VOL.10 Leading by Example and Giving Back to Society An interview with N.R. Narayana Murthy, Founder and former Chairman of Infosys Reimagining Sustainable Urban Communities In Hong Kong Increasing the Acceptance Of cultivated meat DOES ELITE QUALITY MATTER? S$16.00
CONTENTS 01 CONTENTS 04 FROM THE EDITOR AT THE HELM 06 LEADING BY EXAMPLE AND GIVING BACK TO SOCIETY an interview with N.R. Narayana Murthy, Founder and former Chairman of Infosys Havovi Joshi VANTAGE POINT 10 DOES ELITE QUALITY MATTER? yes, it can make or break a society Alwyn Lim 06 10 We must bring the impact of economic growth not just to urban India where it is very visible, but also to the remotest parts of our country. - N.R. Narayana Murthy, Founder and former Chairman of Infosys Asian Management Insights November 2023
INDUSTRY WATCH 16 REIMAGINING SUSTAINABLE URBAN COMMUNITIES in Hong Kong Jeroen van Ameijde, Sifan Cheng, and Junwei Li 24 INCREASING THE ACCEPTANCE of cultivated meat Mark Chong CASE IN POINT 32 RIDING THE DECARBONISATION WAVE BHP and its LNG dual-fuelled vessels Shantanu Bhattacharya, Flocy Joseph, and Mahima Rao-Kachroo EXECUTIVE BRIEF 38 NOVUS EX MACHINA realise your organisation’s creative potential with AI Adam Tatarynowicz and Utz Claassen 32 62 46 FROM MINDSET TO ACTION accountants as stewards for sustainability Yvonne Chan 54 PURSUING PROFIT AND SUSTAINABILITY in the age of climate change Tracy Xie THE ENTREPRENEUR’S CORNER 62 BUILDING SUCCESS in the Philippine retail sector Jimmy Thai A WALK THROUGH ASIA 68 THE RISE OF MULTI-HOMING in Asia’s ride-hailing industry Wang Hai PARTING SHOT 70 DELIVERING HEALTHCARE TO THE UNDERSERVED using a data-driven approach Edward Booty Do elites contribute to a society more than they extract from it? In many countries where populism has surged in tandem with declining trust in elites in the political and other spheres, the answer is an emphatic ‘No’. - Havovi Joshi, Editor-in-Chief, Asian Management Insights 24 02 Singapore Management University
EDITOR-IN-CHIEF Havovi Joshi EDITOR Lim Wee Kiat DEPUTY EDITOR Alvin Lee CONTRIBUTING EDITOR Thomas Lim PRODUCTION EDITOR Sheila Wan EDITORIAL BOARD Indranil Bose Nykaa Chair Professor of Consumer Technology at Indian Institute of Management, Ahmedabad and Distinguished Professor at NEOMA Business School, France Goutam Challagalla Professor of Marketing and Strategy at IMD, Switzerland Roy Chua Associate Professor of Organisational Behaviour & Human Resources at Singapore Management University Robert J. Kauffman Professor Emeritus of Information Systems at Singapore Management University Michael Netzley Affiliated Faculty at IMD Business School Rajendra Srivastava Novartis Professor of Marketing Strategy and Innovation at the Indian School of Business Tan Chin Tiong Professor Emeritus of Marketing at Singapore Management University Philip Zerrillo Professor of Marketing at Thammasat University, Thailand CREATIVE DESIGN C2 Design Studio Pte Ltd Asian Management Insights (ISSN 2315-4284) is published thrice a year at a recommended retail price of S$16 by the Centre for Management Practice, Singapore Management University, 81 Victoria Street, Singapore 188065. We welcome comments and letters to the editor, which should be sent with the writer’s name, address, and phone number via email to ami@smu.edu.sg. Letters may be edited for length and clarity, and may be published in any medium and at the Editor’s discretion. All letters become the property of Asian Management Insights and will not be returned. Submissions: We encourage submissions. Proposals for articles should be addressed to ami@smu.edu.sg. Unsolicited manuscripts will be returned only if accompanied by a self-addressed stamped envelope. Subscriptions: Please email enquiry to ami@smu.edu.sg For further information, to advertise or request reprints, please contact: ami@smu.edu.sg Copyright © 2023 Singapore Management University. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage and retrieval system, without written permission. The views expressed in articles are those of the authors and not necessarily those of Asian Management Insights, the Centre for Management Practice, or Singapore Management University. Authors may have consulting or other business relationships with the companies they discuss. All information in this publication is verified to the best of the publisher’s ability. Singapore Management University does not accept responsibility for any loss arising from reliance on it. 70 Asian Management Insights November 2023
FROM THE EDITOR Building urban sustainability with quality elites Do elites contribute to a society more than they extract from it? In many countries where populism has surged in tandem with declining trust in elites in the political and other spheres, the answer is an emphatic ‘No’. The hashtag #TaxTheRich reflected growing resentment and dismay at worsening income inequality, all while activists organised the Global Protest to Fight Inequality during the same week the rich and powerful congregated at the World Economic Forum in Davos in January this year. Alwyn Lim was part of a research collaboration that produced the Elite Quality Index, which examined the role elites in different countries play in creating value for society at large. Mediation by a strong government is a proven path to elite value creation, but a business-driven approach where corporate profits fund social goals is an alternative. At a fundamental level, he opined a commitment to economic openness and free enterprise dynamism will be crucial for elite value creation. N.R. Narayana Murthy is a bona fide value-creating elite, founding Infosys and sparking India’s ascent to be among a select group of nations at the forefront of information technology. Murthy shares his thoughts on fostering innovation and the importance of creating trust. He also reflects on his lessons learnt as a businessman and citizen, assesses India’s current stage of development, and gazes into the future to speak about technology’s next big thing post-digital transformation. Some of the popular anger witnessed today stems from increasingly overcrowded urban dwellings, and much can be learnt from Hong Kong’s experience in building New Towns post-World War II, which has contributed vastly to creating high-quality, highdensity developments globally. As the city embarks on building its third-generation New Towns, Jeroen van Ameijde, Sifan Cheng, and Junwei Li examine integrated planning strategies that effectively address 21st-Century concerns such as environmental and social sustainability. In this issue’s The Entrepreneur’s Corner, Jimmy Thai shares about how the Primer Group, which he formed with his brother and three friends in the Philippines, expanded to become a regional retail giant in one generation without much high-tech wizardry. From quitting a stable job to distributing global brands and establishing Primer’s own retail brands, Thai looks back at Primer moving up the value chain and how it built employee loyalty during the pandemic, not forgetting the impending handing over of the business to the next generation in the era of Artificial Intelligence (AI) and digital transformation. AI is a powerful tool for innovation, but it is not a magic wand. Integrating AI into an organisation’s innovation process requires deep understanding of the technology involved and a clear-eyed approach to how AI can help. Adam Tatarynowicz and Utz Claassen propose a Factory Model of Innovation that drives a continuous datadriven innovation cycle which generates more, and better, solutions than the traditional Funnel Model. AI is also widely known as a key component in ride-sharing services that matches drivers with passengers. What is less wellknown is drivers’ ‘multi-homing’ behaviour, i.e., using more than one ride-hailing app to bolster their income. Wang Hai explains the costs of multi-homing and strategies to maximise earnings, as well policy implications for transport and urban planners. The real estate and construction industry is not the most environmentally-friendly–buildings take up 12 percent of the world’s drinkable water and produce 40 percent of Earth’s carbon dioxide emissions. Much of this is a corollary of meeting economic targets which are often thought to be achieved at the expense of the environment. Tracy Xie explains how E2 innovation– achieving environmental goals without sacrificing economic ones– is possible. Above all else, committed leadership to building essential capabilities will make all the difference. The shipping industry is relatively friendlier to the environment: marine transport carries nearly 80 percent of all transported goods but consumes roughly 20 percent of total energy expended. BHP, the world’s largest mining company, decided to improve that further by increasing the use of Liquefied Natural Gas (LNG), which produced 30 percent less emissions than conventional fuel. This issue’s Case In Point by Shantanu Bhattacharya, Flocy Joseph, and Mahima Rao-Kachroo details how the mining giant convinced multiple stakeholders such as vessel owners, regulatory authorities, and fuel suppliers to make the switch. All these changes will be reflected in financial statements, which increasingly highlight performance not measured in dollars and cents. Financial reporting is evolving beyond the traditional bean-counting functions to transform into a stewardship role, says Yvonne Chan. A thorough understanding of accounting standards will be essential, she adds, but culture-building and change management will be key steps to take along an organisation’s sustainability journey. We also look at sustainability from the food angle and a communication point of view. Cultivated meat, also known as lab-grown meat, is the closest thing to replicating the sensory and nutritional attributes of conventional meat without the attendant animal welfare and environmental concerns. However, considerations over its ‘unnaturalness’ and cost, among others, have translated into slow consumer acceptance. Mark Chong explains how marketing and message framing can address consumer reluctance and boost cultivated meat consumption. The merit of cultivated meat is far down the list of priorities for developing nations, whose citizens often lack basic healthcare. Edward Booty makes the case that US$5 per resident would solve healthcare access issues for the vast majority of the underserved. Perhaps even more importantly, the developing world represents a business opportunity for healthcare and pharmaceutical companies. The key to success is accurate field data. It all perhaps comes together: as global inequality drives an expanding wedge between the haves and the have-nots, we invite you to turn the page and read for yourself why elite quality matters, and how AI and sustainability will provide the backdrop for the coming years. Does it sound like fiction? Until 1969, going to the moon did too. DR HAVOVI JOSHI Editor-in-Chief Asian Management Insights havovijoshi@smu.edu.sg 04 Singapore Management University
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AT THE HELM N.R. Narayana Murthy, the founder and former Chairman of Infosys, a global provider of next-generation digital services and consulting, speaks with Havovi Joshi about the Indian growth story, digitalisation, and his leadership philosophy. You once said, “Let us build an India where every child has access to education, healthcare, and opportunity.” How has India fared in achieving this goal? India is currently the fastest growing country among the top 20 economies in the world, and the government has done a good job of encouraging economic growth. My statement echoes the vision of the founding fathers of our country. They fought for our freedom to ensure that the poorest children in the remotest village have decent access to education, healthcare, nutrition, and shelter, and hope for a better quality of life for themselves and their progenies. Therefore, this clarion call of our founding fathers is a very important action item for the entire country. Given that we are a 1.4-billion-people country and rank low on the United Nations (UN) Human Development Index, there is work cut out for us. We must bring the impact of economic growth not just to urban India where it is very visible, but also to the remotest parts of our country. We can do this by Leading by Example and Giving Back to Society 06
models will be the leaders who can use the power of research and advanced knowledge to solve the grand challenges our country faces. As technologies mature, what was once innovative, such as generative Artificial Intelligence (AI), including ChatGPT, will one day become commoditised. How can organisations identify such turning points and wean themselves off as cutting-edge technology dulls away? I had thought about this problem as early as 1976-77 when I realised that the coming years would be full of challenges and opportunities. Our modern world is a rapidly changing one, and the only constant for us is change. Technology and business models change rapidly, and different countries grow fast at different points in time. As a result, there are always opportunities for a company like Infosys in various business domains in different parts of the world, in new technologies, and in new businesses. We realised that the best way to succeed in such a fastchanging world is to embrace what I term ‘learnability’. To me, learnability is the ability to extract generic inferences from specific instances and use those learnings to solve new unstructured problems. Thus, every candidate who applies to Infosys for a job must first clear the learnability test, which is primarily a set of puzzles, before advancing to the next stage in the recruitment process. The second thing we realised was that innovation is the most important instrument to obtain, sustain, and enhance our market share. Dominant market share is achieved when a corporation offers products and services with a highly differentiated and not-easily-beatable business value. To do so on a sustainable basis is to leverage the power of continuous innovation. For us, the challenge was to make innovation a permanent feature of Infosys. We wanted to create an environment where everybody believed in innovation and wanted to be innovative. The mindset of innovation had to become part of the DNA of the organisation. It had to be from the janitor to the chairman of the company. To do this, we had to make everybody in the company understand what innovation was. Innovation, to me, is about seeking answers every day to the following three fundamental questions: How do I do whatever I am doing today faster tomorrow? How do I do whatever I am doing today cheaper tomorrow? And how do I do whatever I am doing today to deliver a higher level of quality, a greater level of comfort, a better level of user interface, and better value for money tomorrow? creating jobs for our semi-literate and illiterate Indians who live mainly in rural India. India’s literacy rate is about 75 percent, and we have about 20 percent of semi-literate people, so it is fair to say that we have over 500 million people who must be provided with jobs that do not require a college education. We should learn from other countries that have managed this well, particularly China. We must focus on rural India and provide it with good infrastructure for corporations and businesses to create quality jobs that offer an adequate income. Also, we must bring rural India into the mainstream of our economic progress. That is a vision every single Indian should embrace. Our youth, especially those who are educated, are our biggest asset. They are the ones who can lead India to become a nation that has better equality, opportunity, prosperity, and a robust rate of economic expansion for everyone. For India to become a prosperous country for every citizen, our economic growth must also come from rural India, from the weaker sections of our society, from those who are not literate, and from every section of society, including all religions, castes, and economic classes. How have the Infosys Science Foundation and the Infosys Prize been instrumental in enabling educational and research investment, and shining the spotlight on Indian scholars? When we established the Infosys Foundation in 1996 and the Infosys Science Foundation in 2009, we were addressing two important needs of our country. Infosys Foundation primarily focuses on the problems of the ‘here-and-now’. So far, it has set up about 75,000 libraries in rural India. At the same time, it has built hospitals in several parts of the country and donated equipment to them. It has further contributed to the work of the Akshaya Patra Foundation in providing quality midday meals to 2.3 million school children every school day, and offered scholarships to children who attend government schools. On the other hand, looking ahead, we believe that the hopes and dreams of our country to become a developed one will only be achieved if India embraces higher education and research. We realised that one way of encouraging that was to identify role models in higher education and research. Therefore, we started the Infosys Prize which awards US$100,000 annually to those who have excelled in each of the following six categories– Engineering and Computer Science, Humanities, Life Sciences, Mathematical Sciences, Physical Sciences, and Economics and Social Sciences. By doing so, we believe we would be creating role models in research for our youth to emulate. These role Asian Management Insights November 2023
To achieve this, we had to adopt new processes, improve the devices we use, and employ entirely new methods to get to the next level of cost reduction and improvement in business value, productivity, and quality. Our task was to ensure that there was an environment that encouraged everybody in the company to experiment, discuss, debate, and offer suggestions on how the corporation could improve. So at least 35 percent of the people in every strategic decision-making committee were less than 30 years old. The reason was very simple. Such people were going to spend a lot more time in the company than I would, because I am much older. Therefore, they would have a much bigger stake than me in making the company better. I have also found that each generation of students, academics, and professionals happens to be much better than the previous one. Hence, to enable the staff to come up with new ideas and strategies, we created an environment where nobody was afraid of offering suggestions. At Infosys, we had a day called Ideation Day where only people below 30 years of age made presentations on how to make the company better. Meanwhile, we, the senior people, took the responsibility to evaluate and implement the suggestions that were accepted. By doing some of these things, we embraced innovation and improved our productivity and quality, and offered value for money to our customers. I believe that is the best solution to embrace and benefit from the barrage of new technologies that come a corporation’s way from time to time. At the end of the day, science is about unravelling nature, and technology is about using the power of science to make the lives of people better and more productive. This must simply be accepted, and corporate leaders must prepare their employees to use these fast-changing technologies without fear to make the corporation a better and more productive place. What do you think will replace digital transformation as the next big growth engine? As an engineer, I feel that the Internet of Things (IoT), AI, Big Data, robotics, and machine learning will play a very important role in the future. AI and machine learning are developing very fast, but Big Data and IoT have not been progressing as quickly as I would have liked. The reasons are very clear. There is a large amount of data generated every day in every country, but we still have not put in place the infrastructure that is needed for collecting and storing Big Data, at least in the developing world. Some countries like the US, Singapore, and some European countries may have been successful in doing so, but this is not the case for every country. It is only when every country in the world understands the power of Big Data and machine learning, and creates suitable infrastructure for them, will we have the ability and infrastructure to collect more data and tap its full potential, because once you have the data, you can then analyse it using machine learning and deep learning. And that is when you can use supervised algorithms, unsupervised algorithms, and semi-supervised algorithms to leverage the power of AI. But the bigger challenge we have is to tap into the power of IoT in our daily lives in fields like education, transportation, healthcare, manufacturing, public governance, and public and private services. For us to leverage the power of automation, we must enhance the use of digital process control in every country, which is a big challenge. Still, I am very excited about IoT and want it to become part of our lives, not just in developed countries, but throughout the world. What are some of the key global and regional trends and challenges that you are observing very closely? The first trend that I have seen in the last 10 years is the issue of nationalism and of focusing less on globalisation. Earlier in the eighties and the nineties, globalisation was always on the front burner. Everybody in the boardrooms of large corporations extolled its virtues. However, there were two problems with the rapid growth of globalisation. Some extraordinarily competitive countries like China built up huge trade surpluses. This made some developed nations unhappy with these high-growth countries that were not buying enough from the developed world, and only exporting more and more. So, the inability to maintain a desirable trade balance between nations led to the rise of nationalism. The second issue is that in many parts of the world, especially in emerging markets where there are large countries with huge populations like those in South Asia, Africa, and South America, globalisation has not improved the lives of most of the rural and poorer people. As a result, politicians began to wonder whether globalisation is indeed the solution for a better and more prosperous world for everybody. There is also a tide of opinion in several boardrooms that despite having a well-intentioned institution like the UN and leaders all over the world professing the importance of peace and harmony, we have not been able to develop enduring solutions for regional conflicts. This has created a lot of tension amongst the poorer sections of each of these warring factions, and they are becoming desperate. The third important change that has happened, thanks to the previous focus on globalisation, is that many developed countries have moved manufacturing to certain parts of the 08 Singapore Management University
N.R. Narayana Murthy is the founder and former Chairman of Infosys Dr Havovi Joshi is Director of the Centre for Management Practice and Editor-in-Chief of Asian Management Insights, Singapore Management University world like East Asia and Southeast Asia, choosing instead to concentrate on high-end services and precision manufacturing. But there are only so many jobs that you can create with such a strategy, so this has created a huge disparity between the well-to-do and well-educated professionals on the one hand, and the lower-middle class and the poor people who worked in manufacturing and services on the other hand. This tension has created distrust and a certain amount of unspoken hostility among the lower-middle class and the poor people in the developed world. Therefore, in my opinion, nationalism, dissatisfaction with globalisation, the inability to bring peace and harmony to warring factions in different parts of the world, and the gradual erosion of the middle class in developed nations are some of the key challenges we face. In addition, there is the issue of economic cycles. Every nation goes through ups and downs in its economy periodically. For example, Europe is experiencing high inflation now. So is the US to some extent. This has created political turmoil, and these are the issues that we are discussing in various corporate and advisory boards that I am part of. As an experienced leader who has been through several crises, has your leadership philosophy changed over the years? It has not. I have had the fortune of having parents and early teachers who helped me embrace time-invariant and contextinvariant values. The first thing that was taught to me was what Mahatma Gandhi professed–that is, leadership by example in honesty, transparency, teamwork, hard work, fairness, discipline, and putting the interest of the nation ahead of one’s personal interest. I believe that leadership by example is the most powerful instrument that a leader possesses to create trust in his or her people. Walking the talk is the essence of leadership. The late Singapore founding prime minister Lee Kuan Yew was another great example of leadership by example. The second thing that I learned early on was to always seek respect from my stakeholders. It does not matter whether you are a student, professional, bureaucrat, corporate leader, or political leader. One has to learn to ask oneself before one makes a decision whether that decision would enhance respect for the leader from the people who will be impacted by his or her action. The third thing that I was very fortunate to have learned from my parents is austerity. My father often told me that one must learn to enjoy the simple things in life because that is the best way to be happy, whether one has much money or not. He gave me three examples of how one could do so. The first habit was reading. Newspapers, magazines, and books were available for free at the public library in every small town in India then. Second, listening to music was free in those days since music would be played on a loudspeaker daily for an hour or two in public parks. We did not have a radio at home then. Finally, he wanted me to make friends with people who had a good set of values–people from whom I could learn something valuable, with whom I could laugh. This is what I do even today. It does not cost much money to read, listen to music, and spend time with friends with good values. My mother used to say that we must live like a saint, think like a scholar, and act like a warrior. So my leadership philosophy has not changed, because my values continue to be the same–leadership by example, good work ethic, discipline, transparency, accountability, honesty, putting the community’s interest ahead of my personal interest, and fairness. Fairness is following the Golden Rule: “Do unto others what you would like them to do unto you”. These values are time- and context-invariant. What advice would you have for the next generation and the youth entering the workforce today? For this, I will use the example of Singapore. I would request the youth in Singapore to remember that this extraordinary achievement of becoming one of the wealthiest nations in the world happened because of its great leader–Lee Kuan Yew. Lee demonstrated high aspiration, intelligence, discipline, hard work, teamwork, honesty, and openness to learning from other countries and cultures. In addition, the ability to debate and disagree without being disagreeable is an attribute I would like the current generation of Singaporeans to continue to have. I believe in what was taught to me by my high school teacher, who said that performance leads to recognition; recognition leads to respect; and respect leads to power. Therefore, you simply must continue to do your best in everything you do to be respected and economically powerful. Asian Management Insights November 2023
DOES ELITE QUALITY MATTER? VANTAGE POINT 10
E Yes, it can make or break a society. lites are an inevitability in society. In recent years, emerging populist movements across different countries have highlighted stark problems with growing levels of global inequality. Are elites the cause of these problems associated with inequality, and can they be a solution? More fundamentally, what can elites do to bring about a positive impact on society? Recent research and a new global ranking index have shed light on these questions. WHO ARE THE ELITES? According to economists Tomas Casas and Guido Cozzi, elites are “narrow, coordinated groups that run the largest income generating business models in an economy and which successfully accumulate wealth”.1 This includes not only segments such as economic interest groups, technology entrepreneurs, oil cartels, and bankers and financiers, but also prominent individuals in society, such as politicians, religious leaders, as well as media and cultural figures. Elites are thus not simply wealthy persons or families but also coordinated groups whose ideas and business models have considerable influence on the whole of a society’s economy and well-being. This perspective on modern elites has much historical precedence: already in the 1950s, sociologist C. Wright Mills wrote of the ‘power elite’ in American society, noting how elites dominated major political and economic institutions in the United States.2 Interlocking government, business, and military elites in Southeast Asia were also a consistent feature in the developmental trajectories of countries in that region. In New Order Indonesia3, for example, patronage was organised through the president’s office, extending through government bureaucracies, state-run businesses, and even charitable foundations. In post-1990s Thailand, business elites exerted direct influence on political parties, elections, and even government bureaucracies to advance their business interests.4 As history shows, elites are a sociological feature in all societies across time, making elite existence a mathematical certainty in all social formations. by Alwyn Lim Asian Management Insights November 2023
WHY ELITE QUALITY MATTERS In recent years, growing levels of global inequality across the developed and developing worlds have led observers to question the role that elites play in society, specifically whether they have contributed to worsening inequality. For example, national populist ideologies and movements have emerged to critique global elite decision-making when it comes to issues like trade, outsourcing, and immigration. Popular observations often portray elites as enriching themselves at the expense of the rest of society. In the US and Europe, these sentiments have been articulated by populist movements led by figures like Donald Trump and Marine Le Pen.5 In Southeast Asia, political populism focuses less on immigration but critiques elites by assessing them through ethnic and religious lenses.6 Are society’s elites guilty as charged? A recent social scientific endeavour helmed by the Foundation for Value Creation has sought to investigate the issue. Researchers at the University of St. Gallen, with international collaborators from several institutions, including Singapore Management University, devised an annual global elite quality ranking called the Elite Quality Index.7 In its fourth iteration, the 2023 edition ranked 151 countries based on how well their elites contributed to society. For the previous three iterations of the Index, Singapore had ranked first for elite quality, while Switzerland was placed first in 2023.8 The core idea behind the Elite Quality Index is this: because elites have greater influence and coordination capacity over society’s resources, their business and social models can have either positive or negative impacts on society. On one hand, elites can engage in rent-seeking practices. This may lead to them extracting more value than what they have created for society. One example is Vietnam’s economy as it transitioned to a market-based model in the 1980s. During this period, the political elites had restricted entry into Vietnam’s textiles, telecommunications, and motorcycle industries.9 Conversely, elites can create broader social and economic benefits when they produce more value than what they have taken. For instance, profits from Singapore’s sovereign wealth funds are channelled into the country’s reserves and operating revenue.10 Thus, elite quality clearly matters as their practices can either be more beneficial or detrimental to a country’s economic performance and human development. HOW TO MEASURE ELITE QUALITY The Elite Quality Index does not examine specific individuals or groups in particular countries. Rather, it uses aggregate measures of political economy at the country level to approximate the combined influence of elite models and practices.11 Some of these measures include the Gini coefficient, regulatory quality, billionaires’ wealth as a proportion of Gross Domestic Product (GDP), life expectancy, environmental protection, trade freedom, and health efficiency. Unsurprisingly, the measures encompass a wide range of political, economic, and social outcomes. In fact, the Index uses over 100 of these political and economic measures from cross-national data collected by international organisations like the United Nations and the World Bank. The Index uses these measures to determine how much ‘power’ elites have in a country in relation to how much ‘value’ they create for that country. A country where elites have a higher power score suggests a greater possibility for them to take advantage of their dominance in politics and the economy to engage in rent-seeking behaviour. Meanwhile, a country where elites have a higher value score suggests that the elites’ business models and practices have contributed substantially to the economic and social development of that country (Table 1 shows the top 20 countries ranked in the 2023 Elite Quality Index).12 TABLE 1 ELITE QUALITY INDEX 2023 – TOP 20 COUNTRIES Country Rank Change from 2022 Score Switzerland 1 1 68.0 Singapore 2 -1 67.1 New Zealand 3 11 65.7 Japan 4 14 65.3 Israel 5 -1 64.9 Netherlands 6 -1 64.8 Australia 7 -4 64.4 Germany 8 3 64.4 United Kingdom 9 -1 64.4 Sweden 10 -4 64.0 Denmark 11 1 63.7 Canada 12 -5 63.5 Norway 13 -4 63.1 Finland 14 2 62.5 Austria 15 2 62.4 France 16 8 61.9 Belgium 17 6 61.8 Estonia 18 -8 61.5 South Korea 19 0 61.4 United Arab Emirates 20 0 61.0 12 Singapore Management University
The core idea behind the Elite Quality Index is this: because elites have greater influence and coordination capacity over society’s resources, their business and social models can have either positive or negative impacts on society. WHERE DO THE COUNTRIES STAND? As in previous years, Switzerland and Singapore dominated the 2023 Elite Quality Index, with countries like New Zealand and Japan climbing several notches to rank among the top five countries. The list of top 20 countries in 2023 shows a large concentration of European countries but also includes the UK, Canada, South Korea, and the United Arab Emirates. According to the Index, these countries have the highest quality elites, and their elite business models have contributed significant social and economic value in relation to their coordinative power in the respective countries. Elites that have higher coordinative power–a reflection of their ability to act in concert to influence outcomes–are in a greater position to seek rents for themselves rather than contribute to the wider society. Perhaps unsurprisingly, countries with lower levels of human and economic development also have the lowest elite quality. Countries like Sudan, Afghanistan, Haiti, Syria, and Yemen rank among the lowest on the Elite Quality Index. The case of Singapore is instructive for making sense of high-quality value creators. Singapore’s elites have a high degree of political and economic power (ranked 23rd on the power sub-index), suggesting a very high degree of control and coordination. On this dimension, Singapore scored well on measures like the control of corruption, government responsiveness to change, regulatory enforcement, economic complexity, and venture capital finance. Nevertheless, Singapore elites’ models and practices have contributed significantly to value creation, enabling the country to rank first on the value sub-index. Several measures like mean Programme for International Student Assessment or PISA scores, natural resource rents, health efficiency, labour productivity, economic globalisation, and trade freedom reflect the economic and human development value created for Singapore. Among the major world economies, the US and China, ranked 21st and 22nd respectively, are in similar positions when it comes to elite quality. Strikingly, the US elite quality ranking fell six positions compared to that of 2022, suggesting that elite practices there have contributed less political and economic value in relation to how much power and coordination capacity they have in the country. That the US and China have come to parity in elite quality has implications for the increasing rivalry between the two major world powers. As they vie for global power and regional influence, elite contribution to value creation will become more crucial to maintaining growth and competitiveness in a climate of increasing de-globalisation. ELITE QUALITY IN ASIA Elite quality in Asia is as diverse as the many cultures and countries that make up the region. As mentioned, Singapore and Japan both ranked in the top 10 of the Elite Quality Index, suggesting that their high quality elites have contributed significantly to value creation. South Korea and China, both countries that have seen rapid economic growth, are ranked 19th and 22nd respectively. Together, these countries lead elite value creation in Asia. Southeast Asian countries also demonstrate no small measure of elite value creation. Malaysia and Thailand experienced rapid industrialisation after the 1950s and embraced economic restructuring after the 1997 Asian Financial Crisis. Despite enduring problems with inter-ethnic tensions and social inequality, both countries have fared well in areas such as collective bargaining and openness to business and free enterprise, reflecting quality elite value creation. Vietnam has also experienced dramatic economic growth since the 1980s, as reflected by its rise on the Elite Quality Index. Like Malaysia and Thailand, Vietnam has quality elites that have
Despite emerging de-globalisation, economic openness will remain crucial to many countries as a source of elite value creation. contributed to value creation. However, the areas of concern for Vietnam include human rights, social mobility, and environmental performance. Indonesia’s elite quality has also risen, but their contributions to value creation have been more modest compared to those of other Southeast Asian countries. Nevertheless, initiatives by the elite in Indonesia like government support for entrepreneurship and favourable corporate tax rates show promising avenues for value creation in the future. TWO PATHS TO VALUE CREATION As is evident from this overview, elite quality varies considerably across countries and the Elite Quality Index demonstrates that elite practices can have either positive or detrimental consequences for a country’s human and economic development. Despite ambivalent portrayals of elites, the potential for elite contribution to inclusive value creation has often been underestimated. The results of the Elite Quality Index reveal one consistent and crucial point: a country’s commitment to economic openness, international free trade, and a free enterprise system is central to generating the resources needed for value creation in society. However, there also appear to be two paths to elite value creation. Singapore and Switzerland have both topped the Elite Quality Index for several years now but their elite models reveal different pathways. In Singapore, elite value creation is mediated by a powerful state capitalist system, where the government coordinates public and private actors, with centralised planning by its technocratic elite. For instance, government agencies like the Economic Development Board and Enterprise Singapore facilitate business activities both domestically and abroad, promoting Singapore as an investment destination and targeting industries with high growth potential. For example, profits from Singapore’s sovereign wealth funds contribute directly to significant social transfers, mobilising economic opportunities for its citizens, and supporting its massive public housing system. Because a significant portion of those profits go into the government’s operating revenue, the Singapore government is able to administer various infrastructural, housing, education, and healthcare and social support programmes. Where the context of Singapore’s elite value creation is concerned, it is very much a case of mediation by the state. In contrast, elite value creation in Switzerland is less dependent on state mediation. The country has a long tradition of political and administrative decentralisation, and businesses have considerable autonomy in the use of resources for investment, research, innovation, and development. Switzerland’s federal structure cedes most governance decisions to the local and canton levels, giving local areas the flexibility to experiment with initiatives like lowering tax and regulatory burdens, introducing new financial technologies like cryptocurrencies, and providing support for small businesses. Economic networking and openness in Switzerland are also primarily business-driven, as is business contribution of profits to social and development goals. This article is not the place to adjudicate between these two national models. In fact, we believe that state-driven and distributed value creation can both be valid pathways to enable the elites to generate social value. Both models offer lessons for countries with different developmental trajectories. 14 Singapore Management University
Dr Alwyn Lim is Associate Professor of Sociology and Lee Kong Chian Fellow at Singapore Management University THE FUTURE OF ELITE VALUE CREATION It is a certainty that elites in society will continue to have considerable impact over how value is created, and how inclusive and sustainable that value creation will be for their respective societies. Moving forward, we can anticipate the following trends that will be of great interest to public actors and policymakers. To begin with, despite emerging de-globalisation, economic openness will remain crucial to many countries as a source of elite value creation. In addition, free enterprise approaches that encourage business autonomy and innovation are more likely to boost elite value creation rather than state-centred approaches with little provision for free enterprise dynamism. Nevertheless, governments still play important roles in facilitating elite business models while channelling profits towards sustainable social objectives. We also expect that ecological sustainability will feature more prominently in future elite value creation. Environmental issues are now mainstream concerns and business elites are becoming more aware that value creation also includes environmental impact. Crucially, innovation in ecological business practices, rather than just state regulation, will drive value creation. Additionally, social sustainability has been found to relate significantly to human and economic development. Elite models that generate returns for social cohesion and public security will be more determinative for value creation. In summary, elites are an inevitability in society but elite quality matters. Elite business models can take more than they give but they can also create more value than they extract from society. Countries vary in their elite quality and there are different paths to elite value creation. In the coming years, however, economic openness and free enterprise dynamism will remain central to elite value creation. Ecological and social sustainability issues will become new frontiers of value creation where elites can take the lead. Endnotes 1 Tomas Casas and Guido Cozzi, “Elite Quality Report 2023: Country Scores and Global Rankings”, Foundation for Value Creation, 2023. 2 C. Wright Mills, “The Power Elite”, Oxford University Press, Oxford, 1956. 3 This refers to the period after the late Suharto, who was the president then, took over in 1966. The term is meant to contrast with the period when his predecessor Sukarno was in power, which was termed Old Order Indonesia. 4 William Case, “Interlocking Elites in Southeast Asia”, Comparative Sociology (2), 249-269, 2003. 5 Roger Eatwell and Matthew Goodwin, “National Populism: The Revolt against Liberal Democracy”, Pelican Books, London, 2018. See also John B. Judis, “The Nationalist Revival: Trade, Immigration, and the Revolt against Globalization”, Columbia Global Reports, New York, 2018. 6 Thomas B. Pepinsky, “Migrants, Minorities, and Populism in Southeast Asia”, Pacific Affairs, 93(3), 593-610, 2020. 7 See Elite Quality Index website at https://elitequality.org. 8 Tomas Casas and Guido Cozzi, “Elite Quality Report 2023: Country Scores and Global Rankings”, Foundation for Value Creation, 2023. 9 Christine Ngo and Vlad Tarko, “Economic Development in a Rent-Seeking Society: Socialism, State Capitalism and Crony Capitalism in Vietnam”, Canadian Journal of Development Studies, 39(4), 481-499, 2018. 10 Saw Swee-Hock and Linda Low, “Sovereign Wealth Funds”, Saw Centre for Financial Studies, Singapore, 2009. 11 Céline Diebold, “How Meaningful is the Elite Quality Index Ranking?”, Social Indicators Research, 163, 137-170, 2022. 12 Readers may refer to the Elite Quality Index website for the full report and ranking of countries. Asian Management Insights November 2023
REIMAGINING SUSTAINABLE URBAN COMMUNITIES HONG KONG IN 1 INDUSTRY WATCH 16
ong Kong began building New Towns in the 1970s in response to a post-war period of rapid population growth. From the first-generation developments (Tsuen Wan, Sha Tin, and Tuen Mun) to the second-generation ones (Tai Po, Yuen Long, and Fanling/ Sheung Shui) built in the 1980s and early 1990s, the continued development of the Special Administrative Region’s (SAR) new towns has had a significant impact globally, especially in Asia.1 The territory’s approach has provided pivotal insights into population decentralisation and housing supply, as well as the creation of self-contained communities, and public transport nodes within a high-density urban form.2 These insights have been applied to the design of its third-generation new towns, as well as to a series of new planned “New Development Areas” (NDAs) located near the border with Mainland China. From land-use mix to transport planning and the creation of social space, Hong Kong’s city planners are refining their strategies to address emerging challenges such as environmental sustainability, social sustainability, and community placemaking.3 In this article, we explore three conceptual strategies that draw on lessons from the planning achievements of existing new towns to improve the long-term vibrancy and sustainability of these new settlements. They include The Hybrid City, The Ecological City, and The Happy City. TOWN PLANNING IDEAS HONG KONG-STYLE Inspired by British construction methods and European Modernist planning theories, Hong Kong has devised a unique model of urban development, distinct from its traditional urban areas. The towns were planned as self-contained communities comprising public and private housing, industrial areas for employment, and a town centre that offered social, cultural, and commercial facilities. The designs aimed to balance density and liveability by combining compact high-rise building typologies with abundant public spaces and facilities. Similar to what was envisioned under English urban planner Ebenezer Howard’s Garden City concept,4 living and working zones were separated from each other, but in view of the territory’s land scarcity, compact high-rise districts were constructed H by Jeroen van Ameijde, Sifan Cheng, and Junwei Li Using environmental and social urban design principles to create future new towns. Asian Management Insights November 2023
with vertically-separated systems for vehicular traffic and pedestrian flow. This high-density urban design promoted walking and public transport use, and improved access to facilities and services for residents, while also reducing environmental impact. Compared to Hong Kong’s organically-expanded urban core, the new towns offered planned urban environments that support health and well-being, implementing the latest design standards for public space and recreational facilities. The increased accessibility and diversity of facilities encourage social interaction and a sense of belonging, which can enhance the social sustainability of communities.5 However, such highdensity cities can also produce negative effects such as increased prices, reduced access to green spaces, and social exclusion.6 We highlight four key considerations from Hong Kong’s experience of designing new towns. Planning balanced and mixed land-use patterns A key consideration in creating vibrant, diverse, and socially- inclusive new town environments is the underlying planning philosophy of land-use planning. Hong Kong’s first generation of new towns emphasised ‘balanced development’, which meant that equal proportions of public and private housing were spatially mixed. This was done to prevent segregation between the low-income and middle classes. In turn, the land- use planning of the second generation of new towns separated industrial and residential land, using landscape features as buffer areas. As the third-generation new towns were planned around high-connectivity transport nodes, there has been less emphasis on the integration of living and working spaces. Nevertheless, the large Transit-Oriented Development (TOD)-based commercial centres7 (such as in Ma On Shan and Tseung Kwan O) and the SAR’s highly distributed education and healthcare networks offer a range of local employment opportunities and services. Our study of the land-use condition of the three generations of new towns found that the proportion of residential land is similar across all towns (30 to 35 percent). In fact, the third-generation new towns have increased proportions of commercial land, while the size of industrial land has been significantly reduced. The open space land ratio has remained constant at 15 percent throughout the new town planning stages. This corresponds with the ‘compact city’ development model, in which the size of public open spaces is restricted by planning regulations and the economic parameters of high-density development. Surveys, however, have found that while Hong Kong residents are satisfied with the quality of public space facilities provided in most districts, the accessibility to and variation of activity spaces should be improved.8 To enable universal access to sports and recreation, a range of public spaces should be distributed across urban districts, instead of being grouped together in a large central park. Also, quantity-based planning requirements should be accompanied by qualitative design principles, so that there are more engaging and supportive open spaces.9 Promoting public transport use and walking Hong Kong’s new towns are served by efficient public transport systems such as the metro, bus, and light rail, which enhance social connectivity and facilitate the economic interaction among different urban nodes. As a result, the SAR is amongst cities with the highest use of public transport per capita.10 Its relatively low degree of private car use also contributes to its environmental performance, air quality, and pedestrianoriented streetscapes. These qualities are most apparent in the territory’s older urban districts, where historic planning layouts have created narrow roads, which are easy to traverse with pedestrian crossings or elevated footbridges. In the new towns, however, vehicle roads are planned as multi-lane arteries, creating spatial barriers between different housing estates and communities.11 As the majority of residents live in public housing and do not possess cars, cycling and walking could be integrated more prominently. While the new towns were built with the intention of creating self-sufficient communities, a significant number of people commute between the new towns and the historic urban core. As most higher-value companies prefer to be located in proximity to one another, and close to the opportunities and services of the central areas, there is pressure to expand existing road and rail networks across the territory. A lack of street-facing retail spaces in some new towns is an additional factor affecting the walkability and liveliness of the street environments, leading to a lack of social integration and opportunities for local entrepreneurialism. While the improvement of these issues in existing new towns is yet to become a policy focus, lessons are being incorporated into the planning of novel new towns, so that there are better quality walking environments and cycling systems.12 Designing public spaces for residents’ quality of life needs The development of public space in new towns has undergone significant changes over time. In the early stages of new town development, public spaces such as playgrounds and sports 18 Singapore Management University
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