Friday, December 12, 2008

Who's your anchor?

An organisation needs key people who can unite and motivate staff to achieve its goals

Cats Recruit in The Straits Times - August 30, 2008
Have you noticed that in a closely-knit family, whether big or small, there is usually an anchor in the family? This is often the mother or mother figure who creates a home out of a house, and is a uniting force in the family unit.

In an extended family, which consists of three or more generations, the presence of such an anchor - the glue which binds various families together - is even more apparent. This person is often the matriarch (or, at times, the patriarch) whom family members generally respect and whom everyone invariably congregates around at a gathering.

The role of the anchor in the family is a pivotal one, and when the anchor is unable to continue fulfilling that role due to ill health or passing on, the void is keenly felt.

As is often the case, if that person is not replaced by someone else who steps into the role of "anchor", the cohesion in the family unit starts to weaken.

Workplace role
In the working world, the leader of the company creates the vision, influences the culture and value system, sets the goals and direction for the business, and works with his managers and other staff to ensure that the business grows.

A company, like a family, needs to nurture an environment that holds its staff together. The anchoring of its staff may be done in an informal way when the team is small.

Staff members bond with each other and the boss - who takes on the role of anchor - through constant contact.

As the company expands over different floors or multiple locations, the leader - who provided the initial glue in the company - now becomes less accessible to his growing employee base.

If the company has foresight, it will encourage another person or persons with the right abilities and qualities to take on the anchoring role that the leader once filled, on an informal basis.

Identifying the anchor or anchors in the organisation is one of the keys in talent retention.

Reliable traits
Anchors are people who are sincere, people-oriented and able to bring staff together. They normally have the trust of the boss and an intuitive sense of what the boss wants even when he is not around.

Often, these people have had a long history in the company - either as loyal employees or founding members. They are usually non-partisan figures, yet function as important "internal faces" of the organisation.

Anchors are generally positive motivators whom others like, respect and seek advice from when they have problems. They have the ability to make others feel that they are an integral and important part of the work community.

The people who play an anchoring role may be someone from human resource, finance or administration.

It could be the factory manager who keeps the morale on the monotonous factory floor humming through two shifts. In some cases, it may be the principal assistant to the CEO, who provides the much-needed interface between a busy boss and his staff.

The important thing is for the organisation and its leaders to recognise the anchors, treasure them and keep them.

Salient points
As with the matriarch of the family, the anchor person usually creates anchoring points that help to retain the organisation's talents and ensure a continued "esprit de corp" among its staff.

In an extended family, good food provided by the matriarch is a drawing point to gather the family together. So, in a large organisation, the same philosophy can materialise in the form of a staff canteen serving good subsidised "home style" food that draws people from different departments together.

In a smaller business, a well-stocked refrigerator, or at least a pantry with beverages can serve as an equally effective gathering point for staff to refresh themselves and "chill out".

A recreational corner for those who wish to read the news and industry magazines, chat, or bond over a game of table soccer can also be an excellent anchoring point.

Organising entertainment, sports and games on a regular basis can create a sense of team spirit and cultural unity within the company, open up channels of communication at all levels of staff, and bring out strengths in employees which may not normally surface in the workplace.

Identifying anchors in your organisation may not appear to be very urgent. But if you neglect this aspect, the organisation may well see its talents slowly but surely drift away.

Article by Ong Yong Hwee, general manager, CEO Search & Services. For more information, call 6226-0872 or visit

Friday, August 15, 2008

A refined CBD system would be better

Business Times - Weekend Edition, November 12-13, 1994

Ong Yong Hwee has reservations about the effectiveness of the planned ERP traffic control system

Wednesday, August 13, 2008

Financial markets held hostage by fear

Business Times - 14 Oct 1998

By Ong Yong Hwee

An interesting phenomenon became evident early last month. Stock prices traded on Clob and on KLSE in the wake of Malaysia's capital control measures showed large differences.

In a market where fear was the predominant sentiment, a difference of as much as 78 per cent was possible on the same stock on the same day. Some banks even classified Clob shares held by margin investors as worthless.

It goes to show how fear alone can significantly drive down any financial market, disregarding any fundamental factor of the economy. Many analysts think that crony capitalism was the main reason for the fall of the Asian financial markets. However, the severity of the plunge in both the stock and currency suggest a systemic error or faultline in global capitalism.

For a good five years before July 1997, huge amounts foreign capital came pouring into Asia driven by expectations of good returns from the lands of rising tigers and dragons. Western funds willingly found their way into the pockets of powerful individuals and corporations with "good" projects and connections.

Lenders later came to realise that much of their funds had been unwisely used or squandered and that many of the borrowers were cronies with connections but perhaps not the financial wisdom for sound investment decisions. This, according to some economists, triggered the reversal of foreign capital flow.

However, I believe crony capitalism has little impact on a country's economic system, as long as the money is circulated within the economy.

Crony capitalism may have an impact from the standpoint of efficient allocation of resources, but is not likely to have been the key factor leading to the rise and sudden fall of the Asian economies.

The real reason for the crisis is the intense fear initiated by financier George Soros' attack on the Thai baht that started the downfall of one Asian currency after another. The speculative attack (the greed factor) on the baht and other Asian currencies created fear in overseas lenders. Short-term lenders left in droves.

The present sorry state in Asia is the result of a lack of resolve by the Group of Seven industrialised nations, which have it within their power to tame financial speculators like Mr Soros and calm the markets.
The free-enterprise system, like the law of the jungle, encourages the survival of the fittest. But when the fittest become too greedy, the weak will build walls to protect themselves to ensure survival.

Like ostriches, the world's economic powers prefer to bury their heads and leave everything to the the market. But if the atmosphere of fear is not calmed, the world's hope of more openness and democracy will be undermined. The world trading system will go backwards. More walls will be built. What Malaysia is doing now in the area of capital control will be imitated by others, in one form or another.

The world's financial system must be reformed and a proper framework instituted to ensure that the greedy cannot plunder and destabilise the system.

The recent debacle involving a US hedge fund, Long Term Capital Management (LTCM), should be an eye-opener. LTCM was reportedly able to borrow more that US$100 billion (S$164 billion) from banks to buy securities, based on the fund's relatively small capital of US$2.5 billion.

The borrowed money was then used as collateral to take positions on various derivatives and forward contracts with an underlying value of more than US$1 trillion.

Imagine the amount of leverage these combined global hedge funds can exert to destabilise financial markets. Speculators are allowed to sell and profit on what they don't have.

On the other hand, the margin investors are coerced into force-selling their declining assets at below the net asset value of their shares.

So, without proper controls and regulations, fear can overwhelm market fundamentals.

The problem today is that the key world leader, US President Bill Clinton, is preoccupied with his own problems. But until another powerful leader -- or a world organisation -- is prepared to trigger the process of cleaning up the system, confidence will not return to our markets.

The writer is a mechanical engineer by training and a business consultant by profession

Tuesday, August 12, 2008

Building a nation of workhorses and racehorses

Business Times - 25 Oct 2006

We have to believe in ourselves as precious racehorses where personal health is concerned


WORKHORSES are usually kept to do hard manual work in the open fields and are not necessarily well taken care of. These animals are usually taken for granted and their owners will pay special heed to their needs only when they are sick.

Racehorses, on the other hand are considered prize possessions by their owners who spare no expense in ensuring the health and general well-being of their precious animals. These horses benefit from the best of a well-planned diet supplemented by vitamins, exercise and grooming to ensure that they will perform at their optimum when put on the race tracks.

This is because the opportunity costs of a racehorse being unhealthy or sickly are immense. To stretch the analogy, should we live our lives as racehorses or workhorses? It depends.

In health matters, we need to take care of ourselves with as much care and thought as though we are precious racehorses. We cannot afford to take our health for granted, but must constantly be mindful that our health is our wealth.

In today's developed societies where the majority of us work in sedentary jobs, there is a tendency to forget that we need to regularly exercise to keep fit. Too frequently, work, family and other commitments take precedence over our time meant for exercise and recreation.

We often wait till we feel sick before we make a trip to the doctors who then prescribe some medication along, with the good old advice to take proper sleep, rest and exercise (which we may neglect to follow up on).

When we reach the stage where the ailment becomes major enough for long term treatment, drugs or surgery, we have already reached a critical point in the health management cycle. At this point, when we have been diagnosed with a serious illness and then choose to make radical changes to our sedentary lifestyle, it may be already be a case of 'too little, too late'.

In America last year, it is estimated that nearly US$2 trillion was spent on healthcare - and virtually all that money was spent on treating disease. Despite this massive expenditure on treatment, more Americans are sicker than ever before with diseases that are largely preventable: heart disease, cancer, diabetes, arthritis, and depression, to name a few of the more common ailments.

Financial resources are strained when medical treatment is required for major illnesses, and the results are often temporary or somewhat patchwork in effect. It does not make economic sense that so much monetary resources are channelled towards medical treatment rather than on preventive treatment.

A conscious effort at preventive healthcare is a much more practical and cheaper alternative to that of treating illness which could have been prevented or avoided. Hence, we have to believe in ourselves as precious racehorses where personal health is concerned.

We need to set aside personal resources of time, effort and discipline for health. Key areas of focus for physical and mental well-being are through diet and exercise.

I would like to focus on the exercise portion in this article. There are of course, an infinite number of options in terms of types of exercise to stay healthy. Here, I shall describe - taiji & qigong, as I have been a recent practitioner and convert. Taiji & qigong practitioners treat the body as a network of energy systems.

When these systems are working properly, the body can harness, store, distribute and utilise the energy for our daily activities. Practising qigong allows one to restore and maintain these energy systems in good working condition through its set of relaxed mind-body coordinated movements, breathing exercises and meditation.

Regular practice ensures that we maintain our health and hopefully, age gracefully. Qigong, when practised for health and healing benefits, has helped many who had been fighting sickness and poor health.

In the US, the late taiji & qigong grandmaster Jou Tsung Hwa was diagnosed with an enlarged heart and prolapsed stomach at the age of 47. He was introduced to taiji & qigong at that age and managed to consistently practice, excel and discover some important secrets of the art which he shared generously in his books.

National treasures

At 74, he looked like someone in his 40s or 50s. In China, these grandmasters would have been considered by some as national treasures. Because qigong and taiji often conjure up images of elderly and wizened practitioners, not many fit and healthy young enthusiasts choose to learn these forms of general exercise which have been practised for thousand of years in China.

It is often only when Heaven starts knocking hard at the door, do we start to look for quick cures and remedies. Qigong or taiji, however, requires years of practice to build up resistance and generate good health benefits.

Practised regularly over a period of time, it will go a long way in reversing early stage ailments, like in the case of the late grandmaster Jou Tsung Hwa. In Taiwan, some qigong masters play a visible economic role when well-to-do entrepreneurs require their services at business functions.

Once, one of my business associates was in Taiwan and developed a bad headache before an important meeting. The CEO of the Taiwanese company motioned to his qigong master to help this associate clear off the blockage that caused the headache.

The headache subsided and my business associate was able to continue the negotiations unhindered.

Racehorses may be handsome to look at on and off the racetracks. However, these horses can only perform at top speed over a short distance. Their competitive spirit and physique may not however, be geared for the long haul.

In education and work, we need to groom workhorses who are flexible and adaptable, unlike their more pampered racing cousins. Workhorses are hardy animals, accustomed to work in rain or shine, and flexible in adapting to ever changing climatic and economic circumstances.

Students need to inculcate a 'workhorse' attitude which will enable them to rough it out in the increasingly competitive workplace.

On the other hand, if children are brought up like royal racehorses, and start behaving like little CEOs, this would translate to a poor finish at the races when they are placed in the working world. These 'royal' individuals would soon enough be put out to pasture. My alma mater's motto, 'Serve to Lead', is, I think the right way to holistically educate our children, i.e. they must learn to serve first, and serve well.

They must be put through the fire, otherwise no 'special steel' leaders will emerge who can rough it out over the long haul, let alone lead like racehorses.

A good value system that Western fast food chains have brought into Singapore is the 'clean up after yourself' philosophy which allows the premises to be clean and pleasant at all times.

The practice of throwing away remnants or clearing your tray after you are done with eating, is a good one which we should perhaps adopt in our hawker centres.

Our philosophy and attitude in a particular environment makes all the difference in whether we adopt a 'royal racehorse' stance where 'menial' work is left to others or a 'workhorse' orientation where we buckle down and do things for ourselves (and others), whether it be in school or at work.

To sum up, although it may sound contrary, in health, we do want to be as healthy and competitive as racehorses, whereas in work we need to be as hardworking and adaptable as workhorses.

Whether at the personal, company or national level, this special combination of qualities will hopefully enable one to excel right to the finishing line.

(The writer is a mechanical engineer by training, and a business consultant by profession, with CEO Search & Services)

Copyright © 2005 Singapore Press Holdings Ltd. All rights reserved.

Monday, August 11, 2008

Entrepreneurship and the art of bicycling

Business Times - 16 Mar 2004

Learning about either involves the mind and the gut


WHAT is a bicycle?

This is not a trick question. There are two ways to find out the answer. One is through borrowed knowledge. You can get to know more about the bicycle through a traditional education-based system.

You can spend your early years in an innovative, fast-track, knowledge-based educational system via a gifted programme. Tutors and teachers can spoon-feed you on the intricacies of the brakes, pedals and the handlebars.

You can study the risks involved in cycling and do comparative studies on the most appropriate type of helmet and protective kneepads to wear. You can also be 'taught' the art of balancing oneself and the need to.

A global positioning system for navigating the bicycle can be included in the syllabus. Higher 'bicycle knowledge' can be gained by observation or experimentation and you can even finally get a PhD in 'bicycle-logy' without being able to ride one.

The other way to find out about a bicycle is via experience. You get to know a bicycle simply by riding one. You can even do a triple somersault without any prior knowledge about the bicycle system.

This bicycle-based analogy illustrates two aspects of the learning process. They are basically two sides of the same coin and both must balance each other for a total learning experience.

Training of the Mind

The knowledge-based system which we are accustomed to so far generally requires a logical, facts-and-figures way of learning. Concepts and principles are based on those discovered and are known entities, except if you have not read them. Questions are well defined and students are to regurgitate and apply those principles.

At a higher level, new theoretical or even practical ideas generated are generally based on further rationalisation, synthesis or mixing of existing knowledge. This is done via experimentation and the power of observation on problems surfaced up by those encountered through the door of experience.

Otherwise, the ideas that are generated out of a knowledge-based system are for an imaginary marketplace - that is, not tried and tested - and many will fail the test of the marketplace. You probably will retain the reasoning and thinking skills but will forget most of the knowledge that was pumped into you during your early learning years.

By pushing educational boundaries, educators can continually add new knowledge and push more difficult concepts downwards to the young.

The mantra for a knowledge-based learning here is to acquire, acquire and acquire some more. With the advancement of science in recent decades, there is a knowledge explosion. Even a lifetime isn't enough to learn everything.

But if the education system overdoes the training of the mind, we may achieve many negative traits among students. In pursuing education excellence, the present mantra is divide them into groups at an early age and to push them to the limits of learning incompetence.

As such, we are creating many more who are anti-learning as there is no joy in their educational experience, given the work overload.

For those who have succeeded in the rigorous educational regime, a sense of untrue confidence prevails, hence resulting in arrogance or even naivety.

Given that the educational system is so result-focused, we find ourselves caught up in fighting over an extra mark or two throughout our education years. Teachers and students alike end up focusing on the trees and not the forest.

Training of the Gut

The alternative approach is an experience-based system of learning. Try remembering your own cycling experience or try observing your children trying to acquire the art of riding a two-wheeler. This is generally an intuitive process by venturing into unknown territory. You need not know anything about the bicycle in depth.

And you can only acquire the art of balancing the two-wheeler by letting go of the mind/knowledge interference. If your mind starts interfering, you will not succeed in balancing the two-wheeler. In fact, if the knowledge-based education system emphasises the risks of cycling, you may not even dare ride one.

In the training of the gut, the main goal that applies to everyone is to discover one's centre. Hence, training of the gut means, among other things, the ability to go beyond one's own boundaries, develop confidence, judgement, sensing and awareness.

All these traits can be developed only through experience. Remember that these are the skills that the young are naturally trying to acquire after they are born until they are truncated or stunted by an education system that too heavily emphasises mind training.

The process of discovering one's centre cannot be spoon-fed. It is powered by gut-feel and only you alone can make that happen. If you over- or undercompensate yourself, you will fail to find your centre and will not be able to balance the bicycle. And that discovery cannot be taught but only acquired through experience. When you are centered, your awareness and consciousness are at a higher state of alertness.

The mantra here is exposure, exposure and more exposure.

This exposure can only happen if students have sufficient time (after completing all the knowledge-based educational assignments and accompanying tuition homework). Everyone can acquire the knowledge of bicycling but only you can balance the bicycle through experience. And once you have acquired the skills, you will be able to retain them throughout your life.

Balancing the Mind and the Gut

Once you have experienced cycling, the ideas you will get on how to improve a bicycle system will be more realistic than imaginary - and more acceptable in the marketplace. Thus, knowledge-based learning works together with experience in promoting innovation and problem-solving.

Experience also helps serendipity. Interestingly, many discoveries happen by accident, but if you have not found your centre via experience-based learning, you will not have the awareness to recognise a happy accident when it happens.

Remember, Sir Issac Newton discovered the law of gravity by accident, not through scientific analysis. But if he had not discovered his centering as a scientist, he would not have had the awareness to notice the gravitational phenomenon when the apple dropped on his head.

And if he had not had a good grounding in scientific knowledge, he probably would not have come up with the law of gravity. He would probably have just eaten the apple.

The Gut Route to Entrepreneurship

Like cycling, all of us who want to be entrepreneurs have to experience it and to discover our own entrepreneurial centre. This means developing those traits that are important for entrepreneurship - which can be done mostly through experience.

There is no substitute for this. When you try to find a rationale or a reason to be an entrepreneur, then the centering will not be discovered and entrepreneurship will usually not happen. This is because your knowledge-based logical mind will tell you that entrepreneurship is too risky and complex - which will put the brakes on further development of your entrepreneurial ideas.

Hence you will not move forward. As the adage goes, sometimes, 'to analyse is to paralyse'. The more you excel in acquiring your knowledge through your traditional educational system, the less entrepreneurial you will be. That is one reason why we don't see many PhD holders starting their own businesses.

If our education system continues to be heavily biased towards the training of the mind, we may, at the end of the day, produce a populace that does not have the confidence to venture out of the known or out of the 'comfort zone'.

It is only when we, as a society, are able to create a total learning experience, balancing the teachings of the mind with those of the gut, that cyclists will not only think they know the bicycle well but also ride it with confidence. Only then will we have more entrepreneurs stepping out and seizing new business opportunities.

(The writer is a mechanical engineer by training, and a business consultant by profession, with CEO Search & Services)

Copyright © 2004 Singapore Press Holdings Ltd. All rights reserved.

Sunday, August 10, 2008

Raising the bar of good governance

Business Times - 09 Mar 2007

The 75% voting system can diminish any underlying uncertainty in working conditions where many dissenting voices can create confusion and hence poor management implementation


THE National Kidney Foundation (NKF) saga is really an eye opener. Given the organisation's high profile as well as the constant spotlight on its fund raising activities, it really illustrates the adage: 'the safest place for a thief to hide is the police station'.

Good governance can be hard to qualify and quantify, whether it be in charitable organisations, commercial conglomerates or even condominium management. Can good governance then be improved by simple measures? One suggestion I have is to raise the bar of consensus on all matters which need approval at committee or board level from the current 'more than 50 per cent' simple majority to 'at least 75 per cent clear majority'.

Closer to home, for me, than NKF, is being on the council of my condominium. When I asked my 13-year-old daughter what percentage voting system we should use to manage a condominium, a 'more than 50 per cent' figure was her prompt reply. On the surface, the '50 per cent' rule of thumb appears to be a straightforward, natural figure.

This in fact has been the practice of our condominium council and likely many others, in coming to decisions requiring approval in all matters whether it be financial, maintenance and enhancement or general policy matters. Fifty per cent is a convenient figure. Anything over this number means, 'majority' decision and issues can be pushed through neatly and quickly. However, a simple majority of anything more than 50 per cent may NOT always be the magic number to determine outcomes which are sometimes contentious and require a careful process of weighing pros and cons.

Obtaining just over a 50 per cent majority indicates that there are close to 50 per cent who may disagree i.e. the committee is divided on the issue and there is therefore much room for discussion.

In Parliament, only a simple majority of votes is required, except for an amendment or change of the Constitution whereby a 2/3 majority of votes are needed. In the case of Members of Parliament, they have already gone through a vigorous selection process, so first level safeguards are already in place.

At the Condominium level, serving on the council is almost akin to doing community service, and there are few contenders vying for the posts. That is, almost anyone who wishes to have a seat on the council often faces no competition and simply gets voted in. Character, competency, and commitment to serve and make good decisions in the best interests of the condominium are assumed, but never actually put to the test at the point of voting.

We are assuming that council members, each with a stake in the same real estate, have similar goals, that is, to manage the condominium in the best way possible for the benefit of all. However, apart from the common thread binding council members i.e. each owning a piece of the real estate, members may have very diverse views, visions and philosophy of how money should be spent or saved. This is indeed a good and healthy situation. It means that there is enough diversity so that issues can be approached from different angles and surfaced for discussion.

Having said that, it is important to remember that running a condominium is NOT like running a business in that there are no 'commercial' decisions relating directly to Profit and Loss.

Making decisions for a condominium requires a conservative (rather than gung ho or risk taking) approach to ensure that the assets are well maintained, funds are well spent, and that enough monies are in the sinking funds for asset replacement. To ensure proper checks and balances, committee members must act first with their heads, then their hearts.

Although the process of condominium management is uncomplicated, it does require careful assessment of pros and cons before proceeding (or not) with a plan of action which often entails expenditure which is forked out ultimately by condominium owners. Careful brain-storming and analysis of issues and projects are needed and hopefully through this, more consistent right judgements made by the Council will prevail.

This essentially implies that we need a 'BAND 1' decision, hence the 75 per cent majority voting recommendation. A 75 per cent majority system has its benefits:

Collective rather than factional decision: The 75 per cent majority voting system forces partisan members to work together. Council members who initiate ideas would have to study and think through the proposal before putting up to the council for deliberation. At present, the set of by-laws that is applicable to the private condominium allows factional interests to thrive. With the simple majority system, there are times where half-thought out issues are pushed through because of the 'group think effect'. On the other hand, a clear 75 per cent mandate would ensure that 10 different ideas coming from 10 council members become synthesised and distilled eventually to one.

Clear mandate for implementation; with the 75 per cent voting system, there will be less flip-flops in the Council decision making process, as decisions made this way are likely to be usually well thought through.

This would make the job of the condominium manager easier as well, since decisions are made with a clear 75 per cent mandate, and the condominium manager can safely take action based on decisions made, and need not spend his time appeasing the other dissenting voices which are in a clear minority.

Hence, the 75 per cent voting system can diminish any underlying uncertainty in working conditions where many dissenting voices can create confusion and hence poor management implementation.

Closing the loop: This will also ensure that only issues that are well trashed out at Council level, are allowed to be tabled at the AGM.

Given that the Singapore residential landscape comprises mainly of high rise buildings which require collective effort to manage, it is timely to step up the level of prudence in its management practices. As many of these collective real estates age, unless there has been prudent management of the sinking fund to service the cost of asset replacement, we may be in danger of pushing this liability of a depleted sinking fund to the next generation of home owners.

Thus, it is time that we need to raise the bar to a 75 per cent voting system at the council level to ensure higher level of prudent governance in our real estates. Should the same rule apply to clubs, charity organisations, non-profit organisations, or even public listed companies? Well, the ever prudent Warren Buffett has essentially two rules. Rule 1: Don't lose capital. Rule 2: Remember Rule 1.

Whilst I don't have the first hand knowledge to make an affirmative statement, I would not be far wrong to state that a higher level of collective decision leads to more prudent management of assets and capital.

Therefore, the answer to greater governance, corporate or otherwise, can be achieved by pushing for more prudence i.e. merely raising the simple majority voting system bar to 75 per cent on all issues presented at Council or Board level. It just does not make business sense to have a paper thin 'simple majority' system that easily allows cracks to develop, which can then lead to exploitation or mismanagement. Good governance through clear majority decisions will go a long way in ensuring solid consensus building and management.

(The writer is a mechanical engineer by training, and a business consultant by profession, with CEO Search & Services )

Copyright © 2005 Singapore Press Holdings Ltd. All rights reserved.

Saturday, August 9, 2008

Getting manufacturing's golden goose to stay put

Business Times - September 27, 2001

The Singapore economy will suffer greatly if the government ignores crucial measures to keep the Republic attractive to MNCs

By Ong Yong Hwee

MANY employees in Singapore currently feel uncertain, rather than confident, about their jobs and their future. Those in the manufacturing sector seem most concerned.

The present hollowing out of multinational corporations (MNC), particularly in the electronics manufacturing sector in Singapore, is disturbing. And it is extremely stressful for Singaporeans who feel they are drawn into a Russian roulette game with their careers - you know you could be next in line to be chopped, but don't know when.

Harvard guru Michael Porter, during his recent visit, said that Singapore should focus more on services and less on manufacturing, and move away from a foreign direct investment (FDI) driven strategy to an innovation-driven strategy. Anxious Singaporeans working in the manufacturing sector, already at a loss, became even more distraught, as they interpreted the advice as confirmation that manufacturing has no future in Singapore.

Is this indeed the case? Is China going to become one giant manufacturing plant and leave a big manufacturing hollow in Asian countries?

In the much longer term, China may indeed be the manufacturing centre of the world with its huge market potential, which will work as a magnet for MNCs. But this does not mean that developed countries like Singapore should stop attracting foreign investments in manufacturing.

Attracting MNCs' manufacturing FDI is, in fact, a 'no risk, golden goose' strategy for Singapore. They invest their capital, time and technology, whilst the direct risk to Singapore should the investment fail is a reduction in jobs which can, with some foresight and planning, be replaced by new MNC investments. Singaporeans do not lose everything in the process of transition; they merely change their jobs for a different one. Although there are investments on Singapore's part in infrastructure and manpower training, these investments have to be sunk in anyway before any golden goose will come to roost.

The manufacturing sector is an important anchor for Singapore's economy. This sector, particularly electronics manufacturing, has played an important role over the last few years and allowed Singapore to ride out the 1997 downturn with less pain than otherwise. The electronics sector during this time was the bright spot, and factories were kept busy with Internet dotcom and Y2K orders, providing considerable spin-offs to the rest of the economy through its linkages with design, IT, logistics and finance.

Contrary to the perception that manufacturing is labour-intensive, with low returns to the workers, great strides are being made in further automating assembly work through the use of IT and complex robotics. Productivity per worker (and hence, earnings) can increase many fold, and is more quantifiable than productivity strides in the service sector. And it is precisely because of the ability of this sector to use unlimited machines and robots to generate a higher level of economic activity that this sector should continually be nurtured.

A recent case in point is that of Seagate's 'Factory of the Future' in Ang Mo Kio, showcasing one of the world's most sophisticated assembly lines and an intelligent tracking system. These high-tech machines allow a very flexible production system of producing a wide range of disk drives, depending on demand requirements. At the same time, workers have not been displaced, but are upgraded to process the data from the machines, hence increasing overall productivity.

To quote Seagate president William Watkins: 'Singapore is the central location for our disk-drive manufacturing. China is meant to be the satellite, a second plant.'

Hopefully, Singapore can develop to be the central Asian base from which design, innovation and new manufacturing processes will evolve. Manufacturing can have an important future role to play, and continue to be a 'golden goose' for Singapore provided we provide a comfortable and competitive nest for the goose to lay the golden eggs.

Singapore already offers the political stability, transparency, rule of law, infrastructure and efficiency which attract top businesses to locate here. But the one snag foreign and local companies face is the issue of cost.

What appears to be missing in the equation is the Republic's hands-off approach in allowing internal market forces to determine pricing levels. In land-, resource- and labour-scarce Singapore, a slight shortage of any one factor of production tends to lead to a quick escalation of costs. The tight and inelastic supply of these factors in a small country leads to a bottleneck of unmet demand and, ultimately, irrational spiralling costs.

We have to recognise that the cost of doing business in and from Singapore is now high. The government must respond quickly and react with an appropriate strategy. The present mantra in electronics manufacturing is swift restructuring through significant cost-cutting measures. As a pro-business environment, the Republic has to respond accordingly. Otherwise, Singapore will continue to see an erosion of MNCs as they move out to more cost-competitive locations.

The latest casualty in Singapore is 3Com, the computer networking giant which is relocating part of its manufacturing operations to Ireland - and the speed of the departure after they had just moved into their own building is telling. Earlier, Aiwa closed down its fairly large R&D facility in Singapore. This is a significant signal indicating that the cost structure here may not be favourable to an innovation-driven strategy as well.

It would not pay to adopt a wait-and-see attitude or shrug off yet another relocation; fast counter-measures are needed. After all, there is a critical mass required for any one sector to flourish, and the electronics manufacturing sector is no exception. Looking ahead, it is going to be more difficult to promote new foreign direct investment. Hence, it is up to the Republic to ensure that it is even more attractive for the existing ones to remain.

A concerted effort to consider all aspects of the cost structure in Singapore and how to best create flexible and elastic solutions needs to be part of the new masterplan. Only then will Singapore be able to maintain a strong manufacturing base and continue to enjoy the fruits of this 'no risk, golden goose' strategy.

(The writer is a mechanical engineer by training and a business consultant by profession, with CEO Search & Services)