MANY local firms are falling into the “short-termism” trap, with the attraction of immediate gains overshadowing long-term goals that create more sustainable wins, a management consultant said.
That is one of the reasons there are few truly global Malaysian brands and no local world-class companies that excel in their design, research and development capabilities, according to Vital Factor Consulting Sdn Bhd chief executive officer Tan Wooi.
Speaking at the KL International CEO Forum organised by the University of New South Wales Alumni Association in Kuala Lumpur yesterday, Tan warned that the competitiveness of Malaysia's economy could suffer if more attention was not paid to long-term value creation.
He said the system that compelled many businesses to show good short-term financial results sometimes on a quarterly basis – and many top executives whose pay packets were based on those results – may not necessarily be in the best interests of shareholders or the country as a whole.
This also may not be good enough for competitiveness when these firms were pitted against the very best in a liberalised world market. Malaysia’s lead would be quickly overtaken, he said.
Tan gave the example of a CEO of a plantations firm who was content with selling crude palm oil rather than invest in downstream research and development of oleochemicals, despite knowing full well it was necessary for the company’s long-term survival because the CEO could make more money trading “just by pushing a few buttons”.
“We have been rather complacent and really need a wake-up call. So many companies take the easy way out and go on year after year without any clear strategies. This has clearly got to change,” he said.
Speaking to reporters later, Tan said the Government’s move to revamp government-linked companies was a good one but that too required a long-term focus.
Change agents through the injection of fresh talent were crucial components in the reforms but these should be balanced with the necessary experience and expertise, he said.
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