Tag Archives: growth

Active government

Mariana continues her tirade against government capture by capitalist in general. It is interesting how her lessons for government applies perhaps overall to organisations and businesses just as well. That the point of the economy is not the profits but the purpose of the activities themselves. In short run, going for the profits may work but in longer run, it is knowing what problems you want to solve and working on them effectively that brings about the profits.

For governments, that is perhaps the strongest point. But when it comes to corporates, I still think that it is natural for the capitalists to hijack the agenda of the government, lobby for the focus on growth and highlight all of the social benefits of economic growth so much so that government keeps staring that way. The dominance of the economic agenda and how the goals of societies have become caught up with the principle of growth is perhaps something we should be discussing and considering as a society.

In Singapore, how we want to grow our society next needs to be considered. I think the Forward SG initiative was attempting that exercise through the idea of (re)formulating our social compact yet all too often, the logic of resolving the issues seem to boil down to certain initiative, formation of committees or some kind of organisation to look into things. Maybe it is not about adding components? What if it’s about discarding some of our existing things? Including our emphasis on academic merit?

We ought not lose heart but keep the conversation going.

Delays and promises

Ordered something and there was something wrong in the order? Delivery delayed? Put in a complaint and got a voucher code? What was the promise from the company when you first made an order? Was that promise broken?

Service promises have been escalating under the competitive pressure in the consumer markets. But these promises are increasingly costly to deliver consistently and cheaper to break.

Think about these platforms – they probably make about 10-20% margins so giving you a $5 voucher might cost them only $4 but you will end up spending $10 more potentially which allows them to cover another $2 and end up costing only $2 for the broken promise rather than having to invest in better systems or pay their service staff more to serve you better.

In long run, it does mean you pay higher prices, continue to get poor services and allow these business to remain in that bad cycle.

If we start taking promises by businesses more seriously, be less tolerant of poor delivery of service promises, we might just be able to create a better culture for business and for our future generations.

Learning from mistakes

The tricky part about trying to learn from mistakes is to overly focus on the mistakes rather than the lessons that are being taught by the mistakes. The lessons are often things you discover upon making the mistake; they represent new knowledge or information that you previously weren’t aware of. Yet we rarely dwell on those; because we’ve been told that finding those ‘reasons’ are actually just finding ‘excuses’.

A few good questions to tease out the lessons to learn would be:

  • What is something I did not know that I now know, having made the mistake?
  • What new relationship between variables did I discover upon making the mistake?
  • What are some patterns that should raise red flags for me in future?
  • What are false red flags created by this mistake that may cause me to be overly worried or cautions about actions in future? How do I tell?

Moving past blame and finding fault after discovering a mistake is not easy, but it starts with a mindset that is focused on learning, and moving forward. To release oneself from the emotional downward spirals, diving deeper into some of these questions is useful.

Industry chains and value chains

It was interesting to look at the copy and storytelling of this TWS’ piece sponsored by Ministry of Trade & Industry. The main message is around skills and jobs upgrading and the changing economic situation of a country that developed. I appreciated the empathy and recognising that the economic shifts do cause people to be left behind. But the idea of applying a one-size-fits-all solution to the broad economic shift seem simplistic to me.

The fact that the country embark on a kind of industrialism does not require all its people to do the same. When the UK was undergoing the industrial revolution, the French and Italians started forming artisan guilds and creating systems of artistic and craft authenticity verifications to protect and price their products better. When Frito-Lays or other big brands moved their potato chip making operations to developing countries, the developed European farms started making their own chips and marketing them at prices that are 4-5 times.

Sure, there is more technical components involved in the premium versions and probably more work went into the marketing, packaging and consumer experience. But this is precisely the sort of product development and market-growth thinking that Singaporeans need to move into the next stage of our development.

Manufacturing value-add and improvement in Singapore can be achieved by having more economic promotion, tax incentives and being able to gather a bunch of competent people able to participate in the production. That is because we are small and rely on MNCs investing in manufacturing capacity. And that MTI push for people to become cogs of such industrialism is based on this strategy. Yet as an individual, I don’t know how optimal this is. I find it simply makes us even more fragile and at the whims of the industrialism.

I’m not sure how worthwhile it is to develop stronger manufacturing base driven by our homegrown technologies and research. We do have that strategy in place and try to move in that direction as well. But we are stuck as second class folks in the game if we continue to encourage the majority to remain as cogs in that industrialism perpetuated by others.

Doing the Tough Stuff

technology

Organic Growth for companies. Most of our Singapore’s small medium enterprises grow organically despite the introduction of much Merger & Acquisition support from the Singapore government such as M&A Tax Allowance (which was enhanced following the 2015 Budget) . In challenging times, even larger companies may still want to conserve cash to be invested internally rather than go on an M&A ‘spree’ – that is if they believe that they will be able to emerge larger after the temporary downturn.

To the end of doing the tough stuff called sticking to organic growth, McKinsey has a couple of pretty good questions to ask oneself when planning strategically for value creation along short to long-term timescale.

  • How balanced is our portfolio? If we take our portfolio of growth and innovation initiatives and plot them against NOW NEW NEXT, how balanced does the distribution look? Do we have a perspective on which of the six “growth plays” would be successful in our business?
  • Who is thinking about disruption? Are we as systematic in NEXT as we are in NOW? Is anyone tasked with disrupting our core business—or are we leaving it up to competitors? What are we doing to explore additive business models?
  • Are we limiting our horizons? In exploring NEW opportunities, do we impose limiting mind-sets on how we define consumers, our category, or the addressable channels?
  • Do we use advantaged insights? Do we rely on the same data and insights as our competitors—or do we have a source of distinctiveness?
  • Are we agile enough? Have we been able to accelerate our time-to-consumer and time-to-market? Or are we still stuck with cumbersome and slow innovation processes?

Source: Now, New, Next: How growth champions create new value.

Ultimately, these questions may also start leading companies to consider acquisition in the mid to long term horizon where threat of disruption may force even very niche companies to place some hedging bets through incubation of related peripheral technologies.

Raffles’ Port City

history

In 1819, when Sir Stamford Raffles came to strike a deal that made Singapore a British colony, the population of Singapore is approximately 150. In 2 years, the population rose to 5000 mostly as a result of the establishment of the port providing ready access to population from other centers. By 1860 however, the resident population ballooned to around 80,800 comprising mainly of “temporary” immigrants coming from India, China as well as from the surrounding islands. This wasn’t purely luck or a matter of economic policy. Several things the British did was particularly important for encouraging the trade flows through Singapore and pushing the growth of Singapore into an important center for trade in the region.

Just 5 years after the establishment of Singapore as a free port under British rule, in 1824, the English and the Dutch brokered a deal to exchange Bencoolen (or Bengkulu in Sumatra) for Malacca. This was particularly important; the other port that was controlled by the British in the region was Penang, which the English established since 1790; the location was not that popular since ships from the east will still have to pass through the Straits of Malacca before reaching Penang.

With Penang and Singapore under the control of the British, the rivalry between the English and the Dutch in the region meant that Dutch control of the Straits of Malacca through possession of Malacca was a significant bottleneck. The Anglo-Dutch Treaty of 1824 resolved the rivalry (somewhat) by allocating spheres of influence, opening up the entire chain of territories – Penang, Malacca and Singapore to British control and thus greater incentive for the Royal Navy to maintain the safety of the trading ships passing through the Straits of Malacca. The Dutch Navy was given the same responsibility on the side of the straits closer to Indonesia. Before that, piracy was extremely rampant along that straits and the numerous islands around provided safe bays for pirate ships. Stepping up security in these waters gave way to higher flow of trading ships thus facilitating the boom of the port of Singapore.

By 1825, the population of Singapore went past the 10,000 mark. And in 1826, the British East India Company officially took on Singapore as a colony of the British Empire after John Crawfurd signed a second treaty with the Sultan of Johor and the Temenggong, which extended British control of Singapore over to the entire island instead of just the port. The formation of the Straits Settlement consisting of Penang, Malacca and Singapore happened in the same year with Penang designated as the capital. In 1830, the capital was shifted to Singapore, further entrenching the important institutions of British governance in Singapore.

The decisions made by British to build up and enhance the value of Singapore and the injection of top civil servants and managerial talents into Singapore due to its designation as capital of the Straits Settlements (and subsequent establishment of the Straits Settlements as a crown colony in 1867) played an extremely important role in shaping the economic, political and administrative environment which proved extremely favourable to Singapore. The strength of governance has always been an important quality our growth has been attributed to – and it seems to have dated back way before the country’s independence.