How Ovo took off with a corporate innovation model that could challenge venture capital

When Lippo Group, one of Indonesia’s most powerful family-owned conglomerates, brazenly launched its ecommerce venture Matahari Mall in 2015, only to fail in short order, few thought it could bounce back so quickly.

But rebound it did, thanks to its payments venture, Ovo. Spearheaded by Lippo’s 33-year-old heir apparent John Riady, the venture went from nothing to become Indonesia’s leading e-wallet within three years, capturing 37% of the total digital payment transaction values versus rival GoPay’s 17%, according to internal data from the country’s central bank.

Photo credit: KrAsia

How did the conglomerate turn things around? With Matahari Mall, Lippo wanted to retain control over the venture, so it rejected a sizable offer of outside investment for a huge stake. But with Ovo, the company took a different tack: It readily gave up a substantial chunk of the e-wallet business to Grab and Tokopedia, sources familiar with the situation told Tech in Asia.

Ovo saw its biggest explosion in users when it was integrated into Grab, the sources added, validating Lippo’s new approach of doing whatever it takes to offer customers what they want – even if it means getting a smaller percentage of a much larger pie.

Another difference from Matahari Mall was how Riady had opted to collaborate with an external party, Boston Consulting Group Digital Ventures (BCGDV), to develop the idea, prototype, and go-to-market plan for Ovo.

BCGDV is a relatively new arm of the well-known management consulting firm. Founded in 2014 as a separate entity with its own partnership structure, it’s a cross between traditional consulting and venture building. Instead of just providing guidance, it rolls up its sleeves by getting involved in product creation. And to that end, its team includes not only jet-setting strategy consultants, but also product designers, programmers, data scientists, hiring experts, and other specialists.

The BCGDV model presents an alternative for large companies that want to innovate from within. Traditionally, such corporations have pursued one of a few paths: starting or investing in a venture capital firm, creating some kind of startup accelerator program, or building the product themselves.

BCGDV handles the full scope of launching a startup, including ideation, user research, prototyping, marketing, and hiring – depending on what the client wants or needs. In exchange, the firm charges a management fee or may co-invest.

The hiring bit is crucial. BCGDV helps to put in place a founding team to take charge of the project before handing it over to the client. Typically, such hires come from outside the corporate partner – that’s because the odds of finding entrepreneurs with the right skill set and mentalities externally are higher. In Ovo’s case, its CEO Jason Thompson was previously the head of Grab’s payments arm.

Jason Thompson of Ovo. Photo credit: Tech in Asia

BCG isn’t the only consulting firm with a venture builder. McKinsey & Company started Leap – which also incorporates a multidisciplinary team of designers, engineers, and more – about five years ago. However, it could not immediately respond to questions about its projects.

As such, when it comes to staking out new territory in Asia, BCGDV appears to have the edge at the moment. One of its partners is Hanno Stegmann, the former CEO of startup builder Rocket Internet’s regional joint venture, Asia Pacific Internet Group.