Managing Change: Lessons from Corporate Culture Change, Part 3 of 3

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ACKNOWLEDGEMENT

This article was published in the July-Sept 2009 (Vol. 44, No. 3) issue of
Management – the quarterly magazine of The Malaysian Institute of Management

Reproduced here with permission from the author Dr. Victor S. L. Tan
and from
The Malaysian Institute of Management
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Too many organisations go about the wrong way in creating corporate culture change. That probably explains why many corporate culture change initiatives fail or that they cannot be sustained. And it is not too surprising that many leaders and managers are beginning to doubt whether it is possible to change corporate culture in the first place.

Corporate cultures are created by humans. Those rules whether overt or covert in terms, beliefs, thinking, feeling and behaviour are man-made and can be changed. Perhaps, the main aim of this concluding part of a series on change management is to offer change agents some valuable lessons from some of the corporate culture change efforts undertaken by various organisations. While there are many aspects and lessons that one can learn from corporate culture change work, I am taking the liberty to share here ten powerful lessons that I believe will help change agents get on the right footing.

Lesson 1: Effective corporate culture change must begin with changing mindsets

No change can be implemented without, first of all, a change in mindset. By changing mindsets, I am referring to the 5 components of mindsets: Blindspots, Assumptions, Complacency, Habits and Attitudes, more easily remembered from the acronym; B.A.C.H.A. (Source: Changing Mindsets, Victor S. L. Tan, publisher: Times International). Changing mindsets is about uncovering blindspots with regard to areas for improvement. It is about questioning assumptions of thinking, behaviour and practices that are no longer relevant or useful. It is about reducing complacency in the workplace to increase innovation, productivity and performance. Changing mindsets is about eliminating unproductive habits or work practices that do not add value to the individual or the organisation. It is about inculcating a positive attitude towards oneself, work, people, the management and the organisation as a whole.

With mindset change, one is then aware of the need to change the policies, procedures and practices accordingly. In one of our client engagements with a conglomerate in Indonesia, the culture change began with a mindset change from the top management and then cascaded down to the lower level staff. This has proved to be an effective approach to pave the way for a start of the change process as the whole organisation had been engaged in old thinking and outdated ways of managing for the last 20 years in operation. The uncovering of the blindspots and the constant questioning of assumptions helped reduce the level of complacency of the leaders and executives. This resulted in the abandoning of unproductive work practices in the workplace and overall, a more positive attitude of people towards one another, towards their respective departments, their work and the organisation as a whole.

Lesson 2: Successful organisations have corporate culture aligned to their vision, mission, strategies, goals and their environment

It is generally agreed that the purpose of corporate culture is to develop an internal environment that is conducive for people to perform effectively.

However, a corporate culture will only be relevant and useful if it is aligned to the organisation's vision, mission, strategies, goals and the external environment it operates in. What this implies is that an organisation must first get its vision and mission right before deciding on the desired corporate culture. Of course, having determined the right vision and mission, it can then formulate the relevant goals and strategies. In the case of Jaguar Cars, a luxury car manufacturer, in the 80s, the culture change led by Chairman and Managing Director, John Egan focused on aligning the culture towards the new mission for Jaguar "to become the finest car company in the world". A new set of beliefs and core values on growth, quality, market sensitivity, learning and human development, and professionalism was developed, encouraged and practised in the workplace to enable Jaguar to produce world-class luxury cars. With the new culture, what followed was an impressive turnaround of Jaguar, with a huge jump in turnover, profitability and productivity.

The reason why determining the corporate culture needs to take into consideration the environment is because the nature of the industry or the type of business often dictates certain ways of doing things to enable it to compete or stay successful. For example, in the IT industry, the speed of response is a critical factor in doing business. In financial services, integrity is an important value to win the trust of customers.

Lesson 3: To achieve credibility and win the commitment of people, policies, procedures and practices must be consistent with the new culture

Consistency is an important factor in gaining the credibility for any change programme. Saying one thing and doing another thing is the surest way of losing credibility. Once a new culture is identified and the desired core values and behaviour communicated to employees, it is important to simultaneously change the existing policies, procedures and practices in the workplace to align to the new culture. Thus, for example if a new culture promotes openness, it is important to share information and disseminate relevant information freely and openly based on needs rather than hierarchy.

In the case of the culture change initiated by Ciba-Geigy where it strived to reduce its impact on the environment and pay more attention to employee concerns, the leaders started to change their policies and practices to align to the new culture. The company disposed of its photographic film business and reorganised itself to make decentralisation and autonomy a reality. It also conducted massive training to develop leadership and entrepreneurial qualities among its employees.

Lesson 4: To get a buy-in of corporate culture change requires a strong rationale

It is true that most cases of culture change take a lot of effort and time to overcome resistance. An effective way to overcome resistance is to provide a strong, compelling and sound rationale for the culture change. From our experience, such a rationale must often incorporate not just what is good for the organisation but also for individuals. Thus for example, an organisation which is promoting a performance-oriented culture should not just stress on the benefits of increasing productivity and performance to enable the company to compete and survive. It should also stress that by developing such a culture, it would also enhance the competency of individuals, help them develop a performance track record and increase their market value in terms of knowledge, skills and experience. It should also communicate to the staff that such a culture would also add meaning to their work and bring about personal satisfaction in the process.

Lesson 5: To ensure company-wide culture assimilation, culture change programmes should utilise the various culture transmission mechanisms available

To succeed in culture change, there must be prevalent practices of behaviour that reflect the new culture. Thus to ensure company-wide internalisation of the new culture, an organisation should utilise every channel of communication and every opportune occasion to promote and communicate the new belief system, core values and desired patterns of behaviour to every level of staff from the top right down to the lowest level of organisational hierarchy. Companies should use formal and informal channels of communication to influence and educate others on the new culture. Just like in advertisement, the publicity blitz should be frequent, focused and impactful to achieve maximum results.

Lesson 6: Achieving deep and sustainable culture change requires the participative approach

Culture change is by nature a deep and fundamental change. Such a change requires not just opening up minds but also touching hearts. People must really not just think it but they must really feel it before they behave in accordance to the desired culture. The way to achieve sustainable culture change is to first have people want to practise the new culture rather than being forced to do things in a certain way. A good way to do this is by highlighting the aspect of the culture that shows care for people. Thus showing how the practice of the new culture will enhance respect between one another, create a more enjoyable workplace and increase the competency and value of individuals speaks well of the care the organisation has for its people. As the saying goes, "People do not care how much you know until they know how much you care". Showing care certainly goes beyond opening one's mind; it certainly touches the heart.

Another good way of developing sustainable culture change is to get people's involvement. Involvement can come in many ways. It could be involvement through their input and suggestions on how they would translate certain core values into practice in their daily tasks. Or it could be soliciting their suggestions on how they could promote the practice of respecting one another in the workplace. Other ways of involvement could be through culture promotion activities such as a slogan competition to come up with a theme for launching the core values of the new culture. One of the organisations we worked with had come up with an essay writing competition on topics such as "How I Can Help Promote the New Corporate Culture in My Organisation" for individuals as well as for group categories. In the process of discussing amongst themselves and writing the essays, employees began to understand a little bit more of the new culture and began to see the value of the new culture, and subsequently began to want to assimilate the desired patterns of behaviour in the workplace.

Lesson 7: Top management commitment is essential to the success of culture change

The success of culture change requires company-wide acceptance. A limited change in the way of thinking and working within a small unit or department does not constitute a culture change in organisation. To have company-wide practice of a new corporate culture requires the commitment of top management. Commitment here refers to not only the initial launching but the continued support and follow-through. Support is needed to change policies and systems to align to the new culture.

In the case of British Airways (BA), a major culture change was instituted with full top management support, when the then Thatcher government decided to convert BA from government ownership to private ownership. The Chairman, Lord King and CEO, Colin Marshall provided the support to the change in organisation structures, systems and policies. In fact, the company's top management approved the change to a new performance appraisal system and compensation system which put greater emphasis on improving customer service and being market-driven. Colin Marshall's unwavering commitment was demonstrated by his personal presence in question-and-answer sessions at a series of training programmes on "Managing People First" and "Leading The Service Business" for senior and middle managers.

Lesson 8: To speed up culture change, leverage on “Opinion Leaders”

Every resource is needed to help speed up the culture change process. A good way to tap into the organisation's resources is to seek out "opinion leaders" to assist in promoting the new culture. Opinion leaders can be formal or informal leaders whose opinions matter to others. Often these leaders have people who look up to them and listen to what they say and do what they say. Thus, it will make sense to first convince these opinion leaders and then involve them as change agents and as role models to help spread the new culture within the organisation.

Lesson 9: Create a powerful dream of the new culture

Every great achievement starts with a powerful dream. There is a compelling force of change in creating a powerful dream. And great changes come from powerful dreams. Martin Luther King had a powerful dream in the 60s when he said, "I have a dream that one day on the red hills of Georgia, the sons of former slaves and the sons of former slave owners will be able to sit down together at the table of brotherhood". Christopher Columbus had a powerful dream of sailing across a shorter East-West trade route. Mahatma Gandhi had a powerful dream to lead his country to independence from the British. John F. Kennedy had a powerful dream of landing man on moon. Likewise, it is important to create a powerful dream of the new culture an organisation wants to develop. It should come across as exciting, inspiring and worthwhile for everybody in the organisation.

Lesson 10: Recognise and reinforce change success early and frequently

A culture change is on ongoing process and may take a long time to see tangible results. Too often leaders wait too long before they start to recognise, reward or reinforce the motivation of people in the process of implementing culture change. If the wait is too long, people will run out of stamina, their interest will simmer down and the assimilation process will come to a halt. It is thus important to look out for "early wins" and "small wins" along the way of culture change implementation, and recognise and reward people to ensure they stay motivated. In one of our culture change engagements, for example, a celebration was held when the organisation came to a consensus on the defined core values. There was further recognition of the roles of the people involved when the new culture was launched. And every success, no matter how small was highlighted early in the process and was recognised, celebrated and rewarded.

Rewards need not be merely monetary. It can come in the form of a commendation letter recognising a particular team in recruiting the most number of change agents, or a public announcement during a family day outing where individuals are singled out for being effective role models in leading their team effectively. It is the culmination of all these small positive gestures and steps taken on a continuous and relentless fashion that ultimately lead to a culture transformation for the organisation.


Written by Dr. Victor S. L. Tan. Dr. Tan is an international authority on change management and the CEO of KL Strategic Change Consulting Group (www.klscc.com) specialising in strategic change and corporate culture. He is the author of six management books including his latest book, The Secret of Change. The author may be contacted at +603 – 9074 1129 or victorsltan@klscc.com

Securing your PC or laptop against cyber-criminals

We constantly hear about computer viruses, trojans, spyware, malware, etc that has made most of us indifferent about the need to apply the latest updates against operating system vulnerabilities, and to keep our firewall, anti-virus and anti-spyware solutions up-to-date. Most of us may feel that no matter what we do to secure our desktop PCs or laptops, viruses, trojans, spyware, malware, etc will still penetrate our computer systems. So, why bother? Thus, most PC and laptop users think that defensive efforts are futile. This basically stems from a lack of understanding or misinformation. When an unethical hacker or cyber-criminal gains access to your computer system, the potential for executing malicious acts is very high.

I will use the Microsoft Windows file system for this discussion simply because Windows is the most commonly used operating system in the world today, making it an attractive target for unethical hackers and cyber-criminals.

The Windows NT File System (NTFS)

Microsoft's NTFS file system was introduced with the launch of Windows NT, and is still the file system used by Windows 2000, XP, Vista and the new Windows 7 operating system. The NTFS file system is a major improvement over the previous File Allocation Table (FAT) file system.

The NTFS file system “was designed to include many features, including data recovery, security, fault tolerance, large files and file systems, multiple data streams, UNICODE names, sparse files, encryption, journaling, volume shadow copies, and file compression” (Silberschatz, Galvin & Gagne, 2006, p. 790).

Once a computer system is compromised, unethical hackers and cyber-criminals usually hide their malicious files, instructions or data in the hard disk, using either of two popular methods: (a) low-level formatting, and (b) partitioning.

If the low-level formatting method is chosen, unethical hackers and cyber-criminals typically target the redundant sectors and bad sectors to hide their damaging codes. In the partitioning method, the typical target locations are the partition tables, inner-partition gaps, hidden partitions, deleted partitions, unallocated spaces, and boot records. However, a competent and up-to-date anti-virus and anti-spyware application can identify and act to remove such threats.

A more subtle technique makes use of the multiple data streams (MDS) feature of NTFS. The MDS feature enables multiple independent streams of data to exist in a file. Each stream contains the complete data of the file, for e.g. .doc, .xls, .txt, .zip, etc. Furthermore, the MDS includes a data stream known as Alternate Data Stream (ADS), originally created for compatibility with the Apple Macintosh Hierarchical File System (HFS) but is also used by most application programs and native Windows operating system to store file attributes and for temporary storage of other file related information.

Alternate Data Streams (ADS)

ADS provides the ability to fork file data into other files without affecting their functionality and size or display of file information to file browsing utilities such as the DOS “dir” command and Windows Explorer.

The following steps demonstrate how an unethical hacker or cyber-criminal can make use of ADS to plant malicious codes and launch it later.

Step 1: Using Microsoft Windows XP

1. Create the folder 'ADS_Demo' in your hard disk root directory C:\
2. Copy and paste the applications Notepad.exe and Mspaint.exe into C:\ADS_Demo
3. Your result should be similar to that shown in Figure 1
4. For this demonstration, let us assume that the application Notepad.exe is the file created and planted by an unethical hacker or cyber-criminal into your PC or laptop, and contains malicious codes. In other words, assume Notepad.exe is the malicious file
5. Take note of the file sizes and date stamps as follows: Notepad.exe = 68KB, 4/14/2008 and Mspaint.exe = 335KB, 4/14/2008

Figure 1: Windows Explorer

Step 2: Create an ADS for the malicious file

1. Launch 'Command Prompt' from Start All Programs Accessories
2. Change directory to C:\ADS_Demo
3. Enter the DOS command 'dir' to list the contents of your ADS_Demo sub-directory
4. Your results should be similar to Figure 2
5. Again, take note of the file sizes and date stamps as follows: Notepad.exe = 69,120 bytes and Mspaint.exe = 343,040 bytes. No change in the date stamps
6. Now, to create an ADS, enter the command 'type notepad.exe > mspaint.exe:notepad.exe'
7. Your result at this stage should be similar to Figure 3
8. Notice that the file size of Mspaint.exe remains unchanged at 343,040 bytes although we have already embedded 69,120 bytes of the malicious file to it, but the date stamp has changed from 4/14/2008 to 10/11/2009
9. A check under Windows Explorer (Figure 4) also shows that the file sizes have not changed at all, but the date stamp of Mspaint.exe is now 10/11/2009

Figure 2: Run Command Prompt & List folder contents

Figure 3: Create an ADS for Notepad.exe (the malicious file)

Figure 4: Windows Explorer

Step 3: Launching the malicious file

1. In the Command Prompt window, execute the malicious file using the standard DOS command ‘start’ as follows 'start c:\ads_demo\mspaint.exe:notepad.exe' (Figure 5). On your Windows desktop, the Notepad program (the malicious file) will launch (Figure 6)
2. Then launch Task Manager to check which program is running. If your computer system is NOT protected by the latest updates against Windows vulnerabilities, then Task Manager will wrongly report that Mspaint.exe is running instead of Notepad.exe (the malicious file) as shown in Figure 7

Figure 5: Launch Notepad.exe (the malicious file)

Figure 6: Notepad.exe runs in your Windows desktop

Figure 7: Task Manager wrongly reports Mspaint.exe is running

Step 4: Delete Notepad.exe (the malicious file)

1. Since Notepad.exe is the (assumed) malicious file, we must remove or delete it from our computer system
2. In the Command Prompt window, enter 'del notepad.exe' (Figure 8)
3. Then enter 'dir' to check whether it has been deleted. The 'dir' command shows only the Mspaint.exe file in the sub-directory (Figure 8). Thus, Notepad.exe was deleted or is it?
4. Enter the command 'more <. mspaint.exe:notepad.exe > notepad.exe' and the Notepad.exe (the malicious file) is regenerated as shown in Figure 9, and likewise in Windows Explorer (Figure 10)
5. Note that prior to deletion, the date stamp of Notepad.exe (the malicious file) was 4/14/2008 and the date stamp of the regenerated Notepad.exe (the malicious file) has changed to 10/11/2009
6. Thus, malicious programs embedded using ADS are difficult to be removed or deleted permanently. The use of appropriate anti-intrusion security solutions is usually required

Figure 8: Delete Notepad.exe (the malicious file)

Figure 9: Easily regenerate Notepad.exe (the malicious file)

Figure 10: Windows Explorer

Conclusion

From the above demonstration, we can conclude that when unethical hackers or cyber-criminals gain access to a computer system, they can easily hide malicious programs to existing files, and the file size shows no increase in size even after malicious codes have been added. Later, the malicious programs are launched to cause havoc to the computer system or take control of the computer system to further spread malicious programs to other computers via the Internet.

Therefore, it is important that as a computer user, you ensure that your computer system is:

• updated with the latest updates or patches against operating system vulnerabilities
• protected by a firewall application from a reputable security software company to prevent malicious access or intrusion
• using a firewall program that is regularly updated with any new patches released by the manufacturer (use the auto-update feature)
• protected by an anti-virus and anti-spyware program from a reputable security software company and that the program scans in real-time for viruses, trojans, spyware, malware, etc
• using the latest anti-virus and anti-spyware definition files (use the auto-update feature)

While there are good firewall, anti-virus and anti-spyware programs which are downloadable free-of-charge for use, these typically have some missing or disabled features. For e.g. in most free versions of anti-virus and anti-spyware programs, these solutions do not run in live mode i.e. they allow the computer systems to be infiltrated by the virus or spyware, and then during scheduled scans, take action to clean or remove the virus or spyware. It is highly recommended that you use anti-virus and anti-spyware programs that run live and thus, is able to intercept the incoming virus or spyware in real-time, in addition to scheduled scans.

References:

Gralla, Preston. (2005). Windows XP Hacks, Second Edition. New York: NY, O'Reilly

Silberschatz, Abraham; Galvin, Peter B. & Gagne, Greg. (2006). Operating System Principles, Seventh Edition (Wiley Student Edition). Singapore, John Wiley & Sons Asia

Sinchak, Steve. (2004). Hacking Windows XP. New York: NY, John Wiley

Solomon, David. A. & Russinovich Mark. E. (2000). Inside Microsoft Windows 2000, Third Edition. Redmond: WA, Microsoft Press

Tanenbaum, Andrew S. & Woodhull, Albert S. (1997). Operating Systems: Design and Implementation, Second Edition. Upper Saddle River: NJ, Prentice Hall

Tanenbaum, Andrew S. (2001). Modern Operating Systems, Second Edition (Eastern Economy Edition). New Delhi: India, Prentice Hall India

Value-based Marketing: A Quantitative Approach to Creating Shareholder Value (Part 1 of 2)

The dot.com crash of the late 1990’s, gross errors in business strategies, and corporate mismanagement scandals such as Enron, Tyco International, WorldCom, Parmalat, Marconi, and Daewoo had generated renewed interest in corporate governance and in the creation and sustenance of shareholder value.

Thus, it has become increasingly necessary to ensure that companies and corporations are effectively and efficiently managed for shareholder value. One approach is known as value-based management.

The Chartered Institute of Management Accountants’ official terminology defines value-based management as “a managerial process which effectively links strategy, measurement and operational processes to the end of creating shareholder value” (Starovic, Cooper & Davies, 2004, p. 2).

Value-based management attempts to identify the basics of value creation by focusing on issues that matters to shareholders, resulting in an acceptable annual return on their capital investments.

Among the key activities and resources being focused around value creation is marketing, and the ability to identify the contribution of marketing and evaluate or measure its effectiveness is necessary in value-based management.

An approach to creating the ability is via value-based marketing. Value-based marketing defines the central objective of marketing as contributing to the maximization of shareholder value by aligning customer focus marketing to the interests of shareholders (Doyle, 2000a, p. 4).

Many companies realize that the key to sustainability and profitability lies with customers. Thus, we see an increasing shift of companies to become more customer-focused in order to increase customer value, and managing customer loyalty to create higher shareholder value (Best, 2009, p. 36).

What is Shareholder Value?

What is shareholder value? How do we measure it? Shareholder value is a financial concept under the ownership of the financial management discipline. Shareholder value is determined by four factors:

• The level of cash flows
• The time value of money or cash
• The durability of cash generating assets i.e. the concept of net present value
• The risks of future cash flows i.e. the opportunity cost of capital (Doyle, 2000b, p. 300)

In non-financial terms, shareholder value can be created when corporate actions result in the:

• Introduction and sales of new products or services, or variations of existing products or services, clearly differentiated from competitors’ offerings
• Adoption of new technologies that will create or enhance its core competencies
• Developing and implementing entry barriers against potential rivals
• Reduction of operating costs or the increase in efficiency of resource utilization (Subbrayan, 2008, pp. 13 – 14)

Consistent successes in creating shareholder value are typically reflected in a company’s share price. In Value-Based Marketing, Doyle says, “The basic principle of shareholder value is that a company’s share price is determined by the sum of all its anticipated future cash flows, adjusted by an interest rate known as the cost of capital” (2000a, p. 33).

Thus, companies that adopt the shareholder value approach will need to maximize returns for shareholders by developing and executing marketing strategies that maximize the value of cash flows over time.

Quantifying Shareholder Value: Basic valuation methods

a) Shares and Shareholder Returns

Shareholder return is derived from the capital appreciation on the value of the stock, and the dividend distribution by the company.

Let us consider a simple example at the personal shareholder level – assuming that the stock of Malaysian Airline System Bhd (MAS) is trading at Malaysia Ringgit 10 per share, and you decide to buy 1,000 shares. Your investment amounts to RM10,000. Five months later, the share is trading at RM10.95 per share, and the company declares a RM2 per share dividend.

What is the current market value of your shares?
Current market value = RM10.95 x 1,000 = RM10,950

How much is the capital gain?
Capital gain = (RM10.95 – RM10) x 1,000 = RM950

How much did you benefit from the RM2 per share dividend?
Dividend income = RM2 x 1,000 = RM2,000

Thus, the total shareholder return = RM950 + RM2,000 = RM2,950. In other words, the original RM10,000 investment has grown into RM12,950 through capital gain and dividend income.

What is the total percentage of shareholder return?
Total percentage return = RM2,950 / RM10,000 = 29.5%

How much of 29.5% is due to capital gain and how much is due to dividend income?
Capital gains yield = (10.95 – 10) / 10 = 9.5% i.e. each Ringgit invested has returned 9.5 sen in capital gains.

Dividend yield = (RM2 / RM10) x 100% = 20% i.e. each Ringgit invested has produced 20 sen in dividends.

In total, each Ringgit invested in MAS’ stock has returned 29.5 sen.

b) Discounted Cash Flow (DCF) and Net Present Value (NPV)

Using a simple example, let us assume that investment analysts have projected that MAS is to produce annual cash flows of RM100,000 for the next five years due to its business transformation plan of implementing a value-based marketing strategy. Will it be worthwhile to invest in MAS now?

We will need to compute the Net Present Value (NPV) of the projected cash flows over the five year period. For this purpose, let us assume the required rate of return is 10 percent.

Referring to a Present Value Table http://www.studyfinance.com/common/table3.pdf for the Present Value Factor, we can create the following Table 1.

Table 1

Since the sum of all present values of cash flows is RM379,070, thus, an investment amount today that is lesser than RM379,070 would constitute a prudent investment.

c) Economic Value Added (EVA)

A measure of shareholder value that has gained popularity is the Economic Value Added (EVA) model, established by Joel M. Stern and G. Bennett Steward III.

The proponents of EVA claim that it is a measure of a company’s true economic value creation, but presently, there is wider acceptance of cash flow as indicator of shareholder value and wealth creation. The fundamental percept of EVA is that true shareholder value is only created if a surplus is created over the total capital invested in the business.

Using data from the 2006 and 2007 Annual Reports of MAS, the EVA is computed as follows:

EVA = EBIT(1-t) – (Capital x WACC)

Table 2: Economic Value Added (EVA) of MAS

* To simply the discussion, we assume that WACC = 15%

Since MAS was loss making in the financial years 2005 and 2006, the EVA reflects that negative shareholder value was created (i.e. the destruction of shareholder value) during those financial years. For the financial year 2007, MAS was profit making again, and positive shareholder value was generated.

We have identified that shareholder return is derived from capital appreciation on the value of the stock, and dividend distribution by the company. The capital appreciation of the value of the stock i.e. creation of shareholder value is determined by the sum of all its anticipated future cash flows, adjusted by an interest rate known as the cost of capital.

Figure 1: Relationship between Marketing and Shareholder Value

Then, how is future cash flows generated? Obviously, the primary source is from sales revenues (Figure 1). Activities such as operational costs reduction and the efficient use of cost resources are indirect means of enhancing cash flows. The higher the sales revenues, the higher the potential for the company to generate more cash flows. In turn, higher sales revenues can be achieved through the successful execution of strategic marketing plans and marketing activities that create higher customer values. Thus, marketing is related to and central to the creation of shareholder value.

References:

Best, Roger J. (2009). Market-Based Management: Strategies for Growing Customer Value and Profitability (5th Edition). Upper Saddle River, New Jersey: Pearson Education Inc.

Creating the Lexus Customer Experience. (2009). The Executive Issue, No: 34, January. Management Centre Europe. Downloaded from http://www.mce-ama.com/downloads/cases/MCE_cat09_CCS-Lexus.pdf

Doyle, Peter. (2000). Value-Based Marketing: Marketing Strategies for Corporate Growth and Shareholder Value. Chichester, England: John Wiley & Sons Ltd

Doyle, Peter. (2000). “Value-Based Marketing.” Journal of Strategic Marketing, Vol. 8 (4), pp. 299 – 311

Hodge, Richard & Schachter, Lou. (2006). “Accelerate Your Customers' Success: The Lexus Sales Story.” CustomerThink.com, September 5. Downloaded from http://www.customerthink.com/article/accelerate_your_customers_success_the_lexus_sales_st

Lexus Earns Best-Selling Luxury Brand Title for Sixth Consecutive Year – Surpasses 300,000 Sales in Record-Breaking Year. (2006). Lexus.com, January 4. Downloaded from http://www.lexus.com/about/news/articles/2006/1/20060104_1.html

Malaysian Airline System Bhd (MAS) 2006 and 2007 Annual Reports. Downloaded from http://www.malaysiaairlines.com/hq/en/corp/corp/relations/info/reports/annual-reports.aspx

Starovic, Danka; Cooper, Stuart & Davis, Matt. (2004). “Maximising Shareholder Value: Achieving clarity in decision-making.” The Chartered Institute of Management Accountants. Downloaded from http://www2.cimaglobal.com/cps/rde/xbcr/SID-0A82C289-AA3CDFE4/live/tech_techrep_maximising_shareholder_value_0105.pdf

Subbrayan, Radhakrishnan. (2008). How a Company Creates Shareholder Value. Petaling Jaya, Malaysia: Leeds Publications

The Chartered Institute of Management Accountants. (2005). “CIMA Business Talk: Creating Shareholder Value.” New Straits Times - Appointments, July 2, p. 12

Wilson, Richard M. S. & Gilligan, Colin. (2005). Strategic Marketing Management: Planning, Implementation and Control (3rd Edition). Oxford, England: Butterworth-Heinemann / Elsevier

Cloud Computing – an introduction

1.0 The evolution and concept of cloud computing

“Cloud” is a metaphor for the Internet. Thus, cloud computing is Internet computing or in other words, the usage of the Internet as a computing infrastructure and resource. In cloud computing, the Internet is used to provide services such as data storage, software applications, and email and file exchanges.

The key aspect of cloud computing is that the users do not have or need the knowledge, control or ownership of the computer and network infrastructure. Users just simply access the software or service they require to use and pay for what they use. Therefore, “in cloud-service engagements, buyers [users] just need to care about the service [level or quality] without worrying about its implementation” (Khan, 2009).

A simple example – if your organization is a user of Microsoft Excel®, typically, your organization would have a client-server networked computing environment with Excel running off an application server and/or off numerous Microsoft Windows®-based desktop PCs and laptops – collectively known as fat clients. In a cloud computing environment, your organization invests in thin clients (low cost scaled-down desktop PC and laptops) networked to the server to access a spreadsheet application from the “cloud”. In the case of an individual, if you have a broadband connection to the Internet, you can use an inexpensive laptop, for e.g. a netbook (from your home or neighbourhood Starbucks) to access a spreadsheet application from the “cloud”. Furthermore, most cloud computing services for the individual are free.

Obviously, organizations have greater computing needs and the cloud computing service providers have more to offer than just spreadsheets.

Stroh, Acker & Kumar ideally define cloud computing as, “Cloud computing is nothing more than the collection of computing software and services that can be accessed via the Internet rather than residing on a desktop or internal servers. Such services include applications as simple as e-mail – Yahoo! Mail, Google’s Gmail, for example – or as complex as Salesforce.com, which helps manage customer relations and sales leads” (2009).

Cloud computing evolved from Software as a Service (SaaS), and will lead to increased:

• Virtualisation
• Usability
• Collaboration
• Scalability
• Standardisation

Cloud computing collectively propagates:

• Infrastructure as a Service – defined as the fully outsourced delivery of computer or computing infrastructure as a service. In the business model’s upstream, the cloud-infrastructure providers can dynamically allocate the required resources to cloud-service providers. Downstream, this means that end-user businesses do not need to purchase or own computer hardware, software and related equipment.
• Platform as a Service – defined as the ability to provide all the necessary facilities to support the complete process of developing and delivering Web applications and services to cloud-service providers and end-users.
• Software as a Service – defined as service-on-demand where cloud-service providers will license customized software for end-user use for the duration of the service agreement.

2.0 Major cloud computing vendors and popular cloud-services available today

2.1 The major vendors are:

• Amazon http://aws.amazon.com/ec2/
• Google http://www.google.com/apps/intl/en/business/index.html
• Hewlett Packard http://www.hpl.hp.com/research/cloud.html
• IBM http://www.ibm.com/grid/
• Microsoft http://www.microsoft.com/azure/default.mspx
• Salesforce.com / Force.com http://www.salesforce.com/cloudcomputing/

2.2 Popular cloud-service offerings are:

• E-Mail
• Human resource management (HRM) applications
• Office applications
• Customer relationship management (CRM) applications
• E-Procurement applications
• Remote backup and storage
• Project management applications

3.0 Why is cloud computing gaining interests?

So, why is cloud computing gaining interests? While the critics and supporters of cloud computing continue to debate on the virtues of cloud computing, “… more and more companies are quietly making the transition, and they are finding that Web-based computing services can provide the power, low costs, functionality, flexibility, and mobility that has long eluded traditional enterprise computing” (Stroh et al, 2009).

Business sustainability issues and challenges in the following areas have also driven companies to explore alternative solutions and acted as a catalyst for high technology solution providers to innovate.

i) Increasing total costs of ownership – upgrades, maintenance, and obsolescence

Traditional enterprise computing systems require regular hardware and software upgrades and maintenance. The introduction of new technologies has shortened product lifespan thus accelerating obsolescence, and increases the need for hardware and software refresh.

ii) Cost savings

The overall need of firms to drive down costs in operations, production and wastes to maintain competitiveness can only go as far as not compromising on product and service quality and efficiency in order to continue to meet customer expectations and satisfaction. Other areas of cost savings can come from a reduction on capital expenditure and maintenance costs of enterprise computing systems.

iii) Risk of new computer system project failure

Growing firms, for e.g. SMEs, new to adopting enterprise computing solutions may reconsider the high acquisition cost and unproven usage and maintenance capability in favour of alternative computing solutions with lower risks.

iv) Human capital

Failure to hire and retain skilled computer human resources is becoming more prevalent today. In some less-developed countries, there is a shortage of skilled computer systems and technology manpower, and the issue can be further aggravated when universities produce graduates equipped with the wrong skills and knowledge compared to industry needs, probably due to the fast pace of change in the industry.

3.1 The key advantages of cloud computing

• Reduced hardware and software acquisitions i.e. reduced capital expenditure
• Lower hardware and software maintenance costs
• Up-to-date software functionality from regular software updates
• Greater accessibility and mobility (a basic laptop, broadband Internet connection, a free operating system and Web browser such as open source Linux® (e.g. Fedora®, Ubuntu®, etc) and Firefox®
• Pay-for-what-you-use
• Flexibility and agility – companies can easily increase or decrease their computing needs
• Increased collaboration with suppliers and customers at a lower transaction cost
• Companies can focus more on business challenges such as markets and competition, marketing and demand generation, product development and innovation, profitability and sustainability without worrying about the implementation and maintenance of enterprise computing infrastructure

4.0 Major concerns, issues and challenges

While the benefits of cloud computing are clear, corporate buy-in is slower than expected chiefly due to the following areas:

i) Security and Reliability

Security and reliability concerns about storing corporate data with a third party continue to be debated. “For some corporate users, keeping the cloud in-house alleviates the security and privacy concerns that can come with running key applications and data outside the company. However, cloud providers insist that data is safer and less vulnerable with them” (No Man is, 2009). This is generally true because cloud-service providers offer and maintain state-of-the-art facilities and implement security updates immediately as the nature of their business pose a higher risk.

Also, there is on-going debate among technology gurus on the issue of data residency – the time delay between data being requested and delivered i.e. a question on performance in a real business environment.

ii) Privacy and Confidentiality

This issue is closely related to security and reliability. While cloud-service providers may implement high system security measures to ensure and enhance reliability, the human element of potential greed and corruption among the cloud-service providers’ employees of lesser ethics still appear as a point for concern.

iii) Responsibility and Accountability

The level of responsibility and accountability expected by end-users versus what the cloud-service providers are liable to in their service level agreements (SLA) differs. Cloud-service providers cannot afford to extend too much in terms of responsibility and accountability should security or data privacy become breeched as doing so would severely increase their business risks. Thus, it is the norm that cloud-service providers limit themselves to ensuring that the latest security measures are in place and every precaution is checked and double-checked. However, should breeches or failure occur, to what extend are cloud-service providers answerable? Are the answers in long drawn-out legal suits?

iv) Cost savings doubts

In a study conducted by McKinsey & Co., and published in March 2009, McKinsey based their research on Amazon.com’s Web service offering and concluded that it would cost more than double! (Clearing the Air, 2009).

“Forbes, The Wall Street Journal, The New York Times and others have all written pieces quote the report saying ‘clouds are NOT very cost-effective’” (Cohen, 2009).

v) Too many cloud computing platforms?

As cloud computing represents one of the next growth areas in information and communication technology for the IT industry, several cloud computing players exist today championing their flavour of the cloud computing platform, creating some confusion, and leading to concerns and questions about standards and interoperability.

5.0 The future of cloud computing

As companies continue to be driven to reduce costs or better manage costs in the increasingly competitive regional, international or global market, cloud computing is a fast emerging technology that is revolutionizing information and communication infrastructures, providing flexibility and potential cost reductions.

Hardware, software or applications are becoming increasingly costly to maintain as business volumes grow. Thus, with cloud computing, the pricing model of pay-for-what-you-use or rent-what-you-need removes the need for costly capital expenditure in acquiring, implementing and maintaining an enterprise computing system infrastructure. In this aspect, cloud computing can replace corporate private datacentres and multi-dedicated server infrastructures.

Cloud computing enables companies to utilize standard applications or develop and deploy customized applications, and monitor and scale those applications using resources accessed over the Internet.

Presently, cloud computing is still in the infancy stage, where companies and individuals use it for small projects or simple needs, for e.g. office applications. For a greater rate of adoption to take place, a higher level of trust or business buy-in must be achieved in the critical areas of security, privacy and reliability.

References:

Clearing the Air on Cloud Computing. (2009). McKinsey & Co., March 1. Downloaded from http://uptimeinstitute.org/content/view/353/319/

Cloud Backup Tutorial: How to Leverage Cloud Backup Services, Part 1. (2009). SearchDataBackup.com, July 1. Downloaded from http://whitepapers.businessweek.com/data/search?site=bw&qp=site_abbrev%3Abw&qg=VENDOR&cp=bpres&cr=bpres&st=1&qt=Cloud+backup+tutorial%3A

Cloud Backup Tutorial: How to Leverage Cloud Backup Services, Part 2. (2009). SearchDataBackup.com, July 1. Downloaded from http://whitepapers.businessweek.com/data/search?site=bw&qp=site_abbrev%3Abw&qg=VENDOR&cp=bpres&cr=bpres&st=1&qt=Cloud+backup+tutorial%3A

Cloud Computing: Latest Buzzword or a Glimpse of the Future? (2009). CBS Interactive, Inc., February 1. Downloaded from http://whitepapers.businessweek.com/data/search?site=bw&qp=site_abbrev%3Abw&qg=VENDOR&cp=bpres&cr=bpres&st=1&qt=Cloud+backup+tutorial%3A

Cloud Computing: What is its Potential Value for Your Company? (2009). CBS Interactive Inc., February 1. Downloaded from http://whitepapers.businessweek.com/data/search?site=bw&qp=site_abbrev%3Abw&qg=VENDOR&cp=bpres&cr=bpres&st=1&qt=Cloud+backup+tutorial%3A

Cohen, Reuven. (2009). “McKinsey & Co: Clearing the Air on Cloud Computing”. ElasticVapor.com, April 16. Downloaded from http://www.elasticvapor.com/2009/04/mckinsey-co-clearing-air-on-cloud.html

Hosted Enterprise Cloud: The Cloud of Efficiency. (2009). NaviSite Inc., May 22. Downloaded from http://whitepapers.businessweek.com/data/search?site=bw&qp=site_abbrev%3Abw&qg=VENDOR&cp=bpres&cr=bpres&st=1&qt=Cloud+backup+tutorial%3A

Khan, Imrana. (2009). “Cloud Computing set to go Mainstream.” Outsourcing, Issue #13: July – August, pp. 30-31

Nellutla, Thirumal & Teoh, John. (2008). “Cloud Computing”. IBM Corporation, Illinois Digital Government Summit, September 15.

No Man is an Island: The Promise of Cloud Computing. (2009). Knowledge @ Wharton, April 1. Downloaded from http://knowledge.wharton.upenn.edu/article.cfm?articleid=2190

Ortiz, Joseph. (2009). “Slash Storage Costs, Archive to the Cloud.” Storage Switzerland LLC, August 1. Downloaded from http://whitepapers.businessweek.com/data/search?site=bw&qp=site_abbrev%3Abw&qg=VENDOR&cp=bpres&cr=bpres&st=1&qt=Cloud+backup+tutorial%3A

Stroh, Stefan; Acker, Olaf & Kumar, Aneesh. (2009). “Why Cloud Computing is Gaining Strength in the IT Marketplace.” Strategy & Business: Leading Ideas, June 30. Downloaded from http://www.strategy-business.com/li/leadingideas/li00131

Timbuong, Jo. (2009). “Cloud Computing set to Shine”. The Star, InTech, August 18, p. IT15

Timbuong, Jo. (2009). “Red Hat Takes to the Cloud”. The Star, InTech, August 18, p. IT15

Getting Started in Cloud Computing

(Image source: http://infreemation.net/cloud-computing-linear-utility-or-complex-ecosystem/)

“In 2009, worldwide cloud-services revenue is expected to cross USD56.3 billion, a 21.3% increase from 2008 … likely to reach USD150.1 billion in 2013 … Business processes delivered as cloud services are the largest segment of the overall cloud-services market, accounting for 83% of the overall market in 2008” (Khan, 2009).

If you are still trying to find out what cloud computing is about or how it works, the best way is to try it out yourself …

Get yourself started here http://www.google.com/apps/

For businesses, you can try out the Standard or Premier Edition here http://www.google.com/apps/intl/en/business/index.html

For techies or programmers:

Run your web apps on Google's infrastructure
http://code.google.com/appengine/

Connecting Apple's iPhone to Google's cloud computing offerings
http://www.ibm.com/developerworks/web/library/wa-aj-iphone/

References:

Google and the Wisdom of Clouds
http://www.businessweek.com/magazine/content/07_52/b4064048925836.htm

Google's Cloud Looms Large
http://www.technologyreview.com/biztech/19785/

Google Groups: Cloud Computing
http://groups.google.com/group/cloud-computing

How the Google-Apple Cloud Computer Will Work
http://computer.howstuffworks.com/google-apple-cloud-computer.htm

Khan, Imrana. (2009). “Cloud Computing set to go Mainstream.” Outsourcing, Issue #13: July – August, pp. 30-31

The Impact of Globalization on Malaysia's Private Higher Education Sector

Introduction

Much as been said about globalization, which is synonymous with the opening of national borders to the international flow of goods, services, raw materials and resources, information and technology, and human resources.

In the area of higher education, universities have become factors of the competitive advantage of nations (Porter, 1998). They are the locus of scientific discoveries that move economies forward, and the primary means of educating and generating the talent or human capital required in order to obtain and sustain competitive advantage in various industries.

In response to the same forces that have propelled world economies, universities have become more self-consciously global, especially universities of the advanced nations – seeking students from around the world who represent the entire spectrum of cultures and values, sending their own students abroad in educational exchange programmes to prepare them for global careers, offering courses of study that address the challenges of an interconnected world and collaborative research programs to advance science for the benefit of all mankind.

Of the forces shaping higher education none is more sweeping than the people movement across borders. Prospective students travel from one developed nation to another, and from developing or less-developed to the developed countries to seek good education.

However, cross border movements in higher education is not limited to students. Universities have also undertaken the setting up of branch campuses in suitable foreign countries, such as:

• University of Nottingham Malaysia Campus http://www.nottingham.edu.my/Pages/default.aspx
• University of Nottingham, Ninbo, China http://www.nottingham.edu.cn/
• Monash University Malaysia http://www.monash.edu.my/
• Monash University South Africa http://www.monash.ac.za/
• Curtin University of Technology, Sarawak, Malaysia http://www.curtin.edu.my/
• Swinburne University of Technology Sarawak Campus, Malaysia http://www.swinburne.edu.my/
• University of Chicago Booth School of Business, London, England http://www.chicagobooth.edu/visit/london/index.aspx
• University of Chicago Booth School of Business, Singapore http://www.chicagobooth.edu/visit/singapore/index.aspx
• INSEAD Asia Campus, Singapore http://www.insead.edu/singapore_campus/getting/index.cfm

The British Open University http://www.open.ac.uk/ alone has 43 branch campuses outside the UK. In Malaysia, the Open University Malaysia http://www.oum.edu.my/portal/ has an enrollment of over 79,000 local and foreign students. It operates in Yemen, Bahrain, and Maldives via partnerships with the local higher educational institutions. By September 2009, it will operate in Vietnam and Ghana (OUM to spread, 2009). INTI University College http://www.newinti.edu.my/ has a branch campus in China focusing on teaching English language to Chinese students to equip them with the global communication language (Ramli, 2006). Limkokwing University of Creative Technology http://www.limkokwing.net/malaysia/ has campuses in Indonesia (Bali), Botswana, Cambodia, Lesotho, and the UK (London).

Where branch campuses are not possible, twinning and transfer programmes with local private institutions of higher education have become another avenue brought about by globalization, for e.g. in Malaysia, the University of Northumbria, UK and KDU College; University of East London, UK and UCSI University College; University of Southern Queensland, Australia and SEGI University College, and the University of London, UK, external degree programmes with several local private colleges (Uda Nagu, 2006a).

Rapid advancements in digital and Internet technology, and e-learning courseware have also significantly contributed to cross border delivery of higher education, for e.g., University of Phoenix, USA http://www.phoenix.edu/ is recognized as the leading accredited online degree course provider. Universitas 21 Global http://www.u21global.edu.sg/Education/home formed by 19 world-class universities, is the leading accredited online MBA course provider. Technology has made access to quality education easier irrespective of nationality and location. While the impact of globalization appears to deliver overall positive effects to higher education, what are the issues and challenges?

Literature Review

Today’s era is characterized by globalization that is changing, among others, the economic environment that in turn affects institutions of higher education irrespective of their physical locations, traditions, and current practices and aspirations. Continuous growth in economic relationships among nations, a global shift towards free-market dynamics, and increasing consumerism are some factors affecting institutions of higher education i.e. universities. The changes in the economic environment are also causing significant changes to national and international organizations, and to governmental systems such as moving from a centrally controlled economy towards a free-market economy. The explosive growth in digital and Internet technology, and telecommunications represented another catalyst of environmental change (Magrath, 2000). Thus, universities, traditionally operating on a highly individualized basis will experience increased competition, a need for increased national and international collaboration in research, and introduce new educational delivery and support methodologies.

As higher educational institutions everywhere begin to face similar challenges, and with increased competition in the higher education industry, the institutions i.e. universities respond by becoming more market driven and adopt a more global perspective by focusing to increase foreign student enrollment especially from less-developed countries. A global shift to knowledge economies is also increasing the importance of higher education. Further competition is in the form of new entrants to the higher education industry in response to increasing global demand for higher education (The Futures Project, 2000). Globalization is also affecting methods of educational delivery and support. Traditional classroom delivery is now enhanced with electronic learning support. Online courses, virtual classrooms and Web-based tutorials are some delivery methodologies for distance education across borders as a result of globalization.

However, the effects of globalization in the higher education industry cannot be left completely to free market mechanisms as issues such as quality and quality control, accreditation, educational relevance, the effective use of new technology, and ethics needs to be in place and regulated. Higher educational institutions cannot be allowed to only focus on profitability but must develop a strong sense of responsibility to educate and assist less-developed nations establish or acquire sound educational systems for future generations (The Futures Project, 2000; AUT and DEA, 1999).

The Impact of Globalization

Globalization is rapidly reshaping the landscape of higher education. Driven by global shifts to free market mechanisms that cause continuously increasing international trade, foreign direct investments and other economic relationships among nations, multinational or transnational corporations constantly need to obtain and maintain their core competencies and competitive advantages to generate economic wealth with scarce resources. An increasing awareness of the need to focus on the consumer, and growth of new consumer experience and consumer satisfaction business thinking has also contributed to changes in customer relationship models. A continuous flow of human capital talent and skills is required. Institutions of higher education, both public and private institutions are the source for current and future human capital.

So, how has globalization affected Malaysia’s higher education sector, especially the private institutions of higher education or Institusi Pengajaran Tinggi Swasta (IPTS)? We can group the impact of globalization in the Malaysian private higher education sector into four major categories:

1. Creation of world-class education – Curriculum, Research, Technology and Collaboration
2. Quality assurance and accreditation – Ethics, Branding and Ranking
3. Academia and Industry collaboration
4. Malaysian Government as catalyst

Creation of world-class education – Curriculum, Research, Technology and Collaboration

Globalization and the transition to a knowledge-driven society or economy have created a greater demand for higher education. This demand will constitute a good market for cross border or transnational education providers. Transnational education can take the form of franchising, twinning programmes, offshore courses, distance learning and the setting up of branch campuses and other forms of collaboration. In other words, there is a need to create world-class institutions of higher education or world-class universities. What is meant by “world-class”?

According to professor Dr. Stephanie Fahey, the common yardsticks that make a university world-class are staff and student performance, which includes research output and impact, students’ academic results, graduation rates and employability (Aiming for world-class, 2006). Phang argues that, “we need to produce world-class graduates who possesses the ability to bring in a range of relevant variables into our thoughts and decision-making processes. It means being international in outlook and possessing a keenness to expose ourselves to issues and happenings around us” (Phang, 2005).

Therefore, it becomes very important for the Malaysian private higher educational institutions to possess the ability to design, develop and deliver the correct curriculum to meet industrial changes and development brought about by globalization, for e.g. globalization has created the need for international management or know-how to manage across borders with different cultures and practices. Thus, the curricula needs to educate our students in international management and cultures, and problem identification and solving.

To create and provide world-class education, Malaysia’s private universities need to also conduct relevant international-level research, for e.g. we should conduct research into understanding and learning global competitive advantages so that our small and medium enterprises (SMEs) and industries can grow and compete at the international or regional economic level instead of continuing to depend on government incentives and protection, and foreign tariff exemptions. In 2007, Malaysian SMEs make up 99 percent of the total number of registered businesses, 56 percent of total employment, but accounts for 32 percent of the GDP and 19 percent of total exports (Government to ensure, 2008).

The education and exposure to high technology and information and communication systems in the areas of enterprise systems, business intelligence systems, supply chain management and customer relationship management systems are necessary.

Where our private universities lack in ability and know-how, they need to collaborate with more advanced higher educational institutions and also with industry. We can benefit from such collaborations with the transfer of knowledge and technology and maintain abreast of industry needs and changes. We cannot continue to produce human capital graduating with irrelevant and obsolete knowledge, technology and skills.

Quality assurance and accreditation – Ethics, Branding and Ranking

Prospective students of higher education are consumers, and consumers have rights. Students have rights to quality education. The Malaysian government is responsible to ensure that our private higher educational institutions provide quality education by providing official accreditation and annual evaluations (Azizan, 2006; Uda Nagu, 2006b).

Quality education can only be assured when the private higher educational institutions meet the necessary criteria in terms of relevance of curricula, qualifications of academia, graduation results and performance, quality and employability of graduates, research and collaborations, and policies and practice of ethics and corporate governance.

Ethics and corporate governance of some private higher educational institutions are questionable as some act as a front for illegal immigration activities, declaring foreign workers as students (Karim, 2006; Sujata, 2006).

With these criteria and quality accreditation in place, private higher educational institutions can build their respective branding and establish respectable ranking positions in the educational field they pursue, for e.g., excelling in providing management education, information technology or engineering education. With these credentials, we can attract more foreign students to study in Malaysia and more international collaborations with other institutions of higher education (All out to, 2006; Martin, 2006).

Academia and Industry collaborations

Another important aspect for our private higher educational institutions is to establish academia and industry collaborations. Why is this important? As Malaysia transitions to a knowledge economy or society, a strong collaboration between academia and industry will “create the impetus for the creation of a new workforce that will strengthen the Malaysian economy. On the other hand, a weak link between academia and industry will create unemployable graduates who do not fit the requirements of the new economy and will cause Malaysia to lose its competitiveness” (Phang, 2003; Help shape varsity, 2006).

Academia and industry collaborations will benefit both parties. Academia gets more aligned to the needs of the industry and will be able to produce graduates relevant to the industry. Companies in the industry will benefit from the research capabilities of the universities and may even be able to commercialize some of the research findings of the universities. A close collaboration will establish the academia as a knowledge providing resource to the industry value chain and will help improve the competitiveness of Malaysia. A higher educational institution that establishes cooperative ties with industries can rise in recognition surpassing its more established peers (Gomez, 2009; Ramachandran, 2007; Ismail, 2007; Indramalar, 2003).

Malaysian Government as catalyst

The Malaysian government, through the ministry of higher education, in addition to being the guardian to ensure quality education and ethical practices in the private higher education sector, needs to also play an active role in promoting private higher education and enabling academia and industry collaborations.

The government needs to develop a vision and sustainable roadmap for the growth of the private higher education sector. This is important as the private educational institutions are managed like commercial corporations and hence, lesser administrative barriers exist in order to respond quickly to market and industrial changes and developments.

Development and research funding, and tax incentives should be made available to the private higher educational institutions to enable them to grow and produce industry relevant graduates thereby helping Malaysia build and maintain competitiveness and build human capital so vital for our country’s future and economic well-being (IPTS, 2006; Private colleges want, 2006).

Conclusion

While globalization is changing the landscape of the private higher education sector, Malaysia has already embarked on transitioning to a knowledge economy (Malaysia on course, 2009). Higher education represents the nucleus of the knowledge economy. In order to continue our economic growth, maintain and generate new competitive advantages in the global market place, we need to invest in and build our human capital. This can be achieved through creating and delivering world-class education.

To create world-class education, we need to be nimble, flexible and global in outlook – basic characteristics expected from the private higher education sector, but possessing these characteristics are insufficient, as we also need to develop core competencies in:

• Designing, developing and delivering industry relevant curricula
• Achieving and maintaining the gold standard in educational and ethical excellence
• Establishing a high technology focus and usage
• Establishing international collaborations in educational technology and research
• Establishing academia and industry collaborations
• Establishing infrastructure and support programmes by the government to nurture and grow the private higher education sector

References:

Aiming for world-class. (2006). The Star: Education, July 30, p. 8

All out to attract foreign students. (2006). The Star: Education, September 3, pp. 2-3

AUT and DEA (1999). Globalisation and Higher Education: Guidance on Ethical Issues Arising from International Academic Activities. London, England: Association of University Teachers http://www.aut.org.uk/, and Development Education Association http://www.dea.org.uk/

Azizan, Hariati. (2006). "Setting a new standard". The Star: Education, July 16, p. 7

Gomez, Terence. (2009). "Strengthening linkages: Effective partnerships between industry and universities will help cultivate entrepreneurial skills". The Star, March 28, p. SBW8

Government to ensure economy continues to prosper. (2008). Daily Express, December 5. Downloaded from http://www.dailyexpress.com.my/news.cfm?NewsID=61445 as at 6 July 2009

Help shape varsity education, industry urged. (2006). The Star, August 23, p. N3

Indramalar, S. (2003). "Intel's strong links with academia". The Star: Education, August 3, p. 19

IPTS: Goodies still elusive. (2006). The Star, September 10, p.

Ismail, Izwan. (2007). "Collaboration to drive innovation". New Straits Times: Tech & U, July 2, p.

Karim, Farah N. (2006). "1,200 foreign students missing from classes". New Straits Times, September 9, p. 8

Magrath, C. Peter (2000). Globalization and its effect on higher education beyond the Nation State. Salzburg Seminar / Universities Project 12th Symposium: The Impact of Globalization on Higher Education.

Malaysia on course towards full-fledged k-economy. (2009). New Straits Times, August 7, p. B4

Martin, Sumitha. (2006). "Quality first". New Sunday Times: Learning Curve, August 20, p. H2

OUM to spread wings to Vietnam, Ghana. (2009). New Straits Times, July 25. Downloaded from http://www.nst.com.my/articles/23thir/Article/index_html as at 26 July 2009

Phang, J. (2003). "Academia and industry: The Stanford experience". The Star: InTech, July 29, p. 39

Phang, J. (2005). "Creating world-class education". The Star: InTech, April 26, p. 29

Porter, Michael. (1998). The Competitive Advantage of Nations. New York, NY: Free Press

Private colleges want more government backing. (2006). New Straits Times, February 28, p.

Ramachandran, Sonia. (2007). "When industry and university forge ties". New Sunday Times: Learning Curve, July 22, p. H2

Ramli, June. (2006). "More foreign universities eager to set up campuses in Malaysia". New Straits Times, August 9, p. 14

Sujata, V.P. (2006). "Kedah college under probe". The Star, September 9, p. N8

The Futures Project (2000). The Universal Impact of Competition and Globalization in Higher Education. The Futures Project: Policy for Higher Education in a Changing World, Brown University, Rhode Island http://www.futuresproject.org/

Uda nagu, Suzieana. (2006). "Fruitful tie-ups". New Sunday Times: Learning Curve, July 9, p. H2

Uda Nagu, Suzieana. (2006). "A gold standard for education". New Straits Times, August 20, p. 24

Managing Change: How to Change Your Corporate Culture (Part 2 of 3)

****************************************************************************************
ACKNOWLEDGEMENT

This article was published in the April-June 2009 (Vol. 44, No. 2) issue of
Management – the quarterly magazine of The Malaysian Institute of Management

Reproduced here with permission from the author Dr. Victor S. L. Tan

and from
The Malaysian Institute of Management
****************************************************************************************

Changing corporate culture is unlike a heart transplant operation which can be done overnight. Instead, it is an ongoing process that takes time and requires constant monitoring. It is certainly not about transplanting alien cultural elements into an organisation. Changing corporate culture is about transforming the organisation through continuous influence and the shaping of beliefs, assumptions, values and patterns of behaviour of people towards creating a desired work environment. It is about changing the mindsets of people to a new way of thinking and working, which will enable the organisation to be effective, efficient and competitive. Thus, changing corporate culture is about opening minds and winning hearts of people to a new way of working, which is not just about increasing the bottom line but also about improving relationships amongst people and seeking meaning in work through a sense of belonging, shared values and satisfaction.

How does an organisation go about influencing and shaping its corporate culture? KL Strategic Change Consulting (KLSCC) Group has worked with over 200 Asian organisations, and in many of them the work has involved, to a great extent, changing their corporate culture to align to their respective visions, missions, goals and the environment.

The following diagram shows the KLSCC's Corporate Culture Change Model, which is comprised of four phases.

Phase 1: Culture Assessment

The Culture Assessment phase comprises two tasks. One is the assessment of the existing culture of the organisation, and the other is to determine the desired corporate culture. To get a more reflective picture of the real culture of an organisation, one should use a combination of tools. One way is to conduct personal interviews with a representative sample of participants in the organisation. One-to-one interviews as well as focused interviews with groups can be conducted to assess the existing culture as well as determine the desired culture of the organisation.

Besides interviews and discussions, Corporate Culture surveys can also be conducted on a representative sample of participants. To encourage accurate input, these surveys must be conducted in an anonymous fashion with the assurance of strict confidentiality. In this respect, KL Strategic Change Consulting Group has developed various corporate culture assessment questionnaires, tools and instruments to help organisations gauge their existing culture as well as determine their desired culture. A desired culture encompasses not just personal and organisational aspirations, but also the demand of the external environment (which includes competition, customers, shareholders and other stakeholders) that will enable the organisation to compete and succeed.

Phase 2: Culture Gap Analysis

This phase involves analysing the gaps that arise from the existing corporate culture and the desired one. This analysis looks into the people, policies, process, technology, strategy and structure of the organisation. One way this can be done is by analysing what currently impedes an organisation from achieving its desired vision, mission and goals. Another way is to define the missing links, be they resources, the appropriate leadership style or the behaviour of people that is required to enable an organisation to achieve the desired future state. The results from the gap analysis will provide sound input to the development of change programmes that influence and shape the culture of the organisation.

Phase 3: Changing Mindsets: Influencing Culture Change

The core of cultural change is the change in mindsets. This involves learning new ways of thinking, new ways of working and interacting with one another. It enables the acquiring of new attitudes and new skills in the workplace. To do this, there is a need to influence and shape the beliefs, assumptions and values of people in the workplace. There are many ways to do this. For a start, the change agents who lead the culture change should become role models. Their attitudes and daily behaviour in the workplace must reflect those defined as desired culture. Their consistent behaviour with the desired culture will encourage others to emulate them. Albert Schweitzer said it best, when he remarked, “Setting an example is not the main thing in influencing others. It is the only thing.”

The next change should be to revamp company policies, procedures and the systems of the company to be aligned with the new culture. Thus any inconsistent practices that are not aligned to the desired patterns of behaviour should be abandoned. To ensure wide influence of the new culture, the organisation should undertake company-wide training to communicate the new belief systems, core values and desired patterns of behaviour.

Orientation programmes can be conducted for new recruits as well as existing staff to help them modify their beliefs, attitudes, values and behaviour to the desired patterns of behaviour in the workplace. The company must capitalise on every communication channel possible to widely publicise and communicate the new corporate culture. Newsletters, e-mails, department meetings, branch managers' meetings, management meetings, family day gatherings, sports club activities and company anniversary events can be useful channels and opportunities for promoting and reinforcing the new culture within organisations.

Another very effective way to start the culture change process in an organisation is through the recruitment process. Potential candidates are screened for the right values and behaviour patterns that will fit the desired culture. Candidates are then interviewed thoroughly and selected on the basis of possessing the relevant values, thinking and behaviour patterns. Some organisations we worked with, have also undertaken a thorough workforce reorganisation, whereby people with the beliefs, values and behaviour that are consistent with culture of the organisation are put in charge whereas those who are not, are being sidelined.

“The crux of effective change will come from how organisations implement a performance reward system to recognise, encourage and reinforce the practice of the desired culture.”

Thus the new leaders who are in charge will develop their people and inculcate the practices of the new culture in the organisation. This type of workforce restructuring, while it “rocks the boat” often is what is needed to change the culture of very old, bureaucratic and archaic organisations in crisis situations. Often the demands of competition and the fast changing environment dictate this type of approach to change quickly and effectively to enable the organisation to survive. Culture change requires constant monitoring and fine-tuning of approaches to achieve effective results. And ultimately, the crux of effective change will come from how organisations implement a performance reward system to recognise, encourage and reinforce the practice of the desired culture.

Phase 4: Sustaining the New Culture

Sustaining a new culture requires continuous improvement efforts in moulding, shaping, influencing and reinforcing actual behaviour in the workplace on a daily basis. The reality of whether a new culture is sustainable lies in what value and importance leaders place in maintaining the consistency of the desired practices and patterns of behaviour in the daily activities and tasks in the workplace.

Thus a constant flow of new ideas and suggestions to promote and reinforce the new culture is needed to get people to really internalise those beliefs, values and behaviour. And the constant linking of positive performance and results to the new culture will also add credibility towards the new corporate culture. And once people truly see the benefits of the new culture not just for the organisation but also for themselves as individuals, they will want to continue those practices.

To serve as a useful guide for change agents to implement culture change in their organisations, 1 would like to share our experience of the change efforts we made in working with over 200 Asian organisations. Overall, there is a common, desired work environment which employers and employees strive for.

While there are many issues and a lot of dissatisfaction raised by various levels of staff in the organisations we worked with, we feel that a lot of these are symptoms of some of their yet unfulfilled intrinsic needs. These needs could be the feeling of recognition and appreciation, a sense of importance, a sense of belonging, the joy of achievement, the pride of involvement or the fun of sharing.

In summary, there is a common thread running through the organisations which we have worked with. Overall, their staff members want the following:

• Good relationships between divisions, departments and individuals
• A conducive work environment
• Appreciation of good work done
• A sense of fairness
• Encouraging support and guide when needed
• Competitive salaries and staff benefits
• Relevant and timely information on what's going on
• More open communication without fear
• Promotion and growth opportunities in the company
• Tactful discipline

Overall, to create this environment and a conducive and productive corporate culture, top management, leaders, managers and staff must work in concert to achieve a win-win partnership to ensure the following are practised in the workplace:

• People are clear of the direction of the organisation
• People are involved and their views or input sought in the decision making process
• The workplace is friendly and meaningful, and people enjoy coming to work
• Communications are clear, timely and relevant
• People get the resources and support they need to do their jobs
• People are respected, recognised and appreciated for doing a good job
• People are kept informed about what is going on in the company
• People are held accountable for their jobs and own up to the problems
• Individual and team efforts are rewarded or recognised
• There are opportunities for learning and career advancement
• There is a spirit of enthusiasm, sense of belonging and teamwork
• Nurturing people is a practice of the organisation

Written by Dr. Victor S. L. Tan. Dr. Tan is the Chief Executive Officer of KL Strategic Change Consulting Group. He is an author of five management books. His latest book is The Secret of Change. For more information, visit www.klscc.com or contact the author at victorsltan@klscc.com

The Global Financial Crisis and the Optimal Period to Refresh Your PCs

With the current global financial crisis, many countries’ economies are depressed, and international trade and business volumes have reduced significantly in most industries.

The effect on desktop and laptop computer ownership and usage by companies and corporations is immediately to adopt an approach to prolong the equipment’s lifespan. While this is the normal course to take, owners need to be aware that prolonging the lifespan beyond ‘x’ number of years actually increases the total cost of ownership (TCO) of maintaining those desktop and laptop computers -- yes, the Law of Diminishing Returns also applies to extended ownership -- the longer you maintain old systems, its TCO increases.

So, this question, “When is the best time to refresh or replace the computers?” would probably be on your mind now.

This link http://communities.intel.com/docs/DOC-3144?dfaid=1&crtvid=0 will take you to an interesting article and whitepaper arguing that, “…for most firms, the optimal PC refresh lifecycle for both laptop and desktop PCs is three years.”

Managing Change: Understanding Corporate Culture (Part 1 of 3)

**************************************************************************************** ACKNOWLEDGEMENT

This article was published in the Jan-Mar 2009 (Vol. 44, No. 1) issue of
Management – the quarterly magazine of The Malaysian Institute of Management

Reproduced here with permission from the author Dr. Victor S. L. Tan

and from
The Malaysian Institute of Management
****************************************************************************************

Many organisations today are hard pressed to change as they are driven by a strong need to change through this digital and the K-economy era. There is no alternative. They have to change to enable their organisations to compete and survive. However, many CE0s are unhappy because many of the changes implemented are not sustainable.

The scenario sounds too familiar. An organisation suddenly realises the need to change due to external pressure of competition. It decides to take a quick and simple way, i.e. undertake training for staff to improve their competency and motivation. Their staff members are sent off to a nice resort for a couple of days where they brainstorm issues, develop strategies to resolve problems, build team spirit and nurture a sense of camaraderie. When the staff members come back, they are all charged up for two weeks and then the enthusiasm subsides and everyone goes about doing things the old beaten way. The issues are still there. The result is that there is no iota of change happening. It is likewise with the implementation of change initiatives, be they TQM or business process reengineering or the GRID management approach – all started well but have not ended up well.

As a consultant, I have been posed the most common question from CEOS: How do you sustain a change initiative and the enthusiasm for continuous improvement?

There is one great strategic flaw in the way most organisations go about implementing change. They go about managing change in a superficial manner through merely changing the structure, process, strategy and technology without addressing the fundamentals that drive the organisation. And these fundamentals are the components that influence and guide the behaviour of people in organisations. It is these very basic components that make up the corporate culture of an organisation. Unless an organisation takes time to shape its corporate culture to the desired change, the effort and results will not be sustainable.

What is Corporate Culture?

Corporate culture is the way people do things in an organisation. It is a set of norms comprising of beliefs, attitudes, core values and behavioural patterns shared by people in an organisation.

It is these shared beliefs, core values and patterns of behaviour which influence the performance of an organisation. Beliefs are the assumptions or perceptions about things, which people and the organisation as a whole take as true or valid. For example, an organisation may have a shared belief about the great potential of its people. Core values are the primary or dominant values that are accepted throughout the organisation, e.g. the core value of respect. A pattern of behaviour is the way people act towards one another. For instance, an organisation that has the belief in the potential of its people and has the core value of respect will have the desired pattern of behaviour of treating people well.

KL Strategic Change Consulting Group, in its consulting work with over 250 Asian organisations, has found that the corporate cultures of Asian organisations play a significant role in determining the capability and speed of leading change within the organisations as well as in the industry. Thus corporate culture is important as it will determine whether or not an organisation survives in the face of changes, turbulence and challenges in the environment. The model developed by KL Strategic Change Consulting shows a direct correlation in how an organisation's beliefs and assumptions influence the core values, which in turn shape the behaviour of people. And it is this behaviour pattern that ultimately affects the performance of an organisation.

Characteristics of Corporate Culture

How does one go about specifically to describe the corporate culture of an organisation? There arc certain characteristics that an organisation values, which distinguish it from other organisations. It is this set of characteristics that provide a start for describing the corporate culture of an organisation. Overall, organisation behaviour experts can agree that there arc about 10 characteristics which collectively provide insights into the essence of the culture of an organisation. The following are the 10 differential characteristics:

1. Individual initiative: the degree of responsibility, freedom and independence that individuals have
2. Risk tolerance: the degree to which employees are encouraged to be aggressive, innovative and risk-taking
3. Direction: the degree to which the organisation creates clear objectives and performance expectations
4. Integration: the degree to which the units within the organisation are encouraged to operate in a coordinated manner
5. Management support: the degree to which managers provide clear communication, assistance and support to their subordinates
6. Control: the number of rules and regulations, and the amount of direct supervision that is used to oversee and control employee behaviour
7. Identity: the degree to which members identify with the organisation as a whole rather than with their particular work group or field of professional expertise
8. Reward system: the degree to which reward allocations (i.e. salary increase and promotions) are based on employee performance in contrast to seniority, favouritism and so on
9. Conflict tolerance: the degree to which employees are encouraged to air conflicts and criticisms openly
10. Communication patterns: the degree to which organisational communications are restricted to the formal hierarchy of authority

To understand the corporate culture of an organisation, employees are invited to participate in rating these characteristics on a continuum from low to high that corresponds with a scale from 1 to 10. By collating the input from a representative sample of employees, a composite picture of the organisation culture can then be determined. This description will provide a good starting point for employees to develop a common understanding about the organisation, the way things are done and how people are supposed to behave.

The Benefits of Corporate Culture

How does corporate culture help an organisation? What benefits can an organisation derive from developing a strong and conducive corporate culture? In our corporate culture work, we have found that our clients benefited in the following ways:

• It helps align the company towards achieving its vision, mission and goals.
• It increases the team cohesiveness of various departments, divisions or units within an organisation as its corporate culture serves as the 'glue' that bonds people together.
• It shapes the behaviour of staff at work by encouraging the assimilation of core values and the desired behaviour, thereby enabling the organisation to be more effective and efficient.
• A common culture promotes consistency, resolves conflict and facilitates coordination and control.
• It increases staff motivation through a sense of belonging, loyalty and common beliefs and values, which encourage them to think positively of themselves and their organisations.
• A strong culture enables an organisation to pull all its people together and maximise their potential; this certainly provides a competitive edge.

A study of 200 companies by Harvard Business School researchers John Kotter and James Heskett found that corporate culture has a strong impact on the performance of organisations. This landmark study provides four significant conclusions as follows:

• Corporate culture can have a significant impact on a firm's long-term economic performance.
• Corporate culture will probably be an even more critical factor in determining the success or failure of firms in this new millennium.
• Corporate cultures that inhibit strong long-term financial performance are not rare; they develop easily, even in firms that are full of reasonable and intelligent people.
• Although difficult to change, corporate cultures can be made more performance enhancing.

A company with a strong positive culture will motivate people to continue growing, learning and improving. Research has shown that employees have higher motivation and satisfaction working in organisations which are well managed with managers and employees who practise sound principles, common beliefs and shared values.

Thus it can be seen that to enable change initiatives and the enthusiasm for continuous improvement to be sustained, organisations need to develop a conducive corporate culture to support such efforts. They need to inculcate beliefs, assumptions and core values that shape behaviour towards the desired results. To do this requires more than just simply instituting a performance management system. It requires a mindset change of the way people create their own identities, make sense of their working lives and find meaning from their work. And that is going to the core of fundamental change – the change in corporate culture.

Written by Dr. Victor S. L. Tan. Dr. Tan is the Chief Executive Officer of KL Strategic Change Consulting Group. He is an author of five management books. His latest book is The Secret of Change. For more information, visit www.klscc.com or contact the author at victorsltan@klscc.com