The strategy behind Grab’s rise in Southeast Asia

As Grab prepares for its history-making US listing by merging with a special purpose acquisition company (SPAC), numerous profiles of its CEO Anthony Tan have been published. Several features describe a man who works so hard that he reads business case studies while exercising.

In Grab, Tan leads a sprawling multinational in one of the world’s most complex, fragmented, and increasingly competitive regions. Studying how other companies deal with adversity is one way he stays ahead of his peers.

History rhymes, after all, and when solving today’s problems, the past can often be our best source of inspiration.

There’s one particular business case that Tan surely must have come across, as it has enough parallels to Grab that it could act as a compass for his decisions.

If he read it while running on the treadmill, one can imagine him stopping the machine to take notes.

To better understand the rise of Grab and how it came to dominate Southeast Asia, we must first take a brief detour to learn about a man named Sam Su, the fast-food wars in China, and how Kentucky Fried Chicken (KFC) became a beloved brand in the Middle Kingdom.

Hyperlocal lessons from China’s fast food wars

It’s 1987, and China has just begun to open its market to the world.

When a large new country like China opens up to foreign investment, multinationals try to estimate its total addressable market and make a call on whether the juice is worth the squeeze.

Sensing the opportunity, the leadership teams of McDonald’s and KFC plotted their entry. China’s fast-food wars had begun.

One country, two go-to-market strategies

McDonald’s approach was a tried-and-true strategy based on a series of answers to a set of rational questions. In which cities would our business model be viable? How do we maintain our high standard for execution so far away from the mothership? How can we mitigate risks to give ourselves a margin of safety?

And so, the rollout of McDonald’s unfolded in a predictable fashion. Its first restaurants opened in large commercial centers, it flew in executives who had launched the brand in other countries, and it kept their menu largely the same.

KFC and Sam Su, who was the fast-food chain’s acting general manager for China at the time, had a different approach since its strategy was founded on the answers to a different question:

Grab’s first act: Using hyperlocal strategies to go on the offense

How to compete with a global giant: Solve hyperlocal problems with urgency

How KFC became part of daily life in China

Grab’s second act: Hyperlocal as a defensive strategy

Where does Grab go from here?