Leadership leap into the 21st century
Creating management and HRD strategic challenges for performance, results and prosperity
(Keynote address on the 27th ARTDO International Management and Human Resource Development Conference, ARTDO Asian Regional Training and Development Organization, Penang, Malaysia, September 28, 2000)
PENANG has always been one of my favorite Southeast Asian places - and one of my unfulfilled dreams is to retire somewhere between hill and sea on this lovely island. And I know even retirement on Penang would not be sinking into lassitude on some lotusland. No-retirement here would be an active one for both mind and body - because Penang keeps up with the world in every way.
Although I have not visited here for sometime, I keep tabs on Georgetown - in whom I delight - as a microcosm of East Asian culture. And I know Georgetown has become an icon of information technology in East Asia.
So let me begin by thanking Dr. Thomas Chee of ARTDO and the distinguished Patron of this Conference, the Chief Minister of Penang State, Dr. Koh Tsu Koon for their gracious invitation, which I'm afraid I may have been too quick to accept.
Apart from the anticipated pleasure of visiting Penang again, my eagerness stems from my interest in ARTDO's work of regional training, which developed during my time as East Asia's longest-serving Labor Minister.
And I subscribe wholeheartedly to your Conference theme.
Over these next few years, the ARTDO countries must indeed make a "Leadership leap into the twenty first century."
Over these next few years, our countries must learn to cope with the "new economy" being created by the new information and communication technologies.
Over these next few years, our national communities must convert themselves into "Knowledge Societies." They must position themselves strategically on the right side of the "digital divide" threatening to split the globe.
You and I recognize the world has always been divided into the haves and have-nots. This time around it is splitting into the world of the skilled and the unskilled - the world of the knows and know-nots.
If our countries are to survive - and prevail - in such a competitive world, they must produce worldclass workforces. Only by doing so can all of Asia transit finally to developedcountry status.
On this theme, let me elaborate briefly.
Coping with the new economy
At the start of a new century and a new millennium, new scientific and technological knowledge is challenging our conventional wisdom.
Most of what we assume - axiomatically - no longer fits our reality.
The continuous process by which emerging technologies are pushing out the old has become so relentless it objectifies Schumpeter's theory of "creative destruction."
And not since Marx has capitalism displayed such "brutal vigor" - battering down "all Chinese walls" of the old order, and compelling all nations to adopt the new modes of production.
Specifically, the new communications and information technologies - working in synergy - are generating an "information revolution."
By their ability to transit data instantaneously - across time zones, frontiers, and cultures - they are annihilating distance and creating a virtual borderless world.
This information revolution has also generated unprecedented interdependence - "globalization" - among individual countries. And it has created a "new economy" characterized by the widespread use of information and knowledge in business and the economy.
Increasingly for countries, corporations and individuals alike, the ability to compete in a world where all the barriers are falling will mean the difference between survival and extinction.
This new era will be different from every other, in the possibilities it holds for everyone of us; and in the demands it makes on our creativity, intelligence, and adaptability.
Penang and Malaysia as models for coping
In this new era, Penang and Malaysia offer for our countries good examples of how to respond to the challenges of globalization.
They are textbook studies in how to cope with the new economy, models which ARTDO acknowledges, by holding its 27th Conference here.
This historic trading port has turned itself into a "Silicon Island" at the center of an ASEAN "Growth Triangle" pulling together Sumatra and southern Thailand, even while it has nurtured its attractions as a traveler's destination.
Malaysia's achievements in the large are even more impressive.
Since 1971, its economy has expanded yearly by about 7%, multiplying GNP from 13 billion ringgit to 123 billion 20 years later and individual incomes from the equivalent of US$410 to more than US$3000.
Prime Minister Mahatir's Wawasan 2020 (or "Vision 2020") stands for the selfsufficient industrial nation that Malaysia is determined to become in 20 years' time - its economy eight times larger than it is now - and its people, adept at telecommunications and aerospace, rivaling in creativity and entrepreneurship the most advanced nations.
To benefit from the new economy being created by the new information and communication technologies, Malaysia is already transforming itself into a knowledge-driven economy.
To attract the capital and the technology for its own information-technology industry, the country is investing up to 100 billion ringgit in a Multimedia Super Corridor close to Kuala Lumpur.
Stretching 50 kilometers long and 15 kilometers wide, this corridor and its centerpiece "smart cities" - Putrajaya and Cyberjaya will house all of Malaysia's IT and multimedia projects.
Within this Corridor, the Malaysian Government has packaged a variety of cutting-edge infrastructure, tax breaks, duty-free imports, and a variety of other incentives.
Whether our countries like it or not, the Malaysian example is the standard they must begin to match in their own efforts to cope with the new economy.
Changing concepts of leadership
Not only our governments - but our business organizations too - must adapt urgently to the new economy.
In the new economy, manufacturing is based less and less on the traditional factors of production - labor and natural resources - and more and more on knowledge and its material applications.
I recall the New York Times once noting that "the only factory asset of Microsoft is the imagination of its workers."
As an example, in the 1920s, raw materials and energy made up 60% of the cost of the key product of the era - the automobile. But the emblematic product of our time - the microchip - has a raw material and energy content of less than 2%.
"And by 1988, the same volume of goods could be produced as in 1973 with only two-fifths the blue-collar man hours."
(Figures from Peter Drucker)
Even the composition of workpeople is changing. In many countries, blue-collar workers in mass-production industries are being replaced by "technicians" equipped with theoretical as well as practical knowledge.
Not only that; industrialists can now also range the global market in search of the best production sites for specific manufacturing components. Already, Japan, for one, is training all its school population to become "Knowledge workers", confident it can find all the manual workers its industries will need in the developing countries.
Creating corporate cultures of teamwork
Meanwhile, the rise of the information-based organization is rapidly making the traditional business corporation obsolescent.
The era of the autocratic business empire-builder and the command-and-control corporate model is over. Management can no longer command excellence from knowledge workers, whose expectations of their work, of the way they are managed, of their opportunities and rewards, are different from those of assembly-line workers.
This is why, at the Indian software giant, Infosys, every single employee has stocks in the company; and even the waiter who serves that company's Gandhian CEO his vegetarian lunch is apparently worth about half a million US dollars. (FEER, 24 August 2000)
Nowadays, corporate management can no longer run things top-down. It must create cultures of teamwork.
Business hierarchies are being flattened. No longer are employees organized in strict layers of title and salary. The key to the executive washroom has lost its potency as a corporate status symbol.
By Peter Drucker's reckoning, most large American companies have already cut their management levels by one-third or more between1990 and 1995. Yet the restructuring of corporations has barely begun.
And Drucker sees the process ending only after the typical corporation has been unbundled, reduced to its core competence, with all its subsidiary and support services farmed out to outside contractors.
Our need for strategic leadership
In today's competitive world, leaders must possess strategic capacity. And this is true of political - as well as business - leadership.
Strategic leadership is anticipating the future. It is learning what all the possibilities are. And it is the determination to shape events, rather than allowing events to shape the country or the corporation.
Strategic leadership starts out by conceiving a vision for the organization, which it then reduces into a workable mission.
Of this kind of leadership, Prime Minister Mahatir is a prime political example. So is Singapore's Lee Kuan Yew, whose efforts nowadays are focused on making the whole of Singapore an "Intelligent Island."
In my own country, between 1992-98, President Ramos raised the vision of the Philippines reaching the threshold of NIC-status by the year 2000. And his successor President Estrada has focused the country's modernization campaign on wiping out Filipino poverty.
It is the leader's ability to think strategically that distinguishes him from the routine manager.
James MacGregor Burns, the American historian and student of the Presidency, differentiates between "transactional" and "transformational" leaders.
In MacGregor Burns' terms, good managers are transactional leaders. By definition, they are skilful negotiators, brokers, compromisers. They make the political- or the corporate-system work by producing consensus out of debate, and order out of conflicting particularist interests.
Transactional Presidents see their political office as the seat of pragmatism; they deal step by step with problems as they arise.
But, MacGregor Burns argues, truly great leaders have all been transformational leaders who raised inspiring visions before their people that produced bold, transformational change.
Our political and corporate systems will always need transactional leaders-managers who (in Max Weber's phrase) can routinize charisma. But I suggest our situation and our times call for transformational leaders, in our politics and our economies; leaders of vision, courage and imagination who will take our countries across the digital divide and from the old economy to the new.
Creating world-class workforces
At the dawn of a technology-driven era, our most urgent need is to position our countries - and our corporations strategically in the ever-changing, fast-moving world they are entering.
And this we can do only if we create workforces able to compete directly with the best in the world.
To create world-class workforces, our greatest resource are our young populations. While the peoples of the West - and of Japan - are all aging, fully half of all developing Asia's peoples are below 22 years old, with all its implications for creativity, daring, and vigor.
Not only must we improve the productivity of our work peoples. We must also increase their ability to move across sectors of the national economy, as its center of gravity changes.
The best job and business opportunities in the new economy are in information technology, which is a natural fit for the skill-level, availability, and comparative costs of Asian workpeople.
The consultancy firm McKinsey & Company recently identified 11 white-collar services - with an estimated demand worth $180 billion by 2010 - that the mature economies can profitably outsource - and which our countries are well-positioned to supply.
In the Philippines, the electronics industry is already shifting toward more sophisticated and more complex products. And we already run back-office operations - in accounting, software development, and technical support - for some of the great service-industry multinationals.
The keys are training and education. We must match the young Asian's passion for education with institutions and systems that will both sharpen his skills and expand his mind.
Our countries must also load up on the hardware of the new economy - telephone mainlines, mobile phones, personal computers, and Internet hosts. In this regard, Singapore and Malaysia are the furthest advanced.
In training and education, governments can only do so much in the face of competing demands for their severely-limited resources. The private sector must do its part. In my country, tertiary education has become dominated by private colleges and universities run for profit. Employers too must do their part as the users and beneficiaries of workpeople's skills and knowledge.
This is why ARTDO's mission is so crucial.
Conclusion and closing message
Now to sum up and conclude. For countries, corporations, and individuals, the ability to compete in a world where all the barriers that have kept peoples separate and distinct are falling will mean the difference between being up there with the winners or down among the losers.
To stay ahead of the competition in the emerging Knowledge Society, it is imperative that the worker, the corporation, and the nation-state should be creative, innovative, nimble and flexible. They must be rich in what Rosabeth Moss Kanter of the Harvard Business School calls the three C's - concepts, competence, and connections.
In such an interdependent world, the task of political and corporate leadership is to position our countries strategically, to make them competitive players, in the new economy.
In such a world, workpeople who do no more than passive assembly work of components that other peoples invent are the new economy's equivalent of the Biblical "hewers of wood and drawers of water."
Asians must themselves become source of entrepreneurship, inventiveness, and creativity. They must be able to contribute meaningfully to the world's technological culture in a measure equal to those of all other peoples.
This is the goal to which ARTDO - and its kindred and allied organizations around the world - must rededicate themselves.
Your collective end-effort must be to make our countries, our corporations, and our workpeople competitive players in the new economy.
Together, Asian governments and Asian corporations must foster competition - encourage start-ups and venture capital, invest in research, and shape education to enhance Asia's human capital.
It must be your task to awaken our peoples to the dawning of a technology-driven era, to lead them in crossing the digital divide, and to take up their rightful place as equals in the global community of nations.…