Are Filipino-Chinese businesses capable of innovating?

That’s what I had to wonder after being invited to moderate the Anvil Business Summit, a biennial event organized by the Association of Young Filipino-Chinese entrepreneurs.

I hadn’t lived in the Philippines in more than 10 years at this stage, and this was my first real reinduction into the community.

More than 500 delegates filled the grand ballrooms of the Marriott to listen to five speakers talk about innovation and growth, under the theme “Giants: Level Up!” Most were bright-eyed and ardent, eager to pick up some insights and a new contact or two.

But here’s the thing: after working the rounds I realized very few in the audience had ventured far beyond the path laid out for them by their parents.

Into the palm of my hand they pressed business cards trumpeting enterprises in construction, import/export, food distribution, printing — all legacy businesses that, by the sounds of them, hadn’t changed much in the decade that I’ve been away.

The hardware enterprises rely on the same band of customers on speed dial. The retailers are still stacking shelves upon shelves of inventory, a large chunk of which gathers dust before it’s sold off. And the marketing strategies clearly belong to a different era.

I get it. The ultimate goal of any family enterprise is to preserve wealth for future generations. That means minimizing downside risk at every turn. My own parents harped on endlessly about that.

But see, this time really is different.

First, because we live in a part of the world where borders are just about to truly open up, and second because we live in a time when automation — robots on the factory floor! — is a reality.

Renowned innovator Dado Banatao, one of the speakers that night, tried to bring home this message. That he grew up walking barefoot to school in Cagayan Valley and overcame the odds to become a success in Silicon Valley is the stuff of legend. The chipsets he developed are found in every personal computer, barring exaggeration.

“Why do we only consume and not manufacture anything of substance?” Banatao asked the audience. We may now be the second fastest- growing economy in all of Asia, just behind India, but that growth is meaningless without real, honestto- goodness innovation. The kind that makes the world sit up and take notice.

We only need look at our exports data to know the world can easily live without our products: 16 straight months of decline, with shipments to all our major trading partners

in the red. A new sustainability index by the Hinrich Foundation found that the Philippines largely skipped the manufacturing step, and went straight from an agriculture- dependent economy to services ( read: BPO). The downside of that is we churn out a lot of low- productivity, low-value output.

Indeed, no country has ever made the leap from third world to first without investing heavily on research and development — so why is R&D more often than not the first to go in times of belttightening?

Banatao is now on the other side — he’s made something of himself, built up a legacy, and is giving back via his Philippine Development (Phildev) Foundation, which sends deserving students to top universities.

His story, he says, can be the story of every Filipino.

Edgar Saavedra, one of the other speakers at the Anvil Summit, stood out to me as well. Saavedra is the cofounder and president of Megawide. He and his partner struck out on their own in 1997 — right in the heart of the Asian financial crisis. Where does one find the gumption to build a construction company from scratch during a recession? Saavedra said youth played a big role — but so did backbreaking work and the smarts to adopt new technologies like precast concrete. In the first six months of this year alone, Megawide generated P1.8 billion in profit.

The truth is that real innovation hurts. It’s risky, it’s difficult to explain to people, and it often costs money.

But here’s the message from these guys: if you’re in the driver’s seat of your family’s business, you owe it to future generations to begin looking under the hood now.

McKinsey calls it moving away from linear logic — take, make and dispose — and into a more circular approach. That is, treating supply chains as circles, where you “create new value by looping products and materials back into the production process after they’ve fulfilled their utility.”

At the heart of it, that requires embedding new ways of thinking in your corporate culture.

Because if there’s one carryover theme I’ve seen from covering business in three countries, it’s that the SMEs who think they can afford to stand still, are often the ones that get left in the dust.

We may now be the second fastest-growing economy in all of Asia but that growth is meaningless without real, honest-togoodness innovation.