THE current economic crisis has affected more people than is                                                                                          
suggested by official statistics.                                                                                                                     
                                                                                                                                                      
While there may be less corporate bankruptcies or failures                                                                                            
compared to the mid-80s crisis, the effect on the average                                                                                             
Malaysian is nevertheless traumatic.                                                                                                                  
                                                                                                                                                      
Take the case of two close friends. One is a prominent                                                                                                
businessman, serving on several corporate boards which went                                                                                           
public just before the downturn.                                                                                                                      
                                                                                                                                                      
As a director and bumiputra, he was given sizeable lots of new                                                                                        
shares at par value of several companies. To acquire the                                                                                              
shares he had to borrow quite substantially from commercial                                                                                           
banks.                                                                                                                                                
                                                                                                                                                      
Then came the downturn and the value of his shares was reduced                                                                                        
by as much as 80%. Servicing the bank loan became impossible.                                                                                         
In effect, his personal wealth accumulated over 40 years of                                                                                           
corporate work was destroyed.                                                                                                                         
                                                                                                                                                      
Another is a young graduate on the fast track, moving rapidly                                                                                         
from job to job. So sure was he of the future that he took a                                                                                          
mortgage on a house, bought a car on hire purchase and led a                                                                                          
lifestyle envied by many. He was among the first to be                                                                                                
retrenched as he was new to his company and could not find                                                                                            
alternative employment.                                                                                                                               
                                                                                                                                                      
These two stories can be multi- plied a thousand-fold across                                                                                          
the country.                                                                                                                                          
                                                                                                                                                      
Will we ever learn to better manage ourselves in the future?                                                                                          
                                                                                                                                                      
We should first accept as a fact of life that there is no such                                                                                        
thing as a status quo, that today is different from yesterday                                                                                         
as tomorrow will be very different from today.  Countries and                                                                                         
organisations will, therefore, be exposed and subject to                                                                                              
market forces.                                                                                                                                        
                                                                                                                                                      
Economic reality has it that we will be continuously buffeted                                                                                         
by the winds of change that often-times blow prosperity in our                                                                                        
way, but sometimes adversity cannot be avoided.                                                                                                       
                                                                                                                                                      
A prudent country or organisation will recognise this stark                                                                                           
reality and take proactive steps to exploit the opportunities                                                                                         
of the market and cushion the impact of potential threats.                                                                                            
                                                                                                                                                      
What are the lessons that can be drawn from the recent                                                                                                
economic crisis?                                                                                                                                      
                                                                                                                                                      
First is the need to recommit to fundamentals. We observed                                                                                            
this need after the mid-80s crisis but, with the euphoria of                                                                                          
unimpeded growth over such a long period, lost sight of                                                                                               
reality when housing and building starts were way ahead of                                                                                            
existing and potential demand, when price-earnings ratios were                                                                                        
in three-digit terms and when bank borrowings were excessive                                                                                          
to equity commitments.  It is only to be expected that when a                                                                                         
downturn occurs, the sudden reduction in consumption will                                                                                             
affect those with excessive stocks high gearing ratios and                                                                                            
high operating costs most severely.                                                                                                                   
                                                                                                                                                      
Second is the wisdom of sticking to your core business, a                                                                                             
business that you know have achieved competitive advantage and                                                                                        
have direct competencies.                                                                                                                             
                                                                                                                                                      
It was fashionable in the late 80s and early 90s for companies                                                                                        
to rapidly diversify into quite unrelated businesses,                                                                                                 
particularly into property.  The diversification of Sime Darby                                                                                        
into banking, for instance, proved to be disastrous during the                                                                                        
1997 downturn.                                                                                                                                        
                                                                                                                                                      
Third is the push for higher productivity, efficiency and                                                                                             
effectiveness.                                                                                                                                        
                                                                                                                                                      
Domestic and international competition will drive out                                                                                                 
organisations which cannot compete on price, quality and                                                                                              
timely response. This may require compensation packages to be                                                                                         
linked to performance and the deployment of technology                                                                                                
support.                                                                                                                                              
                                                                                                                                                      
Knowledge work will command a premium as we move into                                                                                                 
e-commerce and frontier markets not yet fully exploited by                                                                                            
traditional distribution channels.                                                                                                                    
                                                                                                                                                      
Fourth is the very urgent need to remove all wastes and                                                                                               
misallocation of resources.                                                                                                                           
                                                                                                                                                      
Cost-savings exercises and right-sizing should be a continuing                                                                                        
corporate agenda and not undertaken only during economic                                                                                              
difficulty.                                                                                                                                           
                                                                                                                                                      
Likewise, the audit committee of organisations should be an                                                                                           
active force to ensure that there is compliance with                                                                                                  
articulated polices and procedures. Transactions should be                                                                                            
transparent and there should be in place systems and                                                                                                  
procedures that severely limit the opportunities for graft.                                                                                           
                                                                                                                                                      
Fifth is to develop a culture of excellence.                                                                                                          
                                                                                                                                                      
Whatever form it takes, whether through kaizen, quality                                                                                               
circles, ISO procedures or internal competition, there should                                                                                         
be promoted a crusade that there is always more that can be                                                                                           
done to be better than the competition.                                                                                                               
                                                                                                                                                      
As soon as an organisation claims it has arrived, its problems                                                                                        
will begin. For the organisation to have a sense of purpose it                                                                                        
has to continue to exploit new markets, create new products or                                                                                        
services and think of new ways to meet customer satisfaction.                                                                                         
                                                                                                                                                      
It has to change to meet the changing market place.                                                                                                   
                                                                                                                                                      
Sixth is the primary role of leadership. When the going gets                                                                                          
tough the tough get going.                                                                                                                            
                                                                                                                                                      
In adversity, leaders do not jump boat but see to it that the                                                                                         
boat stays afloat and continues to sail towards its desired                                                                                           
destination. Painful decisions may have to be made like                                                                                               
cost-cutting exercises and even retrenchment, but the leader                                                                                          
has to be the focus of action. It is therefore wise for                                                                                               
organisations to invest in a leader of substance.                                                                                                     
                                                                                                                                                      
Seventh is the resurgence of the spirit of enterprise. To be                                                                                          
effective in handling crisis organisations should be                                                                                                  
innovative to seek new products and new markets and introduce                                                                                         
new processes in their core business on a continuing basis.                                                                                           
                                                                                                                                                      
Given the impact of rapid change, organisations will be                                                                                               
required to meet change by exploiting new opportunities that                                                                                          
change will produce.                                                                                                                                  
                                                                                                                                                      
Customer satisfaction and convenience will be critical factors                                                                                        
in the entrepreneurial drive.                                                                                                                         
                                                                                                                                                      
Eighth is to apply technology to the work that we do. There is                                                                                        
simply no turning back on digitalisation as IT invades the way                                                                                        
we communicate and do business.                                                                                                                       
                                                                                                                                                      
Not only do IT applications create savings, improve                                                                                                   
productivity and maintain quality, IT is also the new engine                                                                                          
to electronic business opportunities via e-commerce and e                                                                                             
business. In the USA, some 40% of business is transacted over                                                                                         
the net. Sooner or later we have to follow suit.                                                                                                      
                                                                                                                                                      
Ninth is the need to develop the workforce into thinking and                                                                                          
opportunity-oriented resources.                                                                                                                       
                                                                                                                                                      
For too long, human resource development has been to enhance                                                                                          
the competency of an individual at a given job.                                                                                                       
                                                                                                                                                      
As change will continue to affect organisations more                                                                                                  
dramatically in future, we need to develop people to be                                                                                               
multi-skilled so that they can be routed to new jobs with new                                                                                         
competency requirements.                                                                                                                              
                                                                                                                                                      
In other words, more emphasis should be given to the                                                                                                  
development of potential so that the workforce can be                                                                                                 
reconfigured to meet unexpected change.                                                                                                               
                                                                                                                                                      
Tenth is to recognise the received wisdom of the past. In his                                                                                         
reflection of the lessons from Chinese cultural tradition for                                                                                         
corporate success, Tan Sri Frank Tsao cites several                                                                                                   
requirements that have enabled the overseas Chinese                                                                                                   
entrepreneurs to be so successful in his book, Success and                                                                                            
Succession.                                                                                                                                           
                                                                                                                                                      
In his reckoning eight requirements are critical, viz                                                                                                 
knowledge, commitment, capital, human resource, prudence,                                                                                             
responsibilities, diligence and thrift.                                                                                                               
                                                                                                                                                      
These requirements are by no means exclusive to the Chinese                                                                                           
businessman; they are universal attributes which will stand                                                                                           
every business in good stead.                                                                                                                         
                                                                                                                                                      
There are, of course, other lessons that can be learnt from                                                                                           
today's economic crisis and the crises of the past.                                                                                                   
                                                                                                                                                      
We tend to have short memories. That is why many of those                                                                                             
adversely affected today are not novices to recession, but                                                                                            
were also victims of the mid-80 crisis.  Yet we seem never to                                                                                         
learn.                                                                                                                                                
                                                                                                                                                      
The 10 lessons serve to remind our Malaysian managers, present                                                                                        
and future, that management is not speculation, that                                                                                                  
management is clearly a profession that is guided by a strong                                                                                         
sense of responsibility and accountability for the vast re-                                                                                           
sources that have been entrusted to us by shareholders,                                                                                               
creditors, suppliers and employees.                                                                                                                   
                                                                                                                                                      
Like any other profession we have a duty of care.