MalaysiaReimagined.NOW: ‘You may become irrelevant in the blink of an eye’

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It was the first time in Accenture’s storied history in Malaysia that the consulting powerhouse had gone outside the company to recruit a country managing director. Trying to explain the rationale for the move, Azwan Baharuddin, the new man in the hot seat of Accenture’s Malaysia practice, comes up with a neat play on words.

“Just as Accenture wants to inspire change in its clients, it too wants to change, to get a fresh perspective. You could say the decision to bring me in was almost like an Accenture on Accenture move.”

And while he has settled in quickly, thanks to his strong background in information communication technology and accounting, he concedes that the first few days felt like “it was me against the world” as the 3,000-strong organization in Malaysia adjusted to the new boss who did not come from their ranks.

The early days of adjusting to and feeling each other out are now out of the way. In a fast-changing digital-inspired world, there are too many uncertainties, challenges and rocky situations and Accenture and its clients need a reassuring voice and a steady hand at the helm. Witness how Singapore’s central bank has just talked about allowing the island nation’s banks to invest in e-commerce companies or payment platforms, ostensibly as a means to compete against non-traditional players who are disrupting the banking space — think Alibaba.

And Azwan aims to ensure that Accenture is that steady hand they can rely on. One of his remits is to transform Accenture for the next 20 years — in the next three!

“That is bold thinking,” he acknowledges. It has also got him thinking and wanting to play a central role — not just in Accenture’s future but in Malaysia’s as well.

 And, with future all about digital, riding that wave to growth and job creation is front and centre as he aims for Accenture to play a key role in helping both companies and the government manage to their advantage this ongoing wave of disruption.

The rate of change is hard to follow he says, citing some analysts who predict that 40% of the companies in the Fortune 1,000 will not be around in 2024. “You are going to see many more Kodaks to come,” he warns, referring to the US film and camera maker that has become a poster child for how not to deal with digital disruption.

He also refers to the “Global Information Technology

Report 2016”, which features the latest iteration of the Networked Readiness Index. The report assesses the factors, policies and institutions that enable a country to fully leverage ICT for increased competitiveness and well-being.

Malaysia ranks 31 in the world and second in Southeast Asia. It is a digital savvy nation with 145% mobile penetration, which has produced its share of unicorns, with JobStreet the first and now Grab grabbing all the headlines as a disruptor.

But it that enough? “Despite the political rhetoric from some countries, it is an open, borderless world in the digital economy, where your traditional competitor no longer exists. Where the likes of Alibaba have done what no one thought was possible — it has become everything to everybody. You could become irrelevant in the blink of an eye if you do not monitor carefully and react quickly to the changes,” Azwan predicts.

And that is going to be the challenge for Malaysian corporates. He believes the convergence of industries will be one of the biggest challenges. “Globally and regionally, you have media companies trying to become tech companies, telcos trying to become digital companies and providing financial services, tech companies aiming to build cars, meter companies wanting to provide healthcare. I mean it’s all coming at them fast and furious,” he says.

He believes the danger is that Malaysian corporates  seem to think they are handcuffed to their existing businesses and business models, or that they are too big to change. “But really, they have to force change.” And that involves a relook at what their business is and what business they really want to be involved in because the traditional industry verticals are breaking down.

“Everybody is rushing to be everything to everybody, but who is providing the customer experience?” he asks. “I think that is what people are fighting very hard to own.” This involves delivering a level of personalisation and customer service, especially to millennials, that is digital first, which many digital disruptors understand instinctively but which bricks-and-mortar corporates, complacent with their yearly profits, do not.

“The biggest question at the moment is, how to unlock the trapped value of digital (see Chart 1) because it is the disruptors that are quickest to make money — not the incumbents.”

Azwan’s own thinking is that, to survive, corporates need an ecosystem strategy and must select the right partners to execute for them. These correct partners could be other corporates and definitely the digital disruptors. “You can never do this alone,” he says “those days are gone.”

 

ROLE OF Regulators

It is not just how companies compete that has to change in today’s digital-infused environment, regulations must be adapted as well. The secretary-

general of Treasury, Ministry of Finance, Tan Sri Mohd Irwan Serigar Abdullah, acknowledged this when he welcomed the inaugural cohort of 56 start-ups from around the world to the Malaysian Global Innovation and Creativity Centre (MaGIC) Global Accelerator Programme in Cyberjaya last week.

“In fintech, the regulator needs to create rules to make it easy for SMEs to participate and compete in the market,” Mohd Irwan said.

To Azwan, regulations can be a powerful tool for the government to accelerate or slow the pace of digital adoption. “Do you transform regulation, so we adopt digital faster to force the change, or do you say, ‘Let’s manage it to make the change slower so people can adapt’.” Either way, it is not an easy question to answer, he notes, because if you don’t change and disruption comes, regulators will be left behind.

While regulators now face pressure to be agile, Azwan notes that there are six characteristics that seem to define the bricks-and-mortar players who  have unlocked the trapped digital value from their businesses.

They are purposeful and aligned to creating innovative services for their customers.

They are essentialists that look for asset-free or light businesses. Where traditional businesses look at their balance sheets and assets owned, that paradigm has flipped now and these companies look for asset-light or asset-free businesses and how they can make the most of them.

They are hyper-efficient, utilising tools such as machine learning and Internet of Things to reinvent the business, where previously they would have looked at business process re-engineering.

These companies are expansive from the point of view of establishing a high-value talent pool that utilises crowdsourcing and a contingent work force. “It is almost like a utility model of labour here and it would be a complete headache for human resources departments to manage,” he acknowledges. But this approach helps companies tap top talent who only want to work on exciting projects and call their own down time.

They are network-centric, but we are not talking about IT networks here. Rather, they are able to develop deep, broad partnerships in the ecosystem with collaboration, co-sourcing and so on because no one party can do it all alone in the digital economy. The days of asking a vendor to give a quote to solve a particular problem are drawing to an end.

And, finally, these successful bricks-and-mortar companies also exhibit a tech-prolific nature whereby they actively invest in new technologies.

The examples of companies that have captured their digital value, for example GE, are global examples. Is there a local catalyst for change? Azwan thinks there is, provided there are three stronger competitors in the space, “perhaps” he says. “But when you don’t have that strong competitive element, it is up to you what you want to do.” (See Chart 2 for an idea of the potential impact of digital initiatives.)

 

Malaysian response to digital disruption

Azwan notes that many Malaysian companies have clearly started their digital journey but that, overall, they are not keeping pace with the global leaders. “Even some of our government-linked companies have appointed chief digital officers (CDOs) and I see that as a good sign. But they need handholding. What does the role mean? How do you integrate it with the more established chief information officer role?”

To him the CDO role is more about questioning and exploring new ways of doing existing things, about reinventing the business. The role is definitely not about technology. But it is also a temporary fix “because once everything is digital, that CDO function is not relevant as a standalone anymore”.

Interestingly, Azwan observes that GLCs that operate overseas and compete against multinational companies are more forward-looking in their digital approach and awareness of being asset-light where possible.

While it is easy to look at the doom and gloom side of digital disruption, Azwan sees great opportunity.

“I actually think there is a massive opportunity for Malaysia right now and we should seize it to become a top competitive digital economy because we are now where we are [based on the various global indices] as a competitive nation without yet taking full advantage of the digital opportunities available.”

Surprisingly, in most instances, it is the government that has set the pace for digital adoption. The Digital Malaysia strategy was developed in 2011, and execution began in 2012, led by the Malaysian Digital Economy

Corporation and Ministry of Science, Technology and Innovation. Agencies focused on start-ups, such as MaGIC, have also been strong drivers of the various components of the digital ecosystem to speed up the embrace of digital.

“The launch of the Digital Free Trade Zone is the latest example of driving home the message that we as a nation have to not only adapt to, but lead in shaping the digital economy,” says Azwan.

“Our companies must not wait until they are in trouble and being disrupted before investing in their digital capabilities. They have to act now.”

 

Near a tipping point

He strongly feels Malaysia can do better than its 31st ranking in the Networked Readiness Index. “I think we are near the tipping point and need to articulate the dream clearly, so everyone is marching to the same tune.”

Azwan sees TN50 [National Transformation 2050] as an important part of this articulation and even mentioned this in his remarks when his appointment as Accenture country MD was made.

“Accenture aims to be a key driving force to shape the nation’s vision for the next 30 years [TN50] to be ready and relevant for the future. We are firmly committed to being a part of Malaysia’s advancement into the future in terms of innovation, economic growth and social well-being.”

He aspires to help establish Malaysia as an innovation hub. With Malaysia already a Global Delivery Centre for Accenture, with over 1,000 highly qualified staff that will more than double in the next 12 months, Azwan sees a future for Malaysia in the KPO space (Knowledge Process Outsourcing) where the scale advantage of India and the Philippines is neutralized. And this dovetails with how Accenture is reimagining BPO (Business Process Outsourcing), focusing on AI driving insights and business outcomes, managed by engines, cloud and platforms with intelligent people managing the role of robots rather than managing the jobs themselves. Moving away from such commoditized, low-value BPO work and shifting its focus to niche technical skills, knowledge and expertise in advanced and sophisticated areas of outsourcing is termed as KPO.

To achieve this, he needs local talent to draw the business from Accenture and once it is established here, to drive it forward in an aggressive growth mode.

Which is why, anyone having a conversation with Azwan can be assured that at some point, education will come into the picture. He becomes animated over the urgency to adapt the education system to the needs of the digital economy.

“Education provides the future supply side and when talking about primary and secondary education, we need to change the way children think. We are starting to do that, but it’s hard because their parents and teachers don’t think with a digital skew.”

Higher education also concerns him. At a time when Malaysia needs relevant degrees, he feels the education system is still offering some degrees that are not relevant. “We urgently need to refresh the curriculums offered to stay relevant.”

That becomes even more urgent in the context of the rising concern over job loss from ever more advanced levels of automation and sophisticated software that has started to replace white-collar jobs as well.

“But that is the conundrum of today — when higher efficiency causes displacements.” But being the optimist that he is, Azwan feels new industries and new types of jobs will pop up. But we have to get used to the fact that there are no longer jobs for life. “But there will be jobs created that you and I never dreamed of doing before,” he says.

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