Entrepreneurial Management
West Zone Principal's Retreat
May 2005
Paper by Tan Kin Lian, Chief Executive Officer, NTUC Income

1. INTRODUCTION

In his inaugural speech as President of the United States in 1960, John F Kennedy outlined the audacious goals of his presidency, which included sending a man to the moon and setting up the Peace Corp. He said, "My fellow Americans, I ask you to pursue these goals not because they are easy, but because they are hard."

Many people prefer to do the easy things. They prefer to do what has been done before, and has been proven to be successful. They like to follow the herd. They feel safer. I wish to argue that it is better to do the difficult things.

I will talk about our entrepreneurial approach towards management. It includes the willingness to try new things and to do the difficult things. This is relevant to principals, as you now to embark on a new approach to "teach less" so that students can "learn more".

2. ABOUT NTUC INCOME

NTUC Income started in 1970 with a small capital of $1 million. It has achieved significant growth during the past 34 years. By 2003, its has:

- 1.2 million customers
- Premium income in 2004 is $1,960 million
- Total assets of $11,500 million
- Ranking in general insurance - 1st Ranking in life insurance - 4th

I have worked with NTUC Income as the chief executive officer for the past 27 years. Our success has been due to our willingness to exercise entrepreneurial management and to adopt many innovative practices.

3. COMPETING FOR GOOD BUSINESS

Many people like to do a profitable business. But, you will not be the only person who can see a profitable business. Many other people are just as smart as you. Even if you have a head start and succeed, you will soon find that other people follow you. This will soon lead to strong competition, resulting in severe price-cutting. Any profitable business will become unprofitable, if the price is reduced to a low level.

If you want to go into a good business, you must make sure that there is a sufficient barrier to entry to prevent other people from copying your success or undercutting you. You should also have a way to keep a competitive advantage that will be sustainable over a longer period.

4. DIFFICULT BUSINESS

I prefer to do a difficult business. Many people will avoid it. There will be great difficulties and
challenges. A lot of hard work is needed to overcome them. If you can find a way to overcome the challenges, it will give you a sustainable advantage. The difficulties will keep many people away. They do not wish to work hard and dirty their hands.

Some examples of our difficult challenges are:

  1.. Motor insurance. It has been very difficult to keep the repair cost at a reasonable level. The workshop is able to inflate the bills. It is also easy to bribe the employee to pay a higher amount.
  2.. Customer complaints. Customer can be difficult. Many people do not wish to be involved in dealing with customer complaint, especially in the difficult business that can become a source of dispute.
  3.. Retention of employees. Many companies suffer from high turnover of employees during good times. If they pay high salaries, they become uncompetitive. If they do not, their good employees can be easily poached by competitors.

NTUC Income has managed to overcome these challenges. We are able to manage our claims and be profitable in motor insurance. We are willing to find the way to manage customer expectations and reduce the complaints. We are able to keep our employees and keep our cost at a competitive level.

By doing the difficult things, we learn to overcome the challenges. We learn to be entrepreneurial. We learn how to find innovative ways to do better.

5. GENERAL PRINCIPLES

We have developed the following principles in addressing these issues:

  1.. Set the expectation right. We define our service standard and put them in the website. We inform our customer on the service standard, "just in time". We tell them about what we do, and why we do it in our way.

For example, we tell our customer that if they meet with an accident, we will arrange the repair through tender. We know that the customer expect a satisfactory quality of repair. We tell them about how we intend to meet this expectation. We also tell them about our daily survey, where 95% of the customers find the repair to be satisfactory and 5% have it rectified.

  2.. Three level approach. We recognise that issues have to be handled in stages. 90% of the customer issues can be handled at the first level. The remaining 10% have to be passed to the second level, to be handled by more senior or specialised people. 1% may have to be handled by senior managers or independent arbitrators.

This approach gives confidence to the people at the lower levels in handling the difficult issues. They know that the difficult cases can be passed up to more senior people to handle.

  3.. Do-learn-adapt. We adopt this approach towards solving our difficult issue. We do not worry about what the right approach is. We usually do not know what works. So, we adopt an experimental approach. We are prepared to do and learn if it works. If not, we will adapt.

After trying a few times, we will learn what works best, and why. This becomes our standard practice, until a better approach comes along. We also adopt an open and consultative approach. We describe the problem and proposed solution and ask for views. We monitor the actual results and share the learning points. We get more people to contribute their perspective. This helps the learning process.

6. DO NOT OVER-RELY ON THE BOSS

Many people over-rely on the boss to tell them what to do and how to do it. They should not. The boss usually does not know how to solve the problem. They are not familiar with the actual situation on the ground. They are not likely to find the right solution, unless they have the past experience. Even so, the conditions might have changed.

At best, the boss can make the judgement of the goals, if they are presented with reliable facts and the possible choices. You should think and be confident. You should decide what is best, and convince your boss to back you. This is an entrepreneurial approach. You should act as if you are the boss.

If you do not know the right solution, you can try a pilot exercise. You can learn what works. You can ask for advice from people who are more knowledgeable. Even if you are not sure, you can have multi-prong strategy.
You only need to agree on the target and the budget with your boss. You should keep the strategy flexible and within your control. Focus on the ends and not the means.

7. SPEAK YOUR MIND

You should have values and beliefs. They should be for the good of others, and not for personal gains. You should take a stand on many issues and learn about what is right and wrong. Over time, you will gain confidence in your judgement and principles. This allows you to speak your mind. Here are some principles on how to take a stand:

  a.. Be open. If you are not sure or do not know, say so. Do not pretend.
  b.. Be positive. If someone express a view, you can look for the reason to agree with them. If you have a different view, you can state it and give your reason. You do not need to disagree with the first view. There are many ways to find the right path. We can accept many views.
  c.. Be ready to change your stand. You cannot be right all the time. If you are wrong, change it. There is no shame in it. One can only learn by trying.
 
8. PROMPTNESS

I believe in acting promptly. I am prepared to give a tentative and partial answer immediately. If necessary,
I will follow up with a fuller answer or a more confirmed answer later. This helps me to overcome uncertainty.
There is no point in proscratinating. We can never be sure about the right answer, even if we wait a long time.

By giving a tentative answer, we may invite a response from the other party. Their feedback may give useful information for us to formulate the firm answer. Our aim should be to achieve a win-win solution. The feedback helps us to achieve it.

9. INNOVATION

I define innovation as doing something better. We need to know an issue is being handled now. Our task is to find a better way to handle it.

Here are some tips on how to be innovative.

  a.. You must know what is being done now, and what is the current results.
  b.. You must be willing to try new ways. You can generate new approaches by learning how other people handle the issue, and what are their results. The new approach could be an idea from a different area of activity.
You only need to learn if the idea can work.
  c.. Try it. Monitor the results. Learn from the results. By adopting the above approach, we are able to identify many innovations.

 10. CREATIVITY

Creativity is trying something that has not been done before. Many of the principles of innovation can be applied in looking for creative solutions. Creativity tends to be more guided by the values and beliefs. We want to pursue audacious goals to achieve the desirable outcome.

 11. CONCLUSION

I wish to share the principles, values and beliefs that can drive people to achieve bold goals. I hope that I have influenced you in some of these ideas.