Innovation by Asian business leaders no longer a luxury; Amid the changing rules driven by the acceleration of globalisation, Asian leaders must be game-changing innovators to succeed in the new normal

Innovation by Asian business leaders no longer a luxury

The Nation March 30, 2013 1:00 am

Amid the changing rules driven by the acceleration of globalisation, Asian leaders must be game-changing innovators to succeed in the new normal, according to a study by global management consulting firm Hay Group.

Increasing globalisation is a given, with international competition likely to grow fiercer and markets even more diversified. The rise of India and China, coupled with the global economic power shift towards Asia, is reshaping the world before our very eyes. In the West, the number of jobs is falling; in the East, leaders have to learn how to manage in new markets as they expand westwards. Technology convergence and the evolution of social media have raised the bar on customer engagement. Customers now expect an instant response to their queries – and even to be involved in the process of product development in such services as information technology and communication. Additionally, advances in technology convergence will continue to blur the boundaries between private and working lives. More business is conducted “virtually”, and power is shifting to employees – particularly the rising class of digital-knowledge workers, who can work anywhere.

However, while technological prowess can aid innovation, digital natives’ over-reliance on technology and their lack of social skills make them unprepared for leadership roles. Hence talent will continue to be at a premium, and retaining employees with key skills will be a challenge. 

The “youth bulge” in Asia poses significant leadership challenges. What will it take to accommodate and motivate the “me” generation that forms our next band of leaders? The hunger to capture Asia’s abundant business opportunities is challenged by higher expectations, greater business risks and stronger market competition. Meanwhile, the growing scarcity of strategic resources such as water, minerals, metals and fossil fuels will cause price increases and lead to social instability.

Coupled with shorter economic cycles, hyper-connectivity and restless digital natives, the only way for companies to succeed is to innovate – not just in new products and services for customers, but also in the way they treat and motivate employees, groom leaders and conduct business. As we know, innovation is easy. Commercialising it and building organisational discipline around it is much more challenging.

While there is no silver bullet for success, Hay Group’s study reveals specific organisational practices that market leaders have adopted to enable and encourage innovation. To establish and sustain a climate that is conducive to meaningful innovation, Hay Group has identified four business practices that organisations need to have:

1. Enable agility. Agile organisations are better able to respond to challenges with innovations, and capitalise on their successes. Good organisations structure their organisations for speed and flexibility.

2. Create the context. Smart innovations require a fundamental understanding of customer needs, and a willingness to risk rethinking them. Good organisations ensure that employees understand customer needs, and support new approaches to address them.

3. Broaden perspectives. New and different points of view are essential precursors to innovation. Good organisations encourage and embrace different cultural and generational perspectives, and work to broaden the viewpoints of their employees.

4. Reward collaboration. If innovation is the product of different perspectives, collaboration is the process that brings them together. Good organisations do not merely preach collaboration; they require and reward it.

“It’s crucial to foster an atmosphere, environment and mechanism where people are encouraged and enabled to undertake creative problem solving, where people are not afraid of failure and are prepared to welcome and deal effectively with changes, and where people are trained and supported to undertake and manage risks with prudence,” said Punyacha Teparakul, senior consultant at Hay Group. 

To run globalised companies, Asian leaders must set the direction and discipline for innovation. Insights on individual leadership styles, ensuring strong leadership pipelines and so forth have been useful preludes, but they are no longer enough for sustainable success in the new economy.

Hay Group’s research urges Asian firms to catch up to leading companies in the following ways:

• Develop an organisational structure that enables quick communication. This is fundamental to organisational agility, its decision-making frameworks and responsiveness to market changes.

• The Asian tradition of directive leadership will not work. Everyone is expected to lead, even if they have no formal position of authority, and Asian bosses must learn to delegate their authority and decision-making power. This, Hay found, leads to higher employee engagement and motivation.

• Create personally meaningful work. Having an innovation strategy is no guarantee of success, and the most innovative companies are interested in discretionary effort. Therefore, strategies must be decoded vertically and horizontally so that personal interests are aligned with corporate and interdepartmental goals.

“The challenge for today’s leaders is to apply various leadership styles suitably, may they be coercive, pace-setting, democratic, coaching and so on, into different situations and employee groups,” Punyacha said. “Leadership styles have significant impact on organisational climate and culture, which in turn has an impact on employee perception and engagement, which in turn has an impact on individual and company performance.” 

LEADERSHIP RELOADED 

In an uncertain business environment of rapid and irrevocable change, innovation is no longer a luxury. It is a necessity. To be successful, leaders need to be adept at conceptual and strategic thinking, have deep integrity and intellectual openness, find new ways to create loyalty, and relinquish their own power in favour of collaboration.

Leading in the new normal environment will test executives’ virtuosity in switching between leadership styles. To envisage and then sell a concept of customers’ future needs will require an authoritative style of leadership that many leaders in Asia already exhibit. However, to encourage and enforce discipline around innovation will require a more collaborative style of leadership – this is where Asian leaders need to step up.

In addition, keen influencing skills will prove to be the key ingredient for managing productivity in the “cloud”, where leaders are responsible for multifunction and cross-border teams, some of whom may not even report to them.

Finally, leaders need to tap into their emotional maturity and lead their teams to bounce back from negative feedback and failure. This calls for both emotional and mental resilience. 

Building discipline around innovation has become just as, if not more, important than innovation itself. And innovating leadership is perhaps the most critical step to survival.

Asia has made great strides in leadership competencies in the past 20 years. To meet the growing demands of business here, companies have done a great job of developing and accelerating talent. Is there more to be done?

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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