LIVE FROM RISE, HONG KONG: App-driven startups increasingly face significant obstacles in the form of regulations, while incumbents are learning to innovate by partnering with traditional rivals.

This was the key message in a panel session outlining major challenges and new initiatives featuring executives from Jakarta-based ride-hailing app Go-Jek, and Honda R&D Innovations, the US-based arm of the Japanese car company responsible for fostering new collaborations.

Piotr Jakubowski, CMO of Go-Jek (pictured, centre), said its biggest challenge is trying to balance the way innovation is outpacing regulation.

“We’re innovating to make our customers’ lives better and help them save time, but we’re finding that regulation is not keeping up with the speed of innovation,” he said, adding the issue isn’t limited to Indonesia – it’s a challenge worldwide.

Indonesia’s Ministry of Transportation recently set a price range for ride-hailing services as well as limits on fleet size.

Mobility options
Nick Sugimoto, head of Honda R&D Innovations (pictured, left), said apps and smartphones have created more options for people to move around, making ownership old-fashioned, which of course is disrupting Honda’s traditional business model.

He said four key trends are shaping customers’ transportation choice: increased connectivity; the move to electric vehicles; the sharing economy; and AI. As the world’s largest producer of engines, he said it’s a huge challenge for Honda to transform from a combustion engine base to electric.

To cope, he said open innovation is the key. In 2016 Honda announced a partnership with Google’s Waymo on driverless technology for chauffeur or ride-hailing services.

Sugimoto said many colleagues were scared because they see Google as a competitor: “We [the R&D team] saw things a bit different. We’re a car company; we’re not good at building software. Google by far is more advanced, so why don’t we team up.”

Honda hasn’t focused on developing technology for ride-hailing vehicles, which have a different design and use case: “That is a new business for us and the partnership could be a game changer.”

Beyond ride-hailing
Jakubowski said Go-Jek is much more than a ride-hailing app. It’s an on-demand platform serving 18 verticals covering everything from transportation and logistics, to food delivery and ticketing for events.

However, it is best known for its ride-hailing service, with roughly 400,000 driver partners operating motorcycles and cars across Indonesia.

The CMO said Go-Jek does not plan to expand outside of Indonesia, a nation with 260 million people, of which only about 110 million are connected to the internet, offering a huge addressable market which is untapped.