High Tech / High Touch and Business
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The organizers got together a very distinguished and thoughtful panel to discuss how Malaysian businesses may transformed to fully exploit the opportunities of the New Economy and assess the implications of High Tech/high touch for Business.
Many issues were discussed. Among them:
- Adoption of Technology
- Challenges of a Talent Pool
- Chasing Dreams and a Different Kind of Wealth
- Stock Options and Funding Start-ups
- Finding the Adventurers
- LARRY: Larry Gan, Managing Partner, Andersen Consulting, Asia
- GERALD: Gerald Lim, CEO of IDM, and a homegrown dot.com company
- WAI: Cheong Yuk Wai, CEO of Mybiz, Malaysiaís e-commerce platform
- BEE: Chok Kwee Bee, a merchant banker/venture capitalist
- CHAIR: Foong Wai Fong, Author, The New Asian Way
Highlights of the discussion:
CHAIR: How has high technology transformed Malaysian business? How well is Malaysian business position to exploit the opportunities offered by the Internet platform?
WAI: We can look at this issue from two aspects. One is the drivers for high technology; how do we access them, how do we bring the capabilities and knowledge from practitioners into Malaysia. The second is how do we use this technology and learn from it.
On the area of knowledge first, this is not just issue facing Malaysia but also Asia as a whole. Malaysian businesses have been reasonably average in the use of technology for efficiency, using it as a tool. The part that technology is driving the new economy is using technology to compete. In this aspect we are faring quite poorly. There are many reasons for this. One of the reasons is we donít value capabilities. Asian society as a whole value relationships, status, titles, but not capabilities. We value influence; we hardly value capabilities which is one area reduces our ability to look for new ways to compete.
Coming back to the usage. You must first to have a culture of wanting to use technology, with the intent to learn how to use it effectively. We probably have the know-how but not the know-why. We know the technology is fantastic but without understanding why we are using it - understanding the fundamentals behind the technology. That also limits the benefits we have gained from technology.
We see a lot of this replicated in many areas, from mobile phones to computers, and not just the hard technology, but also the McDonalds franchises. So we copy from culture to mindset of the young, to even to the mindset of the more successful. The education system doesnít encourage the adoption of technology or adoption of how-to-compete. It is more about taking it and use it, vs. how we I challenge it, question it, break it down, and reapply it in a new way of doing things. In this area, I see a big gap.
CHAIR: Wai has pointed out issues concerning the slow adoption of technology. There isnít a culture in this country on innovation, of doing things in the new way.
LARRY: Before you begin anything, the key thing you need is a conducive environment. For Malaysia to leapfrog ahead and be among the worldís leading players, it needs to have the right environment. The MSC was originally set up to fulfill that purpose. At its inception, that was thought leadership at its best. It was pioneering in its boldness, and to a certain extent, quite innovative for an Asian country to embark on such an initiative that has captured worldwide attention. The question we are faced with today is whether that environment is still conducive, and if not, what steps are we taking to re-create it.
We operate from a trade standpoint, in both domestic and global economies. We know who our international suppliers and buyers are. A lot of that trade is premised on very old business traditions coupled with very old demand and supply conditions. All these things are changing.
Secondly, Malaysia has embarked on an aggressive industrialization program, [and this is both] good and bad. By participating in a lot of manufacturing activities we are asking people to remain deep-seated in an old traditional model.
Thirdly, our people. Malaysia has no shortage of talent. We must create an environment for these talents to flourish. We have to help them and link them with the global community. Of course therein lies the issues of freedom, the age-old issues of citizenship and immigration. We have to continue to create an environment to attract talent inwards in order to help us to very cheaply upgrade our intellectual capital.. .
What happened with the Asian crisis and the currency depreciation, have in fact driven these talents away. They simply found it more lucrative to work down south, in Hong Kong or to return home.
CHAIR: Everyone is concerned with the talent pool. We are losing and we are not attracting. And we have come to a point where the old wealth must be reinvented with knowledge, and we just donít have the people. What should we do?
WAI: The challenge of the MSC is execution. The idea is not flawed. In coming up with the idea, it was incredibly well done. It captures the imagination of the entire nation. The awareness was well done. Now, to execution, it is all about implementing that plan. It is all about getting the pool of people to drive it. Also from the point of view of creativity and crossbreeding sense, an organization or country has little respect for capabilities or for intellect. Then you will find it very difficult to value this capability, very difficult to put a value on. When you have that situation, how can you bring brains in? And the knowledge economy is all about knowledge and if you donít have the protection, how are you going to create?
LARRY: We are operating in a very unstructured environment. I would go as far as to call it a state of chaos. Each step you take along the way you think you see some form of structure, but really there is none. It is in this environment where we have to surrender our dependencies on government and to take the lead for ourselves. The traditional environment where the government takes the lead will change. These days, the country is dependent upon the man on the street or the private sector to make this change happen.. Such an environment requires people to respond at e-speed. What the government needs to do now is to figure out how to let itís citizens have the freedom, to access resources, whether it is human, monetary or knowledge capital. If you need talent, you must be able to get them. Because three to four years ago there was a program like the MSC, you can now bring skilled workers into the MSC. The man on the street must be allowed to be the next Bill Gates. No amount of programming or plans will create these individuals. Our role is to very quickly recognize and reward them. The reason why the Internet took off so fast in the US and became so rampant was partly because the windfall each of this pioneers received when they listed. The amount was so outstanding that it captured the imagination of the entire nation. In Malaysia we have yet to have any windfall. Only a few have managed to raise some money through some high valuations, but before you know it, even they in no time will be off to Palo Alto or Hong Kong. There is therefore a need for reward reform. Rewarding people for risk, boldness and even silliness.
WAI: How do you measure rewards? We often do that by material things. Someone drives a big car. Sometimes we equate too much wealth to face. It is all about face - ďWe canít be wrongĒ and ďI have made no mistakesĒ. We donít reward risk taking because we donít allow it. We now have a situation cultured in the way that business is run and in the way the country is run which determines the risks and the rewards. Unfortunately the new economy doesnít work that way.
CHAIR: It sounds like both of you are advocating a cultural shift?
GERARD: I agree with Larry, we just donít need programs or structured way to tell us this is the route. The man on the street wanting has to take charge. I want to highlight the point on reward; in Malaysia we havenít got any windfall just yet. First we must understand the whole notion of the Silicon Valley to begin with is the whole culture thing started way before the present day frenzy. And that started the progress of computerization, hardware, software, and the Internet came later. The reward is not about the material things; not the early pioneers have in mind. What they were really pursuing was a dream. They were basically chasing a dream, which many people today still do. Unfortunately or unfortunately some do chase money. In all intent and purpose, some people do chase dreams. I can speak for myself, when I started my company 5 years ago; we were chasing a dream. And to certain degree, we have achieved what we set out to achieve. Along the way we are making some money, and money is basically there. But money was not what we were chasing.
There are people who formed and structured their company to make an IPO. That is the goal of some people, their first goal is to make money. There are those companies out there. But there are also companies out there formed to improve our way of life. Their basic intent is to create something new.
CHAIR: GEís CEO Jack Welch is not for Stock options and Management Guru Peter Drucker also warned against the danger of stock options. The drive to build high tech companies today seems to be motivated by stock market windfalls, at least that is the appearance of the stock market frenzy. . What are your views on stock options?
What advice do you have for Malaysians, old wealth companies, those who made their money from commodities, perhaps even from privatization projects. What can they do to promote internal entrepreneurship and capture the new opportunities?
What should be their attitude towards funding start-ups? Kwee Bee would be the perfect person to take this as she has been working with so many old wealth companies.
BEE: More than 50%of the companies on the KLSE have stock options for their staff. There are pros and cons about Stock options. You give it to the wrong person, they stay on forever, and they donít work. Malaysian companies are not selective in giving stock options. And that has to be change. They have to be more selective. Stock options are important to get and keep good people.
How companies must change. First they must change their mindset. A lot of people are still doing their business in the old fashion way. Their thinking process must change. The other day, I was reading about [the American Company Gateway, how they pick up their top 100 executives, put them through an assessment and change them. I am not sure whether they are any companies in Malaysia daring enough to do that. In this new environment, everything is lean and mean, just between you and the computer no more layers to hide behind. Every manager must show that his or her ideas work.
LARRY: I like to latch on your word DARE. Look at our big banks and our big utilities companies. The question I always have is WHY CHANGE. If you know that your life is threatened you would do something out of a need. That is not courage. If there is nothing that is threatening you, then why change? People are more risk averse here for a variety of reasons. We have operated under protected markets for a long time, and we have had a decade of golden economy. Even the financial crisis now seems more like a blip, short-lived, than a real lesson. So you are right to use the word dare. The question I have is how do we get the message out there, that we must change or else we will perish.
BEE: Maybe we have to change the CEO, if they are not visionary and forward-looking.
LARRY: If I look at it from my earlier point about creating the environment, I think Malaysia almost has to turn itself into a jungle. We have laid nice roads; we have created a lot of regulations, a lot of very old industrial economies. But today we should throw them all out and let anybody who wants to be a property agent or a developer, anybody who can do anything, to have a free rein. If we realize that if it is too dangerous, then we figure out a new way to regulate and control them. In our own jungle, allow trees to grow, grow on hard roads, and allow houses to be uprooted and so on. . Once you turn it into a jungle, then the law of the jungle will take precedence and It will then become a case of survival of the fittest.
WAI: Have you visited my website? My theme is the jungle.
LARRY: So the environment that we have to create is that of the jungle where the old rules of business no longer apply. We are using old thinking to protect ourselves in the new economy
BEE: And it doesnít work. I agree, we have far too many rules. And it takes too long to get things done. This kind of culture is no longer conducive in todayís high-speed business environment.
CHAIR: But the people who have command of the old economy, whether it is the owner of the old wealth or the banks. And we have to reinvent in time.
LARRY: We need to create a protected jungle, with national boundaries. Within this jungle you allow anything to happen, to discover new things.
WAI: You have to create a jungle environment. The concept of the jungle is not about space. It is not tied down to buildings. Not physical, but a concept, it is the mind. When people are close to starvation, close to be attacked by animals, yet watched and cared for from the sideline. That is the kind of protected jungle. The MSC, have the right direction by the wrong focus. GEís Jack Welch talked to his executives, ďgo destroy your business and rebuild.Ē When information is filtered down, and not information triggered upwards. And this culture is a problem.
CHAIR: The new economy is about dreams, allowing people to fail and let the young people try. We seem to have a different set of business values here; short term, fast return, profit driven. And many people donít even understand how the new economy works in the first place. What do you all think?
GERARD: It boils down to peopleís values and what they value. How people value assets and value of ideas. The old economy doesnít value ideas. There is neither strong culture nor concept on intellectual property; there is no respect for intellectual property or ideas. The whole culture in the area we live in doesnít quite position ideas like other more successful countries. There is no magic wane to transform this overnight. But if we donít understand this, then we cannot move forward. Then the idea of net worth, how do we see that play out in the new economy, the CEOís role etc. Rightfully today many countries are being valued at ridiculously high amounts, especially the dot.coms. That is because they are being valued by the old ways, and not by the ideas and potential.
BEE: I thought they are being valued by their ideas.
CHAIR: The market does.
GERARD: Not the accounting system. To highlight a point, when we go to a Venture Capitalist, the one thing they really look out for is the Management team. If I have Larry Ellison on my team, if I have the great people who run the successful dot.coms, I will get a good valuation on my company.
BEE: It boils down to credibility, isnít?
GERARD: The old system doesnít look at things that way. The value creation is not just about money alone. It is about what we can be.
CHAIR: How do w e get the old wealth people to see this value?
WAI: Getting away from money makes it too easy to block the thinking. But donít measure the money in the way we do today. In a traditional business you cannot leapfrog. You work on a moving average. But if you look at YAHOO. The valuation is different. If you just purely look at the valuation system today, you cannot justify their values. You have to look at it in the context of a different set of value system. People must learn to distinguish the noise from the real ones. When we talk about a start up, they have to justify credibility by ideas, and it becomes extremely difficult because there is no historical makeup to support that. To find out the real ones, the only way is to assess whether they do what they say.
BEE: So you have to stay with the company for a while.
WAI: For start-ups, you canít go and review them every three years. You can only judge them in a year to see the quality and ability of their execution. The results have to come - watch the execution.
BEE: In Malaysia, the rules and regulations, it takes too long to get things approved. And this must change.
WAI: If a start up company said that it would do this within this schedule. You gauge a start up by their commitment and what they do. You pay for that kind of capabilities - people who are able to declare what they would do and do them.
LARRY: I agree that ideas are free, but execution is the key. But let me try to put this in another way. People do things out of need. Adventure is different from need. Letís take the example of Chinese immigrants. They went to start life abroad, and set up mini China towns of the world. Some were chasing dreams; but many were doing it out of need. That need will come to Malaysia at some point.
CHAIR: Can you put a time frame on this?
LARRY: It will come sooner than you think. Now Gerard is talking about dreams. He is talking about the adventurers. Like the old Columbus story. When you find new land, you find new wealth. Queen Elizabeth gives the charter, which is an endorsement. In this kind of world, there are some people who can give endorsement. For example, if Goldman Sachs thinks that your idea is worth10 million, then you can take that and peddle it for that value. The endorsement comes with seeking out the adventurers. We have to create the adventurers. How did the US create adventurers? Very simple. In the US, when the Stock price goes up, a lot of the money resides within the company, not like here where the paper money rest with the shareholders.[It is like] when they raised money for Columbusí ship, it was to enable him to make the trip. Columbus did not say, ďthank you very muchĒ, and then went out to hired a professional manager to run the trip. Instead, he took on the mammoth task himself, based on his own conviction. Thatís the big difference. We need to be able to identify the individuals who are looking for an adventure rather than those only willing to make a fast buck! Thatís our challenge.Futures Dialogue "HIGH TECH High Touch: Your Definitive Guide to Business & Personal Success" featuring world reknown futurist John Naisbitt will be held on March 14, 2000 at PWTC, Kuala Lumpur. Registration details and group incentive, contact RAYMA Management Consultants Wendy Song at tel: (03) 7044-666, fax: (03) 7044-484 or e-mail: email@example.com