, Nair, Rahul T., and Painchaud, Natalie. “Breaking Down the Barriers to
Innovation.” Harvard Business Review, November-December 2019. https://hbr.org/2019/11/breaking-down-the-barriers-to-innovation.)
» Research Methodology 21 Innosight analysis, Datastream.
22 Singtel’s story is detailed in chapters 3 and 7 of Innosight’s book on dual transformation. (Anthony, et al. Dual Transformation.)
23 Ho,Victoria. “Singapore’s SingTel Wants to Pump Another $1.6B Into Startup Investments.” TechCrunch, May 15, 2013.
https://techcrunch.com/2013/05/15/singapore-telco-singtel-to-invest-1-6b-over-next-three-years-in-startups/.
24 Innosight analysis, Datastream.
© 2020 Huron Consulting Group Inc. and affiliates. 16In 2016, as online and social takeover, VGI gained an and data-driven predictions on
media became primary enormous repository of mass future consumer spending,
» Executive Summary channels for customer transit data enabling advertisers invaluable for advertisers.
engagement, VGI took over to better target advertising.
» Introducing ASEAN’s Rabbit Group (Rabbit), a smart This data also enabled VGI to The confidence created through
Transformation Champions card/e-payments business experiment with new offerings this curiosity to experiment led
within BTS Group. With Rabbit’s such as location-based services to a US$173 million acquisition
» Three Transformation Themes in 2018 of a 23% stake in Kerry
Express, a successful Thai
» Future Champions e-commerce fulfillment
provider.25 This was a key step
on VGI’s transformation into an
» Conclusion: The Best
integrated provider of media
Time to Plant a Tree
services. VGI’s most recent
results show revenue more than
» Profiles: Transformation 1,000 times higher than the
Champions US$150,000 seed capital Kavin
invested to get VGI off the
» Profiles: Future Champions ground.26 An impressive
outcome and testament to the
» About the Authors importance of long-sighted and
and Innosight long-standing leadership.
» Research Methodology
25 “VGI Global Buys Into Kerry Express.” The Nation Thailand, April 24, 2018. https://www.nationthailand.com/Corporate/30343863.
26 “VGI Annual Report, 2018/19.” VGI Global Media Public Company Limited. http://vgi.listedcompany.com/misc/AR/ar2018-en.html.
© 2020 Huron Consulting Group Inc. and affiliates. 17FUTURE CHAMPIONS
» Executive Summary
The growth record of ASEAN the
past few decades led to our “Our research identified eight companies
» Introducing ASEAN’s
Transformation Champions
research surfacing a lower that have recently begun or stepped up their
number of dual transformation
stories compared with similar transformation efforts in the search for
» Three Transformation Themes research efforts in other sustainable growth.”
geographies. This is because
» Future Champions many companies have versus the strategic industries like financial services,
historically been able to grow by transformation of a stand-alone telecommunications and real
» Conclusion: The Best expanding their core organization we are studying. estate. Despite these
Time to Plant a Tree businesses. Another differences, this group is united
idiosyncrasy in ASEAN is the However, our research identified in the pursuit of growth through
role played by many dominant eight companies that have transformation. We have
» Profiles: Transformation
conglomerates across its recently begun or stepped up outlined the seeds of
Champions
markets. The general playbook their transformation efforts in transformation each has
for these often family-controlled the search for sustainable planted and critical areas to
» Profiles: Future Champions conglomerates is to focus on growth. Two are recently listed watch, to see if they achieve
building their nations’ gaming unicorns, which means their full transformation
» About the Authors underlying infrastructure they crossed US$1 billion in potential:
and Innosight through diversified operating valuation before going public.
companies. Change comes from Others are more than 70 years
» Research Methodology capital allocation between units old and from traditional
© 2020 Huron Consulting Group Inc. and affiliates. 18FUTURE CHAMPIONS
» Executive Summary
ABS-CBN (Philippines) Seeds of transformation: Currently navigating political challenges around its core broadcast
business but has laid the foundations for revenues outside broadcast. This includes investing in
» Introducing ASEAN’s Industry: Media related physical experiences, including a theme park (KidZania franchise) and studio. In
parallel, it has repositioned the broadcast business by undertaking digital transformation.
Transformation Champions Beginning of Transformation: 2015
What to watch for: Can premium physical experiences sufficiently scale given constrained
Revenue: US$765 million consumer spending power and limited availability of content and characters?
» Three Transformation Themes
Axiata Group (Malaysia) Seeds of transformation: Launched digital businesses in three core verticals: financial
» Future Champions Industry: Telecommunications
services (Boost), marketing (Ada) and an API platform (Apigate). Since launching, each has
shown promising user adoption and revenue growth rates.
Beginning of Transformation: 2014 What to watch for: Can each digital business sustain early growth and achieve sustainable
» Conclusion: The Best profitability in competitive spaces? In parallel, can the core business demonstrate resilience
Revenue: US$5.7 billion during increased market consolidation and the economic challenges of a 5G rollout?
Time to Plant a Tree
» Profiles: Transformation Central Group (Thailand) Seeds of transformation: Ambitions to become a market leader in digital-lifestyle platforms.
Recently created a US$500 million joint venture with China’s JD.com for the development of
Champions Industry: Retail, real estate, merchandising e-commerce, logistics and e-finance businesses.27
Beginning of Transformation: 2017 What to watch for: Can the e-commerce platform and associated services
effectively scale given the potential for confusion or conflict with established
» Profiles: Future Champions Revenue: US$7.4 billion (retail business) brick-and-mortar businesses?
Seeds of transformation: Established two companies, the first with a stated ambition to
» About the Authors create Thailand’s first fintech unicorn (Kasikorn X) and the second in Shenzhen (Kaitai Tech),
Kasikorn Bank (Thailand)
and Innosight to develop technology and foster partnerships in China. In parallel, efforts are underway to
Industry: Financial services reposition its K Plus phone application as a “lifestyle platform” offering e-commerce, payments
and lending services.
Beginning of Transformation: 2019
» Research Methodology What to watch for: Can a sufficiently differentiated value proposition be found across fintech
Revenue: US$4.2 billion and e-commerce offerings, noting these are the same or similar areas of focus as Siam
Commercial Bank?
27 Setboonsarng, Chayut.“JD.com, Thai retailer Central Group Form $500 Million E-Commerce JV.” Reuters, September 14, 2017.
https://www.reuters.com/article/us-jd-com-centralgroup/jd-com-thai-retailer-central-group-form-500-million-e-commerce-jv-idUSKCN1BQ0A1.
© 2020 Huron Consulting Group Inc. and affiliates. 19FUTURE CHAMPIONS
» Executive Summary Seeds of transformation: Fueling Transformation B by combining the capabilities of three
Siam Commercial Bank (Thailand) group entities (Digital Ventures, SCB Abacus and SCB 10X) to reposition the bank as a
technology player. In parallel, undertaking a digital transformation program to create new
» Introducing ASEAN’s Industry: Financial services digital customer experiences.
Transformation Champions Beginning of Transformation: 2016 What to watch for: Can efforts to invest in and build technology capabilities and solutions find
sustainable and scalable business models, noting the competition with startups and
Revenue: US$4.3 billion incumbents such as Kasikorn Bank — and will these efforts get executive time and energy
given an ambitious core digital transformation program?
» Three Transformation Themes
UnionBank of the Philippines (Philippines) Seeds of transformation: Launched UBX, a Transformation B effort to build products for
» Future Champions Industry: Financial services financial institutions in the micro, small and medium enterprises segments while in parallel
undertaking Transformation A to launch fully digital branches and online and mobile banking.
Beginning of Transformation: 2015 What to watch for: Can UBX successfully commercialize and scale these products while
» Conclusion: The Best investing significant energy on core digitization?
Revenue: US$686 million
Time to Plant a Tree
Seeds of transformation: Created a fintech arm to promote digital payments and increase
» Profiles: Transformation Razer (Singapore) financial inclusivity for youth across emerging markets. Razer Fintech has applied for a digital
full bank license in Singapore to establish a youth bank. Has also ventured into hardware for
Champions Industry: Gaming cloud gaming, virtual payments and esports sponsorship.
Beginning of Transformation: 2018 What to watch for: Can its millennial brand create leverage, and can its gaming user base, a
significant proportion of whom are young underbanked users in emerging markets, be
» Profiles: Future Champions Revenue: US$712 million monetized? Early signals are promising, with a 50% year-over-year growth in Razer Fintech’s
total payment value to US$2.1 billion in 2019.28
» About the Authors Seeds of transformation: Made moves from gaming into payments with SeaMoney (formerly
Sea Group (Singapore) AirPay) and subsequently leveraged its digital entertainment expertise to launch a social-first,
and Innosight highly engaging e-commerce platform, Shopee. In parallel, it has ventured into game publishing
Industry: Gaming
and self-published Free Fire, the world’s most downloaded mobile game of 2019.
Beginning of Transformation: 2014 What to watch for: Can Sea Group turn a loss-making e-commerce business profitable,
» Research Methodology meaningfully differentiate it through engaging digital experiences and make localization a
Revenue: US$2.1 billion
sustainable competitive advantage in its battles against deep-pocketed regional competitors?
28 “Razer Announces 2019 Full Year Financial Results.” Razer Inc, March 24, 2020. https://doc.irasia.com/listco/hk/razer/annual/2019/respress.pdf.
© 2020 Huron Consulting Group Inc. and affiliates. 20» Executive Summary
» Introducing ASEAN’s
Consistent
transformation
themes
1 Dual transformation:
All eight are pursuing
a dual transformation
approach with simultaneous
efforts to reinvent today while in
long-tenured predecessor. For
example, ABS-CBN group’s
current Chairman Emeritus
Eugenio Lopez III previously
served as CEO of the group from
The future champions parallel creating new growth 1996 to 2012. Another example
Transformation Champions
closely follow the three engines in spaces they possess is Banthoon Lamsam, who
themes of our ASEAN strategic advantages. served as Kasikorn Bank’s CEO
» Three Transformation Themes transformation champions. for a period of 28 years before
2 Fintech-enabled recently stepping down this
» Future Champions year. And both former unicorns,
business models:
Seven of the eight Razer and Sea Group, are led
» Conclusion: The Best by their founding CEOs,
(ABS-CBN is the exception) are
Time to Plant a Tree Min-Liang Tan and Forrest Li,
leveraging fintech in some way,
with efforts ranging from digital- who have served for 15 years
» Profiles: Transformation only banks to e-wallet platforms and 11 years respectively.
Champions and “bank-in-a-box” solutions.
While it is too early to tell
3
» Profiles: Future Champions whether they will become
Long-serving
our next champions, these
leadership: Almost all
» About the Authors attributes appear to push the
of these companies are
and Innosight odds in their favor.
led by long-tenured senior
leaders or leaders who have
» Research Methodology recently taken the baton from a
© 2020 Huron Consulting Group Inc. and affiliates. 21CONCLUSION: THE BEST TIME TO PLANT A TREE
» Executive Summary
There is a popular saying, transformation champion, securing today (Transformation
generally attributed as a Singtel, began its A) while planting the seeds of
» Introducing ASEAN’s Chinese proverb, that says: transformation journey coming innovation in the downturn to
Transformation Champions
out of the global financial crisis create tomorrow’s business
“The best time to plant a tree in 2010. (Transformation B).
» Three Transformation Themes was 20 years ago. The second Strategically diversified
best time is now.” The key to corporate longevity companies with twin growth
» Future Champions is the ability to continuously engines are more resistant,
Companies seeing signs of reinvent today while planting ensuring a greater readiness for
» Conclusion: The Best disruptive change should act the trees that create tomorrow. the next global shock. Each of
Time to Plant a Tree before they need to. Further, A recessionary environment the five ASEAN transformation
hope is not lost for companies can help companies to make champions spotlighted in this
that have been caught flat- overdue hard choices while also report has managed to do this,
» Profiles: Transformation
footed by the COVID-19 crisis. creating opportunities to plant and the eight future champions
Champions
Many great companies were trees due to lower commodity have started their journeys. We
founded during downturns. IBM prices, cost-conscious believe all forward-thinking
» Profiles: Future Champions started in the panic of 1896; customers ready for disruptive ASEAN organizations should
Disney started just before the new products or services, and take inspiration from these
» About the Authors Great Depression in 1923; increased availability of talent. stories to build resilience in their
and Innosight Burger King, during the V- core businesses while
shaped recession in 1953; As leaders reassess strategies simultaneously turning
» Research Methodology Microsoft, during economic and priorities for a post- disruptive threats into
stagnation in 1975; and Airbnb, COVID-19 environment, a dual opportunity by planting trees
during the global financial crisis transformation approach helps now.
of 2008. Also, one ASEAN disaggregate the challenge of
© 2020 Huron Consulting Group Inc. and affiliates. 22DBS BANK
» Executive Summary Country Singapore
Singaporean multinational banking
Industry Banking and financial services provider
» Introducing ASEAN’s Revenue US$10.2 billion
Transformation Champions
Employees Around 28,000 CEO Piyush Gupta
Beginning of Transformation 2013
» Three Transformation Themes “Transformation is infinite, and it’s
Transformation Story: Traditional regional bank transforms an ongoing process. We are setting
into a global digital platform company, around a cultural vision bolder goals and continuously
» Future Champions of a “28,000-person startup.” reinventing ourselves.”
— Paul Cobban,
Chief Data and Transformation Officer, DBS Bank
» Conclusion: The Best Source: HRM Asia
Time to Plant a Tree
For DBS Bank, the decision to transform stemmed from a
FROM TRADITIONAL TO fundamental realization that, with the advent of new fintech
» Profiles: Transformation
Champions
DIGITAL-FIRST BANKING players, incumbents would have to pursue digitization in order
to survive.
GANDALF. DBS’ digital transformation strategy has been centered on
The fictional character from The Lord of the Rings became the three core principles. First, that the bank had to be digital
» Profiles: Future Champions to the core and not just apply “digital lipstick.” This meant
rallying call for transformation at DBS. The first letters of
Google, Amazon, Netflix, Apple, LinkedIn and Facebook reimagining its legacy technology architecture to make
» About the Authors together spell GANALF. DBS aspired to provide the missing it API-based. Second, it focused on embedding itself in
“D” by transforming itself into a technology company. the customer journey. The final principle was to transform
and Innosight its culture.
» Research Methodology
© 2020 Huron Consulting Group Inc. and affiliates. 23DBS BANK
» Executive Summary
Acting on these principles has enabled DBS to deliver on its systems. By 2019, more than 400 partners were connected to
transformation strategy. DBS through its API platform.30
» Introducing ASEAN’s In 2019, its digital banking platform, digibank, was used by DBS has also made progress to become increasingly
Transformation Champions 3.25 million customers for everyday transactions such as data-driven, with the bank running more than 150 projects
payments and investments. DBS’ digital customers are now leveraging advanced analytics.
52% of its total customers, versus 33% in 2015, and are twice
» Three Transformation Themes as profitable as traditional customers.29
DBS has come a long way since it first started its
transformation journey. In 2019, it became the first bank in the
DBS launched the world’s largest application protocol world to simultaneously hold three prestigious titles. They are
» Future Champions interface (API) platform in 2017, where financial and retail “Bank of the Year” (The Banker), “Best Bank in the World”
partners could invisibly integrate DBS’ capabilities into their (Global Finance) and “World’s Best Bank” (Euromoney).31
» Conclusion: The Best
Time to Plant a Tree
FINANCIAL PERFORMANCE
DUAL TRANSFORMATION REVENUE BREAKUP
» Profiles: Transformation SINCE 2013*
TRANSFORMATION A
Champions
Reposition Today Revenue
8.7%
Digitization of CAGR (‘13-’19)
» Profiles: Future Champions A Banking Services (‘13) 3.4 33%
Billion USD
EBITDA
» About the Authors 8.8%
TRANSFORMATION B CAGR (‘13-’19)
and Innosight Create Tomorrow
Digital customers contributed TSR 82% vs. 19%
» Research Methodology
B API Platform (‘17) one-third of DBS’ revenue (‘13-’19) (for STI index)
in FY 2019
29,30,31 DBS Annual Report 2019
* Starting year of transformation | All figures used for CAGRs are in local currency. Innosight analysis of Capital IQ and Datastream.
© 2020 Huron Consulting Group Inc. and affiliates. 24SINGAPORE POST
» Executive Summary
Country Singapore
Singapore's designated public
Industry Postal services postal licensee
» Introducing ASEAN’s
Revenue US$930 million
Transformation Champions
Employees Around 5,500 CEO Paul Coutts
“SingPost embarked on transformation years ago
Beginning of Transformation 2004 to future proof our business, and in recent times,
» Three Transformation Themes we are ensuring that our people are well equipped
Transformation Story: Postal services provider to embrace change. Our focus will continue to be
diversifies and transforms into a postal, logistics and on transformation, riding on disruptions within the
industry and connecting communities in this
» Future Champions property services provider. digital age.”
— Paul Coutts,
CEO, SingPost
» Conclusion: The Best Source: Innosight interview
Time to Plant a Tree
Singapore Post (SingPost) transformed itself from a mail
FROM POSTAL TO LOGISTICS carrier to a logistics and e-commerce fulfillment services
» Profiles: Transformation
Champions
AND PROPERTY SERVICES provider. SingPost leveraged its logistics and operational
capabilities to launch a full suite of services for e-commerce
Digitization has completely transformed the way we businesses, including front-end web management,
communicate. Email has replaced letter writing, and warehousing and fulfillment, last-mile delivery, international
» Profiles: Future Champions companies now prefer communicating electronically with their freight forwarding and digital marketing.
customers instead of sending pamphlets.
It pursued its new growth business through strategic
» About the Authors acquisitions (Quantium Solutions; 2009) along with
and Innosight For a postal services provider, this spells one word — organic investments (US$140 million for an e-commerce
disruption. To counter this disruption in its core business, logistics hub).32,33
» Research Methodology
32 Singapore Post News Release | 33 SingPost Press Release
© 2020 Huron Consulting Group Inc. and affiliates. 25SINGAPORE POST
» Executive Summary
Since launching, SingPost's new business efforts have Since undergoing this transformation, SingPost has gone
borne fruit with 38% of overall revenue coming from its through several challenges, including a sudden departure of
» Introducing ASEAN’s logistics business (including e-commerce) and 6% from its the CEO in 2016 and the 2019 bankruptcy of its U.S.-based
property business (comprising commercial property rental e-commerce subsidiaries. While it has outperformed notable
Transformation Champions
and self-storage services) in fiscal year 2019-20. peers in mature high-GDP markets like Japan (Japan Post),
the U.K. (Royal Mail) and the Netherlands (PostNL), it still lags
In parallel to the new growth initiatives, in its core business
» Three Transformation Themes operations of postal services, SingPost focused on operational
the likes of Deutsche Post DHL, whose growth template it
aspires to adapt.34 Over the period of 2004-2019, an
efficiency through post and parcel integration, self-drop
investment of US$10,000 in SingPost would have yielded
boxes, and delivery tracking. It has also launched new services
» Future Champions such as bill payments and mailroom management services. In
37% higher returns than the same investment in a basket of
its global peers**. Per CEO Paul Coutts, "SingPost is
recent years, SingPost has doubled down on digitization of its
well-positioned to capitalize on the ASEAN region's booming
» Conclusion: The Best postal business by introducing initiatives such as automated
e-commerce market.“35
self-service post offices and digital sales advisory services.
Time to Plant a Tree
FINANCIAL PERFORMANCE
DUAL TRANSFORMATION REVENUE BREAKUP
» Profiles: Transformation SINCE 2004*
TRANSFORMATION A
Champions
Reposition Today Revenue
8.4%
Streamlining of CAGR (‘04-’19)
» Profiles: Future Champions A Postal Services (‘04) 409 44%
Million USD
EBITDA
» About the Authors 0.8%
TRANSFORMATION B CAGR (‘04-’19)
and Innosight Create Tomorrow
SingPost’s revenue from its TSR 132% vs. 166%
» Research Methodology B Logistics and Property logistics and property business
Business (‘09)
(‘04-’19) (for STI index)
in FY 2019-2020
34 CNBC | 35 Business Times
* Starting year of transformation | All figures used for CAGRs are in local currency. Innosight analysis of Capital IQ and Datastream.
** Innosight Analysis | Deutsche Post, PostNL, Austria Post, Belgian Post, Royal Mail, Japan Post (respective market index returns were considered for the years these companies were not listed between 2004-2019)
© 2020 Huron Consulting Group Inc. and affiliates. 26You can also read
