DPM Teo Chee Hean at the 2016 Stewardship Asia Roundtable Dialogue
(Photo courtesy of Stewardship Asia Centre)
“Stewardship for the Future – Taking Action Today with Tomorrow in Mind”
Mr S Dhanabalan
Chairman, Board of Trustees of Temasek Trust and Member, Council of Presidential Advisers
Mr Lim Boon Heng
Chairman, Temasek Holdings
Mr Hsieh Fu Hua
Chairman Stewardship Asia Centre
Mr Ong Boon Hwee
CEO Stewardship Asia Centre
Ladies and Gentlemen
Good afternoon. You have already heard from many interesting speakers this morning on how effective stewardship has helped companies and organisations grow over time. I would like to share some thoughts to frame the topic of “Stewardship for the Future – Taking Action Today with Tomorrow in Mind”. I will be happy to hear your views later during our discussion.
Three Key Trends: Super-connectivity, Super-speed, Searching for new Meaning
I will start by pointing to three key trends that are shaping the world:
- a super-connected world
- moving at super-speed
- searching for new meaning in the face of social dislocation.
With jet travel and modern communications, the world has been drawn closer together. We can fly halfway across the world in 18 hours – but that means a virus or a terrorist can do so too. We can bring such a diverse group as yourselves physically into one room to share ideas; and we can exchange email addresses and form chat groups to continue our conversations thereafter. But the world is also being pulled in many different directions. Anyone can post up comments on the Internet freely. This can lead to better mutual understanding and a meeting of minds, with the best ideas prevailing. But the Internet also allows extreme views to be propagated, encouraging and reinforcing fault lines. This can lead to more divided and entrenched views, not less. Conflicts based on extreme ideology are growing. Xenophobia, hate, violence and terror are also transmitted around the globe. So, does super-connectivity lead us to become one world, or are we becoming more divided?
With technology, we can shape our surroundings and our world. We can control our indoor climate with air-conditioners and heaters, turn night into day, and make deserts bloom. But carbon emissions have led to global warming and rising sea levels. We can now grow fragments of organs from stem cells – but there are still many people in the least developed countries who do not even have basic healthcare. We can 3D-print a mechanical artificial limb – but we can also circumvent security checks and 3D-print a gun. We can be networked into the new sharing economy, the internet of things – but this has also given rise to the proliferation of cyber-crime and cyber-attacks. Technology may have improved our lives, but have we used technology to make the world a better place?
With the Internet and social media, we are connected all the time to whomever, wherever we want in the world. But, have we forgotten how to connect with the person sitting across the lunch table, or living next door to us, and live in harmony and peace with him?
Moving at super-speed
Globalisation and technology are continuously challenging and disrupting current business models in what the World Economic Forum terms as the “Fourth Industrial Revolution,” characterised by the mass adoption of digital technologies, and the digital transformation of industries.
Startups and incumbents alike, can now reach out to new customers quickly at very low marginal costs. With lower entry barriers, there are more opportunities for innovators to develop applications that excite the digital consumer and enterprise.
Companies need to accelerate product development before their competitors beat them to market. But not all companies adapt well to such rapid shifts in their operating environment. Over half of Fortune Global 500 companies from the 2000 list have been displaced by 2015 .
Another observation of the Fortune Global 500 list is that the change is also occurring across geographies. The number of Asian companies has increased significantly. There were only slightly over 100 Asian-based companies in 2000 and within 15 years, this has doubled to close to 200, of which more than 100 are based in China alone.
This rapid turnover of successful companies gives optimism for the many start-ups and technology firms that they would one day earn their place.
On the other hand, if successful companies are around for much shorter periods, what are the incentives for companies to upgrade the skills of their employees and invest for the future? What does it mean for the employee given that the generation entering the workforce today is much more likely to switch companies and take on several jobs in their lifetime compared to their grandparents who may serve in the same company for life.
Searching for New Meaning
Globalisation, the fast pace of technological change, the rapid changes in business models and the life-cycle of companies, has impacted the whole meaning of work, and how one relates to the community and country. When workers live longer than companies, the whole notion of life-long employment takes on a new meaning. When workers move across borders, what does community and country mean? There is great angst, in the developing and developed world, to these social dislocations. People are reaching out for answers and for solutions. Parties on the extreme are gaining traction, both on the left and the right, offering an outlet for anger and frustration, but a paucity of real solutions. What we need is to search for meaning in a new middle. To act today, with tomorrow in mind. And be willing to take decisions today, some hard ones, so that we have a common vision that brings us on a better path for the long term.
Stewardship for the Future
These developments all impact how companies and boards think about stewardship for the future. As we look at what to do today so that we are better prepared for tomorrow, let me put forth three sets of issues to help frame this – serving our stakeholders, driving innovation and the value of values. How will these shape or sustain our companies’ performance over time?
First, our stakeholders? For companies, the tyranny of the financial markets, quarterly and annual reporting of results, and top-line revenue and bottom-line profit considerations drive a certain behaviour. But is making money the sole mission, the sole measure, the raison d’etre of a company?
Many companies take a broader view. They adopt fair employment practices, work on tripartite relationships, and are more willing to look after the development, health, safety and welfare of employees to retain and re-train them. More companies are now looking at their ecosystem and taking up charitable causes as part of their corporate social responsibility efforts, rather than chase the last dollar. We are also seeing more companies seed social enterprises, getting to the heart of business, doing good while doing well. Some are also committed to the environment and play their part to address global climate change.
Beyond their shareholders, how companies engage their employees, ecosystem and the environment as stakeholders will therefore define what they stand for and differentiate them from their competitors. Will institutional investors, boards, analysts or the media react positively and price in these initiatives for the employees, the ecosystem and the environment when they value or report on the companies? This will take time. But certainly, some alignment and encouragement from the market will send the right signals to help establish new baselines of corporate behaviour.
Second, driving innovation. Unlike in the past where a company’s key assets were tangible, different strategies are now required to manage a knowledge-driven company. It’s no longer just about managing fixed assets, inventory levels and cashflow, but also about accelerating the generation of ideas, translating innovation into new products and services, and enhancing value through intangibles such as intellectual property and brand recognition.
Instead of developing products and services entirely within the traditional value chain, the ability to crowd-source ideas, co-create new products and services with their partners and customers, and codify and improve the customer experience will enable companies to better understand the technology possibilities and drive innovation. Just as companies invested in physical distribution channels for products and services in the past, innovations to exploit the potential of the digital superhighway networks of tomorrow will open up opportunities in the digital and sharing economy.
Third, the value of values. Organisational values drive the mission of our organisations, and the motivation of our people. In the government, good political leaders and public officers derive happiness from other people’s happiness.
For the Singapore Public Service, we have the values of Integrity, Service and Excellence. A Public Service with integrity engenders trust among citizens and foreign investors. By being accountable, having moral courage and being fair and impartial, we maintain a high standard of integrity. We owe a debt of gratitude to our pioneers who developed Singapore to what it is today. Just like our founding generation, our public officers serve with dedication to Singapore and have empathy, compassion and respect for others. We also strive to be quality-oriented, working with others as a team and seeking continuous improvement to achieve excellence.
For Asian societies in particular, there are several values that are aligned with strong stewardship, such as working for the collective and societal good, emphasis on social harmony and meeting the needs of others, and an orientation for the long term, to invest to build a better future for our next generation. These values are by no means exhaustive nor exclusive. You would have your own experiences. Ultimately, where your values and beliefs guide you in weathering the highs and lows in a rapidly changing operating environment.
These are some thoughts – Besides shareholders, who would be your stakeholders? How do we drive innovation for success? What values shape and sustain performance over time? Our choices today to prepare for the future will make a difference.
I look forward to hearing your thoughts and views, and having a good discussion with you during the dialogue. Thank you.
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