Category Archives: Business

Business

The missing ingredient in education?

I attended the recent Ministerial Forum in my university hoping to hear answers on the state of, and the future of, education in this country. Unfortunately, however, the Minister for Education provided few compelling points that gave me any sort of confidence for the future. Instead of providing a clear concept of what he imagined the future to be, the speech – broken into two separate parts that mainly covered (strangely enough) the economy and the future of trade in Singapore – was filled with past and present figures of GDP, as well as how we are quite unable to compete with the developing country juggernauts of India and China.

My friend, a graduating student who runs his own social media marketing company, asked the Minister what he thought could be changed about the culture of risk aversion that pervades the local environment. While the moderator might also have to take some blame for allowing seven consecutive questions to be asked before the Minister answered all of them (at once!), the Minister merely acquiesced about the state of affairs; as an aspiring entrepreneur, I was hoping at least for a little more on some form of a policy that could change things.

But perhaps I was asking for too much. The main takeaway at the end of the Forum, I concluded, was that this Minister appears to be particularly interested in the economy and how education serves as a cold, hard input into increasing national income. Never once was there any mention about how education makes people creative, makes society vibrant, and increases mutual understanding. The 300-strong crowd filling the Mochtar Riady Auditorium was treated to a plethora of paranoid statements that most of us already know: Singapore lacks the drive, the critical mass, to succeed in almost anything. Right. So what’s next for us?

It is strange that I, as a university student, am unveiling the missing ingredient in education: entrepreneurship. As I type this I am imagining that some of you are trying very hard to stifle a groan. We’ve heard all these things before as well: we need to nurture our own Silicon Valley, we can be just like entrepreneurial Israel, blah blah blah. But I’m going to avoid talking about these cases in particular. Instead, I’m going to talk about an example that might be far removed from most of our minds today: Pakistan.

That’s right, Pakistan. In the 1970s the country was prospering from a wave of their overseas expatriates who remitted money back to their families. So? The interesting thing is that these families, who were now flush with a little bit of cash, decided to start what might best be defined as some form of a mom-and-pop shop. These little cash inflows helped stimulate and create a vibrant economy – until 1988, when the government decided to adopt the IMF and World Bank structural adjustment measures. The moral of the story? Cash grants can help to stimulate the economy – and not just that, it has the possibility of creating new jobs.

But yes, this country is known for quite a bit of risk aversion. We can encourage a more vibrant educational curriculum that includes ideation and creative thinking from young (according to some studies it seems that our creative levels start decreasing beyond a certain age – so it makes sense that we should tap on it early!). We can make sure that the syllabus includes principles of accounting and economics for as many students as possible. Perhaps most importantly, we can relax the restrictions for cash grants or loans that are provided to entrepreneurs.

The traditional middle class was dominated, as Donald Low mentioned in another discussion in my university, by bean counter-like occupations such as typists and clerks. As technology makes drastic adjustments to the workplace environment, these jobs, along with others, have become redundant. I foresee that the only way to prevent the inevitable income inequality from those at the “top” – CEOs, directors, and other leadership positions – compared with those at the “bottom” is to create new jobs. In short, we need to create a new middle class which is creative, flexible, and enterprising. And to me, this is why it is imperative to help young entrepreneurs succeed.

When the Minister spoke about how Steve Jobs was asked by Obama how engineering jobs could be brought back to America, and Jobs answered, “Sir, they’re not coming back”, it seemed that what he was thinking about was the jobs, with small letters. But what I was thinking – along with several of my peers – was Jobs, with a capital J. Apple today sits on a huge cash pile; the value-add of the iPhone and the other Apple products continue to surpass the assembly jobs that helped create it. What we need isn’t to make ourselves more competitive and hence join in the race to the bottom in the global sweatshop; instead, we need to create new jobs, in this economy, to propel us forward into the future. Unfortunately, I didn’t hear this during the Ministerial Forum.

Why Al Gore is an enigma and why Starbucks gives me a nice feeling

Note: Another paper I wrote for my Ethics class.

In 2001, sixteen science academies from all over the world made a joint statement supporting the conclusion of the Intergovernmental Panel on Climate Change that they were “90% certain that temperatures will continue to rise”[1]. Global warming is widely acknowledged to be happening by the scientific community, but continues to attract remarkable controversy among the public. Jim Inhofe, the Senator of Oklahoma state in the United States, calls global warming a “hoax” even as his state’s summer temperatures hit record highs last year[2]. Some politicians, keen to seek an easy way out of the environmental problem, have tried to escape through redefining the problem altogether: George W. Bush, in 2007, said that he was “committed” to reducing global warming[3], but after calling the Kyoto Protocol “fatally flawed”, he remained in opposition to binding limits on carbon emissions.

Overstating the truth for a greater good?

I will not, however, be discussing on whether global warming is true or not, for like what Al Gore’s spokesperson mentioned, debating on whether global warming is true is like whether we should be “debating whether smoking causes cancer”[4]. The question is whether, in the state of urgency to save the environment that we currently find ourselves, if there is an incentive by environmental organisations to overstate the claims of global warming in order to incentivise people to take action on climate change.

Al Gore’s career after his controversial loss to Bush in 2000 would culminate in a movie, An Inconvenient Truth, that presents the phenomenon as real, frightening, but a problem that can be solved. Despite the mostly positive reviews about Gore’s presentation prowess and accuracy, the British High Court highlighted nine errors in the film that overstate the risks of global warming, including the fact asserted by Gore that sea levels will rise up to 20 feet in the foreseeable future. Judge Michael Burton’s reply was crisp: that it would only “take place over thousands of years”[5].

The utilitarian, obviously, will offer the maxim that there is a greater good for the community that can be derived by overstating the truth. Surely, to get people to save the environment to benefit the thousands of tribal communities living in vulnerable forests around the world, as well as making development sustainable for future generations, provides much greater benefit than simply providing conveniences to the current generation? The Kantian perspective would obviously be against this: lying is not a rule that one would want to be applied universally, and it is also exploiting a person rather than providing him with the autonomy to decide.

The key problem with utilitarianism, however, is with the quantifying of what constitutes “utility” for different groups of individuals: for instance, in the case of policymaking, a politician has to decide how to allocate a budget between the life sciences and the environment. Believing that the environment is in dire need of rescue, the politican allocates the majority of the budget to environmental causes. But if the status of the environment was more accurately reported, then perhaps the politician might have benefited through funding life sciences programs that can make future generations stronger and healthier. The constraint (labelled “imperfect information” in economics) results in the misallocation of resources that could have been better used to maximise happiness in the community.

Hypocrisy

What really makes Al Gore such an enigma is not so much the message as it is his actions: he has been criticised for staying in a house that consumes far more electricity than the average American, although he continually advocates cutting down on electrical use in his talks, including in his movie. What is interesting, however, is that even though he uses more power than the average household, he subscribes to the plan that maximises the use of clean energies such as wind and solar power[6]. Yet, one can argue that even that does not invalidate the argument that he might be a hypocrite, asking people to reduce power usage when in fact his household is not doing so.

Hypocrisy is, in essence, the violation of Kant’s first formulation of the categorical imperative: the principle of universality. It is also somewhat of a violation of the second formulation, the principle of humanity, since you are asking everybody else to take your share in committing an act when in fact you have no intention of doing so. This is what makes critics feel that Al Gore has not been a good role model in the case of saving the environment. The Kantian ethical perspective, though underused in an age where capitalism and the “free market” as dictated by Friedman rules the zeitgeist of the day, provides an important lesson to all wanting to preach about the environment: to do good, one must first individually do things right.

Starbucks – Being a good corporate citizen

Just as most of us feel uncomfortable that a person who may preach to us to do one thing but in fact is himself doing quite another, most of us will feel a sense of respect for the values (and actions) that Starbucks has identified itself with. Very early on in its business career, Starbucks had pledged to be a good corporate citizen, and believes in contributing to the environment which has provided it with profits.

Quite unlike the sportswear manufacturing industry that disgraced itself in the earlier decades that made profits through a “race to the bottom”, Starbucks wanted the entire industry to move forward through a “race to the top”, by only buying from the most sustainable, yet highest quality coffee growers. Even before the partnership with Conservation International, Starbucks had already given back to local communities to provide education and clean water supplies[7].

What makes reading Starbucks’ involvements in corporate social responsibility (CSR)  so pleasing is because of how it hasn’t shied away from the matter as firms often seek to do, but rather tackled the issue head on and really made it part of its philosophy instead of an afterthought. It has reaped enormous benefits for the company, with employees and consumers alike praising the contributions of Starbucks and making the company have one of the lowest employee turnover rates in the entire industry.

We can make use of the multitude of theories available in the presentation slides for an in-depth ethical analysis of what Starbucks did right, though I feel the most succinct would be to examine it from the Kantian point of view. Starbucks’ contributions make it a good corporate citizen by keeping to the principle of universality: first, it pays a premium for top-quality coffee beans, which is something that the farmers would do if the roles were reversed, for fairness. In the meantime, Starbucks’ CSR efforts have really benefited the lives of the local community through improving their education and health facilities; this is keeping in line with the principle of humanity – ensuring that there is no exploitation of any individual that goes against his autonomy.

All roads lead to Kant?

Like I mentioned in the previous paragraph, I adopt Occam’s razor by stating my belief that there is no need to make use of stakeholder, social contract, or even Rawls’ theory of justice as fairness in the analysis of Starbucks’ actions in corporate social responsibility, because Kant’s categorical imperative cuts through to the “bare bones” of environmental ethics, at least in determining what should be the ethical behaviour of a firm. The social contract theory, which states that there is an unspoken “contract” of values and morals that should be adhered to by the company, is to me merely an extension of Kantian theory.

Ultimately, Kantian theory allows us to articulate why we feel some parties are more ethical than others (especially when comparing between Al Gore and Starbucks), but is rather limited in determing who exactly should have what done to them in order to benefit the entire community. The categorical imperative is great in determining how to behave ethically, though it is the what that businesses like Starbucks are interested in. I believe that businesses should first take a good hard look at themselves through the Kantian perspective, and then make use of the stakeholder theory – which is where it comes in useful – to determine what exactly they have to do to contribute to the community at large.

Things to note when I start my business

After two years at SMU I realized one thing: sometimes, I regret that I didn’t make business my major, instead opting for the Invisible Hand and the social sciences. Taking some business courses at Emory has given me a sampler of what I’d really been missing.

I’ve decided to record some things that I MUST take note of when I decide to fulfill one of my biggest dreams: and that is to start my own business. Note: Most of these things are tidbits from things that I’ve read. They don’t exactly flow neatly into a story.

  • Today: when hiring somebody, they must have a comprehensive set of personal characteristics referred to by Matsushita (now Panasonic) as the acronym Smile – Specialty, Management ability, International flexibility, Language facility, and Endeavour.
  • Remember that in business, nothing is really ever that easy – but don’t lose your head and start thinking that it’s really that complicated. Create useful, viable systems, not complex ones. We are not academics: we shouldn’t search for the best theory, but really the best solution.
  • The structure of a company is merely the body. You need the blood and life – the culture and the psychology of the company – to be in good health before it can be successful.
  • 12.10am: we tend to assume that multinational firms have subsidiaries with limited capabilities. Today, however, things have changed dramatically. We should think of the world as an integrated, interdependent network.
  • Essentially, all this means one thing: in business, it all depends. (Edited 3.32pm, Feb 17 2010)