Wanna Create An Entrepreneurial Culture?

Article posted (can't remember exactly when, probably 2001) on a Singapore government website that was asking for feedback on how to remake Singapore. This article written in response to the question posed below.



Beyond Careers: New Roads to Success.

We now have an escalator approach to success. Young Singaporeans strive to get on the right track in education, graduate, get on to one of the established career tracks by working for a large company, and expect to be set for life. What needs to be changed in order for us to be a more entrepreneurial society? How will education, attitudes and values need to be changed? The Economic Review Committee will be looking mainly at the economic and financial incentives. This committee will look at the soft side. How will we stimulate creativity, greater risk taking, higher tolerance of failure, and provide alternative role models of success?


1. Abolish the Singapore scholarship system in its present form.

This has served us well for the last 2 decades. But the appropriateness of long term scholarship bonds in rapidly changing market conditions should be examined. Many scholars are just "serving out their time", present in body but elsewhere in spirit. And this spirit might include entrepreneurial ambitions.



Instead of 5+ year bond in return for a fully funded scholarship, give the scholar an option. You can either get full scholarship in return for a 3 year bond, or you can decide at the end of your degree to convert your scholarship to a loan. You decide, based on your career options and interests at the end of your degree.



This is what happens in leading US consulting firms like McKinsey and The Boston Consulting Group with regard to funding an MBA programme for their entry-level consultants. MBA-wannabes will get full funding, but if they choose not to join the firm after graduation, they have to pay back the funds. Usually their new employers will foot the bill or at least arrange for a loan scheme with a bank.



In practice if one were to do this for Singapore, we need to get real abut the length of the bond period. Anything above 3 years is too long in my opinion, but we still see 7 year bonds around.



A side benefit of implementing something like this is that a lot more scholarships will have to be offered to get the same number of recruits that government agencies want - which will mean a bigger pool of people who will benefit from scholarship/loan opportunities.



2. Break up the GLCs into smaller business units, and encourage management buy-outs (MBOs)It pains me to see some GLCs speak of 4 core businesses when core really means one. Break them up! Unleash the entrepreneurial spirit of the business unit heads. Spin off business units, encourage management buy-outs of stakes in these business units and see what these ex-business units can do as a focused independent company.



Sever the relationship at the board level between the parent company and the spin-off entity so that the latter can truly become independent and even deal with the former parent's competitors.



The days of leaving management of companies to a few trusted hands shows the government's own risk averseness. Time to walk the talk. You might discover some hidden talent within the 2nd level management ranks. No doubt you will win some and lose some.



A secondary benefit of a proliferation of MBOs in Singapore is that the bond market will come to life (as management teams seek financing to buy-out business units). Investment bankers will be kept busy, and maybe all those retrenched folks in the financial services sector will be rehired again.(I have dealt with some representatives of a GLC and they are a royal pain - all looking to look good internally but not really caring about whether customer/partners needs are met. Maybe, as an independent entity, where their survival depends on their customers, their customers' voices might be heard)



3. Encourage franchising.

A two tiered approach in this area. First, assist some good local products and services to develop a franchise system that can be expanded internationally. Second, encourage Singaporeans, particularly those recently retrenched, to consider franchising as a first step into the world of entrepreneurship.



With regard to the first, it is refreshing to see the worldwide Coffee Bean head franchise bought out by a Singaporean, and now being expanded internationally. There is Ya-Kun Kaya toast, who are beginning their journey in franchising. Some possibilities: a fish head curry franchise (like Muthu's Curry), a roti prata and teh tarik franchise, a kueh franchise (like Bengawan Solo), a nyonya food franchise (sorry the franchise opportunities examples used so far revolve around food, but hey, this is a core competency of Singaporeans). Subsidise the costs of setting up a franchise system, and get some professionals on the government's payroll to identify, encourage and advise local successful businesses to build a franchise system.



Second, encourage Singaporeans to start their entrepreneurial career through franchising. Have more franchise fairs, list franchises in a web-accessible database and try lower the entry risks for potential franchisors (e.g. low interest loan scheme to pay for franchise fees, or a one for one matching scheme to pay for franchise and start-up fees, like our current angel investing programme). Encourage GLCs who own master franchises to farm them out, and not be too kiasu about the upfront franchise fees.



Run training/information programmes that enable a potential franchisee to identify which franchises have a high chance of succeeding, and which are just fronts for master franchise owners to make a fast buck (read bubble tea).



4. Encourage risk-sharing by land and building owners (especially the GLCs)

A disproportionate proportion of the cost of doing business in Singapore is high rental costs (even in current depressed markets, commercial landlords including GLCs are still holding out for high rents). High rents means greater operational risk, and our poor franchisee above and other entrepreneurial companies are likely to struggle to cover their operational costs.



Why not encourage the kind of leases that encourage risk sharing between landlord and tenant, common in the States? For example, why not tie rental to the sales revenue of a particular retail tenant. Instead of charging a Ya-Kun Kaya Toast franchisee a rent of $10,000 a month, why not have a cap and collar approach - charge minimum rental of $5,000, then 2% of retails sales up to a maximum of $15,000 a month?



This substantially reduces the operational risk for the tenant, and aligns both the interests of the landlord and the tenant to ensure that the tenant's business is successful. Landlord will do all they can to encourage foot traffic, and their success or otherwise in doing so will reflect immediately in their monthly rental takings.No reason why this should not apply to other non-retail businesses, but alignment of interests between landlord and tenant will be harder to achieve.



5. Reform of education system

I must admit that although I did my secondary education in Singapore, I have not experienced the Singapore education system. However, it is telling that many parents I speak to are scared of the Singapore education system, which is perceived to be ruthless and unforgiving.



So much so that Singaporean parents are considering sending their children to alternative education systems (trying to find a lubang to get into international schools); non Singaporeans asked to work in Singapore are deterred from coming here because they fear their kids cannot cope in Singaporean schools. It speaks volumes when a whole movie can be written on the unforgiving nature of Singapore schools.



Let us first acknowledge something. This is a good problem to have. Other South-East Asian countries (and many of the developed ones) are still at the stage of figuring out how to provide a good basic education (underpaid teachers, no talent in the profession, teachers supplementing poor wages by selling Amway products). Singapore instead is thinking of how to tweak its solid education system so it produces more well-rounded individuals, and where academic failure does not necessarily mean the end of the world. A very, very unique, highest order first world problem. Suggestions:



A.. Get rid of streaming at the primary school level.

Begin streaming at the secondary school stage only. This is to explicitly recognise that primary school is very much in the realm of the period of discovery, Get the kids to enjoy knowledge for knowledge's sake at this stage. So long as the kids get a good grounding in the 3Rs (reading, writing and arithmetic) that prepares them well for secondary school, our basic job is done. But if we can get them excited about the world around them, and because of that they thirst for knowledge, this is a great goal to work for. Streaming gets in the way of this as the focus is more on exams than on knowledge.



B. Even where streaming is introduced, e,g, Secondary 1, only certain subjects should be streamed, e.g. English, Mathematics, Sciences. Kids should be able to be in Stream 1 for English yet Stream 2 for Mathematics, and mingle with other students for other subjects.



This get rids of elitism and encourages mingling of students of different abilities in the same class, notwithstanding that they are streamed for others.



C. The secondary school curriculum should emphasis learning more than exams. This means that we should base end-of-year results less on exams than on class projects. Sure, continue the class tests to measure abilities, but also place equal if not more emphasis on projects, where knowledge from different disciplines is applied. We can always shift gear to the GCSE exam mode two years before actual date of the exam.



In these class projects, one can introduce an entrepreneurial bias e.g. new products/services that will improve our lives, innovative ways to raise funds for charity, to nurture and encourage creativity



D. Consider replacing A-Levels with the International Baccalaureate (IB) system. It is well recognised that IB is a more holistic form education which includes a good emphasis of application of learning (e.g. in assessed projects) as opposed to just learning itself.



6. Educate general public on entrepreneurship

In the early 80's, I remembered John Cleese of the Monty Python fame, doing corporate videos on business management. These were immensely entertaining and were targeted towards people who wanted to learn the basic fundamentals of running a business. It was delivered in a casual and humorous way, which probably accounts for its success.We can do a similar one focusing on running your own business, starring Gurmit Singh. There are discrete topics probably to do an 8 part series, starting from identifying opportunities, to financing a business to managing cash flow. Air it on TV, in Mandarin, in Malay, in English, get people engaged through its humorous delivery.



Complementing this could be 8-10 week programmes in entrepreneurial management, which could be offered along the lines of the WSTP programmes offered by SPEC/SHRI currently. I'd be happy to contribute towards the development of such a programme if required.



7. Continue to publicise entrepreneurial role models

Don't just focus on Sim Won Hoo, but also middle of the road entrepreneurs too, even the successful Muthu's curry and Ya-Kun Kaya Toast owner. Focus on the phoenixes too. Get them to speak of the difficulties they faced along the way, not just their successes, to prepare their audience for the challenges ahead.