Mention innovation and it conjures an image of whitecoat clad people carrying out experiments in a lab.

However, in reality innovation is quite different and only rarely by scientists clad in whitelab coats. Innovation takes many forms and can happen anywhere. Innovation can be an improvement to a processor a collaboration that  results in some new efficiency.

Three of Sri Lanka’s leading evangelists for open innovation or innovation by collaboration joined a discussion with Imran Furkan. Ranil Vitarana, the Chief Innovation Officer of MAS Holdings, Randhula de Silva, the founder and Chief Executive of Good Life X and, Ruwindhu Peiris who is the Managing Director of Stax Sri Lanka.

What advice can you give organisations about establishing a culture of innovation, particularly if they don’t have a lot of resources?

Ranil Vitarana: I think that it’s probably easier to create a culture of innovation in a smaller organisation than it is to create one in a large organisation. When we, that’s MAS Holdings, decided to make innovation a competitive advantage we had to decide between becoming an innovative organisation, or establishing an innovation function in a large organisation.

We chose to be an innovative organisation, a very conscious decision, when you had both options. In order to do that, we went to the mind mecca of innovation, to Silicon Valley, and met a lot of companies including Google, Facebook and many others. Some of the companies we visited then no longer exist. We also visited some smaller startups, trying to understand what it means to have an innovation culture and what we needed in order to make that happen.

A few learnings were that innovation culture is a topdown thing, as opposed to a bottom-up thing, and that means everyone in the organisation from the chairman downwards needs to change their behavior in order for us to create that culture.

First, it has to be a culture of risk taking, and when people say risk taking it is not about taking absolute risks, its about calculated risks and risk-aware decision making. Most companies have risk averse decision making.

The second thing is that you have to accept innovation intrinsically, and that means failure too, and failure doesn’t mean that an individual or the organisation has failed, it is that we haven’t been able to reach that particular objective we wanted to. More than likely, the reason is the lack of internal capability, or external market forces, or something like that.

Therefore, you pivot, or change the way you are doing things. As an organisation, it is important to have that mindset. Often, failure teaches you more than success. You have to get in to that mindset that things are not always going to work. It’s important to then ask yourself, could we have done better? What data could we have acquired earlier in order to have acted differently?

The other thing is that your hierarchy must be narrow. The hierarchy can exist in administration but it cannot be for ideas or capability. With a narrow hierarchy, decision making is faster. Those are the things that enable a culture of innovation.

Ruwindhu Peiris: Just one thing to state at this stage, and that is that failure is a certainty. If you start looking at the world that way, then the problem becomes how fast and how cheap can you fail. The mindset is getting the leadership at the topmost level to embrace that concept. It also depends on what you mean by failure. If you make it cheap and fast, then you can absorb a lot of failure. So, it’s a very important concept.

Randhula De Silva: The one thing I wanted to highlight is that fearlessness and risk-taking needs to be driven from the topdown. Innovation is not always top-down, it most often is a very flat thing. But innovation culture always starts at the top.

Failure, in some form is inevitable. We must embrace failure. One of the ways to navigate innovation is to look at future challenges that maybe the country or the industry is going to face to map the opportunities. Any advice you can give companies or individuals who are in that mapping phase?

Randhula: Firstly, you need to identify if an organisation is interested in solving real life challenges faced by humanity, the planet and the people. It needs to be done for the reason of wanting to address that very challenge, not to tick a box, not to penetrate a market, not to gain market accessibility alone. I’m not saying that because I’m a millennial, I’m saying that because if you chase after those (commercial) goals, for that reason, you’re bound to fail.

Different markets will care about different things, like human rights, societal care, traceability of where products come from, and religion. And these weren’t matters businesses cared about 10 years ago. It’s important to note that people no longer listen to what the companies are saying, but are looking at what the companies are doing more closely than you think. Essentially, to cater to changing trends, businesses need to be ready to do good while doing well. And it’s possible to achieve both these at the same time.

It’s important to evaluate your core, look at who you are and what you’re doing and why you’re doing it, or your purpose. This goes beyond assessing your company’s sustainability or any matrices that you may look at, or even doing CSR activity on the side. It’s no longer any of that. But it is embedding societal impact into corporate strategy itself; it is the net positive impact that you will create as a company, rather than treating it as an add-on or ticking a box.

Regardless of what sector you’re in, it’s important for a company to layout its entire supply chains, product life cycles, business ecosystems, and identify any potential issues to address because you care and because the people who work for you will know you care. If businesses don’t play a role in addressing larger social challenges, they are undermining the very system in which they operate. Therefore, it will be difficult to play the long game.

Ranil: Our industry is probably the one that moves the fastest because what is fashionable changes quickly. So, it’s incumbent on us to be in line with what fashion is today, but also what it might end up being tomorrow or the day after.

And one of the things that we’ve been lucky with is that we’ve always had a high percentage of youth in our organisation, and climbing up our leadership ladder in an accelerated manner. This allows us to constantly stay relevant. And that’s really good, because as a society we are helping each other to change. And I really do agree with Randhula that if you’re starting a business, if you’re an entrepreneur, always be genuine.

You don’t always have to be the most woke person, but you have to be genuine. Then people will believe you and support you. But the day they find out you’re being fake, everyone will leave you.

Ruwindhu: The one thing that hit me, is the notion of authenticity. This notion of living in a vulnerable state is hard. It wasn’t how we grew up. Growing up, it wasn’t cool to be vulnerable, to show your weaknesses was not a cool thing and you didn’t achieve things in life if you are perceived to be weak, or if you are perceived to not know the answers.

The starting point for everything is the purpose of a venture. If you think about it, in this day and age, a lot of the base executions are automated All you have to do is to keep tuning the system.

What advice do you have for people about executing an innovation strategy?

Ruwindhu: The starting point for everything is the purpose of a venture. If you think about it, in this day and age, a lot of the base executions are automated. All you have to do is to keep tuning the system.

In that situation, it is important to keep reminding yourself about what you are doing and why you’re doing it. I can’t underscore how important it is to start with the ‘why’. After that, if there’s one more thing to measure if something is going to get executed or not, is to ask the team individually or in different forums about what needs to be achieved. If you get five different answers, you’re guaranteed that job is not going to get done. You’ll be surprised how often when you ask someone what you’re doing and why, the answer is, ‘I don’t know, I was told to do it’. To me that’s the primary factor.

If you think of a formula or mechanics, at least in my experience, it would equate to ‘focus multiplied by daily improvements multiplied by time (focus x daily improvement x time). You have to be focused in today’s age more than ever before, because there’s so much happening. You can’t be everything to everyone, you’ve got to figure out what the final focal point is.

For execution, what is really important is daily improvements. I think it stems from the fact that if you can’t measure it, you can’t improve it. And the notion of integrity may not apply. In today’s day and age there is such a sense of urgency that you do need to have very short iterative cycles. The only way that you can fail fast and fail cheap is if you are measuring the right metrics and then understanding what actions you need to take based on the results.

Finally, you need to give it time; you’ve got to persist. That’s another area we sometimes fail at probably because of the instant gratification culture. A sense of urgency is great, but you also need to understand that some things do require time, and you’ve got to be willing to go the distance on these.

To me those are the three things; focus, measured improvements, and time. If you can do these three things in a cohort, it has an implied amplifying effect and then you get execution success.

Ranil: Lots of people think that innovation cannot be measured. Innovation is a step by step process towards that ultimate goal. There’re are many things to accomplish in order for you to really be able to say, ‘I’m creating value’.

It’s the process of saying I’m better today than I was yesterday and I’m going to be even better tomorrow because I have more knowledge. One thing a leader has to realise, is that you need different skills at different stages of an innovation journey. A leader has to ensure that the appropriate people lead the right stages. During execution, you will need a few innovators but more execution power.

As a business leader you can’t just put three people and say build this for me. You need to still play the role of the Chief Executives by making sure the team is equipped with the skills and that it has the right leadership. Once that is set, it’s relatively easy for you to drive innovation in an organization.

Randhula: The point I want to add is the importance of cross functional, multifaceted teams. From the inception, we’ve had people with different skill sets, and coming from different walks of life. Innovation comes from the most unexpected people sometimes, and it’s important that an organisation and leadership gives space for that.

Innovation also requires actionable and also differentiated insights. How do the companies that you work for and work with develop these?

Randhula: I work with entrepreneurs who are innovators in traditional sectors. What has worked for most of them is to go directly to the customer. By doing that, they really reduce the ‘failure life span’. They tend to be more successful when they quickly hit the market, because their feedback is directly from customers.

Ranil: I come from the corporate sector and we’ve managed to disrupt some of our own customers’ businesses. Most of the time, when we go to the end consumer, we have heard them say that (our) customer hasn’t been thorough when they did their ‘consumer work’.

This is something that at first baffled me. I later realised that when large companies do ‘consumer work’, they are not really listening to everything the consumer says. They only asked very specific questions about a very specific solution and they take for granted that they are the ones who know best. Now, when you see such a situation, that’s one ripe for disruption.

The second is that the younger generations don’t have fixed notions and they will question everything that you’re doing. Which is why they can innovate for various situations that we might take for granted, where we might be very satisfied with the status quo. I

It’s really important to have the right people asking the right questions from the right number of people. So you don’t need to do a 1,000 person consumer study in order to go and disrupt. If you talk to the right five people, you get enough data.

Ruwindhu: As I looked at it from an investor point of view, you ask; are you solving a problem? Or addressing an existing need? Or are you creating a need? Quite often that clarity doesn’t exist. How you would approach gathering data and insights is different depending on what you’re trying to solve.

If you’re creating a need, then it’s very different. It’s like Steve Jobs had a dream: design but don’t ask the customer. It’s the argument that the customer doesn’t know what she wants. But in my experience, at least, for startups that becomes the excuse for not gathering the insights they should have. You have to take the initiative to go get the data.

First, be clear about what you’re doing. Most of the time you’re solving an existing problem and trying to be more efficient and effective about how you solve that. That’s what most businesses try to do. The wonderful thing is that the data is all there now. It’s a treasure trove, and it’s increasing daily. Think about the amount of insights that can be gathered from review sites, from comments etc.

If you were able to gather implicit insights, which is what people are putting out on the review sites, that provides an insane amount of data. We at Stax have developed this capability to go scrape these reviews, and have NLP or Natural Language Processing tools to get to sentiment analysis.

It’s been a real winner in our space because we now help private equity investors uncover information and insights about their own products and what their customers are saying. As we have all been saying during this webinar, we need to be customer centric, and customers are telling you stuff and you need to be able to listen to them. The data is out there its just about how you access it.

Startups here are not using data and the tools which are available. The easiest approach is to realise that ‘the answer to my question is out there’. ‘I just need to go find it.’ If you start with that mindset, you’ll do really well for yourself. I think a lot of people don’t start with that mindset.

How can companies attract the right kind of smart capital that will help them innovate and attract investors that can actually add value. Is this something that they should focus on?

Ruwindhu: In my day job, we assess investment opportunities for private equity firms to make large ticket investments. I think it boils down to two things. What can you get out of this investor and the second is why do you need the money? That second question has to be well understood. If the answer is ‘I need money today’, well, that’s probably not going to connect with an investor.

You need to go asking for money when you don’t need it. That’s the right time to go ask for money. If a lot of the conversation is about defending your current view of the valuation; that’s not a great focus. For an investor it wouldn’t matter what it is today. What an investor would care about is ‘I’m going to join you from today. What can happen during the next three, five years?’ That understanding is very important.

Particularly with regards to innovation in conversations that I’ve had, it ends up being so caught up squarely on technical innovation or software innovation or product innovation. It stems from the fact that people haven’t gone and seen the competing product that’s 10 times better already. You have to get stuck with the view that someone is doing better than you already. Go find them and figure out what you can do differently. Anyone can have the conversation about technical innovation. I think we don’t have enough conversations around model innovation, business innovation, access to market innovation: those are really where the game changes can happen.

There are people doing some very innovative stuff that you just need to piece the puzzle together, you don’t have to be the owner or the creator of all innovations, particularly from a technology perspective. There is amazing value in cobbling up or putting together from different innovations that are used in different contexts.

Ranil: Even with internal innovation we look at it from a value creation perspective. In a business model change you measure value, not by bottom-line but value creation. That’s the way we look at startups, we try to understand what is that vision they have of how they want to do it? The second one is the most important thing about a startup, it is to do with the founders. Do the founders get it? Do they understand what is valuable in their organisation? And are they trying to protect the wrong thing? Are they also big enough to understand that they don’t know everything, and we might have to bring in other people, even above them in order to grow the and accelerate the company? If you don’t have the right founders, there’s really very little point in investing in a company.

Randhula: The one thing that I would rephrase is going out there, find out who else is doing it. It’s not only about figuring out how to do it differently, but also about what you can do together. Successful innovative is collaboration.

This is why the founders are important; that the founders are willing to compromise is important, the mindset, because it boils down to the fact of how far are you willing to go to make things work, not just to be ahead of the race but to form a bigger circle. That’s not splitting the pie, but growing the pie.

We often think tech when we talk about innovation. At Good Life X, one of the things that you work on is innovation in traditional areas. How do you bridge this gap between the traditional perception of innovation and value creation?

Randhula: Good Life X aims to disrupt the traditional sectors. When I say traditional sectors, it really is to optimise the best Sri Lanka has to offer. They have so much potential but are often focusing on optimising operations and maintaining that for decades. On the other hand, we have so much excitement around tech innovations and tech entrepreneurship. I started to work in private sector development 10 years ago and that began with startups where the focus was purely tech driven; it was not seen as a means to an end.

Technology is really important, it’s a tool that enables all of us to disrupt and make giant leaps. At the same time, traditional sectors are important. All that Sri Lanka has to offer in the natural value-chain, agriculture, travel, wellness and our heritage sectors, all of these can benefit so much with digitalisation and technology. That’s what we’re really trying to bridge.

What’s most important is the mindset of the traditional sectors. Since we worked with companies from the tourism sector, to agriculture, and food innovators in the traditional sectors; most of them are people who were open minded, willing to learn and embrace change at a fast pace, and they saw skyrocketing growth through the pandemic.

On the other hand, some industries with high global demand, like virgin coconut oil for example, if they were not willing to embrace new technologies, to get a grip on traceability or to embrace being digitally present, they would see demand decline even though global demand increased.

It’s really essential to use technology in this day and age. But on the other hand, tech innovators or tech entrepreneurs need to understand that building the next best AI, or building the next best IoT device is not going to do much unless it’s going to solve a real-world problem in these sectors. I think, these two different universes working in silos need to come out to the lobby and speak to each other.

For that we need facilitators who can really translate between these two languages and build trust in order to humanise technology and the traditional sectors in each other’s eyes, and to harness collaborative opportunities. This is something we’ve tried to do.

The ball is in the court of entrepreneurs and innovators on both sides; traditional sectors, as well tech sector. For both, there is an opportunity to start working together to maximize the potential our country.

Ruwindhu: I think we just have so much ahead of us. Partly the current challenges could be due to the island mentality, it could be the fact that we went through 30 years of war and that numbed our ability to dream. I think we’re still holding on to some of that. I like what Randhula mentioned, about it being ecosystem-power. You don’t have to compete on everything, there is coexistence, there’s a lot of opportunities to where oneplus-one-becomes-three kinds of situations. Go look for those.

Ranil: People equate innovation to tech culture, especially in Sri Lanka. I think the money is in two areas. One is democratisation of services and the other one is around experiences. You can improve someone’s experience, and this is an area where the softer skills and the softer sciences of this world matter.

Unfortunately, in Sri Lanka, there is a separation around the clever people being the ones doing engineering and science and everyone else is doing something else. We must change that mindset and realise that creative people are the ones who can take the tech and make it really valuable. We are primarily a service led economy and it will take all disciplines to make innovation mainstream.

Technology is really important, it’s a tool that enables all of us to disrupt and make giant leaps. At the same time, traditional sectors are important

One of the things that leads successful innovation in other parts of the world is co-creation with competitors, customers, and suppliers. I don’t see that happening much in Sri Lankan companies. Do you have any ideas for how we can break out of that?

Ranil: So it’s an attitude, right. Every company looks upon their supply base as someone who profits from them. If they just change that to say, this is a company that can make me better, then you will see them as a partner, an enabler, and you won’t mind sharing your profit with them, because you know that they’re going to return it back to you. That’s how we at MAS changed the dynamic when it came to our customer base.

Your supplier is your biggest ally, because if you win, the supplier wins. The other side is there’s also a lot of infrastructure that other people have paid for like our university systems, our arts centers and all these things where you have people that you can go and work with. As long as you articulate your problem very well, they will become big allies who want to work with you.

As far as competitors are concerned, I think, again, it’s the definition of a competitor that is important. For instance in the Sri Lankan scenario, we have something like 0.5% of the world’s apparel industry and if we get together we can be a bigger force. So it’s about defining the challenge, and not trying to be better than your competitor. You want to be in a world force therefore everyone works together to make Sri Lanka a world force. By changing the definition, you change that whole way that you approach it.

Ruwindhu: We are blessed, despite everything happening around us, it’s the best time ever to be alive. But I think the weight is on future generations to make the most it. You know what? We’ve done a lot of damage to the planet and there are going to be consequences, there already are.

So as the books of history are written 100 years from now, and they look at us, how will they then view the present. What are they going to write? Are they going to say these guys had everything going for them and yet they weren’t able to think big.

I think by defining a bigger ask and a bigger responsibility, you can alter the perspective. All of a sudden, your competitor is now your co-partner because you have this far bigger challenge and expectation in front of you. In some places, you can choose to compete and in some instances you will collaborate.

Randhula: Beautifully articulated by both Ruwindhu and Ranil. Looping into my first ideas to this session is that all of this would come together, if we recognise there is a larger challenge to be met and we can only do it together. In one generation, we can turn things around if we work together.

But the problem is that we are still working in silos and we imagine the universe ends at our doorstep, and that really needs to shift. Only then will there be innovation that can address the biggest challenges. A systemic change is needed for all of us to thrive and grow. Not only as a society, but also in businesses, to bring back creative value to our shareholders and to the largest stakeholders. It’s important that we change our perspectives and the younger generations are already doing this.

People equate innovation to tech culture, especially in Sri Lanka. I think the money is in two areas. One is democratisation of services and the other one is around experiences

How do we commercialize innovations? Ultimately, it is a very important outcome, both from an organizational and national perspective.

Ranil: The difference between invention and innovation is around taking ideas and converting them into to cash. This is the biggest area we falter in, because we are not in a big market to begin with. As a result, we are not known for coming up with products or solutions for the needs of the world’s biggest markets.

We have to learn to form alliances. We might not immediately be able to realize the full value or the potential of what we have, and we might have to give credit to someone in-between who might be able to make it a reality. However, 5% of a billion is far better than, 95% of a million. So we have to understand how we can approach unfamiliar markets.

Everyone knows that it’s not the best product that sells the most. It’s the company who can sell best that sells the most. So you have to get this into your head: just because you have a good product it is not going to become successful. As much as you’re good at everything else, that final leg, if you are not good at, or you don’t find the right alliances, or you don’t hire the right person at whatever cost, you might not be able to go to market. I think that’s the most important step. And that’s the step that is most alien to us in Sri Lanka.

Randhula: A couple of things that I’d like to add there is looking for different kinds of alliances, and people to partner with, especially for smaller companies, who are ready to scale and go out, but need different types of solutions they can’t undertake on their own. It’s important to look outside of the box and look outside the normal, linear way for the next step, and to look for different alliances and partners who can solve that problem for you.

The type of questions you ask and the type of partners that you approach really matters when it comes to scaling. But I think before taking that step, many times we’ve seen working with larger Sri Lankan corporate that scale, the question of scale itself, prevents companies from launching or experimenting a pilot. That shouldn’t be the case. You shouldn’t paralyse yourself and you shouldn’t allow scale to become a roadblock, or barrier to experiment.

A fearless attitude is necessary. You get yourself out there and test the product or pilot the service, before you have all the answers. It’s okay to have ambiguous environments, when you’re testing and piloting a product. So those who will thrive in ambiguity and are willing to get themselves out there first in order to try something out will get a lot of answers.

Ruwindhu: I’m going to give a different slant to this. It’s about how do you make this work? And I guess the measurable outcome is how do we get towards a developed nation, because a lot can be achieved by being innovative.

One thing that hit me the most was this notion from Peter Diamandis and the team about scarcity being false. In reality, there is abundance, the problem has been about accessing that abundance. To me, this is the true calling of all humans, every business and every person, that of solving an access problem. What a crime if we have abundance, and haven’t figured out how to access it. The way to do that is collaboration. I think Sri Lanka is well poised to do just that. So that’s my view of how we commercialise this. It’s beyond just one industry. It’s about taking on a much higher purpose, and leading the way with a new way of thinking.