Corporates are a necessity in the startup journey. They provide entrepreneurs with the work experience required to understand business and industry, they can end up being a startup’s client or investor and they are crucial to the overall development of the private sector.
In the Middle East however, many corporates tend to compete with startups and thus become an obstacle, creating barriers to market. UAE-based Majid Al Futtaim (MAF), the retail and shopping giant, has taken an entirely different approach and has embraced startups through partnerships, investments and acquisitions, taking risks even when the returns do not transpire.
At the helm of this strategy is Joe Abi Akl, chief corporate development officer at Majid Al Futtaim Holding who spoke to Wamda about the need to work with startups and the lessons the company learned during the coronavirus pandemic.
As a corporate, is it better to invest in startups or to partner with them?
If you give that money to a startup, they will use it to develop their tech, build infrastructure and scale. If I give them access to customers, integration to digital assets, co-marketing with them, giving them that is more valuable than money. A partner that will give them a stamp of quality and someone who will help them scale is worth more than money. There’s a tendency from corporates to take a startup as a partner and the startup becomes a mini team, that’s not good, neither for the startup nor for the corporate. You want to keep startups at arm’s length so they benefit from you but they keep their independence. The moment you try to embed them into your team, you lose the agility and entrepreneurial spirit they have. Yes, we have to support them, but we keep them at arm’s length.
How do you enable innovation within the corporate environment?
We haven’t really created a centralised team to handle innovation. At the end of the day we want innovation to happen with everyone and everywhere in the business. When we’re trying to bring new tech inhouse, we bring in an internal team that have built digital platforms and touchpoints and they create components inhouse. When there is the opportunity to work with someone else, we look from the outside who can complement what we’re doing from within.
Most corporates believe they have the resources to develop everything inhouse.
It’s corporate arrogance that they think they can do everything inhouse. In this day and age and speed of technology, and customer needs evolving so quickly, there is no room for anyone to think they can do everything from within. They need to focus on what they’re good at and they need to partner with the ecosystem, not just the startups, but also the global tech players, the public institutions, even with the customers themselves to do something at a much faster pace, to be able to always be ahead.
We have a school of analytics, technology and customer experience where everyone gets trained on how to use digital and leverage analytics, to know not only how to procure tech, but how best to use it and customise if for our benefit. We’ve moved from working in a siloed manner to start looking at synergies. We’re working with SMEs and started looking at it with a more strategic angle, not only to partner with these players but to generate synergies – how can we help them grow? How do we let them help us change our DNA? How do we look at human capital differently?
What were the trends you experienced during Covid-19?
Most of them existed before, they just got intensified or accelerated. Most of them will remain in the future. Grocery shopping increased exponentially during Covid, now things are settling, that growth that was achieved, I don’t think will slow down. When people get used to the convenience of ordering, a big chunk of them will keep doing this, but it will be a mix of ordering online, click and collect or going to the shops.
Why did Carrefour struggle with fulfilling online orders in the UAE?
It wasn’t a challenge with technology that put us in that situation, we had a surge in demand, we had constraints on how we could operate. What people miss is the digital process is not fully digitised. There are people sitting in fulfilment centres, or instore and picking and packing. We had to be careful with how we treated our people. This is where the bottleneck happened, in the fulfilment aspect. In the UAE we got a surge of 4 to 5 times in terms of daily orders, we moved people from VOX [cinemas], trained them and moved them to Carrefour. We opened dark stores and managed to work overtime on the backlog. We were doing 15,000-20,000 orders a day.
What were the main lessons that you learned from the pandemic?
The key learning is build for the future. Whenever you’re building for the future, try to build faster. If you think demand will be X, build for 3X.
At MAF a lot of importance was put on transformation, and innovation became core to what we’re doing. There is a lot of pressure to move much faster to how we used to move before. Speed and agility became much more important, doing things at pace and scale is important and having this ability to not only innovate from within, but to partner with the ecosystem around us, with the entrepreneurs, corporates and tech companies.
What do you think is the future of retail?
Nothing will go back to what it was previously, not because of Covid, but because of natural progression. People will still want to go to the mall, but the nature of the offline experience will be different, people will go not to transact, they will go to have an experience around entertainment, food and personalisation.
For a retailer to come and say I just want to rent a physical space and for a mall operator that just leases physical space, that equation will not work. The traditional rent formula will cease to exist, it is no longer a rent equation but what value the mall is bringing to the tenant. The more long term, sustainable solution is a full omnichannel proposition, buying online or offline, book things online and collect from the mall or a full online transaction.