Innovate or Risk Being Displaced

As entrepreneurs or firms, do we have a choice either to innovate or simply rest on our laurels and sustain what we have? I believe today we have reached the end of maximizing productivity and re-engineering processes runway and staying put or sustaining what we’re doing is no longer the luxury that we can afford but forced to innovate or risk being displaced and replaced.
Who would have ever thought that Walmart would have to succumb to competition with e-commerce marketplaces like the Amazon, eBay etc. as they started closing 269 stores throughout the United States? Without a doubt, we can expect other mega stores to face a similar fate like Walmart as consumer behavior changes from walking the alley of the stores to the clicking of a button to purchase a product.Crystal Globe - Europe and Africa

So what should an entrepreneur do to stay in the game? Well, it’s back to the drawing board and start thinking about design. Design thinking process will have to be the core of every enterprise’s culture and values for it to survive. The design culture is not just for startups but for the mature and growing businesses. Many will have to rehire a new CEO as the ‘peacetime CEOs’ are obsolete and they need to be replaced by ‘wartime CEOs’ who have the ability to lead by innovating products or services that the market needs. Firms need to build products that customers want and not what some smart guys in the firm think are best for consumers. The product-market fit cannot be underestimated as it is the lifeline of every single enterprise. Even large protected and monopolized businesses are feeling the heat of small enterprises that equipped themselves with an innovative business model that use technology to re-invent the industry. Taxi operators in many countries are feeling the anxiety as their bottom-line are seriously dented by newcomers like Uber, GrabTaxi and other shared vehicle apps firms. Instead of embracing innovation, most taxi operators resort to the easy way out and resolve their failure to compete by lobbying and putting pressure on regulators to ban their competitors. They fail to realize the growing trend of shared economy and that consumers prefer to be driven in a private car and be treated like having a private driver. Consumers don’t get that experience when they are in a taxi, not especially when they are driven in the Yellow Cab in New York City.

What is design thinking process then? It’s not a rocket science and neither it is about designing of fashion, shoes etc. It is simply a systematic approach and iteration to solving problems that will drive firms’ innovation and growth. It can be taught to Managers who have both the business skill and design iteration acumen. In solving a problem, the objective of design thinking process is not about reaching a ‘correct’ solution but rather an iteration towards a ‘better’ solution. There are tools that managers can use to implement the process and measure its effectiveness. Jeanne Litdka and Tim Ogilvie did a good job in explaining design thinking process for managers in their book entitled “Designing For Growth – A Design Thinking Tool For Managers”. Hopefully, reading the book will help entrepreneur’s taking the first step towards learning and embracing the design thinking process and remain in the game of entrepreneurship.


Will the PAP Win It Big This Time?

Now that the polling is just over and before the results are out, let me try predicting the percentage of votes that the PAP can accomplish in this general election (GE).

This is a watershed GE. Why? Because it is the first time in the history of Singapore’s election since 1965 that all the constituencies are contested and without the discernable presence of Mr. Lee Kuan Yew (LKY). The results of this GE will set the tone of what is to come in the future elections and the fate of Singapore.

I will do a dashboard analysis viewing from the qualitative and quantitative perspectives.

Qualitatively, the mood on the ground is relatively sweet as Singaporeans observed SG50 with great fanfares and festivities from the beginning of the year right up to the National Day celebration. The passing of LKY a few months ago had brought all Singaporeans from different walks of life, race and religion together to pay tribute to and commemorate the founding father of Singapore. Even those who used to be critical of LKY accorded equal sentiment of recognizing LKY’s contribution to the country. But, without fail, the critics were also quick to compare his style of leadership to that of the younger PAP leaders.

From the quantitative perspective, I categorize voters into two age groups – Group A & Group B. Group A consists of voters who are 65 years old and above, and Group B consists of voters between the age of 21 to below 65 years old. In this GE, there will be about 2.46 million voters, and from the Department of Statistics 2014 data and my extrapolation taking into considerations of new voters in 2015 and those who are not able to vote due to various reasons, there are about 431,000 voters aged 65 years old and above, and about 2.028 million voters between the age of 21 to below 65 years old. The assumptions I made are that 80% of Group A and 50% of Group B will vote for the incumbent. Based on these assumptions, I expect the PAP to garner about 55.26% of the total votes – a disappointing result as compared to 60.1% in the GE of 2011.

Nevertheless, if I take into consideration a 5% sway coming from Group A either against or for the PAP, the percentage of votes that it can gain will be in the range of 51.1% to 59.4% respectively. Granting Singapore being a developed country, gaining the majority vote of 55% and above should be regarded a good mandate for the government but considering what the PAP had done to win the ground, it is clearly a worrying trend.

Are You Building A Disruptive Product?

Many have loosely used the word startup to define their new venture or company, as it is the fads and fashion of the day. But really, do we know what a startup is and what does it has to offer?

Talk about startup and the first thing that we derive is Silicon Valley, Facebook, and Google etc. Each day without fail, there will be a company founded by a whiz kid or a genius that either got funded or acquired at a valuation that is unthinkable five years ago. The Internet 1.0 bubble burst is still crisp for some and they cannot fathom the lucidity of these valuations. When Facebook announced the acquisition of Instagram for $1.0 billion valuation, it was difficult to grasp what and how Mark Zuckerberg could have seen its potential upon integration with Facebook. Likewise, who would have believed that (a Chinese company) could have raised more than $30 billion from the US capital market and being the largest IPO offering in the history of Wall Street? The question is what does Instagram or has to offer that a typical old school sustainable business is not offering. It’s all about disruptive innovation!

What is a disruptive innovation? Clayton Christensen, Professor at Harvard Business School who wrote the influential and best-selling book ‘Innovator’s Dilemma’, defines disruptive technology as innovation that results in worst product performance, at least in the near term, and is cheaper, simpler, smaller and frequently more convenient to use. The non-disruptive innovation (or sustaining innovation), on the other hand, would likely be more of improving performance of an existing technology or tweaking of a disruptive product that would usually result in a much faster, efficient and better utilization product. Examples include building faster disk drives, iPhone 6 (the first iPhone was a disruptive product), low fat and zero-sugar cupcakes etc.

As disruption technology tends to be cheaper, simpler and easier to use, it attracts the mass market while on the other hand, sustainable technology tends to continue building faster, smarter and more expensive product to a point that it loses the majority of the market who may not necessarily be needing the extra capabilities and paying a high price for it. Eventually a disruptive product would usually enjoy exponential growth as compared to incremental growth of a sustaining product.

Building a disruptive product is not about competing with an existing product for a limited size of a market, but creating its own market that no other product has the ability to provide. Take the innovation of iPhone as an example where a phone, iPad and computer are integrated in one small device. There was no product at that time offering a similar capability as companies like Nokia and Blackberry were too busy developing sustaining technology to make their phones more sophisticated and relatively more expensive. Apple created its own market and need not have to compete their iPhone with anyone. Of course, once the market was created, we saw the competition from companies like Samsung and Google trying to gain market share in the smartphone space.

There is no limit to innovations in creating disruptive technology and/or products. All we need to do is keep breaking the barrier and changing the game of the industry. Keep it simple, small and more convenient and mobile for people to use.

Investing Opportunities in the US

Strong leading indicators show that the US economy is set to do well in the next few years as more investments are coming from all over the world including Singapore. The global economic landscape is shifting as emerging economies especially China is slowing down, and the middle east region is about to witness another turmoil coming out of Iraq. For several years, US corporations and investors have been investing in China and other BRIC (Brazil, Russia, India and China) countries, but for the last 12 months, the tide has changed. Many Chinese are investing their money in the US creating businesses and jobs, and buying up real estates. The EB5 Visa (Investor Visa) quota allocations issued by the US government to the PRC’s (People Republic of China) are snapped up within weeks, and many more will have to wait for the next cycle. It is also true for applicants from other BRIC countries.

PM Lee’s visit to the US is timely as Singapore’s government continue to foster robust relationship and facilitate Singapore’s companies and investors to look for strategic investments in the US. Fortunately for Singaporeans, we have a very strong and respectable reputation among the US business community, and that makes it an easier entry for Singapore’s companies and investors to do business with the Americans. There are plenty of opportunities in the US ranging from mega to small size deals.

Capitals (both funds and human) are moving back to the US again, and we had seen how its capital markets performed in the last 12 months, and it is expected to perform better in the next 24 to 36 months, assuming the situation in the middle east is contained and not affecting the oil price.

What are the opportunities for Singapore’s companies and investors?

1. Direct investment into small to mid size US companies
2. Invest in startups
3. Merge with and/or acquire a US company that’s looking to expand their business in Asia
4. IPO or a secondary listing for Singapore companies in the US Exchanges to tap on the capital market


The Growth of Post-Seed Fundings in Singapore


More exciting news for startups in Singapore.

A Silicon Valley early stage incubator, Golden Gates Ventures (GGV), plans to raise US$50 million VC fund to invest in Singapore’s startups. The raise is presumably done in the U.S to give opportunities for U.S investors a bite of the startup opportunities in Asia, and Singapore will be a perfect spot to start with. With strong government’s support through favorable policies and monetary grants to jump start the innovative enterprise, Singapore can position herself as a ‘Startup Hub of Asia’ where she can attract innovative people and smart capital from every corner of the globe.

Singapore has been amenable in bringing foreign talents but has slowed down her effort recently to assess the quality of skills brought in to ensure that they are not taking over the jobs of local Singaporeans. A focused approach of talent scouting based on specific industry skills will be more effective to avoid locals’ resentment and at the same time expanding the economy. The innovative business through startups calls for smart and innovative talents that need to be sourced globally and copulated with smart capitals to invest in the ventures.

Pre-seed and seed investors have already existed in Singapore but more are needed to fund deals that are growing day by day. The presence of Series A is almost nonexistent but with GGV’s entry, it will be a beacon for others to join in the foray as post-seed funds increase from US$27.9 million in 2011 to US$1.7 billion in 2013. It will not be long before we see great products coming out of Singapore’s startups as the ecosystem grows with smart people and money becoming part of it.

The Making of ‘Mini Silicon Valley’ in Singapore


In my earlier blog, I wrote about Singapore being the Silicon Valley/Alley of Asia. Though the challenges are numerous, Singapore’s government has unequivocally demonstrated its willingness to accelerate the effort of restructuring the economy through innovations. Unlike in the U.S, the startup industry in Singapore is at its infant stage and has to be driven by the government as the private sector lacks the zeal to do so.

In the recent Parliament budget announcement, the government acknowledged the intended areas of innovation that involve harnessing 3D printing technology, biomedical sciences, electronics and engineering, big data analysis, and robotics. On top of the monetary grants extended to qualified startups, physical infrastructures like incubators and manufacturing center have been built to facilitate entrepreneurs to hit the ground running and start developing their innovative ideas.

Like they said, “Build it, and they will come”. Unmistakably a rational strategy of striving towards becoming the Silicon Valley/Alley of Asia – think big but start it small. As for now, Singapore merely wants to be a ‘Mini Silicon Valley’ and start nurturing imminent stars that will improve the world.

Managing Startup Company is Like Driving a Car


Before you get into your car, you need to know where you’re heading to. In your mind, you have an idea where your destination is and how you can get there. The road map is in your head and, most of the times, you can envision the roads and their surroundings along the route. Having an i-Phone map or the GPS can be convenient as you are able to monitor the conditions of traffic and make necessary adjustments if there is congestion.

You are now set to go and start the engine and take the route that you have planned and begin defining the impediments along the way. As you keep driving, you learn and register the movement of all vehicles around you. You have to ensure that you do not drive slow or fast ending in an accident, receiving a ticket or taking the wrong direction. In all likelihood, despite driving on the same road every day, the variables and conditions of the roads and their surroundings change at all times and you will have to be observant and adapt to these changes. When you encounter heavy traffic, you need to make a precarious decision whether to stay on the same course or take an alternative path to reach your destination. Interestingly, others are contemplating likewise, and the alternative plan may also endure the same consequence.

Once you are on a right track without hindrance, you want to make up the lost time. Ordinarily you want to step on the gas and will be traveling at a faster pace, and the variables you encounter will vary too. When the variables change, you must re-learn and adapt to the new leap that you are experiencing in the fast lane. Re-learning involves assessing the time and distance you have traveled hoping to reach your destination as planned. And if you are not gaining the time and distance, you need to continue stepping the pedal to the floor.

As you accelerate your car on an unknown road, be mindful of the potholes, sharp bend, and slow moving vehicles as hitting anyone will set you back to zero or even fatal casualty.

Have a safe start-up.

Can Singapore be the Silicon Valley or Silicon Alley of Asia?


Why not? It offers a lot of business sense as Singapore restructures its economy through innovation by investing in start-ups that may have the potential of becoming the prospective players of the world like Facebook, Google and LinkedIn. Though it appears simple on the surface, yet the intricacies of the start-up world are nevertheless obscure to many and if not tread carefully, it may result in wasting of resources and likelihood smudging the image of Singapore being a trusted and reliable financial center.

There is a clear political will from the government to develop Singapore into an innovative hub through the startups. In the recent budget speech, Minister Tharman revealed that the government was studying the potential for equity crowdfunding as an alternative source of financing for startups and small companies, and MAS and SPRING were looking into an appropriate regulatory framework.

Crowdfunding sanctions accredited and non accredited investors to invest in startup companies and was a spin-off from the newly introduced JOBS (Jumpstart Our Business Startups) Act in the U.S. to promote accredited investors to invest in startup businesses. Though various existing social media platforms facilitate the crowdfunding for accredited investors, there is no operating crowdfunding platform for non accredited investors as the law, despite approved by the Congress, has not been ratified by the U.S Securities Exchange and Commissions (SEC). To implement crowdfunding in Singapore, the government needs to do likewise and relax its investment regulations to enable non accredited investors to invest in a very high risk venture. Amending the law may have negative repercussion for the government, and the political cost can be rather steep as the plausibility of investors losing all their money is remarkably high. Hitherto, there is not a fool-proof mechanism or filter possible of preventing any fraudsters from setting up fake startups, raising money and eventually disappear.

A distinct stumbling barrier to warrant the success of startups is the absence of zeal from private investors as a critical component of the eco-system. There are varied reasons why established investors in Singapore are averse to  high risk investment in an unproven business as they have ample opportunities of investing with satisfying returns in the ‘old school’ businesses like the real estate, banking and manufacturing. More need to be done to encourage private capital, and eventually public capital through crowdfunding to invest in startups, with the possibility for few of them making astronomical returns. Few success stories can help sustain the model, and attract more private investors in a form of ‘angels’ and venture capitals to inject funds in many more startups in the pipeline.

Preeminently, the eco-system requires a consistent flow of innovative talents offering fresh ideas and actualizing them to the market. Singapore has limited human capital of bright and innovative individuals amenable to assume the risk, and forgo getting comfortable salaries to develop game changing products or services. Many, if not all, Singaporeans go through the mill of studying hard and performing well in their examinations, and expecting to land a fat salaries job in the private sector. Those identified earlier in their schooling life as potential scholars can secure a job in a public sector providing  salaries that are comparable to the private sector. When the crème de la crème being tempted with comfortable job security, where will the likes of Mark Zuckerberg be coming from? The revival of innovative individuals in the U.S occurred during the economic crisis when jobs were scarce and not secured. These individuals chose to create their own job by developing new markets not exclusively for the U.S consumers but global. As other countries like the U.S and China competing to allure innovative individuals, Singapore will have to offer more to bring these bright minds to its proposed Silicon Valley or Alley of Asia.

The Politics of Favoritism

The Politics of Favoritism

It is amusing to discern how many people scoffed when we made reference to them for practicing favoritism. This behavior ranges from having to pay more attention to only one of the children in the family to the consequential things in life like politics.

In Singapore, voters tend to play favoritism with the political parties. We expect the highest standard of excellence, discipline and achievement from the PAP but adopt the laissez faire attitude towards the opposition parties. It is like an endorsement that opposition parties are to make mistakes, even though some are very serious and would have adverse effects in the short and long run.

The recent case of Aljunied Hougang Punggol East Town Council (AHPETC) farce where the WP has failed every year for the last 2 years to satisfy the independent audit of their financials. What is more disturbing is that the leadership of WP do not see the problem as something that is pressing, and they evade it off as oversight and imputing the PAP for the poor handover of the town council. The independent auditor has to qualify the account in view of the missing amount of more than $20 million, and the issue was brought to the attention of AHPETC’s management for the last two years. It is either the management is not competent enough to rectify the situation or the problem is much bigger than we thought.

Here’s where the favoritism comes to play. Despite the ominous mistake made by the WP, there are Singaporeans who are more forgiving and continue in giving them the benefit of the doubts. Numbers do not lie, and for sure those trained auditors know what they are doing. Their findings cannot be doubted. Why the double standards to measure the integrity of the management running the town councils? We placed high expectation of performance from the PAP town councils, but being lenient when the AHPETC made a grave mistake of mishandling public money. Will these double standards be allowed as WP continue to win votes and constituencies and maybe running the government coffers one day? A very murky future scenario if we continue with the intent of replacing the incumbent government for the sake of doing it, without having to ensure that the alternative is the better candidate. It is a blind faith, and a fallacy to think that alternative is always better. Many great nations have fallen on their knees as having a corrupted government is an irreversible process.

It is a no small matter every time we cross the voting paper to choose who will govern Singapore in the future. If a group of so-called leaders cannot manage a town council and rectify a $20 million gap, how are we to trust them with the $200 billion reserves?