I just felt like jotting down some of the stuff I rambled last friday oct 10th at universiti malaya. Please feel free to comment. Violent objectionsare always welcomed...hehe..enjoy...hu hu... the foto immediately above was during lunch in singapore. Flanked by a Brunei Takaful operator on my left and a Saudi (Riyadh) Insurer on my left...
(Asas Pembudayaan Keusahawanan)
Executive Lecture, Faculty of Economics & Administration (FEA), Universiti Malaya October 10th, 2008
by Khaeruddin Sudharmin
Managing Director & CEO of Motordata Research Consortium Malaysia in partnership with THATCHAM UK
Thank you Miss Chairperson for the kind introduction,
Professors and undergraduates,
Professors and undergraduates,
A very good afternoon and thank you so much for the kind invitation to share some of my personal thoughts and reflections about entrepreneurship and my own experiences over the last three decades. I shall not attempt to replace your professors nor shall I attempt to impress you by going down the academic route as I most often have the tendency to, as a result of my occasional adjunct role teaching MBA students at a few universities.
You will also notice that I have no prepared text and no powerpoint slides to bore you. I like to go back to basics, give you a lecture in the traditional brick-and-mortar way. That way I will not be distracted by the slides and I could also look you straight into the eyes and prevent any attempt of falling asleep as I speak.
‘Men have been swindled by other men on several occasions. In the autumn of 1929, men succeeded in swindling themselves’ (John Kenneth Gailbraith). Sounds familiar isn’t it? 1978, 1988 and now 2008? All around autumn. It seems to me the 10 year economic cycle (crisis?) seems to surface around autumn time where the weather is pleasant, people take an extra break after the summer holidays to enjoy the pleasant cool weather only to get the shock of their lives! Last week in Singapore while attending the 5th Asian Claims Management in Insurance Conference at the Singapore Hilton, the Jakarta Stock Exchange was suspended before lunch and it was closed for two days! The nation’s market capitalisation had been depleted by more than 10%. Apparently almost all foreign investments were sold-down to be taken back to their homes to help avert the global financial meltdown. The US700bil financial sector bailout plan by Paulson, US treasury secretary and the GBP50bil rescue plan did not stop the October black Mondays! CEO of bankrupt Lehman brothers was grilled by Congress. When asked if it was fair that he took home US500 mil in salaries while the company went bankrupt, he said well err…that is not correct, I merely took home slightly more that USD250mil!. If you had read the Edge Malaysia page 50 issue of October 6, 2008, Luigi Zingales, professor of entrepreneurship and finance at the University of Chicago’s graduate school of Business in his article, said that Henry Paulson was wrong and that he had addressed the wrong issues. He said that for six of the last 13 years, the Treasury Secretary was a Goldman Sachs alumnus (including Paulson). The decisions that Congress must make now, will affect not only the US economy’s short term prospects, but will shape the type of capitalism that we will have for the next 50 years. Luigi asked a very pertinent economic question that will have serious implications to us too, do we want to live in a system where profits are private, but losses are socialised, where taxpayer money is used to prop up failed firms? Or do we want to live in a system where people are held accountable for their decisions, where imprudent behaviour is penalised and prudent behaviour rewarded? He goes on to say that for anyone who believes in free markets, the most serious risk of the current situation is that the interest of a few financiers will undermine the capitalist system’s fundamental workings. Saving capitalism from the capitalists will, to me, be your most challenging task when all of you my young friends, become business, economic and financial leaders of this country in the not so distant future!
Let’s get back to entrepreneurship. And to be sure we are speaking on the same wavelength I browsed and surfed the internet this morning and saw what wikipedia has to say about entrepreneurship. It said, an entrepreneur is a person who has possession over a company, enterprise, or venture, and assumes significant accountability for the inherent risks and the outcome. The term is borrowed from French and was first defined by the Irish economist Richard Cantillon. Entrepreneur in English is a term applied to the type of personality who is willing to take upon herself or himself a new venture or enterprise and accepts full responsibility for the outcome. In common understanding it is taken as describing a dynamic personality. The modern myths about entrepreneurs include the idea that they assume the risks involved to undertake a business venture, but that interpretation now appears to be based on a false translation of Cantillon's and Say's ideas. The research data indicate that successful entrepreneurs are actually risk averse. They are successful because their passion for an outcome leads them to organize available resources in new and more valuable ways. In doing so, they are said to efficiently and effectively use the factors of production. Those factors are now deemed to include at least the following elements: land (natural resources), labour (human input into production using available resources), capital (any type of equipment used in production i.e. machinery), intelligence, knowledge, and creativity. A person who can efficiently manage these factors in pursuit of an opportunity to add value, may expand (future prospects of larger firms and businesses), and become successful.
Entrepreneurship is often difficult and tricky, as many new ventures fail. Entrepreneur is often synonymous with founder. Most commonly, the term entrepreneur applies to someone who creates value by offering a product or service. Entrepreneurs often have strong beliefs about a market opportunity and organize their resources effectively to accomplish an outcome that changes existing interactions. Some observers see them as being willing to accept a high level of personal, professional or financial risk to pursue that opportunity, but the emerging evidence indicates they are more passionate experts than gamblers. Business entrepreneurs are viewed as fundamentally important in the capitalistic society. Some distinguish business entrepreneurs as either "political entrepreneurs" or "market entrepreneurs," while social entrepreneurs' principal objectives include the creation of a social and/or environmental benefit. Business entrepreneurs who adhere to Cultural Creative values are defined as innerpreneurs as their principal objectives include personal development and social change. An entrepreneur is someone who attempts to organize resources in new and more valuable ways and accepts full responsibility for the outcome. The word "entrepreneur" is a loanword from French. In French the verb "entreprendre" means "to undertake", with "entre" coming from the Latin word meaning "between", and "prendre" meaning "to take". In French a person who performs a verb, has the ending of the verb changed to "eur", comparable to the "er" ending in English. Enterprise is similar to and has roots in, the French word "entrepris", which is the past participle of "entreprendre". Entrepreneuse is simply the French feminine counterpart of "entrepreneur". According to Miller, it is one who is able to begin, sustain, and when necessary, effectively and efficiently dissolve a business entity. Scholar Robert. B. Reich considers leadership, management ability, and team-building as essential qualities of an entrepreneur. This concept has its origins in the work of Richard Cantillon in his Essai sur la Nature du Commerce en Général (1755) and Jean-Baptiste Say (1803) in his Treatise on Political Economy. A more generally held theory is that entrepreneurs emerge from the population on demand, from the combination of opportunities and people well-positioned to take advantage of them. An entrepreneur may perceive that s/he is among the few to recognize or be able to solve a problem. In this view, one studies on one side the distribution of information available to would-be entrepreneurs (see Austrian School economics) and on the other, how environmental factors (access to capital, competition, etc.) change the rate of a society's production of entrepreneurs. A prominent theorist of the Austrian School in this regard is Joseph Schumpeter, who saw the entrepreneur as innovators and popularized the uses of the phrase creative destruction to describe his view of role of entrepreneurs in changing business norms. Foundations Dedicated to Entrepreneurship: To date, the largest foundation dedicated to entrepreneurship is the Ewing Marion Kauffman Foundation, based in Kansas City. One of the main entrepreneur associations is the Entrepreneur's Organisation. In Syria, the Syrian Young Entrepreneurs Association tries to help young people become job owners rather than job seekers. It was founded in 2004. (source: http://en.wikipedia.org/wiki/ENTREPRENEURSHIP).
Is there such a thing as entrepreneurial culture? To some extent perhaps there is. I am sure there are empirical evidence and hundreds of research papers talking about it. I have to be careful here when describing entrepreneurial culture in a race-based manner lest I be labelled a racist! Well, simplistically, a chinese boy, growing up in a family who has a shop selling and repairing bicycles by the time he is 6 years old, would have been able to open up a bicycle into smaller parts and put it back together fairly easily and quickly and would know the bicycle trade including its repairs. That’s what I call entrepreneurship culture. I heard in some colloquiem some time ago that when it comes to doing business, the Malays are reminded about the age old practises in the kampongs where when a small sundry shop selling all sorts of stuff including rice, it seems that the owner (tauke or tuan punyer…the same rice he takes for sale, is also the same rice he takes out to cook fot the night’s dinner…and we call this ‘meniaga buloh kasap: pangkal hilang, hujung lesap’ which in as sense to describe the notion of how important it is to understand the accounting concepts. You need to account and separate between the things you sell for business and your personal stuff!) But, whoever said that the malays do not have entrepreneur culture? They (the malays) have been seamen and traders more than 700 years ago. They were a mercantile society too. Something must have gone wrong along the way. It is always easy to blame others, yes we can say that during the british period before independence they (the british) adopted or was purported to have adopted the divide and rule strategy where the chinese were at the tin mines and traders/business people in towns, while the indians were at the rubber estates, while the malays were fishermen, farmers or mostly government servants. Much of that scenario has gone but that portion where malays would still go for the secured government jobs unfortunately still prevail. I shall not argue or provoke a debate of the ups and downsides to that but therein lie some of the reasons as to why there is still a dire lack of bumiputeras in the commerce & industry. It’s a choice about taking risks and having a secured job. In the corporate world, we define ‘culture’ as the way we do things around here. So, I guess how one looks at what culture is, will determine what one understands what I am talking about. In laymen terms, if one comes from a business or mercantile culture, studies have shown that there is a high probability of the next generation becoming equally or a better entrepreneur. Of course there are detractors, some may opt not to continue the culture or tradition and try completely new, revolutionary or evolutionary vocations. The fact remains that two out of three new businesses or entrepreneurial initiatives fail!
I always like to use parables in driving my subtle messages across. Have you ever watched that movie ‘babe’ about the animals in a farm much like animal farm? One day the farmer decided to make Roseane (the female duck) as the main dish for his dinner. While the farmer and his family was at the dining table, the animals in his farm were all watching by the window, Ferdinand (the male duck) was crying away saying..’…its not fair, why her, why not me?, the cow beside him comforted by saying..’Ferdinand…the secret to a happy life is to accept the way things are, the way things are! Ferdinand replied: ‘…the way things are, stinks!. What the cow said, philosophically we say ‘hopless resignation’ while Ferdinand’s response can be interpreted as ‘spluttering resistance’. So, which one are you? The duck or the cow? If one looks at the Malaysian society in general, it is quite easy to quickly categories the various ethnic groups whether they belong to the ‘hopeless resignation’ or the ‘spluttering resistance’ grouping. I leave that to your illuminating skills to decipher.
I am not sure if I can be considered an entrepreneur or a corporate animal. Corporate animal yes but a reluctant entrepreneur perhaps. I had been in the private sector most of my working life and a short stint as a PTD (diplomatic corp) officer when I was director of the Malaysian Railways training school. Then when I was invited to join PNB (the national equity corporation) I was exposed to fund management and had the privilege to prepare its strategic directions as well as to the initiatives of PUNB (national entrepreneurship corporation). In fact we (PNB IT before a name change to HeiTech) were a PUNB investee company when the treasury directed PNB to sell off PNB-IT (an IT wholly owned subsidiary of PNB) so it (PNB) could focus on fund management. I was one of the management buyout (MBO) team member in 1997. What happened afterwards is history. We took the company public in 2000. I still remain group corporate secretary (http://www.heitech.com.my/) but spend a large portion of my time with MRC as MD and CEO. I was assigned to this outfit in December 2000 when it was in the red to a tune of RM6 mil. Today, it is a member of the global Research Council for Automobile Repairs (http://www.rcar.org/) and our concession as the only centralised database for the motor insurance industry in Malaysia will end in July 2013.
My lecture has been rather eclectic and touchy-feely at times but I rather you ask me the questions. Perhaps as a final note before I get off the rostrum, here’s a story to tickle your brains: three boys were caught in the nude in their hostel room by the warden. Two of the boys quickly covered their private parts with their hands (natural reflex action) while the third boy, covered his face with his hands instead. Question: who do you think would make a promising entrepreneur? Answer: the third boy of course…because he was thinking outside the sarung!
Thank you very much for listening to me.
Thank you very much for listening to me.
The Edge Malaysia Week of Oct 6 – 12th, 2008 page 50