Prepare for the day after tomorrow

Dato' Johan Raslan
Executive Chairman, PricewaterhouseCoopers Malaysia

Source:  The Edge, December 29, 2008 - January 4, 2009; Year-end Special Focus; pg S10

The new year is almost upon us, but it will likely be rung in with considerably less gusto than usual. Malaysia may be slower than others to feel the full effects of the global crisis, but it already has many of us worried. The “R-word” has entered our everyday lexicon.

It’s easy to get mired, pondering the extent to which this turmoil will affect us. But there’s no use pointing fingers or predicting what no one knows for sure.
My eye is on tomorrow and the day after. When the dust settles, I want to be sure that my business and that of my clients’ are in the best shape to take on the landscape of the day after tomorrow.

The fear factor

“The only thing we have to fear is fear itself”. Franklin D Roosevelt’s words are as pertinent now as they were during the Great Depression. Financial crises are cyclical. I don’t know how badly or how long this crisis will last, but we will come out of it. How quickly we recover and the depth of the damage will be partly affected by confidence and perception.

The government’s and regulators’ assurances don’t carry much weight at times like these. It is what companies say and do that influences confidence. Someone told me the other day that the last boom was one of “irrational exuberance”.

Maybe so, especially if you believed UK real estate agents. But now, we in Asia have to guard against irrational fear. If businesses can demonstrate we’re confident of coming out of the downturn stronger, confidence will follow.

Opportunities in a sustainable tomorrow

The philosophy behind corporate responsibility — being accountable to your people and community and having a positive impact on the environment — has never been more relevant than now.

If, globally, we had stuck to the fundamentals of good business, I would like to think that the economy wouldn’t have suffered as badly. Look at the US automobile industry. In a recent ranking of the “greenest” automakers of 2007 by, Honda, Toyota and Hyundai Kia were at the top of the list. The US Big Three, however, were right at the bottom.

US President-elect Barack Obama says, “For years, while foreign competitors were investing in more fuel-efficient technology for their vehicles, American automakers were spending their time investing in bigger, faster cars.” (The Associated Press, Aug 5, 2007) Now the Big Three are at the mercy of a government bailout.

In Malaysia, we need to look at this as an opportunity for new products or services. Think new global carbon markets, “greener” infrastructure and heightened customer awareness of sustainability issues.

Invest in people

For most of us, our business depends on our people. Many fear for their jobs — the ball is in the employer’s court. People must be rethinking what they look for in an employer. The decisions business leaders make now will remain for years to come.

Hire quality talent from weakened competitors. Develop your people, so they are ready to take on the new challenges which arise as you rethink your strategies.

Be loyal to your people when times are bad and they will repay that loyalty when time are good.

When you hire instead of retrench, when you innovate and bring new products to market, it signals that you’re confident your business will rebound and you’re preparing for the upswing.

A matter of trust

According to a recent PwC-Duke University study, US companies plan to continue or even accelerate their offshoring strategies — good news for the rest of the world, particularly Asia. There are still investors with money out there as well as foreign companies that are looking to move their businesses to cheaper or lower-risk markets. Why can’t Malaysia be the investment place of choice?

New Year wish

I would like the government to send a clear message to investors and the public, that Malaysia is focused on the economy and is listening and addressing their concerns. Our new prime minister will have a lot on his plate come March, but he also has a one-time opportunity to set the tone right. Focus on the basics — implement policies that attract investors, enforce robust governance over government procurement and incentivise companies with better tax schemes.
We need to take control of politics, clean up our own backyard and make the economy and the people’s welfare a primary concern. Everything else is a distraction that adds no value.

And the day after

Some of these will be painful measures for both businesses and our government but they are necessary. Sometimes, a downturn is that wake-up call we need to get things in order. We lost ground when others were surging ahead with globalisation. Now the music has stopped. This may be our second chance to get our competitive edge back.

The winners of the day after tomorrow will be the companies (and countries) which are first off the starting blocks — those with loyal, energised teams and ready-to-implement strategies for growth.