Article 28 – ‘Stuck in the middle’ syndrome

by Tan Thiam Hock

Over the last few days, after their closing lectures, all the professors except one were accorded a standing ovation. The AMP 182 group gave Prof Richard Dick’ Vietor two standing ovations. One ovation before and one after his lecture. Dick was extremely popular because of his no holds barred and hard hitting analysis in his lectures on BGIE Business, Government and International Economy.

Many Malaysians who have attended the HBS management programme in Malaysia would know Dick as he has been coming to Malaysia for the last ten years. He is also a consultant to our Prime Minister. Unfortunately for me, he has all the economic data of Malaysia at the back of his hand and he would look for me whenever he mentions our dear country. Just wished that I had gone through Bank Negara’s annual Economic Report before I came to Boston.

In his closing lecture, Dick explained on how countries compete. Within this global market place, countries compete for exports, for foreign direct investment and other capital resources, for technology and managerial know-how and for access to natural resources. And the purpose of this competition is growth and development to reduce poverty, accommodate urbanisation, create jobs and increase living standards.

So in your opinion, how competitive is Malaysia in the global market? According to Dick, like Mexico, Brazil, Argentina, South Africa and Turkey, the Malaysian economy is “stuck in the middle”. We cannot compete with the low cost exporters like China and India. And we cannot compete in the high value added export market against Singapore, Hong Kong, Taiwan and South Korea. That’s the good news.

When we studied the economic data of the United States, Japan, European Union and Greece, Dick gave us the bad news. Our key export markets are in dire straits. Massive budget deficits, even more massive government debt and high unemployment. Their economies are as Dick described “going down the toilet”. He must have used this phrase 50 times, agitating the affected nationalities into “a flushed” state of mind. For his great performance, the class presented him with an autographed toilet bowl which pleases him no end. He had gotten his message through to those still living in denial.

He warned the countries that are stuck in the middle to buck up and compete or we will be “toast” and eventually flushed, yes you guess right … down the toilet.

Let us imagine that managing the country is like managing a public-listed company. So Malaysia Inc needs a chief executive officer. The CEO needs to assemble a management team to manage all the complex internal and external issues of finance, trade, security, human resource etc. And Malaysia Inc is competing with an upstart aggressive company called Pakatan Sdn Bhd. Both companies are competing to secure the social contract, with guaranteed high profitability. The stakes are high. Winner takes all.

Both competitors are well staffed and well funded. Advertising campaigns are under way to win the hearts and minds of the consumers. Road shows, product demonstrations and a circus show adds gaiety to the carnival. But the consumers are confused. Neither side has explained about their product benefits. The most basic flaw found in Marketing for Dummies. Tell your consumers how your product can benefit them. Not yourself.

Then which company should we invest in? According to our French professor of finance, invest only in companies that can create more value. And always make sure these companies have the best management team. So that the success of the company is sustainable in the long run.

As the investor, I would ask both companies for transparency in their accounts. Present me a strategic plan that shows the company can compete strongly in the international markets. Do they have a culture that cares for the environment? Good corporate governance with strong ethical values? And please list down the qualifications and experiences of your senior management team. You don’t have the list? Never mind, a shadow team will do. I need to be comforted as I am investing my life savings into your company. And I cannot afford to absorb failures that might bankrupt the company, my family and my children’s future.

So which company would you invest in? With the general election just round the corner, Malaysians must insist on capable and inspirational leadership from the winning party. With the world economy in massive turbulence, we need to harness the best Malaysian talents irrespective of race, religion and creed, to help us navigate through the stormy seas of uncertainty. I am sure our next leader would not like to go into our history books as the prime minister who flushed our prosperity down the toilets.

So what did I learn after eight weeks of Harvard Business School? Honestly? Nothing much. But I realised how much I love my country and its diverse culture, warts and all. I discovered that different nationalities share the same fears and problems. And nobody has a clue on how to achieve world peace.

Also found out that big economies deserve big egos. They just need bigger toilet bowls in times of turbulence. America will still be America. And European Union is actually a bigger German market. Either way, they are toast. All of them.

Did learn a little about latest economic theories. Adapt, adjust, mix and rephrase any Keynesian or non-Keynesian theories to suit the local conditions. You should listen to the top economic minds of the biggest economy in this entire universe trying to justify their economic policies which proves that the old theories just do not make much sense anymore. When monetary and fiscal policies do not work anymore. And the central bank governor is out of a job since he cannot adjust the interest rate below zero.

I did pick up a few gems from my class in strategy, marketing, finance, leadership, operations, negotiation etc and I will share it with you over the next few weeks. Just need some time to sort out the great from the mundane, the fun from the boring and I will add some chili ala Malaysian style to spice up the dish for you. Much credit must be given to the HBS professors who were thoroughly professional and very learned. Some more current than others. But all are great teachers.

The graduation ceremony was a sea of emotion for all the participants including the professors and organising staff of the programme. Ben, the Air Alaska COO did the class proud with a great closing speech as our chosen speaker. Many friendships formed and many minds enlightened. This article is dedicated to the class and faculty of HBS AMP 182 wherever you are in the world. A toast to world peace. I am coming home.

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