Co-creation of Innovations for Tomorrow's Marketplace

8/31/2009 - Part of TCBN's IT Series
Jake Hsu, CEO of Symbio, speaks plainly about the company's expansion in the last ten years and its emerging role for the future.  Symbio's carefully selected expert work teams are able to create innovative new products to fit into the tomorrow's vision of technology. This interview sponsored by Symbio.


TCBN: Hello, and welcome to The China Business Network.  I'm Michael McCune, and joining me today is Jacob Hsu, CEO of Symbio.  Symbio is a technology services company that aims to co-create innovative products with its clients. Jake joined Symbio in 1998 as their 41st employee.  Since that time he’s overseen the growth of the company to an organization that spans six countries across three continents.  He joins me from his offices in Beijing today for a conversation on the role that outsourcing plays in the economy, the challenge of talent management across multiple geographies, and how to be a successful partner with clients in today's world.  Thanks for joining me, Jake.

Hsu: Thanks for having me.  I'm happy to be here.

TCBN: Now let me ask you, has your view of what Symbio is changed a lot since you started off as the 41st employee?

Hsu: (laughs) Well, it certainly has quite a bit. I’d say that it’s changed along with how our clients also perceive us. I think back when I joined the company we were really doing spot projects here and there. It was really more about taking on projects that our clients either didn’t have the bandwidth to do, or were so out the box that they wanted to outsource it or find a partner to work on it. When we really started to see our operations grow in China, back in 2003-2004 timeframe, back then it was really about low cost. It was about arbitrage. It was about tapping into lower cost Chinese engineers. I think today, of course, cost is always a consideration, and while value is obviously still a core part of our value proposition, today it’s really becoming more about tapping into the innovation and ingenuity of Chinese engineers. We’re really starting to see now that China’s emerging a place of innovation, a place where new products and new technologies are actually starting to take seed here before they actually even reach the rest of the world. I think that a lot of companies now, while they are continuing to scale here, in terms of the labor resources, they’re also trying to tap into the innovation and the expertise that starting to emerge here in China.

TCBN: You bring up a very interesting point about China and how it fits in the global landscape, particularly with the IT development skill sets and whatnot. As I mentioned in the intro, currently Symbio spans a few countries on three continents, and certainly you’re expecting to use skill sets that are prevalent there. How does China fit in with the global skill set these days?

Hsu: Great question, great question. And this actually goes to how our clients are changing in terms of the way of working with us. When clients really start to engage with us, and we really start seeing a lot of growth, it’s coming, basically, from offshoring. Back then, talking about five, six years ago, back then clients were looking at lowering their costs of engineering. I think that continues to be the case today, but models are changing. Now clients are looking at how do they tap into truly integrated global delivery resources. And what do I mean by that? It means really being able to tap into the best expertise, the best people anywhere in the world, to be able to create the best product available – the best product you can build. And a case in point for Symbio: today our headquarters are in Beijing but we’ve got six major development centers all over the world. Besides our development centers here in China we have advance development centers and R&D centers in Finland, we have advanced R&D centers in Sweden, we’ve even got centers in Silicon Valley as well. You can sort of see that clients are tapping into Symbio not just because they’re looking for the scale and the leverage you can get in China, which is of course part of the value proposition, but they’re looking for the best expertise. Being able to combine that globally-integrated expertise to create the best products, the most innovated products with the most value a cost proposition.

TCBN: When you talk like that I almost feel like I could be listening to one of those global firms with footprints all over, be they financial services, consumer products or technology. They tend to have a huge number of in-house resources. I wonder if at some point do companies outgrow the need for a partner like yourselves?

Hsu: Well that’s also a good question. I think that it really comes down having the global scale is one part of the equation. I think the other part is having the right expertise. And today’s software, which is sort of our primary focus, is going through a revolution. I think in the past, in the old days, the worlds of enterprise software, the worlds of embedded software, and the world of web and web services, they never really crossed. But I think what we’re seeing in today’s market, especially accelerating in the last two years, has really been the concept of digital convergence. And when we talk about digital convergence, it’s really about the convergence to different software disciplines, and as mentioned, embedded enterprise software and web services, and also just the convergence at a more basic level, of hardware, software, and services. What you’re starting to really see is this change in software, this change in technology, and how you build technology is also creating gaps in expertise, because most companies around the world have traditionally focused on one area or another. They actually haven’t been able to meld these different worlds together. And that’s something I think Symbio really brings some special expertise, some core expertise, some innovation that doesn’t exist anywhere else in the world. It’s really about the ability to bring in all these people across different disciplines and being able to create innovation and new products that are fitting into the future view of technology.

TCBN: Well, you talk about co-creation a lot in your recent statements, and in your product and company literature, and I wonder how does that windup on a practical level being different from outsourcing labor or fundamentally just subcontracting?

Hsu: Great question. Generally speaking, there are three differences. Let me start first by the business mission – or the business focus. Traditional, plain vanilla IT organizations are very focused on taking existing business process and finding a way of making it more efficient and automating it either using custom software or using packaged software to make that process more efficient. That’s very different from what we consider product co-creation, or in our business, generally people call it outsourced product development. In our business, it’s really focused on helping create the technologies of tomorrow, really focusing on the products, helping our clients to produce the products that’ll help them win in the marketplace. It’s really focused on the future. It’s really about building the core products that will drive their business, that drive the top-line revenues, that drive the sales of the company. I think the second area that is quite different between a traditional IT organization and Symbio is it comes down to smart people. The kind of people that we’ve got to hire in order to create these products, to create these cutting edge innovations, they really need to be innovators. The need to think like developers, think like product specialists. They’ve got to constantly be thinking about how we can do things better, how we can solve problems in a new way, in a more innovative way, for our clients. That really comes across in terms of the orientation of the kinds of people that we hire. Traditional IT organizations may try to hire the lowest cost person that fits the skill set that they need to program something versus in our case, we’ve got to hire people who are passionate about technology, who think like innovators, and who want to help create products that are going to win in the marketplace. The last difference, the third difference, really comes in culture. At Symbio, because we’re doing co-creation with our clients, there’s really a sense of ownership here. There’s a pride of ownership. When our clients launch products, and those products are successful in the marketplace, we really feel that kind of pride. We have a long-term orientation with our clients, and when we launch products really get behind them, and we really are constituents in their long-term success.

TCBN: I want to go back to that second point when you talk about your people. In looking through comments that you’ve made about talent management in China, you’ve often emphasized the need to be operating beyond the top-tier cities – the famous cities of Shanghai, Beijing, Guangzhou – that we commonly think of when we start thinking about business in China. You’ve developed operations elsewhere.

Hsu: In China, we have four development centers here. There’s Beijing, Chengdu, Hangzhou, and also a place in Taipei, Taiwan as well. And how do we actually organize these development centers? They’re organized according to key technology domain. For example, if you’re a web services company, if you’re building something that’s an internet platform, it’s going to go to Chengdu, most likely. If you’re building industry software, you’re building, let’s say, applications for enterprises, mostly likely that’s going to go to Beijing. If you’re building embedded software, it could be between Taipei or Hangzhou or Chengdu. So it really depends on the type of product that you’re trying to build. Why do we do that? It’s because these different cities also have their own special profiles of people. Beijing and Shanghai – these are more mature cities, I’d liken them to New York City in the US. These are cities that are more mature. You’re going to find people who have been in the technology industry longer in these cities. At the same time, because these are global cities now, the costs are going to be a bit higher, and you’re probably going to have more competition for those same types of people simply because they’re such big cities. We really see the future of our growth really coming from places like Chengdu and Hangzhou and other cities inside China. If you’re looking a Chengdu, you’re looking at a city that has one of the most well-developed university systems in China. There are about 40-plus full-time universities in Chengdu that are producing some of the best developers in new technologies. That’s why you’re starting to see things like web services, embedded software, a lot of the new technologies, new software disciplines are really coming out of these second-tier cities. Twelve years ago when Symbio first set up in China, there was no IT industry. There was no software industry out here, so you had to be in cities like Beijing and Shanghai because you were developing talent, and that was where the multinationals were. Today, China is really emerging as a center of innovation. You’re starting to see the new engineers coming out of school have a lot of the skill set – they’re already pretty cutting edge in a lot of new skill sets. Because China now has become a more open country, and younger engineers are able to get access to new technologies pretty easily, you find people are pretty cutting edge at an earlier stage. An example of that is Android. When Google announced Android and really started to make Android as a platform for initially mobile phone development and eventually now in netbooks, what you found very quickly was China overnight – within weeks of Google having opened Android as a platform, within weeks there were over ten thousand Android developers in China alone, that popped up basically within weeks. You can see that the scale, of just the number of engineers here, and also how quickly they’re able to pick up new technologies makes it so that it’s pretty compelling to look at other cities to expand into as you’re looking longer term in China.

TCBN: I know you’ve been involved in some conversations about the economy is affecting individual companies and their approach towards co-creation, or partnering with an outsourcing firm, or augmenting their resources for tech development projects. A lot of the conversation hasn’t focused as much on the budget side as much as on the talent management side and the blending of skill sets across different geographies. For as much as Symbio now has a large platform in China, I wonder if you could comment about how Silicon Valley plays a role still in terms of what you look to from here in terms of influences on how you guide your own company’s development.

Hsu: That’s a very insightful question. I think Silicon Valley continues to be the flagship of software innovation. I think it’s going to be that way for years to come. I should mention, I think that a lot of people like to think competitively about innovation, as if one city’s gain is another city’s loss. I really don’t think of it that way. I think of as “a rising tide raises all boats.” From that perspective, I think Silicon Valley, and this is a reason our US headquarters are in Silicon Valley, we’re actually expanding very rapidly in Silicon Valley as well, both from an R&D capability standpoint and again from just a business presence standpoint simply because it is the innovation capital of the world today. But going to your question about budgets and value, as you start to look at global integration, one of the things that I found counterintuitive was that in the recession of the past year, one of the things that was counterintuitive was that you would think companies would be looking to do even more offshore. You would think that companies would actually be looking to move even more inland and find resources that are even lower cost than they had before. Actually the opposite has happened. What we found was that a lot of our clients were looking to us to take on even more high-value work. In the past, some clients were looking at Symbio as primarily an offshore provider, in today’s world, especially because of the recession, clients are looking for Symbio to take on more higher-value-added work. They’re really looking for us to do even more, to take on even more, to really share ownership of their product life cycles. So what that means is they’re bringing even more stuff to Symbio, like design and architecture work, and that probably in the past would be very difficult to do offshore. Why do we talk about this global delivery model? I think today, Outsourcing 1.0 was about low cost offshore labor arbitrage. I think Outsourcing 2.0 is really being able to find the right mix around the world so you can have the scale and the development offshore, but you have to couple that with cutting edge domain expertise and innovative design from around the world, and being able to package that and work together as one globally integrated team. It’s ultimately being able to give companies the same kind of scale, the same type of capabilities, the same leverage as the truly multinational, the truly transnational companies have. It really enables smaller technology companies to even the playing field with the super-large technology companies. And it allows the large companies to get even more leverage over their competition.

TCBN: I’ve been speaking today with Jacob Hsu, CEO of Symbio. Last year Jake was name one of the world’s Top 12 Young Global Leaders of Tomorrow. Jake, thanks very much for having the time to speak with us today, and we look forward to hearing about more information and developments from Symbio Group.

Hsu: Thank you, I really enjoyed it. 

This interview sponsored by Symbio.