Core Session 2: Firms and Transformation

Investors should actively advocate for transformation to realize the full potential of a firm and have low tolerance of underperformance.

Corporations should embark on transformative initiatives not solely as a response to crises but as an ongoing strategy to overcome underperformance and create value. Companies can transform by changing their business model, strategy, and organizational structure. It is also essential to assign clear accountability for underperformance rather than resorting to rationalization.

Successful conglomerates focus on business fundamentals while embracing emerging trends. These top conglomerates are agile to reshape their portfolio or business by acquiring or venturing into new segments, while maintaining core business performance.

Activist funds play a vital role in creating the urgency of change within a firm. Shareholder activism is a constructive force that compels companies to re-evaluate their strategies. Although most activist funds in Southeast Asia are still nascent, their role in shaping corporate strategies may grow in the future.

Effective transformation can be facilitated internally through a top-down approach, or externally through investor activism.

It is imperative that leaders establish ambitious goals and communicate them transparently within the organization. As a cohesive unit, the company should strive to be at the forefront of its industry and implement policies that incentivize employee outperformance.

The proactive engagement of both management and activist investors will compel firms to continuously pursue excellence. In pursuit of a successful transformation, it is important to foster conviction and overcome any fear of change within the organization. Institutional investors such as Government-linked Investment Companies (GLICs) can play a pivotal role in advocating for consolidation in sectors facing stagnant or decelerating growth, thereby improving the industry structure.

Seize control by taking action now. Firms should adopt a structured approach for transformation and focus on innovation for value creation. To commence this journey, companies can collaborate proactively with ecosystem partners to address industry-specific customers’ pain points.

Businesses must collaborate with partners to achieve greater success.

Collaboration is key for future businesses. Collaboration within an ecosystem allows businesses to gain access to their partners’ expertise, resources, and networks, which can help them to achieve their goals faster and more efficiently.

Synergy across teams enhances an organization. When different teams leverage their individual strengths and collaborate towards shared objectives, they accomplish more than what is possible individually. This can impact all aspects of the organization positively, from its financial performance to its reputation.

Coalitions can foster a culture of continuous learning and innovation. This can help the organization improve its efficiency, effectiveness and develop new strategies to stay ahead of the curve.