New economy model and entrepreneurship

New economy model and entrepreneurship
Written by Nik Mohd Hasyudeen Yusoff
Source:http://www.theedgemalaysia.com/commentary/16414-new-economy-model-and-entrepreneurship.html

THE discussion on the new economy model has grown in intensity lately. Although most discussions are still about the concept, the new model, it is said, would be based on innovation and creativity and is supposed to generate high income for Malaysians.

Given the rapid changes in the global economic landscape and growth of economies such as China, India, Brazil and Russia which suck away foreign investments from our region, the future success of this nation cannot be based on the proven formula of yesteryears. There are a number of drivers which require us, as a country, to do things differently, to improve and sustain our quality of life.

What are those factors?
Competition is certainly going to be more intense across all aspects of the economy. As trade becomes more borderless, more players would be participating in the fields where we are competing. The Asean Economic Community for example would create a greater market for Asean companies but this would also bring greater competition.

The competitiveness of an enterprise is determined by the quality and business acumen of the people running and managing the enterprise. This is the next battle, to get great people to lead and serve organisations and businesses. As people become more accustomed to mobile lifestyles, working away from native lands would be very natural. Our best brains need not necessarily remain here and we would be competing to retain them here. This is already happening and would be more challenging in the future as people, especially the smart and gifted, would be able to choose the kind of lifestyles that suit their preference. Nationalism would no longer be an appealing factor.

Continuous change and greater complexity would also be the feature of the future. Enterprises need to maintain competitiveness while ensuring their conduct is consistent with the well-being of the society and maintain environmental sustainability. Towards this end, standards and practices of a global nature would need to be complied with by enterprises if they want to participate in cross-border businesses.

The new economy model would need to address the above factors, among others, and create an environment where enterprises can innovate without much hurdles and drive creativity among our people.

Talking about creativity and innovation, these two features of the new economy model suggest that we would be comfortable doing things differently and move away from “time-tested” beliefs or culture. Unless this is achieved, moving away from doing what we are doing would not be easy.

We could start by sending a strong signal to our entrepreneurs that business success is about being competitive and serving the market needs. While the government would continue to be the largest customer, business is not just about doing deals with the government only.

Being the largest customer, government should also impose competitive practices so that it would get the best deals and promote the culture of competition among its suppliers. Another signal to budding entrepreneurs is that the government is not the buyer of last resort. If they fail to produce products or services acceptable to the market, they should not demand for the government or government-linked companies to bail them out.

Creative and innovative entrepreneurs would naturally develop business models which may not be tested in the market. This brings us to the next issue, how do we finance ideas that are "out of the world"? Traditional financing models such as banking and government-owned venture capitalist may not work when industry frontiers are being tested. When Google got its first financing from two venture capitalists, it had yet to develop ways to make money out of the technology that it developed at that time. Only private venture capitalists would be able to make such kind of risky venture. Perhaps we need to encourage more private funds to be created to support innovative and creative entrepreneurs under the new economy model.

Innovation and creativity is driven by brain power. If we continue to limit our progress based solely on Malaysian-made brains, we may not have enough ingredients to beat the world. What more when the colour of skin which wraps the brain also matters!

Even global companies such as Proctor and Gamble which has thousands of experts working for it has to tap the ideas of people around the world to retain its competitiveness. The future is about inter-connectedness and networks — where the ideas come from do not really matter. This is the kind of paradigm shift that we need to make if the new economy model is going to work.

Ironically, the sophisticated world of the future would rely more and more on individual values and integrity. Given change would be the only constant, organisations and business entities need to be more flexible. Flexibility could only be achieved when important decisions are made quickly. This is where those trusted to make those decisions perform their roles with utmost sincerity and based on principles which lead to the greater good of the community.

So, while we need more innovative and creative people to drive the new economy model, the basic tenets of integrity and honesty remain critical for the well being of society at large to be continually enhanced.

Nik Hasyudeen is the president of the Malaysian Institute of Accountants. He can be contacted at nik@inovastra.com