Article 45 – Simple uncomplicated solution

WHY must life be so complicated? So sang Avril Lavigne in exasperation back in 2002. Complicated, the song, became a big hit because frustrated teenagers the world over could identify with her.

Maybe old age is catching up with me as I struggle through another Silkygirl brand presentation. The proposed new brand positioning is backed up by AC Nielsen data, advertising agency new concept arguments, competitors’ positioning, previous and current sales breakdown data, charts and graphs on share of voice and consumer focus group findings among others.

After a few hours of fidgeting in my chair and walking around the boardroom, I was in a state of confusion not knowing what and how to decide. My gut feeling contradicts with their findings and the overdose of data did not help at all. I wanted to scream at them, “Why do you have to go and make things so complicated?”

How many times have you seen businesses getting into trouble when they deviate into other businesses that they should not have gotten into in the first place?

Every time you see a company divesting a business, the excuse is a standard “non core business or asset”. So why did it invest in a non core business and make its life so complicated in the first place?

The recent StarBiz report on Malaysia Airlines possible return to profitability certainly sounds encouraging.

But I was puzzled at their new strategy of sweating the assets to enhance income especially at the subsidiary levels of cargo, engineering and MAS Holidays. If they have been underperforming all this while, why was this problem not addressed earlier?

If all the major airlines in the world reported a major drop in cargo revenue because of the current economic downturn, I am just wondering how much sweat MAS can wring out of its cargo division? Maybe it is just too complicated a problem for a simple mind like me to understand.

The Scandinavian Airline management threatened to close down if it did not get concessions from its unions to reduce operating costs by 15% to the tune of three billion kronors.

The main reason given was that its yields or sales were affected by low-cost carriers and since it faced downward pressure on its ticket price, it must reduce cost. A last resort and desperate move to save the airline.

Simple uncomplicated solution to solve a straightforward problem. Basic management 101.

Buying new planes like the A380 which will reduce fuel costs makes sense. Sweating its assets like planes to have quicker turnaround time and cutting out unprofitable routes are simple uncomplicated decisions that should have been made earlier at the last crisis.

MAS, like SAS, faces the same problem of reducing margins and high operating staff expenses. I have to admit though, for MAS, reducing staff cost or cutting the fat can be politically sensitive and has become a very delicate and complicated affair.

For young entrepreneurs with limited capital and resources, it is imperative that you concentrate on a single business and in that business, concentrate on the most profitable part of the value chain. Sweat your limited capital and time to the maximum and you will be fine.

After your initial success, you will want to expand your business and you will now invest in other non core business of which you think has high potential.

That is a natural learning process and you are entitled to make the same mistakes that all the big successful entrepreneurs have gone through before. Just make sure your core business continues to generate profits that exceed your losses in your non core ventures.

You will now face all kinds of mounting problems on a daily basis and hopefully does not distract you from your core business. At this juncture, like me for the last 27 years, you feel like screaming at yourself, “Why did I have to go and make my life so complicated?”

As an entrepreneur, you have not lived if you have not at least got your feet wet in other businesses. How on earth will you know the extent of your capabilities if you do not stretch yourself?

Serial entrepreneurs like Tan Sri Vincent Tan built a diversified business empire over 30 years. It looks like the elastic Tan Sri Tony Fernandes will build his empire in 20 years.

I have come to the conclusion that serial entrepreneurs live in another planet and thrive on a complicated outlook of life. They have lost touch with reality and the value of money. Mind you, I have tried for 27 years to be a serial entrepreneur but unfortunately, I am just not able to stretch myself successfully. I have come to the conclusion that I am just an uncomplicated guy and destined to live a simple life.

Like all ordinary entrepreneurs, I still have problems to solve in my non core business which has been bleeding to no end. I would love to share my experiences with you but it is not easy to explain to you why I have such a problem in the first place. To put it in corporate lingo, it is… complicated.

3 thoughts on “Article 45 – Simple uncomplicated solution

  1. Malaysian business exists in a non-competitive local environment.. If they are in the competitive international environment, concentrating in just a core main business may not necessary be enough..

    Businesses invest in non-core areas for many reasons..

    It could be that they need to seek new revenue stream as their core businesses mature in a saturated market..

    Or it could be that the non-core business is design as somekind of barrier to competitors to enter the main core business.. Google, Microsoft are renowned in this strategy – building up non-core businesses to protect the main business.

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  2. Hi Mr, Tan,

    I remember you wrote some time ago that you have said good-bye to your business, and is now counting golf balls in a remote sunny island full of bikini-clad beauties.

    About consultants. They are equal to management trainers. I used to work in a bank, and I hated attending courses done by these very highly paid trainers. The only thing I found in them was that they have bigger mouths than other ordinary mortals.

    About serial entrepreneurs, I think they are like born leaders. I don’t believe anyone can be trained to be serial entrepreneurs.

    You have a good day. Hope you have finished counting the golf balls and is now watching the bikini-clad girls. By the way, what is the name of the island? (LOL)

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  3. Your Articles give me good fun on weekends. After reading a bit of tits & tats, I also wish to Talk.

    On Consultants, they got to substantiate to justify their respective fees and often return with long reports. As the saying goes too much analysis leads to paralysis. Similarly, one big-name Consultant made a big call a few years ago that one SEA nation would become a top consumer for branded products probably based on the sentiment of the time plus extrapolation etc. Nonetheless, it did admit it erred 2-3 years down the road but some investors would have already been burnt!

    On serial entrepreneurs? Are there such things or people (sic!)? I thought it all boils down to relative strengths (or weaknesses). Probably certain matters can be manipulation by ‘smart’ people to gain an an advantage in the short term -and hopefully to kill off competition. A friend once quoted that there would be no strategy (long term) if you couldn’t get your tactics right (short term). I guess Maslow is right to say Survival comes first.

    Cheers!

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