ASEAN Leadership Model (research funded by SMU Executive Development)

ASEAN: An Emerging Management Model

Challenging How HR Professionals Work

Presentation by Michael A. Netzley, Ph.D. October 7, 2016

We Wanted to Know….

§What makes a good and successful company in ASEAN?

§What does the ASEAN model look like?

§ How should leaders today and in the future be developed and educated?

Stephen WyattEditor

Michael NetzleyScientific Supervisor

Bob AubreyResearcher, Writer

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ASEAN

National Focus

Global Focus

ASEAN Economic Community

5 Reasons Why the SCM Case MattersLeadership demands evolve out of a specific context

Opportunities created by the AEC

World’s 7th largest market by GDP

World’s 3rd largest population

227 Companies with $1 billion revenue or more

Young labor force moving into the middle class

7th Largest Market with Lower Volatility

ASEAN Population3rd largest population in the world: 600+ million

7Source: ASEANup. (2015). ASEAN infographic: economy and demographics.

More Emerging and Middle Class ConsumersThe demand side is expected to grow substantially by 2025

ASEAN Country CompetitivenessSingapore, Malaysia, Thailand & Indonesia leading ASEAN

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Country Rank (2014-

15)Singapore 2

Malaysia 20

Thailand 31

Indonesia 34

Philippines 52

Vietnam 68

Lao PDR 93

Cambodia 95

Myanmar 134

Source: World Economic Forum. (2014). World Competitiveness Report.

$1+ Billion Companies HQ’ed In ASEAN

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AEC

Members

227

ASEAN Median AgeLarge & very young labor force

11Source: Standard Chartered. (2014). ASEAN Growth in the fast lane.

Let’s Not Forget Diversity“What could possibly be a common denominator for managingbusiness in a region where nations are governed by the military, aSultanate, a Communist party, one-party systems and multi-partydemocracies-- not to mention the huge differences in cultural values,ethnic origin, religion, education, income and demographics?”

Quote from SMU White Paper on the ASEAN Management Model

Two Other Trends That Matter

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Urbanization and One Belt, One Road

14Source: McKinsey

Leading in ASEAN

What Leadership Model Evolves Out of This Context?

What is a Regional Management Model?

§ A management model answers the question: what constitutes a good and successful company for the region?

§ A region model is not just an economic model, it is also social and cultural. It impacts governance and business leadership.

§ The only other regional model is the EU. ASEAN can draw lessons from Europe. European integration triggered management development from national to regional (most already did international)

§ Some European regional innovations such as top business schools, internships and Erasmus exchanges can help the ASEAN human development challenge.

Management Spans 2 ASEAN Pillars

ASEAN Regional

Model (Vision 2015)

ASEAN Political-Security Community

• Peace and stability• Shared responsibilty• Rules and norms• Regional policy

ASEAN Economic Community

• Single market and production base

• Free trade agreements• Cross-border mobility• Competitiveness in

global economy

ASEAN Socio-Cultural Community

• ASEAN identity• Human development • Human rights, justice• Welfare and protection

Objectives

§ Identify and assess the vision of CEOs

§ Key characteristics of the ASEAN regional model and fit with ASEAN frameworks.

§ CEO issues concerning management leadership

§ CEO changes in their management ecosystem

§ CEO expectations from partners

4 types of companies: State Linked, Startups, ASEAN multinationals, foreign multinationals

Tentative Synthesis: What the ASEAN Model Could Look Like

Managing Relationships

• Multiple stakeholders, diverse needs & perspectives

• Long term and extensive networks of relationships

• Trust based relationships not contractual

• Government relationships often very important

Managing Change

• Comfortable in rapidly evolving contexts (political, demographic, economic, social, technological)

• High flexibility and adaptability

• Entrepreneurial, seize opportunities, change direction

• Expect to scale or extend scope of businesses

Managing Purpose

• Nation, Region, Society & business main partners in economic progress,

• Look for expansion opportunities across the region

• Building legacy for next generation

Managing People

• Seek harmony not confrontation (expectation of continuing relationship)

• Humanism & inclusion • Keen to develop local talent

to fill leadership ranks who will best serve the development of ASEAN

6 Conclusions from the Interviews

1. CEOs need a management model for ASEAN2. The ASEAN model is a regional stakeholder model3. ASEAN Management is defined by agreed

behaviours and values consistent with “the ASEAN Way”

4. Companies need to make changes in order to develop ASEAN management and leadership

5. HR is Challenged by transition to ASEAN6. External partners play a role in defining the

ASEAN model

With our diversity we are closer to the European model than the American one. We need to work closely together because we have two big neighbours and they will continue to drive the integration of ASEAN. -- Chanin Donavanik, Dusit

1. CEOs talked about an “ASEAN Way”

§ For CEOs the ASEAN model is built on relationships of trust and operates with informal agreements across a very diverse group of countries.

§ It represents is new stage of management development that goes beyond the family-based and nationalistic models.

§ CEOs called it the “ASEAN Way” which aligns management with the way political and economic relations are conducted amongst the ten ASEAN countries.

ASEAN management is more like a network of partnerships than the highly legislated European model. You will have strong nations within ASEAN but you won’t have one central power. So businesses will partner across the region rather than building a big ASEAN office. -- J.P. Orbeta, Ayala

2. CEOs talked about Stakeholders

§ ASEAN management serves shareholders but takes into account other stakeholders.

§ Stakeholders represent diverse political systems with their national interests, NGOs and worker associations representing very different levels of economic development.

§ ASEAN has itself become a major stakeholder with the AEC and the ASCC.

First is the ability to manage multiple stakeholders. Second, at the country level things are very diverse, so you need to manage diversity. Third is demographics: as a region we are very young – so we need a management model for young people. Fourth, our soft infrastructures are underdeveloped, so you have to deal with ambiguity and uncertainty. Fifth, entrepreneurs grow their businesses largely by private capital and family ownership rather than public capital. --Piyush Gupta, DBS

3. CEOs talked about ASEAN values

CEOs in ASEAN describe a good company as one where the management model is built on agreed values of humanism, empathy and inclusiveness.

Leaders in ASEAN are expected to be able to work with people at different levels of the organisation and with diverse sensitivities.

One of Zalora Philippines’ values that we put up on the wall in our office -- Paulo Campos

Malakasit: an authentic ASEAN management concept?

ProjectMalasakit AddressingPovertyinthePhilippines

"Malasakit means genuine care,deep concern, accountability, andsense of ownership rolled into onevirtue. It’s putting the interest ofothers above one’s own. Oneusually exercises or displaysmalasakit for an organization, agroup, a family or individual forwhom one feels a deep sense ofgratitude (or ‘utang na loob’ inFilipino.) It’s a way of returning thekindness and generosity one hasreceived in a meaningful way.Applied to a company, it’s abouthaving a personal stake for theoutcome. It means working aboveand beyond the call of duty.Person-to-person, it means ‘I’ll goout of my way to help you.”

- JoJo Fresnedi,Manila

Musyawarah and mufakat

ASEAN contributed to [the region’s] unexpected outbreak of peace in at least three important ways. First, it cultivated a culture of “musyawarah and mufakat” (“consultation and consensus” in Indonesian).

- Kishore Mahbubani and Rhoda Severino

Values captured in Bahasa and revealing the ASEAN Way

Source: McKinsey,ASEAN The way Forward

4. The Actions Companies can Take for ASEAN

1. Build a regional model for your company2. Re-identify your stakeholders3. Assess you strengths and weaknesses to

manage across ASEAN4. Build an effective ecosystem (HR,

Professional Service Providers, Education Partners, Management Associations)

Managers lack knowledge and experience of other countries in ASEAN -- the school system has to prepare people for ASEAN.

-- Eric Durand, Lamberet

0.0 1.0 2.0 3.0 4.0 5.0

How much will the job of senior executives & business leaders in ASEAN change in 10 years time?

How would you rate the “ASEAN Leadership Brand” compared to

other regions of the world?

My company needs to build a specific regional leadership model

How would you rate the potential of ASEAN business executives and

managers to lead global business?

How CEOs View the ASEAN Leadership and Management Model

All Foreign MultinationalsMultinationals see a

weaker brand but more potential All CEOs

see the need for a regional

leadership model

ASEAN Management and Leadership Challenges

§ CEOs identified several strengths in the ASEAN model: it is flexible, creative and adaptable to change.

§ However they identified gaps and weaknesses require significant development efforts and changes

§ CEOs want to improve the ASEAN “brand value” and accelerate readiness for ASEAN.

§ CEOS communicated a need to develop talent mobility, talent sourcing and talent development in their ASEAN management models.

Our strength in finding compromise is also a weakness. In making decisions we are not always transparent and we show respect to our hierarchical superior even when that person is not the most competent to make a decision. -- Farehana BT Hanapia, Petronas

How CEOs Assess ASEANStrengths

• Openness, flexibility, creativity, speed

• High EQ, relational skills, trust, listening

• In some countries• Risk-taking• Willingness to work in other

ASEAN countries

Weaknesses

• Leadership responsiblity• Unwillingness to assume

personal accountability• Avoidance of making tough

calls as a leader

• In many counties• Lack of transparency;

complacency with corruption (Singapore cited as the exception)

• In some some countries• Lack of adequate tertiary

education at management level• Employees lack an adequate

level of English• Unwillingness to work in other

ASEAN countries (Philippines cited as the exception)

Talent Sourcing

gap

Training &Development

gap

ASEAN multinationals

are ready

State-Linked leadership

gap

How CEOs See Leadership DevelopmentThe biggest challenge is to develop people at the middle and higher management levels to be autonomous. The boss cannot make all the decisions or know what to do. Managers need to take initiative. –- Marc Steinmeyer, Tauzia

CEOs identification of needs to lead from ASEAN(next 10 years)

Exposure within the

region, managing

across ASEAN cultures

Respect among ASEAN

countries, accountability, responsibility, transparency

Global thinking,

global vision, global

exposure

5. Can HR Play a Strategic Role?NO: HR is not a strong driver for ASEAN management. A stronger driver is technology: for example, technology is borderless in ASEAN. HR needs to meet the challenge of engaging the workforce.

-- J.P. Orbeta, Ayala

Yes: HR will need a fundamental transformation. HR will have to build an ASEAN workforce of expatriates while today the HR systems are very nationalistic. -- Batara Sianturi, Citibank Indonesia

Define the Strategic HR Mission• Does HR have a role in

building ASEAN?• If so, the HR mission needs

to be redefined

Think differently• Think regionally• Take leadership• Build the ASEAN generation

Meet challenges • new business models• more competitive• ASEAN mobility• Apply technology

Appendices

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