Companies in Asia are caught in the middle of intensifying geopolitical contestation, and must be both resilient and adaptable to the changing environment for businesses, says Temasek Holdings’ executive director and CEO Dilhan Pillay Sandrasegara.
“We will need to think of a new game because the world which we will be operating in will be very different from the one many of us grew up in, or operated in, for most of our working lives,” says Pillay at the Steward Leadership Summit on Nov 21.
Pillay was delivering the keynote at the second edition of the summit, organised by the Stewardship Asia Centre (SAC). SAC is a non-profit organisation established by Temasek in 2014.
Pillay refers to the period between the fall of the Soviet Union in 1991 and before Covid-19 as “the old world” — a unipolar landscape with the US as a single global superpower. “We were the beneficiaries of low inflation and low interest rates for a very prolonged period of time. Today, we’re dealing with persistent inflation and higher-for-longer rates.”
The world celebrates efficiency, and China is a progenitor of that, says Pillay. But even the manufacturing hub of the world faces a coming reckoning. “Today, we value resilience. The world was ‘growth at all costs’ and today, we’re thinking about sustainable growth.”
The emergence of powers like India and Saudi Arabia has given rise to a multipolar world. This “new world” may either constrain businesses or provide opportunities, “depending on how we look at the resilience of ourselves and our companies”, he adds. “This new world is here to stay. We have to take the world as it is, with its challenges, issues and constraints and change the way we operate.”
Building a resilient business
A resilient company needs to have a strong balance sheet, a strong core business and an intense focus on positioning to grow organically and inorganically, says Pillay.
See also: 'Game of thrones' amid geopolitical tensions means coming decade will be more expensive: Temasek CEO
“Companies need to embark on the business of continuous transformation, because transformation is a journey that knows no end,” he adds. “We will need to constantly look ahead and anticipate not just what is down the road, but what is around the corner.”
Pillay lists four ingredients for success: a resilient business model, workforce transformation and transition, climate change transition and partnerships.
He also highlights the need to digitalise businesses, “and where it matters, adopt robotics and automation”. “But more important is the potential impact of generative AI on our businesses, and its adoption for competitiveness.”
Companies must continuously adapt and evolve. However, adopting technology will impact the workforce, Pillay adds. “Hence, alongside technology adoption for business model transformation, we need to focus on workforce transformation. A key to resilience lies in developing our workforce — skilling, reskilling and upskilling them. Our workers are the heartbeat of our companies; we must proactively engage them to ensure that companies are future-ready.”
In an increasingly uncertain world, companies and governments must value an “ecosystem approach”, says Pillay, in order to scale capital expertise and access to opportunities through strategic partnerships and collaborations.
“Someone once told me knowledge is good, know-how is better, but 'know who' is best,” says Pillay in his concluding remarks. “Most businesses are run today on the two pillars of risk and reward. In the new game, we will need to think through the prism of resilience, risk and reward. Then, we will catch the rainbow when darkness gives way to light.”
Building an adaptable business
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An adaptable organisation can roll with what the world comes at it with, and boasts a “muscle” that can help it withstand the shocks that come periodically, says Pillay in a subsequent discussion with Vinika D. Rao, executive director of the Insead Africa Initiative and Hoffmann Global Institute for Business and Society, Asia.
“Some of these shocks will not be temporary, and may be here for longer than we had expected. As we think through those issues, the most important thing that we think about is how do we make sure that we have an organisation that is very, very well-structured for anything that could possibly come,” he adds.
A decade ago, Temasek would have identified solely as an investment house, says Pillay, and would only look for employees with backgrounds in finance or investment banking. “Today, that’s not good enough. We need creatives in our team; we need people with an ability to think in a non-linear way.”
He adds that “non-linear people” are not typically accepted by many. “These are out-of-the-box thinkers [who] are always challenging the paradigm.”
Temasek has made it a point to address neurodiversity among its employees. “Historically, neurodiverse people have found it difficult to assimilate into organisations… Neurodiverse people bring a lot of talent; for example, in our cyber business, their talents are what we need. [They have] excellent pattern recognition [skills, and] they’re very focused on a task at hand. It’s also about ensuring people have a chance to succeed when they’re a little bit different from the rest of us,” says Pillay.
Environmental, social and governance (ESG) issues are here to stay, says Pillay. “If you don’t address it, the future costs are very high for companies. We have to start somewhere because time is not on our side.”
Market studies have shown that the public markets do support companies that are on a journey to become more sustainable, says Pillay. “But you have to have a very clear articulation of the journey [with] very clear milestones and show that you’re executing it.”
Ensuring diversity and best practices in the workplace cut across the “S” and “G” pillars. “If you don’t adopt the right practices in your workplaces, for example, in health and safety, it’s going to hit you in a different way.”
Pillay may have started his speech warning of novel problems as the world changes, but he remains optimistic for the future. “The 70’s and 80’s were a very turbulent time in the world — I grew up in Singapore [then]. You would not, at that time, be able to dream that the world would turn out the way it has turned out for all of us here in the last 30 to 40 years.”
He concludes: “I believe whenever we go through a period where there are dark clouds on the horizon, somehow, we always find a way to the light; I really do. It has been proven again and again, we just have to remember — human ingenuity can trump all kinds of adversity.”
Photo: Stewardship Asia Centre
