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Shaping the Future in the Global recovery

Andrea Tejokusumo, Jakarta
 
“The statistics are very clear on this: The crisis has created enormous opportunities for many,” stated Peter Williamson, visiting professor of international management at Judge Business School, University of Cambridge, in an interview with The Jakarta Post earlier in December.

Williamson is the program director for the school’s Executive Education Program (EEP) which, in collaboration with Indonesia’s Asian Banking Financial and Informatic Institute (ABFI) Perbanas and organized by SRW&Co., took in its inaugural batch of delegates in June 2009. 

In the program set in Cambridge, UK, Indonesian executives were invited to five days of interactive discussions concerning the reshaping of the map of China/Asia and the positioning of Indonesia — on top of embarking on some cultural activities in between classes. 

The school is now accepting applications for the second batch scheduled between May 2 and 7, 2010, with Williamson’s kicking off the program’s launch with a presentation to a group of VIPs and program alumni at Four Seasons Hotel Jakarta on Dec. 8.

According to the professor and author of Winning in Asia: Strategies for Competing in the New Millennium and Dragons at Your Door: How Chinese Cost Innovation is Disrupting Global Competition, there are five main patterns to persist in coming recovery years:

“Firstly, global financial imbalances would continue to cast a long shadow on future growth pattern. 

Secondly, income disparities would continue to widen in major developed economies,” Williamson said.

Third, China would continue setting the pace for productivity improvement. Fourth, energy would get substantially more expensive and, lastly, Asian cross-border integration would likely pick up pace, a trend that — in the case of Southeast Asia — is further promoted by ASEAN’s 2015 single market plan.

“People are expecting things to get back to normal — well, they won’t,” said Williamson. How a business can ensure its position in the changing times — alongside tackling challenges from mergers and acquisitions (M&A) — make up the most part of the EEP module.

“M&A is an inevitable result of globalization,” reckoned ABFI Institute Perbanas rector Dr Fatchudin. 

“Such was the reason behind Perbanas’ exploration for a program that could exclusively allow executives and policymakers at the CEO level to interact and share knowledge about it in between sectors.”

Williamson acknowledged that the program had started out with a core in banking yet had since broadened due to interlinking between sectors. Energy, for instance, is an industry “that permeates all sorts of things,” as does other types of infrastructure like telecommunication and cellular technology.

Inputs from previous delegates have also helped perfect the module. For the 2010 program, there is more focus on the escalating effects of climate change and on areas most relevant to Indonesia that Cambridge has great strengths in, such as green technology and engineering.

Firsthand case studies of what’s been happening around the region grant the program a wealth of knowledge on M&A practices and the government’s role in creating the framework for recovery and supporting next stage growth.

In the EU, the tendency is to shift from product diversification to geographic diversification as companies find it more efficient to run businesses across the borders — not to mention spreading the fixed cost — once government barriers are removed. This gradual but relentless process is what Williamson is seeing in Asia today.

“The statistics are very clear on this [opportunity]. It is said that the price premium you have to pay to acquire a company ranges somewhere between 5 percent premium over their value during a recession to a 30 percent premium in a boom,” he explained.

Cambridge’s EEP traces every step of the M&A process, from determining strategy to focusing on due diligence, closing the deal and finally managing the integration: “Where you should integrate things and why you should protect what you’ve bought from excessive changes; these are discussed using case studies of Asian acquisitions.”

Another essential capability for a company to develop is a mind for innovation — be it in cost, technology or system flexibility — to serve the growing “value for money” segment, use rising energy prices as a potential competitive advantage, and keep up with China’s staggering level of productivity.

“Because there’s a lot of opportunity in Indonesia, [people often think] we don’t need to look outside. 

But even China — which has the fastest growing market in the world — said: ‘If we do not go outside, we will fail in the long term. We have to be strong internationally by learning from other places’,” Williamson pointed out. 

He offered an example of how innovation can benefit Indonesia relevant to the country’s energy sector and wealth of natural resources: 

“Nowadays, you can’t sell coal in the international market without tying carbon offsets to it. Looking at Indonesia and its forests, however, you can probably create offsets within the country itself. There may be a potential partnership between the coal and forestry companies to create competitive advantage this way.”

Tengku Nathan Machmud, president commissioner of PT Perusahaan Gas Negara (Persero) Tbk, who participated in the 2009 program, found it “very interesting and thought-provoking” and reckoned participants could learn a lot from Cambridge’s “first-class speakers and lecturers who are the best in the field.”

Machmud added: “It was a little expensive of course, but worth the while. It was also very planning-oriented; if we could get some participants from the planning sector to attend — maybe those from the National Development Planning Board [Bappenas] – it would be beneficial for many people.”
 
Source : The Jakarta Post