Technology is narrowing gap between digital natives and traditional businesses

There was a time when startups relied on technology-led innovation to offset the large-scale resources that traditional enterprises reliant on legacy tools possessed. AI has levelled the playing field, leading enterprises to put innovation on the frontburner.

A panel discussion on scaling innovation at TechSparks 2024 brought together leaders of startups and legacy companies. The panel, comprising Shahid Shaikh, Head of Digital Natives and Unicorn Business at SAP India; Vaibhav Tewari, the Co-founder and CEO of Portea Medical; Saurabh Odhyan, CTO - Consumer at FreshToHome; and Arpit Chug, the Chief Financial Officer at Razorpay, discussed retaining tech-driven innovation as companies scale. The panellists agreed that the long-standing difference in agility between startups (or digital natives) and established larger companies is now “narrowing”.

Drawing from his experience working for several years in a traditional enterprise, and from his recent experience at SAP, Shahid Shaikh observed that digital natives are way ahead of the curve when it comes to adopting technology to better service customers. “There’s a lot of legacy that’s carried by enterprises,” he said. “They need to go through a huge change management process to get to the outcome.”

Shaikh emphasised the importance of the cultural mindset. “In a digital native or a startup, everyone is encouraged to do everything; that empowers them to learn more, to push themselves, unlike a traditional enterprise where you’re limited to the work profile that you’re working on.”

As the CTO, Consumer, at Freshtohome, a company that has managed to solve the complex problem of procuring perishable goods from across the country and delivering them fresh to consumers, Saurabh Odhya attributed the company’s success to its readiness to embrace data, and analyse it to enrich the understanding of customers and predict demand. “I think every company in the future has to migrate to being a digital native company because of the kind of advantages that it offers,” he said.

Tewari, who started a company that pioneered in-home medical care in India, added a word of caution. “What starts as a digital native does not remain a digital native five years down the road. Because technology changes, your approach changes, and you get wedded to the first ERP you developed.” He elaborated by recounting the time when Portea ventured into medical equipment. Despite knowing that SAP was the best system to choose from, the leadership leaned towards the in-house system developed for a different purpose a few years ago.

“That has been a big learning for us, as an organisation,” Tewari recounted, “That at each stage, you have to look at that point and say how can I solve the problem with the right tech, the best technology available at that point?”

It is no secret that startups end up losing some of their ability to innovate as they scale. They risk moving further away from their customers with a stronger focus on products, processes, and the bottom line more. But is this inevitable? The panel disagreed, stating that creating a culture where teams have the freedom to ideate and solve small problems on a daily basis can ensure that a company can continue to innovate at any stage.

Razorpay’s Arpit Chug warned startups about a trap that they must avoid as they scale: “When we start measuring revenue and EBITDA, do we stop measuring the extremely important early-indicator metrics?” While startups have to start focusing on their P&L as they mature, they cannot afford to lose sight of customer experience, customer complaints, and NPS scores, he said. Both financial and non-financial metrics have to be measured.

Expanding on what metrics are important to track, he acknowledged that it is possible to overdo “data-driven”, which can lead to analysis paralysis. He said that over time, companies have to start giving up on tracking some of the metrics. “There is no dearth of information," he added, “so you must always figure out what are the 8-10 most important things.”

Reflecting on how AI could impact innovation, all the panellists agreed that AI is not and should not be seen as a replacement for human expertise and intuition. “It is a means or a tool to get human creativity to the next level,” Odhyan noted. 

Chug said Razorpay does not think of AI as a cost-cutting measure. “AI should be focused on increasing operational efficiency, so it leaves time for people to think. That’s where creativity and innovation come from.”