Collaboration Key to Digital Transformation in Mexico
STORY INLINE POST
Q: What market is the Atomic88 business model intended for?
A: Alibaba Group's Global Digital Talent Network created Atomic88 in Mexico to share the positive impact of a new business paradigm of digital transformation with Mexican companies; promoting exponential growth, fostering entrepreneurship and supporting inclusive digitization for poverty alleviation. In Mexico, our objective is to support all companies with their digital transformation process, but we also take great pride in our social projects, digitizing vulnerable communities In Mexico.
We offer acceleration programs in digital transformation such as Helium, aimed at digital economy leaders and decision-makers, which at this time would benefit from Alibaba Group’s insights. Moreover, we offer the GDT (Global Digital Talent) certification. This is designed for small and medium-sized entrepreneurs at any stage of growth and for digital transformation managers working in SMEs.
These two projects complement the work we do in our digital villages, which is our project with the country’s state governments to empower communities with a commercial vocation but that have been historically neglected due to their inability to use digital platforms to compete against large corporations beyond their community. At this time, we have two digital villages in the state of Guanajuato dedicated to the producers of cajeta in Celaya and the artisans of molcajetes in Comonfort, as well as producers of leather and footwear in Leon. In December 2019, we signed an agreement with the National Governors’ Conference (CONAGO) to replicate this model in the 32 states of the country and we are currently working to digitalize communities in Queretaro, Jalisco, Chiapas, Sonora, among others.
Q: What opportunities did Atomic88 see in the midst of the COVID-19 crisis?
A: It is difficult to speak of an opportunity within a crisis. We are all aware that it has been a difficult time for all of us. However, we have been offering talent and digital skills training for some time, which will allow Mexico to move up the base of the innovation pyramid.
Among the effects of the pandemic has been the acceleration of companies’ digitalization processes and of people’s relationship with technology. Changes we expected in the next five or 10 years, are happening now. E-commerce is expected to grow 60 percent just in 2020. While there are companies that have grown despite this situation, only 10 percent of Mexican MSMEs have a website and less than 3 percent of these companies are selling online.
The questions then become, where is this growth being generated and is this transformation benefiting the people who need it most? We understand that the growth of the fintech sector in Mexico is reaching users who were tired of traditional banking but it is not reaching people who are not banked. Online supermarkets are reaching people who were tired of carrying bags but they are not reaching people who go to markets.
We have raised these questions over the past two years and we believe that it is important to consider that there are other countries that went through this process of digital transformation before us. There is much we can learn from them. However, it is important as well to remember that for the base of the pyramid to grow, so must large companies that generate wealth, employment and well-being.
Q: What is Atomic88's approach to the Mexican market?
A: With Atomic88, we seek to fast-track Mexican companies towards their own personal goals of inclusive digital transformation, through access to Alibaba’s experience and insights. With an intensive training program, experts from Alibaba Group can show companies their path toward an open, integrated and intelligent digital business ecosystem.
In 2014, Alibaba debuted on the New York Stock Exchange and raised US$25 billion, earning it the title of the biggest IPO in history. Moreover, Ant Financial, Alibaba’s financial arm and currently the world's most valuable unicorn, expected to beat the world record again with a valuation of US$350 billion, expecting to raise US$35 billion in its double IPO in the Shanghai and Hong Kong stock exchange, allows people to receive instant loans through a digital wallet. Likewise, Alibaba also has the Alibaba Cloud, which is the third biggest cloud system in the world; Cainiao, the largest smart logistics aggregation system in the world and and Xunxi, the most advanced system for smart manufacturing. We brought all this expertise to Mexico to integrate a digital economy ecosystem of leading Mexican companies. We are working hand in hand with companies that could be considered Alibaba Group’s competitors and we even provide the necessary tools so companies can access and use platforms such as Mercado Libre, Rappi and Canasta Rosa.
We do not have local platforms operating as Alibaba Group in Mexico yet, so it is important to work hand in hand with the country's digital economy leaders. For example, there are Mexican companies such as SkydropX or 99 Minutos that are using technology to improve smart logistics in the country to improve the lives of entrepreneurs.
Q: What other lessons can companies in Mexico learn from Alibaba Group?
A: If we consider Alibaba Group’s transformation process in Southeast Asia, we can recognize the concept of creating collaborative ecosystems where direct or indirect competitors can generate added value through cooperation. In Mexico, Rappi and DiDi joined forces to work with the municipality of Garza Garcia in Nuevo Leon when the pandemic hit the country. Their objective was to quickly digitalize all restaurant businesses in the area so they could continue operating during the crisis. This type of action is what we seek to foster through Atomic88.
The creation of collaborative ecosystems is essential and at the end of the day, they are intelligent work systems. The use of digital platforms and exponential technologies such as artificial intelligence, data analysis and machine learning are necessary mechanisms for the day-to-day operations of Mexican companies seeking a digital transformation. It is urgent for us to start integrating our companies' operations and no one but the Alibaba Group has done this so successfully.
Q: Is a change in mindset necessary among Mexican companies to adopt a collaborative system?
A: I think companies are beginning to find out. The pandemic forced us to see allies everywhere. At the beginning of the pandemic in the country, Jüsto, a Mexican online supermarket, allied with Urbvan to be able to ship its products. That kind of news means that we are on the right track to understanding that we can generate more value when we work together.
As for the digital economy, I think it is too early to think that we are ready to wage war between technology companies. The digital technology market in Mexico still has a huge opportunity for growth, companies should not be fighting for a slice of the pie. Right now, companies have to get together, grow the pie and then we can talk about distributing the slices. We must grow the market before we divide it.
Q: What challenges does Atomic88 see for the growth of the digital economy in the country?
A: One of the biggest challenges is to find a way for innovation and technology generated at the peak of the pyramid of the Mexican digital ecosystem to reach the bottom. Sometimes, companies make enormous efforts to build their app, marketplace or webpage and their users do not use them because they do not relate to them. Mexico has tried to follow a digital transformation model probably inherited from the US or from European countries where the digital gap is almost non-existent.
In Mexico, if innovation is generated only at the top of the pyramid, whether by large companies, academic institutions or the government, the gap between them and the bottom of the pyramid becomes larger. Companies understand less and less about digital transformation, they feel distanced from it and think that it is not within their reach. We seek to create a force that pushes from top to bottom and vice versa, just as in China a few years ago.
Q: What is your strategy to approach companies still on the fence regarding digital transformation?
A: Sometimes, people think a digital transformation is either too expensive or too complicated. It is important to understand that exponential technologies give access to platforms, mechanisms or tools that were previously only intended for the budgets of large companies. Technology allows us to bring these opportunities to all businesses in a less complex way.
The first step toward the digital transformation is to digitalize the way we work. The pandemic prompted companies to use new technological tools to hold meetings with their customers, which they thought would not be possible at first. Now, we recognize that virtual meetings provide many tools that we did not have before. Technology should not be thought of as a replacement for physical experiences but rather as a way of integrating technology and knowledge.
Atomic88 is Alibaba Group's digital business accelerator. It provides Mexican companies an accelerated process of digital transformation with insights from the Chinese digital giant