stewardship asia roundtable 2018 · 2018-10-23 · 01 stewardship asia roundtable 2018 04...

STEWARDSHIP ASIA ROUNDTABLE 2018

01 Stewardship Asia Roundtable 2018

04 Rethinking Disruptions, Shifting Perceptions

06 Fostering Stewardship Through Tripartism: Putting People At The Centre

08 Technology Meets Tradition: Scaling Accessibility And Impact

10 Living And Breathing Sustainability Through Spanning Boundaries

12 Staying Ahead Of The Curve Through Agility

14 Inspiring Stewardship Performance, People And Planet: Do Well, Do Right, Do Good

22 Meeting Of Minds Stewardship Principles For Family Businesses: Navigating Sustainable Pathways

24 Stewardship Principles For Family Businesses: Fostering Success, Significance And Sustainability

Stewardship Asia Centre is a non-profit organisation established under Temasek Trust, committed to working with partners to uplift stewardship and foster effective governance across Asia. The annual Stewardship Asia Roundtable brings together the region’s influential business leaders and thinkers for a dynamic exchange of ideas on advocating sound stewardship and governance in their organisations and businesses.

CONTENTSABOUTSTEWARDSHIPASIA CENTRE

“A Sail”: Navigating its journey, through good and tough times, driven by purpose, anchored on values

“A Tick”: A mark of excellence, achieving success, significance and sustainability

“A Delta”: Expect change and be a change agent, undergirded by enduring principles

“A Rising Arc”: Always levelling up, be better, be committed for good

Stewardship in a Disruptive World Stewardship Asia Roundtable 2018 | 01

On 4 June 2018, the Stewardship Asia Roundtable brought together 210 participants from 138 organisations across 20 countries to exchange perspectives on stewardship. Held in conjunction with the Temasek cluster of sustainability and stewardship events, the three-hour forum saw engaging exchanges amongst business leaders, policymakers, regulators, investors and academics. This year’s theme, “Stewardship in a Disruptive World”, highlighted the challenges and opportunities that disruptions had presented to organisations, and the role that stewardship could play in helping organisations navigate the complexities of new orders emerging from the political, social-cultural and business realms. Also featured in this year’s Roundtable were younger business leaders from Asia, and those from new industries whom shared their experiences on how they had been charting novel paths, and how they perceived stewardship as a key asset in aiding them to make sense of and to navigate the rapidly changing world. The Roundtable also inspired businesses to re-think their bottom lines in a more encompassing way to include sustainability, people-centric and community-related considerations.

This report captures the highlights and the insights that have been gleaned from the Roundtable.

During the Roundtable, participants were asked to refer to the MICEpad and enter the first word that came to their mind when they thought of stewardship. Within 30 seconds, a Word Cloud was formed on the screen as shown above. The font size of the words correlates with the popularity of the word amongst the audience.

STEWARDSHIP ASIA ROUNDTABLE 2018

04 |

RETHINKING DISRUPTIONS, SHIFTING PERCEPTIONS

Disruptive forces can disrupt business models and distort the playing field, making it more challenging for organisations to instil stewardship values in their business environment. Many firms have chosen to pursue the path of short-termism in search of profit maximisation and dominance of market share. This short-term approach, while not necessarily bad, poses a threat to the foundation of building enduring businesses, and has led to a rise of corporate scandals over the past decade. Amidst these scandals and turbulence, stewardship has risen in prominence, not as a means to impose stiff regulations, but as guiding principles for businesses to stay true to their values and ideals in their pursuit of excellence. During the Roundtable, participants collectively redefined what disruption meant to them and shared their experiences in exercising stewardship. The essence of the conversation is highlighted here.

Stewardship in a Disruptive World

Stewardship is very much about being responsible owners and acting ethically not just to serve their shareholders and customers, but also the interest of the larger community. It entails the pursuit of

value creation and growth through the articulation of an inclusive mindset. It requires businesses to be forward looking. Possessing a long-term orientation, these firms see profits as a means rather than an end to achieving business longevity. Firms that sought quick profits may soon find themselves in a muddled state of hubris and mismanagement. Conversely, many enduring businesses that have weathered disruptions have created a stewardship mindshare throughout the course of their businesses.

“How do we ensure the sustainability of values across generations? How do we ensure that there is ethical ethos in the company? How do we then percolate it through the organisation and transmit it to the next generation? These are the critical questions.”~ Ms Claire Chiang, Co-founder, Banyan Tree

Hotels & Resorts


“I just want to focus on two important roles that I think the board must take leadership of. The first is in understanding the definition or concept of disruption. And the second is the execution of responses to disruption, which I feel suffers currently from a chronic lack of attention.”~ Mrs Lim Hwee Hua, Executive Director, Tembusu Partners

Redefining disruption

In his welcome address, Mr Hsieh Fu Hua, Chairman of Stewardship Asia Centre, offered the view that disruption is about redefining a reality where reality is malleable. In such a context, stewards need to challenge existing mental models to cope with the future of innovation and disruption ahead. As an epitome of stewardship, the transformation of Singapore came about because our founding fathers had disrupted the conventional wisdom that a small city state could not survive, much less thrive. The late Steve Jobs shifted his employees’ mindset by reframing problems and seeing possibilities in a reality distortion field, helping people to produce results that they themselves did not think possible.

In a climate laden with rapid changes, the complex political, economic and societal forces have ineluctably changed how organisations conduct businesses. The Board, in this inexorable move from the third industrial revolution of simple digitisation to this era of widespread use of technologies, cannot but rethink the way to do business. Undisputedly, the Board needs to engage and be more familiar with technology. Challenging prevailing mental models, it should work in unison with the CEO and team to reimagine the future and be ready to cope with the looming risks. Equally important, they are responsible for the long-term meaningful value creation throughout the course of innovative disruptions.

Internalising disruption

Following the opening speech, the Roundtable participants sparked discussions on how individuals and organisations should respond and leverage disruptions intelligently. As the implications accompanying the various modes of disruptions can be explicit or implicit in nature, they invoke different responses across the business entities. Disruptions that are explicit tend to result in more psychological acceptance, as there are ostensible opportunity costs of not acting upon them and advantages of pursuing them. The implicit disruptions are a lot harder to identify and define; as well as to understand in terms of the threats to existing businesses, hence the acceptance of the need to respond is clearly not a given. Even when there is political will to respond to such disruptions, the lack of competency to understand and work around inherent challenges may also hamper the transitioning process.

Trying to make sense of the avalanche of disruptive forces is hard work. Herein lies the crux of the problem – the need to harness the disruptions so that they can become an asset to the organisations. This can only be achieved by understanding the nature of disruption and getting everyone who has a stake to unequivocally and collectively respond to them.

In tandem, there is the need to align values and actions. Stewards will need to find the organisational conscience of their businesses and accentuate these values in a manner that is easy to be internalised by all stakeholders of the business. These values serve as a linchpin across decisions, without which, it would be difficult to put the act together when disruptions occur.

The science behind disruptions may seem to be esoteric but one can take heart that it can be demystified — through redefining and shifting its perception in a collective and perhaps collected manner. n

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FOSTERING STEWARDSHIP THROUGH TRIPARTISM: PUTTING PEOPLE AT THE CENTRE

Stewardship is about service to the community

The concept of stakeholder theory can find its cultural genesis in ancient civilisation. Businesses were expected to be of service to the community. A good businessman must be honest in his intentions and actions; and is expected to use his profits in a socially responsible way. Several old British European and US businesses subscribe to the Quaker Ethic, and the Quaker Ethic in business is summarised by this statement: “The real goal for an employer is to seek for others the best life of which they are capable.”

Likewise, in Asia, businesses have contributed back to society: building roads, repairing bridges and building schools. Social responsibility is embedded in Confucian thinking. In recent times, the idea of “ethical capitalism” has been promoted. The framework of “ethical capitalism” is built upon the strong belief that businesses exist to contribute to the development of the communities in which they operate. Businesses serve not only shareholders, but also stakeholders and they include the employees, customers, business partners and the community.

Understanding the societal trends that fuelled the growing angst around the world

Profit oils the economy: it is a measure of performance; the currency of exchange by which corporations pay workers. However, as what a Japanese business leader, the late Konosuke Matsushita had mentioned, profit in itself is not the ultimate goal of an enterprise. More basic is the effort to improve human life through enterprise management. Profit becomes important and necessary only to better pursue this basic mission. Workers pay schools to educate their children, and both workers and corporations pay taxes for the benefit of society. However, there is growing angst among working people around the world, leading to the rise in populism and unpredictable outcomes in elections in different countries in the past two years. Many viewed the economic model and social policies as not delivering ‘the best life for which people are capable’.

To deliver a better life for people, one must first understand the underlying trends or forces that have caused the rise in angst around the world. These can be encapsulated by three trends: growing inequality, disruption from new technology, and longer life expectancy.

Growing inequality has come about for two reasons. First, more of the wealth created has gone to capital and less to labour. Second, in a highly connected world, labour has become globalised; top talent is limited, less skilled talent is plentiful. This has skewed the distribution of wages. The majority have experienced wage stagnation, or worse still, wage decline and this is reflected in how they feel about the cost of living.

“Stewardship is about building a long-term sustainable future for our companies, and our companies need to be operating in harmonious, prosperous societies. You cannot have one without the other. “~ Mr Lim Boon Heng, Chairman, Temasek Holdings

In his opening address, Mr Lim Boon Heng, Chairman of Temasek Holdings, shared his views on stewardship and highlighted how the tripartite system of businesses, unions and government can work together to provide people with a better living.


Technology has displaced many workers from jobs, and with the rise of artificial intelligence, many more traditional occupations will change or disappear. There will be more changes in the next five years than past generations had seen in their entire working life. Technological innovations, affordably available, made things possible that were not, just a few years ago. At the same time, new business models have emerged: for example, technological platforms changed the way businesses were done, but which created many low-paying jobs. Usually, the market will work and find the solutions. However, as the pace of change is so rapid, it is difficult for workers to adjust.

The third trend is ageing populations. One reason for ageing populations is the fact that people are living longer. To be able to live longer should be a blessing, a reason to celebrate, but instead it has become a challenge. Social security systems are inadequate, and people do not have enough savings.

Tripartism: businesses, unions and the government Businesses have a wider responsibility than just giving shareholders the best returns. As stewards of our businesses, we must be alert to disruption. Stewards must lead and make bold decisions to prepare for change, and nurture readiness for our teams to prepare for what is coming. These principles define how people behave, and the true test of those principles will be during the most disruptive of times.

Unions champion workers’ welfare. However, the best welfare unions can provide for a worker is a job. That means creating the environment for investments, helping workers acquire the skills needed for jobs through training and re-training. Organised labour also has to work with employers to raise productivity, which in turn should drive business growth. Everyone must share in that growth, not shareholders alone. Those that may not make it will need an extra hand. Providing that is also an important part of stewardship in a disruptive world.

Finally, what is the role of a good government? It must be to give people a better life. Seen in this context, there are convergent interests among the three parties of government, employers and organised labour. There is more to be gained working together than against one another. In short, this is the approach adopted

by Singapore. As the world continues to change at a great pace, there are still many areas to improve. Stewardship principles will therefore be refined and reframed to create a collective responsibility to bring about a better world. n

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TECHNOLOGY MEETS TRADITION: SCALING ACCESSIBILITY AND IMPACT

“When we talk about technological disruptions, it can actually be for the better life. The spirit of humanity and tolerance thus becomes very important, as it creates a peaceful environment for businesses and societies.”~ Mr Yaya W Junardy, President, Indonesia

Global Compact Network & Commissioner, Rajawali Corp

Technology-driven imperative

One key manifestation of stewardship is the staunch commitment towards building for the future. This entails taking proactive actions to understand, anticipate and harness the disruptive forces that have emerged over time. Technology is one notable example of disruptive force, as cited by many participants. It has re-shaped business models and consumer behaviours around the world. Its influence is palpable, evident from how Artificial Intelligence, Internet of Things and Blockchain technology have become increasingly entrenched in our daily lives. Whilst disruption can be technology-driven, there is cognisance that it is not about technology per se. Rather, technology should be viewed as a medium that can catalyse enabling or crippling social changes. At this Roundtable, participants shared how technology has helped them scale accessibility and impact, while allowing them to stay true to their well-cherished values.

Synthesising the views of the Roundtable participants, there are four types of accessibility that can be enabled by technology: market accessibility, service accessibility, network accessibility and ideological accessibility. When harnessed aptly, technology can also scale impact by transforming industries, uplifting communities and touching lives.

Scaling accessibility

Technology is often used as a tool to scale market penetration and to explore new market frontiers, promoting a strong entrepreneurial and innovative spirit in the process. It enables unprecedented access to latent markets at a relatively low opportunity cost. With improved connectivity, technology allows businesses to reach out to the stakeholders involved in the supply chain easily. With more data readily available, businesses can make better-informed decisions, simultaneously educating their suppliers and consumers in a similar fashion. The quality of personalised services rendered to consumers can also be enhanced by tracking technologies, as seen in the field of medical interventions, where users’ behaviours are tracked and their compliance incentivised.

Beyond market and data accessibility, virtual networks also help people to get connected, making online communities count when collective wisdom or help is needed. A closely-knitted world bound together by the advances of technology can offer precious opportunities for people to make a concerted effort to promote a common social cause. Leveraging the multiplier effect of social media, some businesses codify and propagate their ideologies through online platforms to accentuate their sense of purpose.


Whilst technology can promote accessibility to new ideas and networks, many businesses retain a strong connection with the past. Social norms and business models may change, but foundational values such as humanity and compassion will still be strongly upheld by many enduring businesses.

Scaling impact

Stewardship is about giving purpose to business in relation to the community, and creating a shared vision of a better world. It becomes the driving force behind the evolution of many industries — from modernising traditional industries through research and development to transforming nations into cashless societies in the financial industry.

In a world where optimisation is valued, there is an inclination for people to utilise technology as a tool merely to achieve efficiency and productivity. However, the purpose of technology goes beyond making lives more convenient. It is about connecting people to engineer a concerted effort to improve people’s lives. With the prevalence of technology in businesses, it has become even more important to reconfigure our resources to provide support for the vulnerable communities in our societies. Leaving no one behind, stewards can play a role in helping people engage with technology meaningfully. Some examples include the use of social media to inspire hopes, ignite passions and improve livelihood across impoverished communities.

Responsible harvesting

Whilst the merits of technological disruption have been underscored, its benefits have to be harvested responsibly. After all, technology can also be a medium to spread perilous ideologies, or a gateway to incapacitate vital national apparatus. Besides, technology-related transgressions have sparked ethical concerns and prompted the crafting of new constitutional laws related to the infringement of intellectual property and privacy.

Against this backdrop, one has to be cautious about unfettered experimentations. Without stifling innovations, businesses must work within some meaningful parameters. Technology should not be exploited for unfair practices that may harm the interest of the community they are serving. Asset managers have to understand the trade-offs of

embracing technological innovations, and utilise them in an ethical way that creates positive social impact as a whole.

There is also the technological conundrum that weighs on the minds of many businesses. Often, many traditional firms have resisted assimilating technology into their operations due to the inherent difficulties associated with sunken logistical and infrastructural costs as well as rapid technological obsolesce. On the other hand, there are firms that are blinded by hubris and underestimated the impact of how technology can disrupt business. However, the emergence of innovative disruptors has transformed the market landscape, easily eclipsing incumbent businesses with greater efficiency and lower price. Hence, the steward’s responsibility in an organization will be to ensure that robust strategic planning is carried out to prepare for the dynamic evolution across time. n

“As we think about Industry 4.0, and what it means for us, we have to make sure that it also provides a distribution of benefits to all those who are involved in it, and that includes all parts of society that can benefit from the advancement of technology.”~ Mr Dilhan Pillay Sandrasegara,

Deputy CEO, Temasek

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Safeguarding the future of our environment

Organisations that truly imbibe stewardship values will remain committed to their people and environment without compromising performance. As stewards, they lead with impact, safeguard the future of the institution and deliver meaningful benefits to society. They ponder deeply about the reason of their business existence while harmonising shareholder and stakeholder interests. While organisations strive for operational excellence, product leadership and customer alignment, well-stewarded organisations also broaden their sense of purpose to serve the community and build a sustainable relationship with the environment. Eschewing short-termism, they aim to play a role in sustaining Earth’s bounty while drawing resources from her at the same time.

Such sustainability goals can be realised with a strategy that encompasses ecosystem re-mapping. Well-stewarded organisations are able to manage the delicate interdependence between the sustainability of their business and the environment in order to deliver their value proposition. Integrating their businesses into the fabric of the society, they contribute towards fulfilling societal and environmental needs as they grow from strength to strength. This is achieved by first understanding the ecosystem and then building up critical competencies iteratively.

Disrupting the ecosystem

Organisations that aim to create societal impact often emerge as the growing force in the market. These change agents look beyond profits and make attempts to galvanise the acceptance of their business model rather than lobby regulators to reduce standards. They profess their strong commitment towards establishing partnerships only with suppliers and retailers that exhibit good governance and green practices. Cautiously, such initiative may work in favour of corporations with strong bargaining power. Some vulnerable companies along the supply chain, on the other hand, may have limited resources and know-how to effect changes required by the new sustainability demands. To address this issue, corporations that have gained a strong foothold in sustainability practices may choose to incentivise suppliers and retailers that are committed towards realising sustainability objectives. These companies can also play a leading role in advocating and propagating the merits of adopting smart agricultural practices.

Spanning boundaries

As the phenomenon of disruption is multi-faceted, organisations need to span boundaries and establish new networks through collaborating with multiple partners to bring about inclusive growth. Each link of the value chain has to be analysed by capturing inputs, outputs and usage patterns. By leveraging tools to track energy sources as well as patterns of wastage and resource consumption, organisations can identify market opportunities and close gaps in the industry.

More often than not, organisations that believe in the cause of going green find themselves in unchartered territories. Whilst many companies lament such woes of disruption, well-stewarded organisations relish the opportunities it offers. These companies seek to venture into new areas and explore alternative ways of doing business. Amongst notable success stories, some of these organisations have not only uncovered cost reduction techniques, they have been able to rethink their business model, thus resulting in the streamlining of operations as well. Some instantiations of operational efficiency include the provision of an integrated solution for farmers and linking producers directly with consumers through technology.

At a more macro level, we also witnessed the collaboration between multilateral organisations and local governments to promote climate and environmental actions. The blended finance movement, as an example, has brought together the philanthropic community, business community and global financial institutions to provide funds

LIVING AND BREATHING SUSTAINABILITY THROUGH SPANNING BOUNDARIES

“You can take care of the planet if you can provide sustainable livelihood for the people. You have to be transparent with them, and make people your stakeholder.”~ Mr Dharsono Hartono, CEO and Founder,

P.T. Rimba Makmur Utama


to finance businesses that aim to support the sustainability agenda.

Sustaining the changes

Whilst it is encouraging that more organisationsand individuals are embracing the Sustainable Development Goals, it is another ball game to be ableto sustain this promising momentum. The movement has to be supported by a robust system. The participants from the Roundtable shared examples of how social impact can be made bankable by synergising both digital and physical infrastructures. Monetising the value of social investments such as selling carbon credits and providing sustainability chips can add long-term value for the company too. Additionally, social processes that involve co-workers, leaders and policymakers working in concert throughout the stages of problem definition to mapping of future directions can promote functional apparatus that allows leaders to receive more support from the stakeholders.

By demonstrating evidence-informed growth and devising performance metrics that measure intangible assets such as intellectual capital, human capital, social capital and natural capital, organisations will be able to deliver more concrete value to stakeholders. Adopting reporting tools such as the risk assurance framework that evaluates risk likelihood and impact will similarly provide the much-needed confidence boost. In sum, rallying the organisation towards a common goal by shedding light on the effects of transformation and addressing risk-mitigation concerns will foster a robust stakeholder relationship that is based on trust and transparency.

“An all win philosophy means that we have to focus on the business, on the environment, and on the society.” ~ Mr Vikrom Kromadit, CEO, Amata Corporation PCL

“When we are looking at the disruptive world, we are looking not only at technology, but at many other factors of disruption, one area being how much intangible assets have become the driving force of the capitalistic system. Within these intangible assets, how do we really map them, how do we really think about these?” ~ Prof Didier Cossin, Founder and Director, IMD Global Board Center

As an early disrupter, organisations would face impending innovation risks — having to manage fast adaption and to disrupt community behaviours towards the acceptance of a new social order. Notwithstanding all these inherent risks, it is even more perilous not to do anything amid the changes. An ongoing multi-pronged effort that involves getting industries, government, business sectors and philanthropic communities to come together to equip people with new tools, ideas, investments and profit-sharing models is necessary to spur concrete actions and nurture our collective readiness to face current and future disruptive forces. n

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STAYING AHEAD OF THE CURVE THROUGH AGILITY

“Stewardship in a disruptive world for us is being able to balance the long term and also keep an eye on the short term. It is ambidextrous leadership, keeping an eye on your telescope for all the long-term disruptive changes that will disrupt your industry, and keeping your other eye on the microscope, where you have to look after your shareholders and your stakeholders’ short-term needs.”~ Ms Tan Su Shan, Managing Director and

Group Head of Consumer Banking and Wealth Management, DBS Bank

“You can’t become agile overnight. Agility requires you to retool how an organisation operates and is governed; it also requires us to ask questions like what sort of people do we hire? How do we organise them? Does our culture appropriately support and reward risk taking?”~ Mr Mark Goyder, Founder, Tomorrow’s Company

Taking an ambidextrous approach

As stewardship revolves around the concept of responsibility and accountability for sustainable growth, it is vital for managers to take up the mantle and courage to promote a strong entrepreneurial and innovative spirit within the company.

Businesses have to become “ambidextrous” so as to be agile enough to widen market penetration by having a good balance between exploitation of their inherent resources and exploration of new market frontiers. To do so will require business leaders to create an environment that is conducive for design thinking and product innovation. Businesses should also be open to experimentation and reward innovative practices, while placing emphasis on performance-driven KPIs.

Companies that are willing to take calculated risk to invest in research and development often have the first-mover advantage. Those who have reaped the rewards have successfully become change agents and many continue to stay as leaders in their respective industries.

Operational transformation

Embracing a culture of sustainability and innovation will equip organisations with two competencies; organisational agility and organisational learning. The intended outcomes spur organisations to keep abreast of trends, to learn from the successes in other sectors as well as from past experiences. To achieve this, there is a need to ensure the alignment of formal and informal systems to support these strategies.

To begin with, organisations can revisit traditional processes and identify barriers to growth. It could be as minute as multiple-reporting lines to the strategic leadership of the organisation. While there is a need to maintain control for checks and balances, innovation should not be hampered by bureaucracy. Instead, linking mechanisms such as dotted-line reporting and integrator roles can be employed to ensure that there is flexibility and enough autonomy for employees to react. It is about creating a condition such that opportunities and threats can be detected and addressed in a timely manner. When decision-making is not fixated within the realms of top management, it allows employees to experiment and iterate quickly.


“How do we involve the young more and more in the way we develop our forward-looking strategies? We do want the young engaged.”~ Ms Goh Swee Chen, Chairperson, Shell Companies in Singapore

We need to be able to react, and to be able to foresee the changes as well. It is very important not to be too comfortable about where we are right now. We have to make sure that things can change fast. However, we also need to make sure that with any changes and decisions that we make, our principles are still there.~ Mr Jonathan Tahir, Deputy Chairman, Mayapada Group

To bring forth a culture of accountability and prosocial behaviour, employees need to be empowered. This includes delegating authority, partaking in decision-making, sharing information and incorporating employees’ inputs. Employees may be reserved initially, hence a consistent culture that rewards employees on their contributions and ingenuity instead of solely on their work output will encourage risk-taking. To sum up, revitalising a culture of risk-taking requires time, strategic focus and radical transparency.

Collaborative culture

Agility can be tempered by conflicting department priorities but this can be mitigated by implementing cross-functional teams to facilitate collaboration. To achieve high-performance work teams, companies find themselves having to reshuffle resources and implement initiatives to align employee interests with the goals of the organisation. For instance, the practice of evaluating employees based on a qualitative assessment that rewards fairness even when quantitative performance indicators are not met can help promote agility for change. Also, tweaking the reward system such that it recognises employees who contributed to the promotion of others will augment collaboration.

Lastly, companies can gain by promoting organisational learning. This can be done by engaging middle-level managers across sectors to formulate ideas to resolve issues and pain points that the industry faces. With transparency and capacity building efforts, organisations can address hindrances to growth, and shape organisational nimbleness towards developing a strong dynamic capability.

Engaging the next generation

Injecting new blood is one way to boost cognitive agility. Young talents need to be integrated into the ranks of management — a vital component of renewal process for many firms. Many companies recognise the impetus of engaging the youth by understanding their aspirations and encouraging them to percolate their innovative ideas. This is an effective way of bringing fresh ideas which can spark rejuvenation and imbue agility in businesses, especially for industries that are in danger of being disrupted. It also facilitates the moulding of the next generation of leaders, empowering them to become future stewards to build an inclusive and compassionate society.

All in all, management and employees alike, have a stewardship role to play in constructing a conducive and caring working environment for all. Leaders have to rethink the future of their business, assess how it may impact every aspect of the organisation and take actions accordingly. When organisations are agile enough to institutionalise innovations into a set of action, it reflects strong commitment towards enabling real change. n

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PERFORMANCE, PEOPLE AND PLANET: DO WELL, DO RIGHT, DO GOOD

Friends, Ladies and Gentlemen

Good afternoon.

I am humbled by your presence. You are all busy people, leaders in your own right, your own sphere. You have ideas to turn into reality, and businesses and organisations to run. Yet, you have invested a thoughtful morning to examine stewardship challenges in a world at the cusp of major disruptions, or major transformation, if you want to use a more positive word. You are brimming with energy and optimism, and a strong sense of duty and responsibility.

I really wish to thank Boon Hwee and Stewardship Asia for their kind invitation for me to join you here today.

A seed for Stewardship in Asia

Stewardship Asia was founded seven years ago. It set out to foster sound stewardship in a growing Asia with diverse populations, cultures and economic models.

Asia has gone through much over the last century —wars, including World War II, fights for independence, quarrels over borders, skirmishes for resources and territory.

In 1945, post-war Asia produced just one-sixth of global output or GDP.

Then, in the 1960s, the Japanese economy took flight.Shortly after, the four little dragons of Korea, Taiwan, Hong Kong and Singapore, also took flight, each with their own model.

In the last 20 years, we begin to see China also taking flight. China has overtaken Japan as the second largest economy in the world. At the same time, ASEAN — the ten countries of ASEAN together — has also prospered, with a robust economy of US$2.6 trillion. This is followed by India and Korea, as the next largest economies in Asia.

Today, Asia has doubled its share of global output. It now produces a third of a much, much larger global GDP in nominal terms.

What Asia does, and chooses to do, will make a difference to the world, and to her own people. It is thus, timely and right, that Asia steps up to play its part for a sustainable future of our planet.

So I want to congratulate [Ong] Boon Hwee in leading Stewardship Asia, to give voice to sound stewardship and good governance in Asia.

Over the next 20 minutes or so, I would like to share some thoughts on stewardship, including some examples from Temasek.

At this year’s “Inspiring Stewardship” session during the Roundtable lunch, Ms Ho Ching, CEO of Temasek Holdings, spoke on stewardship and sustainability, and shared about Temasek’s effort to do well, do right and do good as an investor, institution and a steward. (This is the full text of her speech.)

INSPIRING STEWARDSHIP


Business and society

Ladies and Gentlemen: As you’ve heard this morning, businesses do not exist in isolation from society, or the forces that shape us all.

Businesses provide goods and services to meet the needs of society and the people. Yes, businesses must make profits to survive and thrive.

But can businesses go beyond profits?

In 1919, the Ford Motor Company in the US had a large capital surplus. Its founder and majority shareholder, Henry Ford, wanted to pursue more than profits. He wanted to end special dividends for shareholders, cut prices for his cars, invest in more production, and hire more workers.

Henry Ford said: “My ambition is to employ still more men, to spread the benefits of this industrial system to the greatest number possible, to help them build up their lives and their homes.”

Unfortunately, his minority shareholders disagreed, and took him to court. The Michigan Supreme Court eventually ruled against Henry Ford. It declared that:

“A business corporation is organised and carried out primarily for the profit of the stockholders … The discretion of directors … does not extend to a change in the end itself.”

In other words, the Michigan Supreme Court restricted the board of Ford Motor Company to pursue profits only for the shareholders, with no mandate to change that end. In that way, the US is a little bit behind the example that we heard this morning on how San Miguel has gone beyond just the pursuit of profits. So perhaps this is a value on which Asia leads the US?

Separately, in Europe, however, shareholder interests do not reign supreme.

Germany has a corporate philosophy rooted in Bismarck’s welfare state in the 19th century. German companies with more than 500 workers have significant employee representation on their supervisory boards. German boards have a broader mandate beyond just shareholder interests.

Over the last 35 years, France, too, has progressively codified similar requirements. French companies with more than 1000 employees must include one or two employee representatives on their boards.

Here in Asia, apart from what you heard this morning about the Philippines and other countries, about Confucianism and other philosophies, Singapore has found a new way to balance stakeholder interests differently.

First, similar to UK, board directors of Singapore companies have a fiduciary duty to the company. Their duty is to the company as a whole, rather than just shareholder interests.

Second, and more uniquely, Singapore promotes a tripartite partnership between labour, business and government, for the common good.

Businesses must be competitive to succeed. But this is not an end in itself.

The end, as [Lim] Boon Heng pointed out, is a better life for the workers and their families, and a peaceful, thriving and just society.

Hence, government, unions, and employers in Singapore collaborate closely to provide economic opportunities through competitive and successful businesses, and to anchor productive jobs through skills and training.

Interestingly, in recent years, even the US is beginning to change its narrow view of company mandates.

Since 2010, some 33 American states have statutes for “Benefit Corporations”. Benefit Corporations are “for profit” businesses with the mandate and leeway to consider public benefit, in their decision-making, beyond just shareholder interests.

At Temasek, we too look beyond the narrow confines of profits. We see three roles for ourselves — as an investor, an institution and a steward. ~ Ms Ho Ching, CEO, Temasek Holdings

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Temasek as an Investor

As an investor, Temasek aims to deliver sustainable returns over the long term.

We invest not just for the next three or 10 years and not even for the present generation. Instead, we constantly challenge ourselves to shape and re-shape our portfolio to deliver for future generations.

This is why we embark on long-term projects like the Mandai Nature Safari Park. This project marries nature conservation with a family and leisure retreat for our urban population, even as it aims to deliver a sustainable bottomline.

I joke with the Mandai team — they’re mostly much younger than me, some of them half my age, or a third — that they are working for their grandchildren. The trees that they plant will take over 50 years to mature — certainly beyond my lifetime, and likely beyond their working lives.

So, yes, Temasek aims to deliver returns, but we want to deliver returns in a responsible and sustainable manner for our future generations.

Temasek as an Institution

Next as an institution, we want to build for the future. What this means is our values and our people.

How do we want to develop our people to think long term, and to act as owners and stewards? What sort of DNA do we want in our people?

I am very encouraged that the values of integrity and meritocracy consistently rank very high with our staff, alongside the pursuit of excellence.

To think long term and to act long term, we need to have systems and structures to facilitate and foster that culture as much as possible.

Should we just go for returns, or should we look at risk-adjusted returns? If businesses go through cycles, should we reward short-term results, or foster a long-term incentive system?

Some say we will not be competitive in hiring good people if we hold back incentives for too long.

But the people we want are precisely those who will not be tempted or distracted by short-term gains. Those who can think like long-term owners; those who can act as stewards in the interest of the larger whole, are precisely what makes Temasek special.

Hence, we have spent time to layer in our values, our philosophies, build systems and processes, systematically, over the years.

How else should we develop our people?

One example is our MAD KPI incentive — MAD, M-A-D, is short for Making A Difference.

Our MAD KPIs support a strong learning culture.

This includes an opt-out programme for all our staff to learn and requalify their CPR (Cardiopulmonary Resuscitation) and AED (Automated External Defibrillator) skills every two years. CPR, you pump the chest to restart the heart!

Through such training, we have put many hundreds of our people into their local neighbourhoods, here in Singapore and elsewhere in the world, knowing how to restart a heart. We hope they never have to use their skills, but when they do, they can Make A Difference!

So you see, Temasek doesn’t just train our folks for job-specific skills. We want to enable our people to contribute to their families and their communities in broader ways, and beyond their work life and tenure in Temasek.


Here, I would like to raise an idea as food for thought.

Ladies and Gentlemen:

Companies have been enjoying the human capital that have been trained in schools and colleges, funded mostly by governments and families.

We should not take the easy way out to retrench the obsolete, when technologies change. We should not throw the problem of skill obsolescence to governments and societies.

Businesses must step up, in a tripartite partnership with governments and unions, to upskill and re-skill our workforce to be employable and to be future-ready. Even better, if we can bring along our suppliers and outsource partners on our re-skilling and upskilling journeys.

In short, businesses should not outsource away our responsibilities as a key stakeholder for the common good, especially for our workforce.

Temasek as a Steward

Lastly, Temasek has a stewardship role in two aspects: the community at large, and our future generations.

We encourage our staff to be constructive members of society in their own right.

We grow with Asia, and re-invest in Asia. We invest beyond Asia, and re-invest in the world. We invest in our family of Temasek Foundations, to build people, capabilities and communities, to give a hand up, rather than a hand out.

Beyond the community, our larger responsibility is really towards our future generations.

At one level, Temasek is a Fifth Schedule Company under the Singapore Constitution. This means we have a constitutional responsibility to protect the past reserves of our company for our future generations.

At another level, we are a responsible global investor, investing and re-investing for sustainable long-term returns. We want to help seed a better world for present and future generations, by promoting sound stewardship and good governance.

Ecosperity and the United Nations Sustainable Development Goals (SDGs)

One key initiative for our future generations has been to promote Ecosperity. This twins Ecology and Prosperity — to foster sustainable development. Ecosperity echoes what Singapore has done since independence: from a backwater, to a garden in a city; from a city in a garden to a city in nature.


Three years ago, Singapore joined over 190 other UN members to adopt the United Nations Sustainable Development Goals, or SDGs. Together, we pledged to bring about a better and more inclusive world of hope and opportunities by 2030 — twelve years from today. We also pledge to protect our planet for future generations beyond 2030.

Put simply, the SDGs spell out goals for an ABC World — A for an Active economy of jobs and fulfilling opportunities for people; B for a Beautiful society of justice and inclusion; and C for a Clean world of fresh air, clear water, cool earth.

I would like to urge companies and non-profit organisations alike to explore how they can contribute to specific SDGs, relevant to each of our institutions.

Do Well, Do Right, Do Good


I have outlined the three roles of Temasek, as investor, institution and steward.

A few years ago, a friend challenged his research institution to contribute to people and society beyond their research mission. He called it their “triple bottomline”.

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Some describe the triple bottomline as Profits, People and Planet. I prefer to think of it as Performance, People and Planet. In other words: to do well, to do good, to do right.

These goals would be equally applicable to NGOs and governments, as well as companies and non-profit organisations.

Coincidentally, the triple bottomline of Performance, People and Planet, dovetails nicely with the three roles of Temasek:

to do well as an investor;

to do right as an institution; and

to do good as a steward.

As businesses, doing well means delivering the returns. Without profits and returns, we can’t survive the short term and we would have no means to make any difference.

To do well gives us the capacity to fuel our investments, create jobs and grow our businesses into the future. This, we must do well.

Doing right means building a culture of integrity and fairness, and developing our people as healthy, capable, productive members of the larger community.

Finally, we must do good, beyond the token or traditional “CSR (Corporate Social Responsibility)” of the past. More than demonstrating positive contributions to our broader community, we must act as stewards for our future generations.

Conclusion

Ladies and gentlemen:

As you have heard this morning, we face a world, threatened by the digital divide, environmental havoc, climate change, even religious terrorism.

The digital revolution will be one of the biggest disruptions that mankind has faced to-date.

On balance, technology is a force for good, as are globalisation, free trade, and the international rule of law.

However, the transition to the new digital world can be very unsettling.

Many new kinds of jobs and opportunities will be created, including by leaders in this room. But many people risk being left behind when their old jobs disappear.

Businesses, governments and civic societies, as well as individual workers and the labour movement, must help our workforce navigate through the disruptive transition. Individuals need to prepare themselves to move beyond their comfort zones and learn new skills.But more critically, the unthinking pursuit of development and growth, at the expense of our planet, is a “slow boiling frog” danger.

The high carbon emission and various forms of air, water, soil and noise pollution are threatening to turn our world topsy-turvy.

I submit that we all share a common duty to protect our planet. That duty starts with each of us today, if not yesterday.

Stewardship in a disruptive world is thinking, planning and acting today with tomorrow clearly in our minds.

I propose we begin today, to develop the relevant triple bottomlines for ourselves and our institutions. This will help us frame how we can do well, do right, and do good, for our companies, people and planet, for a sustainable tomorrow. Thank you.


On “The sectors or areas or companies that Temasek invests in”:

Well, when we set out, one of the things we asked ourselves is where did we come from and where do we want to go. We came from a tiny Singapore that was part of the emerging world and we grew with Singapore. So one of the thoughts we had is, just as we grew with Singapore, we would like to grow with Asia. We saw Asia as the next area of growth, it is in our neighbourhood, and therefore, we wanted to grow with Asia. And that led us to look ahead and say within Asia, what are the trends that we are looking for?

One was a transforming economy, economies that are prepared to transform, to make a change for their

people and to move forward. Two, we were interested to see a more stable society in the longer term, and what constitutes a more stable and more equal society is really the growth of the middle income. And therefore, we want to invest in areas that will support the needs and meet the needs of the growing middle income, including serving the low income to help them transit to the middle income. Three, we would like to invest in places and areas and sectors which have a comparative advantage in the different parts of the world. And finally, we want to invest in emerging champions, those who are making a breakthrough, those who are going to make a difference, whether it’s breaking through from your domestic market to the global market or breaking through in terms of translating from science and the research back into the community.

Q&A SESSION

Ms Ho Ching’s inspiring speech was followed by an engaging session of Q&A — this is a part of the dialogue.

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So that is broadly how we look at what we want to invest, and every few years, we will look at the trends. So the last six years, for example, the trends that we are looking at can be simplified into the concept of a better world, a more connected world and a smarter world. What do we mean by a smarter world? Those are the trends in automation, in AI, in using technology. A better world, that includes the eco-consciousness among our young, as well as the needs of an ageing population as lifespan increases. And finally, a more connected world is really a sharing economy, how do we better use assets. And those are the areas that we have been looking at for the last six years or so. Those areas used to form about 6% of our portfolio. Today, they are at least a quarter of our portfolio.

On “How can we use Stewardship Asia as a platform to define what good disruption is and work together collectively to incorporate Asian values”:

… Stewardship Asia is a small outfit, it is a tall order to ask Stewardship Asia to try to define everything and bring everybody together to one common standard. What Stewardship Asia can do, although I defer to Boon Hwee on that, is really to encourage, to foster thinking about it, to think about the future. And as different companies, different societies, different economic models exist in Asia, we need to recognise and accept that there are different paths to a long common good. This is no different from the concept of ASEAN. Within ASEAN, we have got different economies, different economic models, different stages of development, but we are united in trying to make sure that this is a peaceful world where we respect and recognise each other.

… So in the same way (on setting standards), I think the conversation that Stewardship Asia fosters is really to bring awareness, and NGOs too, I think can play an important role, because even as we look at stewardship, even as we look at sustainable goals, even as we look at how we implement or how we support the implementation of the United Nations SDGs, we do need yardsticks which are recognised, which are objective. So it is the work of many, many groups, including you who are in this room and many outside this room, including the United Nations.

On “Strengthening inclusivity and investing in ways that empower lower income groups to level them up”:

I think the number one thing that we can do is really education. Without education, we cannot open opportunities for people. So whether it’s companies or governments, education, and that includes training, retraining, lifelong learning.

The second will be public health, not so much in medicine, because in medicine, there are different requirements and different challenges, but public health as a common good. And public health would include clean water, clean air. I think if governments and societies can do those, that would provide an environment where the energies and the creativity of people can be unleashed. On “What if you have a project that doesn’t make profit, but it is so clear that it helps people and planet, how would you make that decision”:

You are right, sometimes you need to do the trade-off. What we have done in Temasek is to recognise what we are good at and what we are not good at. We recognise that there are certain capabilities that we must build within Temasek, and certain capabilities that we will have to leverage partners or others.

So in Temasek, we are a financial institution, we are an investor, so that’s what we are good at, we should focus on that. And then we share, through endowments and gifts. In our endowments and gifts, we split that into two parts. One part is to look after the money, because (otherwise) when we give endowments to charities, they usually have to look after the money as well as deliver programmes. So, one part, Temasek Trust looks after the money, the gifts, for the long term. And the Temasek foundations, the other part, are the ones that will deliver the programmes.

So if there are projects which, let’s say don’t quite meet our risk-adjusted hurdle, the foundations have the possibility of picking up that. So we separate the two, and therefore, there’s clear accountability and clear alignment.


On “How do we square in the world that we want to create, the short-term pressures created by M&A (Mergers and Acquisitions), with the desire for companies to be run for the long term”:

We don’t try to square that, because that’s not our mandate. We try to look at the longer term. We do recognise that you cannot be there for the long term if you don’t take care of your short term. One cannot have 30 bowls of rice 30 years from now, and zero bowls for the next 30 days. So we do recognise that there has to be a balance between the short-term and the longer term deliverables. But if we overfocus on the short-term deliverables, we may run the risk of doing that at the expense of long term.

On “Caring for the ageing”:

One of the things that we recognised some years back, is that with economic growth and with better living, people in Asia will live longer. And one of the key challenges about living longer is really retirement. How do we plan for retirement and how do we finance retirement? While we have institutions like Central Provident Fund or Employees’ Provident Fund for retirement savings, we think we need to supplement it. We think companies need to participate in this. And one of the things that we decided to do was to try and make use of our skills and our strengths to create new products for the individuals to invest for their own retirement.

As an example, if you look at housing, a lot of people will invest in housing for themselves to live in. But housing is a very chunky investment, and beyond that home that they invest in for their own use, they really can’t invest in other kinds of assets, which are in some ways inflation-linked.

So, we work with one of our companies to kick-start the real estate investment trust. The idea of the real estate investment trust is to democratise, to unitise the possibility of investing in different kinds of assets in very small quantities. By creating a product which is diversified and therefore provides better risk-adjusted returns for the individual, we can bring a new category of product to the market for the retail investors. So quite apart from things like housing or nursing homes, this is another way where we as an institution, not through our foundations, we as an institution try to bring our skills and our knowledge on assets to create products in the future for those who want to invest for their own retirement. n

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MEETING OF MINDS

Congruence is essential to enhance the sustainability of family businesses

Forging stewardship congruence across the owners, board, and management, as well as between family and non-family members is inherently challenging as relationships are often fraught with paradoxes. Typically, the owners and family members will be predisposed towards taking a longer-term view as they have an inheritance stake; whilst the management will tend to take a short-term perspective due to their brief tenures. Such differences have to be reconciled through participatory engagement, and an alignment of values. Ensuring congruence over time is also important for the internalisation of values across generations.

Succession is at the heart of family businesses

Having a smooth succession is crucial for family businesses as it has ramifications on the family dynamics and survivability of the business. Successful and enduring family businesses truly see succession as a critical aspect of good stewardship. They deliberate, plan and execute their leadership transition in ways that minimise destabilising shocks and increase the stakeholders’ acceptance of the new leadership.

Following the Stewardship Asia Roundtable 2018, 40 participants from 13 countries, comprising people from eminent family businesses, professional associations, academic institutions and think tanks convened at a fringe meeting to share perspectives and to deliberate on the draft version of Stewardship Principles for Family Businesses. They spoke candidly from their knowledge and expertise, and provided nuanced expositions of the influences underpinning sustainable family businesses. Some of the important themes gleaned from the rigourous and engaging discussion are highlighted here.

As highlighted by the participants, there is a need to start succession planning early as it involves a whole spectrum of activities which spans across the spheres of household succession, management succession and asset succession.

“Traditionally, the focus of business succession is mainly on the downstream activities, and specifically, succession to visible assets. However, I really think that this is very short-sighted and the approach is not effective in terms of family business sustainability. Succession should cover all levels of activities, spanning from the upstream to the downstream.”~ Mr Morio Nishikawa, Chairman, Family

Business Advisors Association Japan

STEWARDSHIP PRINCIPLES FOR FAMILY BUSINESSES: NAVIGATING SUSTAINABLE PATHWAYS


Alongside tangible assets, there are also intangible assets such as culture, values, systems, processes and social networks that form the bedrocks of business sustainability — legacies that constitute competitive edges for the family businesses.

Arising from the meeting, there was a general consensus that the successor can be an internal or external member of the organisation. The crux is that the appointed successor must be someone who can honour the transcendental values and legacies of the founders, on top of having the right acumen, character and intrinsic motivation to do good.

Family harmony is highly valued

There is poignant cognisance that unchecked emotions can derail the stability of family and business, leading to the fragmentation and disintegration of family businesses. Family harmony is therefore of paramount importance. To maintain this harmony, participants opined that it would be necessary to keep both the family and business considerations and conflicts separate. Embedding conflict resolution mechanisms to arbitrate tensions can be a useful strategy. For instance, family issues should only be discussed under family governance structures such as family meetings and councils, and not during board or management meetings. More importantly, old-fashioned virtues like trust, compassion, love and tolerance will continue to act as healing balms for animosity while deepening the reserves of loyalty concomitantly.

Value creation involves a higher purpose

Family businesses have to be clear about the purpose of creating wealth. Successful and enduring family businesses establish clarity on the purpose of their existence. A few families mentioned the importance of running businesses in ways that promote long-term economic and social value, which impel these businesses to adopt a humanitarian outlook to prosper others instead of just myopically focusing on creating family wealth.

“You have to separate family conflicts from business conflicts. You can have good arguments at the board level, or between the management and the board about the business. These can be resolved at the company level, but don’t bring the family issues into the board room. Take those family emotional issues out, and try to deal with it at the family level.”~ Mr Richard Eu, Chairman, Eu Yan Sang

International

“At the end of the day, when you think what makes one company different from something else, there has to be a bit of the magic, that founder’s magic. People remember the stories of the founder. People remember the founder’s commitment. It is something that is transcendental across generations.”~ Mr Ho Ren Hua, CEO, Thai Wah Public Co

At a more macro level, some founders even linked their business purpose to nation-building efforts. These values are sometimes institutionalised as family constitution, acting as a moral compass for subsequent generations.

In a nutshell, the fringe meeting engendered coruscating exchanges amongst the participants, which enriched their collective understanding of the issues confronting the stewardship of family businesses. To be promulgated and launched at the later part of the year, we hope that these principles will be relevant and helpful in prompting reflections about stewardship practices for family businesses across Asia. n

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STEWARDSHIP PRINCIPLES FOR FAMILY BUSINESSES: FOSTERING SUCCESS, SIGNIFICANCE AND SUSTAINABILITYThe Meeting of Minds, following the Stewardship Asia Roundtable 2018, was a crucial part of Stewardship Asia Centre’s effort in working with relevant and credible partners across Asia to promulgate a set of Stewardship Principles for Family Businesses.

These principles were gleaned from research studies and consultations with family business associations and family firms, both regionally and internationally. They aim to articulate the mindset and attitudes, as well as behaviours and practices that would foster the success, significance and sustainability of family businesses. As broad principles, they are not meant to serve as a blueprint but to inspire reflections and actions for those who are committed to stewarding their organisations towards sustainable success. Inevitably, the adoption of these principles will require further translation and adaptation to the various contexts to make them more applicable, useful and effective. The stewardship principles can be broadly categorised into the following aspects:

Purpose and values

Successful and enduring family firms are driven by a sense of purpose that is anchored on values. They establish clarity on the purpose of their existence. Premised on this understanding, these family firms align their organisational values, business decisions and daily operations accordingly. The organisational values, which are built, strengthened and passed down over time, help to congeal seemingly conflicting family and business identities and interests. To live out the transcendental purpose and values, family firms have to ensure that their business philosophy is embedded in their daily language, actions and thinking processes as well as communicated clearly across all stakeholders.

Ownership mentality

Family firms tend to have a stronger sense of ownership, which helps in fostering long-termism. To cultivate an ownership mentality among all employees, there is a need to instil a culture that emphasises personal as well as collective accountability where employees are clear of their individual roles as well as shared responsibilities. Valuing diverse perspectives and translating promising ideas into concrete actions will also enhance ownership, mitigate conflicts and

promote collaboration. Owners and employees take responsibility and action as well as develop a sense of collective pride to forge proactive and integrative solutions to complex problems and dynamic situations. Seeing the organisation as an extension of themselves, they will be intrinsically motivated to be change agents and act within their locus of control, with the interest of the company in mind.

Ownership mentality is also closely related to the ownership structure of family businesses. Ideally, family firms should adopt an ownership structure that fulfils the objective of capital injection whilst maintaining some degree of family control. This allows the family firms to continue to exercise some degree of autonomy over strategic decision-making processes, most notably, issues regarding ownership transfer and succession planning.

Long-term orientation

Family firms that strive for longevity also adopt a long-term orientation towards spending and investment, favouring sustainable growth over quick gains. They are mindful of intergenerational equity, and are well aware of the costs and opportunities involved in every strategic decision. By integrating short-term and long-term perspectives, these family firms take calculated risks to reap social and financial rewards in the future. They also adopt the philosophy of preserving intangible assets such as kinship and loyalty for long-term legacy building.


Agility

Successful and enduring family businesses anticipate changes in the business environment, and continually seek to nurture agility. This is not only to prepare themselves to address challenges, but also to build capacity to leverage opportunities brought forth by disruptive changes, new market imperatives and emerging technologies.

By conducting horizon scanning and scenario planning, family firms can understand emerging threats, opportunities and evolving customer needs, thereby re-calibrating what matters and enact the necessary changes. They remove emotional attachments to outmoded beliefs, structures, processes or relationships. They also try to create a leading edge in identified niche areas. These family firms expect change and nurture agility and strengthen resilience in response to the onslaught of disruptive innovations.

More specifically, these firms foster the mindset of lifelong learning to avoid stagnation. Compared to non-family firms, family firms have more informal mechanisms to facilitate learning, which include family gatherings, team-building activities, peer or of intergenerational coaching and long-term apprenticeship or mentorship.

Inclusive relationship

A collegial stakeholder relationship can give family businesses a leg up in their businesses. Successful and enduring family firms embrace inclusiveness and build strong stakeholder relationships. They cultivate an organisational culture that promotes open communication and harmony, where family and non-family employees can share ideas and resolve differences in a consensual manner. They care for the family and non-family members alike to promote reciprocal trust, kindness and compassion. With external stakeholders, these firms strive to forge win-win collaborations in a responsible manner to cement rapport. Buttressed by

sound governance, they engage their stakeholders actively and demonstrate commitment towards business interests to mitigate conflicts related to nepotism. Do well, do good, do right

Relationship sustainability encapsulates the long-standing connection between firms and the broader community. Many family firms aim to do well, do good and do right, contributing to the community. By giving back to society, non-economic wealth such as social capital, communal ties, family reputation and core values will be preserved and transmitted. They evaluate the impact of their philanthropic pursuits to ensure coherence between business goals and societal contributions, thus gaining more long-term support and alignment for doing good. Some family businesses make it a point to uplift the communities and revitalise the environment from which they draw their resources from. By collaborating with multiple parties, they can understand where the gaps are and subsequently give in ways that are more meaningful to the beneficiaries. Such intricate interdependence also gives rise to sustainable and synergistic relationships — constituent elements of non-economic assets that enable family firms to exercise better stewardship across generations in the long run.

Succession

We have learnt from history that it is imperative for family firms to be mindful of succession as the firm’s survivability hinges heavily upon how the successor will be stewarding the firm’s future path and galvanising everyone towards a common goal that resonates. Succession should be viewed as a continual process that paves way for transgenerational viability. As such, identifying and enculturating successors early will provide more time for the new leadership to gain a nuanced understanding of the business; as well as a broader perspective of the environment. More cogently, there must be succession of ownership mentality to move things forward. n

STEWARDSHIP PRINCIPLES FOR FAMILY BUSINESSES

Principle 1

Driven by purpose,

anchored on values

Principle 2

Cultivate an ownership mentality

Principle 3

Integrate short-

term and long-term

perspectives

Principle 4

Expect changes, nurture

agility and strengthen resilience

Principle 5

Embrace inclusiveness

and build strong

stakeholder relationships

Principle 6

Do well, do good, do right;

contributing to community

Principle 7

Be mindful of succession

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Stewardship Asia Centre60B Orchard Road, #06-18, Tower 2, The Atrium@Orchard, Singapore 238891www.stewardshipasia.com.sg

No part of this publication may be translated, reprinted or reproduced or utilised in any form either in whole or in part or by any electronic, mechanical or other means, now known or hereafter invented, including photocopying and recording, or in any information storage and retrieval system, without prior permission in writing from the copyright owner.

The views expressed here are gleaned from the discussion at the Stewardship Asia Roundtable 2018 and do not necessarily reflect the views of all participants or of Stewardship Asia Centre.

Copyright © 2018 Stewardship Asia Centre

This report is printed on Grandeur Zen White paper, which is environmentally friendly and contains wood pulp from well managed forests. Twenty percent of the pulp is sourced from pre-consumer waste and is bleached using an elemental chlorine-free process. Grandeur Zen White conforms to ISO9706 standards.

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