1 Nov 2019
By Prof. Dr. Ahmad Rahman Songip
President, International Association for Innovation Management (iAIM)
Email: email@example.com, firstname.lastname@example.org
The Shared Prosperity Vision (SPV) 2030 launched on 6 Oct 2019 by YAB Prime Minister shall be commended. The basis of SPV 2030 is to grow the GDP from RM1.45 trillion in 2018 to RM3.4 trillion by 2030.
According to Malaysian Institute of Economic Research (MIER), “the GDP growth has to be somewhere between 6.0 and 8.0% to attain the SPV 2030. To achieve over 6.0%, we have to do a leapfrog strategy.” Leapfrogging is transformational. Since the purpose of transformation is to create value, I have coined a new phrase called Transformational Value Creation (TVC), as written in my book, Break the Pattern – The Science of Transformational Value Creation (2018).
One of the criteria for TVC is the 100% jump in value. A fresh egg that costs RM0.36 has its value jumped to a minimum of RM1.00 once it is transformed into fried egg, delivering a minimum return on investment (ROI) of 100%, after adding, say RM0.14 for operational costs.
Since SPV 2030 is transformational in nature, the journey towards achieving this audacious target will be a very challenging one. The SPV 2030 document available thus far is, at best, a mere vision statement. Details on the strategies and action plans will be forthcoming later. Thus, this article suggests the way forward for the government to embark on, to ensure the achievement of the vision.
As explained in my book, the journey towards transformational value creation require three important steps, namely the intention or vision, break the pattern and transformation effort.
As stated above, the vision is already in placed. The next step to embark on is the “break the pattern” step. Without doubt, this is the most crucial step. Breaking away from the old pattern of doing things is mandatory in trying to realize the new vision. Otherwise, more or less the outcomes of SPV 2030 will be the same as before. There is a famous saying, “insanity is doing the same thing over and over again and expecting different results”.
In searching for creative ideas to break the old pattern, it is necessary to define and analyze the problems that SPV 2030 is trying to solve. The problem, as asserted by YAB Prime Minister is, “the failure of implementation of New Economic Policy (NEP) and Vision 2020 by governments under the fifth and sixth prime ministers”.
Defining the problem means the current government has to identify the true nature of the failure supported by facts, figures and evidences. Once these data are gathered, a thorough analysis should be done to identify the root causes of the failure. Failure to identify the root causes would lead to wrong or inappropriate ideas that do not solve the problem, hence wasting valuable resources in execution and failure to achieve the intended outcomes.
Let’s take one of the targets of SPV 2030 – increasing contribution of Bumiputera enterprises to 20% of GDP from below 9% in 2015. What is actually the problem? It is the paltry achievement thus far that indicates a massive failure by the previous government. According to YB Minister of Entrepreneurship Development, the government had spent billions on entrepreneurship development (unfortunately the Minister himself does not know the exact amount). In addition, there are more than 60 organizations involved in more than 150 entrepreneur development programs. Also, there are more than 38 policies, blueprints, action plans and road maps related to entrepreneurship that have been launched in Malaysia.
Such a miserable ROI certainly demands a thorough analysis of the government’s colossal failure. The Rakyat has the right to know since it involves tax payers’ money. It is important to search for data and evidences during the analysis. This is to avoid making mere assumptions and pointing fingers to certain parties. Failure to do a thorough analysis will only guarantee another massive failure by 2030.
In doing the analysis of the failure in the entrepreneurship development, one will uncover certain patterns and root causes that were prevailing during the planning, execution and management of the programs. This analysis process alone may spark the generation of “eureka” moments where one would get creative ideas that would break those old patterns and eliminate or reduce the root causes. Using certain creative tools and techniques to harvest the minds would also significantly boost the ideation process.
Since the target is towards transformational value creation (jumping from 9% to 20% is transformational), the goal of the ideation process is to produce ideas that are “illogical”. The more “illogical” the ideas, the higher the potential of its value creations. As mentioned above, the criterion for any transformation is its ROI should be above 100%.
There are many examples to illustrate my hypothesis on the “illogical” ideas that creates higher value creations. The closest example is the ability of the national political adversaries, namely YAB Tun Mahathir, YB Datuk Seri Anwar Ibrahim and YB Lim Kit Siang, to set aside their political differences to join forces together to form Pakatan Harapan that had defeated Barisan Nasional government. Such an alliance was certainly illogical and impossible until just before the 14th General Election.
Does it produce transformational value creation? Yes, it definitely does. Transformational value creations would only be possible if old bad patterns were broken and being replaced by carefully chosen new patterns. Malaysians now can change government during any general election without any problems. It augurs well for the country because it forces the government of the day to do its level best for the country and Rakyat. The oppositions would also have a fair chance of forming the next government. Hence, there is a stiff competition to offer the best for the Rakyat to choose from.
The BN government that has ruled the country for the past 60+ years has definitely formed certain patterns of governance. Those patterns have resulted in both good and bad outcomes. The PH coalition was successful in convincing voters that the bad outweighed the good outcomes from BN government and it claimed to offer a better deal for the Rakyat. Now that PH is the government, it remains to be seen on its ability to deliver what it promised the Rakyat in its manifesto. If they fail, they are fully aware that they would be defeated in the next GE.
The ideas generated from such ideation exercise, however, is only valid for one scenario, i.e. when the economic growth achieved an average of 4.7% (as claimed by SPV 2030) or 6-8% (as calculated by MIER), which could be themed as a very optimistic future.
However, looking at the historical GDP growth since 1980-2017, Malaysia experienced five years of very low GDP growths (-0.9% in 1985, +1.2% in 1986, -7.4% in 1998, +0.5% in 2001 and -1.5% in 2009). The rests are medium (3-5%) and high growth (>6%).
A superior future planning approach is to have a minimum of three scenarios with different sets of GDP growth. Another two plausible scenarios are gloomy (GDP growth from negative to +2%) and cautious (3-5%).
Each of these scenarios requires different sets of strategies and action plans. As time goes by, signals of economic anomalies that are happening inside and outside the country may appear anytime, hence giving some clues as to which scenario the national economy is heading into. Since the strategies and action plans for each scenario are already well thought-out and documented, the government just need to activate the appropriate strategies and actions. Hence, having economic scenario planning in place allows the government to be ready, flexible and resilient.
The main weakness of the previous economic policies is basing them on the optimistic GDP growth only. Hopefully, it becomes very obvious by now that the crafted strategies and action plans for the optimistic scenario are not applicable for the gloomy and cautious scenarios.
Once strategies and actions plans are ready, the next step is to have the transformation effort to implement them. This step is the most difficult step out of the three steps in TVC. According to literature, more than 60% of organizations failed to implement their strategies. YB Tan Sri Muhyiddin Yassin acknowledged this problem when he said, “even if the previous economic policies have some successes, there were still some leakages and difficulties in its implementation, which made some targets unattainable.”
There are various reasons for this failure. Chief among them is the failure to properly define and analyze the problems as discussed above. Next is the lack of implementation strategy, especially the selection of the person or team in charge of its execution. Another reason is the lack of ownership from the operational and tactical staff. In the conventional management wisdom, the directive and decision making have always been top down.
I strongly urged the government to ditch the typical creation of committees or task forces to undertake the implementation of action plans. It is simply a waste of time, despite lots of meetings with members coming from different departments and units. Everyone likes to talk but nobody wants to dirty their hands.
Instead the government should leverage the office of Public Service Department (PSD) to the fullest. PSD is giving out yearly scholarships for civil servants and the public to pursue masters and doctorate studies. Some of them are heading for expensive prestigious foreign universities. Since their research topics are typically decided by the students and the universities, the government does not earn any ROI on its massive human capital investment. It is the universities that get the most ROI, by getting the tuition fees and intellectual properties and solutions to the problems owned by the professors and universities.
It is the time now for that old pattern by PSD to be broken and value to be created for the Rakyat. Recipients of PSD scholarship should select any of the action plans of SPV 2030 as their action research topics. While studying in local universities are mandatory, they are allowed to travel abroad to collaborate with reputable universities or research centers from all over the world.
I call this arrangement as the Quadruple Innovation Model, since there are four main stakeholders who will all gain high value creations:
- Universities – providing the necessary knowledge, expertise and guidance to solve problems identified by SPV 2030; universities earning more income from the tuition fees and expanding networks with key government officials
- Organizations (Government Ministries/Departments) – solving the problems related to their portfolios and ensuring timely execution of their allocated action plans
- PSD Scholarship recipients as graduate students – acquiring problem solving skills from the experts in the universities and gaining higher academic qualifications
- Rakyat – the ultimate beneficiaries of SPV 2030.
In this Quadruple Innovation Model, the conventional wisdom of management is being flipped upside down. Staff who are directly involved are empowered to formulate strategic decisions. Hence its bottom up and shift the axis or ownership from top management to lower management and this will make them more determined and committed to make it a success, hence recognition where its rightly due. This unconventional approach may not be popular amongst top management for obvious reasons.
In conclusion, while the vision statement of SPV 2030 has been successfully crafted, the main challenge is finding the best strategies and action plans to fulfill its Key Result Indicators. This short article has outlined the way forward for the government to reduce the risk for strategy formulations and strategy implementations. The underlying principle in creating transformational value creation is the need to break the existing patterns that have caused failures of NEP and Vision 2020 and bravely replace them with carefully chosen new patterns.