Glocal Practices of SMEs

31 Dec 2007

Into my 3rd year and 4th article writing for The Edge on the best practices adopted by businesses (that SMEs can learn from), I am now happy to share my experiences with a different perspective since I have taken on the role as Regional Executive Director (Asia Pacific) of Horwath International with effect from April this year. I now travel 3 weeks in a month, and apart from the times in airports and in airplanes, I actually enjoy meeting people and seeing “New-Age” businesses at work. Although different in their ways of achieving success, the common thread of the examples below is their unique ability to change and evolve with the times, in order to survive and/or become simply better. Bruce Barton spoke along the lines of, “When you are done with change, you are done!”

Intense Competition Forces People to Work In Funny Ways

In my travels, I often witness intense aggression and innovation in countries that are populous, tough and competitive, compared to Malaysia where life is relatively contented and undemanding. Jim Collins said that Good is the greatest enemy of Great, and sometimes the good life in Malaysia prevents us from stretching potentials to touch the higher reaches of greatness. As an example of an eye-opening experience, I observed “outsourcing” of a different kind recently. In India, I met several professional firms that professed to employ 300+ people. When I visited their offices, there was no way the 2,000 sq ft. (or less) office space could accommodate their employees. When queried, the owners told me that their workforce is all “outsourced” – i.e. they needn’t come into the office at all. All work assignment, training, briefing, and handing out of weekly wages are performed in a rented school-hall every Saturday! A month later, I saw the same novelty (if you can call this so) in Japan. With high rental costs, a Japanese firm which had “300+ staff” also practised this: its office in expensive downtown Tokyo only had very nicely appointed meeting rooms (and a pantry to serve drinks to clients) – with hardly any rooms allocated for directors, partners or staff! However, all the Japanese and Indian firms had supreme IT infrastructure that would allow any authorized employee to work from anywhere. I was told that they save > RM 1 million in high rentals this way…

In Hong Kong, the first business tool that a budding entrepreneur buys is a mobile PDA – as that’s all he needs to conduct business. He doesn’t even think about renting an office as it is totally out of the reach of many nascent entrepreneurs. Interestingly, when my parents first brought me to Hong Kong 30 years ago, my dad addressed the Sikh gentleman greeting us at the hotel door as “Baiyeee”, which is a derogatory colloquial term used only in Malaysia. Of course, the Sikh gentleman had no idea what it meant, as he was born and bred in Hong Kong with a much better command of Cantonese than any of us. These days in cosmopolitan cities, race distinction is blurred and people speak all languages. Life is indeed tougher, and entrepreneurs respond to these challenges in all sorts of innovative ways. It’s really business that is back-to-basics, without any qualms, preconceived notions, or complicated traditions. To survive in today’s world, the fast leapers are those who speak more than 2 languages, embrace the “just do it” approach and simply excel with greater “streets-manship” – i.e. being totally streetwise.

ISOS: Model New-Age Business

This year’s “Top Award” goes to a company known as International S.O.S – which, in my opinion, is a truly successful, global and “new-age” business. In brief, ISOS provides medical assistance, international healthcare, security services and outsourced customer care – employing 5,000 people in 70 countries. It is one of those companies that you need to look twice to determine what their unique proposition is, as at first glance, it doesn’t sound that special. So what is so unique about this company? The company was founded in 1985 by a French doctor who was working for the French Embassy in Jakarta. He realized that medical facilities and services in developing countries were not as good as developed nations, and immediately saw a golden opportunity to bring world-class medicare to developing nations.

Working in some of the most inhospitable places on earth, ISOS offers international standards of medical care where it is not available or where cultural and language barriers exist. From a base in Singapore, they grew into a Pan-Asian corporation covering all of Asia Pacific by 1995, and now, serve the entire world. They are an “asset-light; asset-right” company where they avoid locking up unnecessary capital into traditional assets. While they can fly your employee or family out of a crisis in 24 hours, they don’t necessarily own the airplanes. While they have a team of doctors and nurses, they don’t own hospitals. However, don’t get me wrong: ISOS does invest heavily into assets that provide the edge in managing their business, so their IT infrastructure is state-of-the-art – which is needed as the founders live in Europe, their centres are all over the world, and their operating headquarters is in Singapore. When I met with the CFO (a Brit residing in Singapore), I sensed an intense focus and clarity on what they needed to do, and this was resonated down to line managers. ISOS is still a private company, and as such, its financial statements are not publicly available. However, you can be assured that they possess a very “light” balance sheet with very efficient and attractive numbers.

Steampro – The Region Is A Bigger Market

A dynamic lady entrepreneur friend of mine used to own and manage a die tooling and mould-making company for many years. As with the usual story, she faced labour problems, compressed margins, escalating production costs, and a shrinking market due to competition. She didn’t own the IP, and she was bound to Malaysia. Not contented with her business’s lackadaisical performance, she took her product overseas into regional markets to scale her business. In the process, she discovered that the regional marketplace was so much bigger than the local market. She networked with regional players. She talked to regional distributors. She leant about regional market trends. She came up with a Blue Ocean: She acquired an IP of a product that is into the business of energy conservation (a nice buzzword and desire these days) and bit by bit, broke into large-scale manufacturing companies where her product is able to bring huge financial savings to factories that consume a lot of heat energy. Thus, she evolved to become an energy conservation specialist, and in the process, has moved upmarket, up the value-chain, and up into the domain of the few and privileged.

What is the lesson here? Apart from her ability to adapt to change, she was courageous, which reminds me of Tony Fernandes when he first announced his intention to provide no-frills flights in Asia. Did you know the enervating and negative response he first received, as not many people believed him then?

D’House – A Symbol Of Constant Change

Finally, DiGi’s amazing showpiece office in Subang Hi-Tech Park is really worth a visit. Coming from behind as the underdogs, DiGi forced constant change into their culture in a risky and radical “do or die” approach to claim a bigger market share of the competitive mobile-line business - at a time when they were becoming a lumbering dinosaur company. It is today the fastest growing telco in Malaysia, outperforming its competitors in a market close to saturation, not an easy thing to do.

Spread out across six different locations, their old offices were once dark, gloomy places stacked with paperwork, and managers hid behind hierarchical barriers. Not anymore – look at them now: fresh, daring and dynamic, their new building is the epicentre of their cultural change. This swanky new workplace is modern, fresh, bright and adopts an open concept to represent clear and transparent practices. One only needs a laptop and can literally work anywhere and anytime. There are no reserved car park lots for managers – all DiGizens (what they call themselves) simply get to park anywhere if they come in early. The CEO sits with everyone else in open areas, and flowers are changed weekly to represent freshness. Their walkways are called “Living Walls” and are re-decorated every so often to reinforce the change culture. Previously, there were over 60 designations, which have been reduced to less than 10. Before, there were 9 reporting layers in the organization, now have been cut down to 4. Sounds simple, right? Dead right, but this simplicity was initially hard to accept, but once embraced, becomes the spirit of life at DiGi.

Time to change..?

By Mok Yuen Lok
Regional Executive Director (Asia Pacific)
Horwath International