Embracing volatility to build on a position of strength: A Road map for Singaporean business leaders?

Co-authored by David Hui and Fabian Tan

As a young nation, Singapore's rapid evolution into an international world class city is down to the bold decisions its leaders made early in its creation and the continued steadfast stewardship by the leaders that follow. There has always been a clear vision and a large amount of long-term planning and strategic decision making to shape how the economy and the state develop. A large part of that planning has gone into how the culture of the nation has developed and how that will help drive growth and success.?However, there is an argument that the economic growth the country has achieved and the way it has achieved it has kept Singaporeans within a comfort zone, where there is little appetite for experimentation or risk. As the next generation of leaders steps up, and as the world changes arguably they will need to introduce new values and dynamism to ensure the country maintains its momentum and continues to advance and develop.

With the World Bank forecasting a global recession, Singapore can expect economic headwinds this year, but the outlook for the country’s labour market is positive. The local job market ended 2022 with a record 231,700 more workers over the course of the year – surpassing pre-pandemic 2019 numbers by 3 per cent according to the Ministry of Manpower . In terms of employment confidence, of the firms surveyed in December, 64.6 per cent plan to hire in the next three months.

Despite the recent market movements and layoffs, the country continues to be well-positioned to be hub of Asia Pacific due to its strong foundation built over the years. However, leaders must be mindful of several key elements as they plan their hiring strategies. Recognizing that today’s world is more volatile than the one that Singapore grew up in, the goal should be to ensure that their organizations can embrace change rather than be impacted by it. They need to see opportunities and not just problems amidst the volatility.

Culture and its effect on decision-making

The cultural makeup of a country inevitably affects the decision-making process and resulting business strategies. Having had the privilege of interacting with global business leaders over a number of years, we’ve noticed how each country’s culture can affect their decision making.

Broadly speaking, in the United States, people are encouraged to challenge the status quo and see challenges in a positive light. Growth is a key part of mindset vs just stability. This mindset has resulted in the growth of entrepreneurs and an eco-system that embraces risk and competition, the success of Silicon Valley can be seen as a testament to that.

In Europe by contrast, many legacy-driven companies that operate in a very mature market follow a more balanced trial-and-error model of incremental growth repeatedly testing and analysing their hypothesis/results to ensure continuous long-term improvement in a relatively stable environment. They are not looking to upset the apple cart, but demographics and politics mean that they always recognise the need for constant change.

Singapore has always thrived in providing good structure and systems for companies to grow in the region. There is a strong rules-based model which creates strong compliance and due diligence, and these traits have provided a strong foundation for sustainable economic growth for Singapore. The nation’s stability is a major reason why many companies choose to establish their regional hubs there. As a small nation, the combination of good governance and conservative mindset for decision making has played a critical role in building up the skilled and competent workforce it has today and enabled it to punch above its weight.

On the flipside though, an economy and business that is too rigid and structured can result in groupthink which prevents challenging status quo. A healthy system depends on a balance between order and flexibility. To thrive and retain its competitive advantage in an increasingly complex world, Singapore and Singaporean business will need to become more open to taking risks. This does not mean a wholesale change overnight, but rather a gradual change of mindset i.e; moving from a “not possible” to “how could this work?” response to a proposal that looks unprecedented or is filled with uncertainties. Adopting such attitudes can increase motivation and confidence in venturing into new markets as well as receptiveness to recruiting a wider variety of people. It is also the way to unlock hidden potential talent in individuals both internally and externally.

Actions that matter for leaders?

Challenge assumptions

Leaders can and should benefit from re-evaluating established ways of operating. Past performance is not a guarantee of future success. This means being ready to question why processes are conducted in a certain way and whether they can be modified or improved. It is important to recognize speaking up and asking questions as part of the search for improvement, not as a sign of lack of knowledge or a desire to disrupt or even as a sign of weakness.

Heidrick & Struggles conducted a study on senior level executives and identified four leadership capabilities that are critical for leaders to continue having an impact in the future, of which creating possibilities from new thinking is one of them. Evidently there is a demand for transformational leaders with scenario-planning capabilities who can apply an unconventional approach to solve complex issues rather than looking to tried and tested methods for guidance. Companies are looking for change agents who can set an example for employees that will render work culture more dynamic and adaptable. These leaders should also actively challenge employees to develop innovative solutions and provide them with the opportunities to do so through allocating time for creative thought.

Increase focus on the upside potential, and not just the downside risk

Another barrier to progress that leaders face is that they tend to focus on the downside of a situation rather than the upside. Recoiling at the cost of an initiative rather than weighing its potential benefits means that it is unlikely to get off the ground.

Many leaders would rather take the safe route and avoid the possibility of wasted time and effort should they invest in an idea that eventually falls through. To move beyond this state, it is helpful to see a new venture as a valuable learning opportunity whether it succeeds or fails.

This is not to advocate recklessness. Due diligence remains essential in assessing the viability and wisdom of a new initiative, and in some cases, the risks may well outweigh the potential benefits. The key is to take a balanced approach — remaining open to the possibility of change while considering all factors and weighing each case based on its individual merit – learning to take risk is a real skill and art that comes with experience, you cannot learn to take risk without making risky decisions.

Hiring diverse individuals creates better performing teams

The need for businesses to become more open-minded extends to diversifying the types of people they hire. Boards need to be prepared to take a position on societal issues and consider divergent values, so they need to be better equipped to understand and act on such issues.

There is no better way to promote a cultural shift than hiring individuals at all levels with varied backgrounds and expertise that complement each other. Companies should be on the lookout for talent with innate curiosity that balances respect for established processes, and the thinking behind them, with the entrepreneurial drive to improve them. Welcoming more employees who actively seek out change rather than wait to adapt to it promotes innovation and can inject new life into corporate culture.

In one example of this, a Singapore listed industrial company appointed a board member based in Hong Kong from a multinational energy management technology business; the idea was to bring fresh thinking and new ideas to the discussion from an adjacent industry to learn from the outside.

This signals how boards are evolving in terms of not just skillsets but culture set as well as growing openness to hiring across borders. Looking further afield for talent is increasingly necessary given the scarcity of expertise in certain areas including sustainability. The normalization of remote work means that senior individuals can continue to be based overseas. At the same time, the return of international movement post-Covid makes cross-border hiring and relocation at all levels a viable option again.

As Singapore companies look to broaden their influence and the number of markets they operate in, they are inevitably going to have to take more risk in areas where they have limited experience. Preparedness for this and the willingness to venture into uncharted territories must start at home. The reluctance to take risks and introduce changes to a system that appears to be in strong shape has been a topic of debate for boards and senior executives in Singapore for years. For change to happen, the whole ecosystem must rally together. If Singapore companies can start to embrace diversity of thought and attempt different methods to innovate, they will be better able to solve the next roadblock they hit. As with any skill, being comfortable with ambiguity and volatility develops with practice and experience: the more risks you take as a leader, the more confident you will be when facing an unprecedented situation.