KL’s taxi service and the New Economic Model

WHAT has Kuala Lumpur taxi service got to do with the New Economic Model? If we consider a number of issues relating to taxi services, we could see its relevance to the economic model, which would be made public next month. Among the issues are:

•    It is a component of the service sector;

•    There are issues relating to the business model applied by the industry;

•    Subsidies and the green economy;

•    Effectiveness of policy implementation; and 

•    People's attitude towards change

Taxi service is definitely a component of the services sector, the sector that is supposed to propel Malaysia into a higher income economy. While the key word here is service, the state of affairs of the industry, particularly in Kuala Lumpur, is less than satisfactory.

If we observe the behaviour of taxis around the Kuala Lumpur City Centre (KLCC), the icon of the city and the country, we could see something that would not make us, as a country, proud. Taxis waiting by the roadside where they are not supposed to, travelling slowly at the side roads around KLCC with the hope of being hailed by shoppers (perhaps this is the only place where they do not speed) and picking up passengers in places where they are not supposed to.

The problem of overcharging is something which we hear frequently, especially involving visitors from other countries. Ask any expatriate friends, and they will share with you how many times they were charged exorbitantly whenever they use taxi services in the city.

If service is the sector that will boost our economy, why is it that basic services like taxis cannot achieve an acceptable standard? Could it be that the business model applied by the industry is a reason for the taxi service being in its present state?

Taxi permits are mostly issued to companies, which in turn lease them out to drivers for daily rental. Although the reason behind such practice is to ensure high quality service, the practice inherently transfers the risks substantially to the drivers. 

Each driver has to earn a minimum income just to enable them to pay the daily rental before he starts to earn his "salary". The more permits owned by a company, the higher the income it would earn. Such arrangement do not work; otherwise, we would not have been hearing complaints about taxi services.

Is it not time to re-invent the business model so that risks and rewards are equally shared by the companies and the drivers?

To ensure taxi service is offered at an affordable rate, the price is controlled by the government. At the same time, the price of gas is also subsidised to reduce operating cost. Could this be a factor why the service level is not satisfactory?

Does the approved rate enable taxi drivers to earn the level of income that allows them to have a reasonably comfortable life in the city? If the rate is too low, we should not be surprised if the drivers start to apply all the tricks in the book to earn extra revenue.

Who ultimately pays the price of the subsidised gas? Although directly the subsidy is borne by Petronas, the oil company that is ultimately owned by the rakyat. The last thing that we want is a system that subsidises service providers who earn sub-optimum income and provide sub-standard service. Looks like it's a lose-lose arrangement!

A less then desirable taxi service would force people to use private transport, thus increasing our carbon footprint. This is something which will be more important going forward.

The prime minister had made a pledge in Copenhagen that we will reduce our carbon emissions. Could we achieve the target if our public transport is not efficient and private transportation remains at the level it is now, if not growing further in the future?

The issue regarding taxi service in Kuala Lumpur is not new. The question here is who is responsible and what happens to the people in the department which is supposed to solve this problem? Are they, at the minimum, not embarrassed as the quality taxi service deteriorates over time?

The situation around KLCC should be a clear indicator of the worsening situation and the failure of the relevant agencies in doing their work. Just imagine the consequences of failure if they were to work in the private sector.

While Kuala Lumpur citizens have accepted their fate and have to live with the existing taxi system, any attempt to shape our economy would require people to change. If change could not be instituted at a small component of the service sector, such as the Kuala Lumpur taxi services, the risks of resistance in larger and difficult components should not be underestimated.

This should be the concern of our economic planners in rolling out the new economic model.

I look forward to hopping into any taxi anywhere in Kuala Lumpur and being driven to any destination and charged the exact price as shown by the meter.

This article is also published on the Edge Malaysia website here:

http://www.theedgemalaysia.com/commentary/160126-kls-taxi-service-and-the-new-economic-model.html

The Confession of a Tiger

Barely a week in the Year of the Tiger, a Tiger has attracted the focus of the world by making his first public appearance after the explosion of details regarding his personal life. Yes, it is about what Tiger Woods said last night.

Tiger Woods faced the public again last night after disappearing when his cars met an accident and, as what the old saying says, the rest was history. The transcript of his public statement could be read here.

What interest me was the part when he explained why he did what he did. "I felt that I had worked hard my entire life and deserved to enjoy all the temptations around me. I felt I was entitled".

While the explanation was brief, the lesson learnt was huge.

How many of successful persons feel the same? The fact that they worked hard to arrive at where they are, this sense of entitlement could be very tempting and rational to justify why they can cross the line. For a politician for example, this could mean using his position to benefit financially because he believes he deserves the rewards for his contribution to the society. The same could apply for senior government servants and corporate players.

I trust we should also reflect on the experience of Tiger, and see whether we could fall on the same trap, feeling entitled based on our hard work and contribution.

Perhaps, the confession of  this Tiger provides other "Tigers" with guidance and opportunity to reflect, and avoid the trap that appears to be real and dangerous.

Nurturing innovation ecosystem

Last week I wrote about the innovation chain; imagination, creativity and innovation and some issues which are faced by Malaysia in moving up the economic value chain. Perhaps now we could explore in more details on how innovation could be nurtured in the society using platforms which are available.

If we observe the innovation chain, the three components involve the ability of people to push their minds to invent something that is not readily available or to solve problems which are yet to be resolved. Some of these invention and solutions could then to made available to the society at large with certain commercial return to the inventors. If innovation is defined as imagination applied which create value, then the invention or solutions should address the needs of the market rather than just addressing the ego of the inventors.

This is the reason why innovation ecosystem is important. An ecosystem, if I could remember my Biology correctly, is about the dynamic relationship among the living beings if a defined environment which enable the environment to be lively. In the case of innovation is the relationships between inventors, learning and research institutions, commercial organisations, developmental agencies and other stakeholders with the ultimate objective of making more Malaysian ideas to be commercialised here and abroad.

The institutions and markets are basically collections of people organised by laws or common interests. So, we we are describing innovation ecosystem, we are discussing about how people in different roles interacting to enhance innovation. This is where technology could facilitate and enable effective interaction.

If we take the InnoXchange initiative which I mentioned in my last week's article, it is a ready platform where players in the innovation ecosystem could congregate, communicate, debate and interact. Among further effort that could be considered to bring this platform to a higher level are:

• Identify champions for specific sector. The champions should invite more participants, encourage interaction, highlights issues and facilitate the innovation process.
• Developmental agencies start to use InnoXchange as the platform to nurture innovation based on their respective mandate. For example, PUNB could use this to encourage retailing business to discuss issues and find solutions for the entrepreneurs under their support. PNS could do the same for the franchise industry and MARDI for the agriculture sector.
• Industry players could start depositing issues and challenges that they face and perhaps offering grants or prizes for ideas or efforts which they feel could lead to solutions.
• Financial institutions and venture capital should also make their presence here by indicating support for the inventors and entrepreneurs who are members of the innovation ecosystem
• Government could organise competitions and offers grants for innovators and entrepreneurs who manage to work on viable commercialisation ideas.
• Institutions of higher learnings could encourage academicians and students to participate and consider such participation as part of the programmes of their institutions.

The innoXchange on its own would not be able to create success stories without the involvements of other members of the ecosystem. What is important now is for the champions to start playing their roles and build the community to a level where things could move on their own.

Perhaps more information and promotion about innoXchange would be helpful. This should include articulating ways and means for others to participate. Let the communities which will spring from this initiative to chart their rule of engagements. The owner of the platform should remain facilitators.

Imagination, creativity and innovation

2010 is earmarked to be Malaysia's Innovation and Creativity Year. Not a surprise given the number of times the word "Innovation" was mentioned in the 2010 Budget. The challenge for us is how do we get things into motion and transform ourselves into a creative and innovative society?

Before we rush to the science labs and start cracking our heads, we need to appreciate that innovation is not just about scientific discovery. In their book Imagination First, authors Liu and Noppe-Brandon argue that imagination, creativity and innovation are interrelated.

According to them, imagination is the capacity to conceive of what is not, creativity is doing something with the initial conception and innovation is when creativity advanced the form.

Therefore, innovation could be applied to many areas such as business process, business models, new products or services and anything that makes our life or business better.

If imagination is the driver of innovation, it is time for us to reflect how this is encouraged in our society, perhaps in our own homes when we nurture and educate our own children before they even start schooling. Are they allowed to think and imagine constructively?

Do we welcome their questions on what we think is right and given; and engage them in meaningful dialogues or we simply shut them off because we, the elders, know everything and they should take our words as the only truth?

This reflection should also cover our schooling system as well as how young and bright Malaysians are groomed to be future leaders at our institutions of higher learning.

We may also want to ponder why the leadership of our universities need to be involved in student elections? Don't they have more critical issues to resolve and leave the students to imagine and sort things out for themselves?

If our students at that level could not be allowed to freely decide on how to solve their problems, how different would they be once they join the workforce and the real world?

For the corporate sector, innovation could be derailed by two attitudes. First is "We Know Everything" where the leadership or those who are in the position to make the difference feel they have enough brainpower to dissect the market and bring out solutions to all problems.

Such an attitude would certainly discourage alternative futures to be articulated, especially by those at lower levels.

The "Not Invented Here" syndrome is where only in-house innovative ideas are welcome. Such thinking is totally opposite to the present practice where any bright and smart ideas are even sought outside of the corporate borders.

Efforts such as InnoCentive which acts as the platform to match ideas from all over the world with corporations which see value in them has created huge value to the world.

This was initially started by Proctor and Gamble which had thousands of scientists under their payroll but was still hungry for ideas and new thinking. They understood then that there are more smart people out there than those who were under their payroll.

We have a number of initiatives which support collaboration among Malaysians to nurture bright ideas into winning global products and services. An example of this is the InnoXChange project by the Malaysian Industry-Government Group for High Technology (MIGHT).

It provides the platform for inventors to make their ideas visible and create a community of experts and other stakeholders who are interested to bring those ideas forward.

It would be great if this ready platform is used by budding entrepreneurs as well as research institutions and commercial organisations to invigorate the innovation landscape in Malaysia. As innovation is about brainpower and people, clusters which represent special interest groups should be encouraged.

Other institutions which are involved in innovation and entrepreneurship should use this as the platform to value-add to the community that they serve.

One issue that needs validation here is our innovation sphere. Are we only interested to nurture ideas from Malaysia for Malaysians or we are willing to nurture ideas from outside our country, provided Malaysia benefits in one way or another.

If we really want to move up the value chain, the thinking behind how we create and nurture value needs to be challenged. We need to be innovative in this area as well.

Land and natural resources would continue to be important in creating wealth. However, brainpower is now the real driver of value creation. As the saying goes, our key assets have legs and they can decide not to return once they leave the doors of organisations.

While we have beliefs and understandings from the past, those may not appeal to intelligent brains that have to face different issues and challenges at present and in the future.

If they are not treated in ways which are relevant to them, these talents will just walk away. We may still have the land and natural resources but without the brains, the value to the society will not be optimised.

Perhaps innovation could be very liberating to those who apply it in their lives. Innovation could be very scary for some of us who wish the world to stand still and let the happier days continue. It is time for these people to imagine, create and innovate themselves!

This article was also published at the Edge Malaysia website here:

http://www.theedgemalaysia.com/commentary/159351-imagination-creativity-and-innovation.html

Golf games to promote WCOA 2010

The Malaysian Institute of Accountants invited key stakeholders from the public sector who would be critical in the organisation of the World Congress of Accountants 2010 this November to a game of golf at Impian Golf and Country Club last Saturday. Dubbed the MIA-WCOA Challenge Series, the game was to create awareness among the key stakeholders and to reinforce their commitment is supporting MIA to ensure the world event would be a great success.

Among the guests were Tan Sri Amrin Buang, the Auditor-General, Dato Mohamad Salleh Mahmud, the Accountant-General, Dato Noharuddin Nordin, the CEO of Matrade and Datuk Abdul Samad Alias, the Chairman of Bank Pembangunan.

Playing host were the MIA President, Abdul Rahim Hamid and his Vice-President, Christina Foo. Everybody had a great time and enjoyed their game and went back with goodies from MIA.

Oil, gas and Petronas

For those who thought the issue about Petronas leadership will be put at rest with the announcement of Datuk Shamsul Azhar Abbas as it's new President and CEO, they may find that such case is not true.

In the absence of more details regarding his terms, there is now concern about whether or not he is just and interim President, to fill the gap until somebody younger with longer service tenure to surface. The Malaysian Insider, quoting a report from Reuters, raises a point that at 57, Datuk Shamsul may not serve similar tenure as what Tan Sri Hassan Merican, the former President and CEO, did. Will there be another leadership change?

The larger concern is whether Petronas could maintain its excellent track record and performance and minimising political interference which could sidetrack it form continuing to be a world class company. The incident where the board of Petronas rejected the nominee from the Prime Minister not that long ago would be a dot which will be considered in assessing the future of Petronas.

At the same time, the report about Malaysia having problem in supplying gas to new companies which plan to come to Malaysia is another issue that could derail our plan to move up the value chain. Is this the impact of maintaining a highly subsidised gas regime where there is no motivation for users to be efficient or it is simply a problem of planning? Could it also be the outcome of forward selling our gas in raising funds to finance our spending in the past? Whatever the real reasons are, Petronas will be involved and could be holding the key to the solutions.

Petronas has certainly demonstrated itself as a respected global company. As the global business environment shifts further, it would have to compete in a more challenging circumstances where competency and business acumen would determine its success or failure.

The last thing that we want as Malaysians is for Petronas to be influenced in such a way that it would have to accede to political interests more that its business interest and the interest of you and me as Malaysians, the real owner of Petronas.

Rethinking purpose and performance

THERE was certainly a lot of rethinking done on fundamental concepts at the World Economic Forum annual meeting in Davos last week. Themed "Improve the State of the World: Rethink, Redesign, Rebuild", the annual pilgrimage of world leaders, corporate captains, community leaders and other global movers and shakers took the opportunity on the world recovering from one of the most severe economic and financial catastrophes to shape a better tomorrow.

Not even capitalism was spared from being scrutinised, although the conclusion seems to be pointing not towards making any fundamental changes to the philosophy but more towards how capitalism should be applied to benefit the global society at large.

The key messages from the conversations at the annual meeting were pointed towards aligning purposes of organisations in the interest of society whilst at the same time not denying the rights of investors to create and receive value from their investments.

Despite the aggressive theme, the outcome could be viewed as basic.

It is a generally-accepted proposition that businesses are allowed to operate out of the licence provided by the society. Therefore, the behaviours of business and the outcome of their ventures should be aligned with the society's interest. Perhaps such simple principles have been forgotten by many industrialists, entrepreneurs and corporate captains in the pursuit of "success" — however, it was defined by these very people. The last global financial and economic crisis is a clear example.

In the session on Business Leadership for the 21st Century, Rosabeth Kanter from Harvard Business School shared her observations from research over five years on companies that had outperformed their peers during the crisis.

She articulated that these companies define their corporate purpose from the perspective of how they could serve the society, following which they developed business models from the defined purpose.

Agreeing with Kanter, Indra Nooyi — chairman and CEO of PepsiCo — provided insights on how her company integrated purpose into performance and stating that performance could only be delivered by ensuring the purpose is delivered at the same time.

By hardwiring incentive systems to purpose and performance, people in the company would work towards objectives which serve both the enterprise and society.

Other attributes of companies which have a fair level of sustainability, according to Kanter, were that they are involved in innovation, operate in sync with other stakeholders in the ecosystem and attract the best people.

According to Google CEO Eric Schmidt, innovation — apart from providing enterprises with competitive edge — serves the society as it transforms the world into a better place through the use of technology. Innovation also drives change and empowers people to shape their life.

This is also how real growth is generated: by bringing solutions to problems. People in companies need to be encouraged to look further than the needs of the enterprises to get the inspiration for innovation.

Engaging others in the ecosystem — such as community organisations and other stakeholders — would enable enterprises to have access to other competencies as well as developing understanding the real needs of the ecosystem. In fact, enterprises do not only create jobs on their own but through their network partners and supply chain, argues Kanter.

People are core to business sustainability, and the best people prefer to be more engaged and want to add value and contribute to problem solving. Competitive companies expect their people to be good at their jobs, while at the same time are excited and involved in issues of the communities around them.

Wang Jianzhou, chairman and CEO of China Mobile Communications, challenges the practice of analysts who focus on the short term and act on rumours. According to Jianzhou, management should focus on creating long term value and act based on realities on the ground rather than theoretical models.

In essence, the captains of industry who participated in the discussion agreed that enterprises need to align their purposes with interests of the society and develop business models on that premise. Off course, boards and management would continue to be challenged on short term performance.

This is where clarity in purpose and leadership would come into play. Boards and management should be able to demonstrate that the long term sustainability of business also means reasonable returns to shareholders in the immediate terms. The challenge is, of course, to balance between now and tomorrow, which is a dilemma in other aspects of life as well.

There is a similar discussion in Malaysia on how to ensure the corporate sector acts and behaves with high integrity and adds value to the society.

Under the National Integrity Plan, corporate integrity is the accumulation of the outcome from corporate governance, ethics and corporate social responsibility.

The conversation at Davos could certainly bring some ideas which we could emulate and adapt here. Certainly the "purpose and performance" approach as practiced by PepsiCo could be a model that we need to understand further and consider.

Combined with the experience of our home-grown institutions such as Petroliam Nasional Bhd (Petronas), we could certainly re-energise the essence of humanities into our corporations and enterprises in Malaysia.

This article was also published at the Edge Malaysia website here:

http://www.theedgemalaysia.com/commentary/158844-rethinking-purpose-and-performance.html