This article first appeared in The Edge Financial Daily on November 20, 2017
KUALA LUMPUR: The term “disruption” was first popularised by Harvard professor and businessman Clayton Christensen in his book The Innovator’s Dilemma, some two decades ago, when he wrote about new technologies causing the downfall of great, established firms.
What is disruption? It uproots and changes how we think, behave, work, do business, learn or even live. It displaces an existing market, industry or technology, and produces something new, more efficient and relevant. It is at once destructive and creative.
And the pace at which disruption can happen is astounding, with the continued advent of technology in an increasingly connected world. It is helping new start-ups leapfrog industry barriers overnight, or shatter the foundations of established ones in a few short years.
It also means being an entrepreneur today is one of the most interesting, exciting and potentially lucrative things one can be. Three of the 16 top nominees of the EY Entrepreneur Of The Year 2017 shared with The Edge Financial Daily, EY’s media partner of the award this year, their thoughts and experience on the issue.
Chiau Haw Choon
Managing Director of Chin Hin Group Bhd
Top nominee in the Emerging Entrepreneur category
Having grown from a 1970s hardware store in Alor Setar, Kedah, to a building material manufacturer with an annual turnover of over RM1 billion, Chin Hin Group Bhd is no stranger to weathering tough times. Like many other companies today, it too is facing the disruptive forces of automation and digitalisation.
A case in point: it is bracing for disruption impact on its trading segment, which was once its core business.
“That’s the only [part of our] business that has a high chance of being disrupted by technology, because people can now use digital platforms to buy directly from the manufacturer, removing the need for traders,” said its managing director Chiau Haw Choon, citing Alibaba and Amazon as examples.
Haw Choon has, however, diversified the group since joining the family business 10 years ago, and lessened its dependence on the trading of construction materials, which is no longer the main contributor to the group’s revenue.
On taking over from his father, Datuk Chiau Beng Teik, Haw Choon — who represents the Chiau family’s third generation at the helm of the company — shifted the group’s headquarters to Kuala Lumpur, and expanded its business by acquiring seven different manufacturing businesses, including wire mesh, concrete blocks, concrete pipes and solar energy production. The group also ventured into property development.
The capital-intensive nature of its manufacturing operations makes it less likely to be disrupted as quickly, Haw Choon said.
However, the trading business remains the company’s “cash cow” and is something that needs to be protected. “So, [technological disruption] is something we need to watch out for as we continue to innovate our current business to make it sustainable,” Haw Choon said.
On that note, he is seeing disruptors like artificial intelligence as something the company can leverage on to grow. “We can use technology to take over back-end work. Industry 4.0 is something we can leverage on,” Haw Choon said.
The 33-year-old listed the company last year, making him Bursa Malaysia’s youngest head of a public listed company and providing the group with alternative avenues for funding. Challenges within the company between his first few years and now have varied, Haw Choon shared.
“Back then, there was more of a challenge in terms of raising capital and attracting talent. We were perceived as just a ‘Chinaman’ company. But as the business grew, we were able to attract more high-quality talent,” he said, referring to the old adage “Rome wasn’t built in a day”.
Now, however, he sees culture management as a challenge as the group’s staff have grown from just 70-strong to over 1,000. Apart from ensuring that procedures are followed, a holistic environment and synchronised attitude are something he would like his employees to share.
“People may not remember you, but they will remember how you made them feel,” he said.
Datuk Seri Chew Weng Khak
Founder and Group Executive Chairman of Pensonic Holdings Bhd
Top nominee in the Master Entrepreneur category
Not many people may know this, but it was a kind of disruption that created Malaysia’s first home-grown electrical appliance company, Pensonic Holdings Bhd, according to its founder Datuk Seri Chew Weng Khak.
It happened in the 1980s, when foreign electrical appliance brands suddenly withdrew the rights granted to companies like Pensonic’s predecessor, Keat Radio Co Sdn Bhd, to distribute their products. “It was then that I realised I wanted a brand that cannot be taken away from me, and that’s how Pensonic was born,” he said.
“Disruptions are actually healthy as they keep us on our toes and push us to keep striving for excellence,” said Chew, who is also Pensonic’s group executive chairman.
To Chew, now aged 75 and the oldest of the 16 top nominees of the EY Entrepreneur Of The Year 2017, entrepreneurs are natural disruptors. “We embrace disruption and at the same time, we are disruptors who anticipate, innovate and deliver products and services that customers need. In a way, entrepreneurs change the way things are done to enrich customers’ lives,” said Chew.
This may be why Pensonic is standing firm in the face of strong competition from China, which is shrinking the local market’s size. “The only way to stay ahead of the competition is to provide innovative products that are affordable, yet fit in seamlessly with our customers’ lifestyles,” Chew said.
He also shared that the company is continuously looking for untapped markets and finding new ways to capture customers’ interests and loyalty.
“The most important element of a business model is the agility for a quick turnaround. We have different brands to support high-end customers as well as the masses, offering products and services for a variety of needs.
“On top of that, we are flexible with our strategies, and we will review and implement changes as required to thrive in local and regional markets,” he added.
Having said that, Chew also shared how an entrepreneur who does not create the disruption or technology can embrace and ride on the growth of one, like when the government rolled out a policy to connect rural households with electricity in the 1960s.
Chew said he saw the opportunity which the infrastructure would bring, and grabbed the chance to start and grow his business.
His advice to future entrepreneurs? Stay humble and to keep learning. “Keep your eyes open for new opportunities. Challenges are opportunities to learn new things and stretch your limits. You learn nothing by staying in your comfort zone,” he said.
He also stressed that customers are important, but employees more so. “Employees represent the company and are your strongest ally if you want the company to grow.”
And bear in mind that disruptors or not, an entrepreneur must learn the essential skills and knowledge to manage a business, like financial management, he said. “Proper financial management training is not an option, but a necessity for future growth.”
Muhammad Iqbal Ameer Ali
Group CEO of Livescape Group Sdn Bhd
Top nominee in the Emerging Entrepreneur category
One can ward off disruption if one creates and maintains a unique business model that cannot be easily copied by newcomers — that is what Livescape Group Sdn Bhd group chief executive officer (CEO) Muhammad Iqbal Ameer Ali believes.
Muhammad Iqbal said the event management company, which started among friends and became one of the largest event management companies in Southeast Asia today in just six short years, has always taken the “blue ocean” approach to things by moving its business to uncontested market spaces. That was how the group’s current flagship festival, “It’s The Ship”, came to be.
“We have yet to see any new disruption on the horizon. We are a first mover in this, and we intend to grow quickly,” he said of the music festival on a cruise ship, touted to be the largest in Asia.
Muhammad Iqbal said Livescape projects itself as a visionary that will revolutionise live entertainment in Southeast Asia and beyond.
“We intend to capture markets like Shanghai and Hong Kong, before China decides to do a ship party as well. Japan is also a good market to stamp our mark, as well as Sydney and Dubai,” Muhammad Iqbal said, adding that the company has already signed a deal to have the festival extended to Japan, Shanghai and Hong Kong next year.
According to him, to differentiate themselves from typical event organisers, Livescape focuses on providing crucial market data to event sponsors on top of just exposure to the sponsor’s target market.
“We have the right data on the right target market that brands want. We have a lot of sponsors who come to us because of the data we have,” he said.
While Livescape’s events are known to attract millennials, Muhammad Iqbal claimed that its events act as a bridge for brands to talk to and get to know this growing consumer segment.
“We segment our data to be extremely specific. So, we know if you have gone to [the] four Rockaway shows and we know whether you bought merchandise at the events. We know when you went in and when you left, so [from there], we can identify what kind of acts you were checking out,” he said.
To expand the use of data in its business, Muhammad Iqbal said Livescape is also currently working on a back-end technology platform to push the boundary of what sort of data they can provide to sponsors.
“We are building it (the platform) from the ground up — we have our own [in-house] programmers and we are building it [to be] specific to how Livescape runs its stuff. We have a report structure back to brands, so brands can see whether it is benefiting from them or not,” he added.