An article to Inspire

Business Times - 04 Oct 2005

CEOs must be prepared - but for what?

Ho Kwon Ping shares Seven Habits for a Highly Uncertain Chief Executive Officer
By ANNA TEO

HAVING been hit by one crisis after another in the last eight years, resort operator Banyan Tree Holdings is now preparing for a possible bird flu pandemic across Asia next year.

But in the nature of crises, executive chairman Ho Kwon Ping says he feels it in his bones that the next crisis to strike will be something no one has expected or planned for.

He was addressing a room of senior executives at a leadership summit on human capital on the side of Global Entrepolis last Thursday. The theme: competencies in an uncertain environment.

'There are a lot of things you cannot learn in an executive education course or business school which a CEO needs to pass Survival Skills 101,' said Mr Ho, who is also chairman of Singapore Management University.

The first of recent encounters with uncertainty came about eight years ago 'when on one bright sunny morning in July 1997, the whole world sort of changed for me', he said.

The Thai baht was devalued by almost 50 per cent and for Banyan Tree - which had a lot of business in Thailand - 'our debts effectively doubled' overnight.

Nations went into crisis, and leaders were forced out of power.

'We survived but we did lose our momentum of growth for about three years or so,' he said. And just when business was recovering and Banyan Tree was planning, for the first time, a company listing, Sept 11 occurred.

'I think there are really not many other industries besides tourism that are so sensitive to extraneous shocks. If you have a ball-bearing company, you know a lot of things could happen - you could have a coup d'etat, you could have Sars, but essentially, people still need ball bearings.

'But if you are in the travel industry, the slightest jolt to travel confidence will affect you tremendously.

'So we were hit by Sept 11 in 2001. 2002 was the Iraq war. Following that was Sars. And finally, we thought we had the best year ever in 2004, and of course in December, the tsunami hit.

'And I recall it so well because I was as far away from it as one could possibly be - I was actually vacationing in Wahaka, which is a hill station in Mexico.'

He was in the middle of dinner with his family when he got a frantic call from his general manager in Phuket that 'there was this wall of water rushing at him, and people were screaming and running all over the place'.

In the next couple of hours, in quick succession, he was to get equally frantic calls from his managers in Sri Lanka, Maldives and resorts elsewhere, all similar in frenzy and chaos.

'Nine of our resorts were hit, and this was even before BBC came out with anything about the tsunami. And here I was, supposedly the CEO, thousands of miles away, in Wahaka. . . and for the next 48 hours, we scrambled to get on a plane back to Singapore and Phuket. But more important even, was to try and establish communications with all our people.

'So when things like that happen, I think you realise that uncertainty has to be something built into your whole outlook on life. And you have to shape an organisation to be able to meet any crisis of any kind - it could range from financial to medical to physical and so on.'

Nine months after, Banyan Tree is recovering. 'Luckily, Hurricane Katrina has not affected us, but oil prices will,' Mr Ho said. 'And of course, we are now preparing for the very real possibility of the bird flu becoming endemic, and seriously hitting all of Asia.'

But, he added: 'If anything at all about crisis management and developing competencies under an environment of uncertainties tells us, it is this one truism - and I think this is borne out by Hurricane Katrina - and that is simply that the next crisis is never the one you expect and plan for.'

He spoke of the way in the US, where after the 2001 attacks, the country basically planned for another terrorist attack. 'And what calamity hit them instead? A natural calamity. I think there's a tendency for all of us to be blindsided by history. We learn too much, perhaps, from history to expect that history will repeat itself. People expected terrorism to manifest itself again with attacks on airplanes. But look at what happened in London. It was in the subways.

'So, even though we are now planning for bird flu - and we really are planning for it - and even though now we have established, after the fact, tsunami responses in all our hotels, there is a nagging feeling in me that the next crisis will be something out of the blue. . . it will be something that we have all never expected at all.

'So, what then do you do in this world of uncertainty? How can you be a good Boy Scout and be prepared?' Indeed, he added, the question might well be: be prepared for what?

So, donning for the first time the hat of a management consultant, he said, to add to titles like 'Seven Habits of A Highly Effective CEO, 18 ways of Effective Leadership, 21 ways to become a Billionaire Before the Age of 21', he has come out with his own Seven Habits for a Highly Uncertain CEO.

'This is with apologies to Stephen Covey (author of the inspirational self-help books on management), and you have to take this somewhat tongue-in-cheek because it is intended to be a bit of a gibe against all these management consultants, coming from someone who never attended business school, of course.'

1. Think the unthinkable

For Mr Ho, this includes political risk scenarios like 'What if South Thailand becomes a Mindanao or a Sri Lanka?' as well as the issue of who succeeds him at Banyan Tree, should anything happen to him. And develop risk management procedures and responses.

2. Anticipate Murphy's Law

'What will go wrong will absolutely, certainly, go wrong. Don't even think anything will ever go right. It means that in a crisis, all the best-laid plans you have are going to go wrong. How, then, do you respond to it?' Mr Ho is developing a 'culture of initiative' within his company because, he says, people who are empowered in their everyday work tasks will be better able to respond in times of crisis.

3. Grow a two-headed snake
Develop redundant capabilities; have 'a backup for the failure of the main unit' by setting up a second HQ, for instance. This came out of coping with the Sars outbreak here.

4. Practise Goldilocks' management style

She wanted the porridge not too cold, not too hot, but just right. In decision-making, things are often not a simple yes or no, black or white. 'We all think decisiveness is a great attribute, but it can easily become rigidity in a situation of crisis. And when does courage become foolhardiness?' Or consultation become indecisiveness? Flexibility is key, 'because you don't know how many times you have to change course'.

5. Empathise and inspire hope

A leader converts fear into hope. 'In uncertain times, people don't particularly want macho, stupid optimism; they want someone who can empathise with them, understand their basic anxieties and convert those anxieties into hope and inspire them to give of their best.' And redefine leadership away from a one-man show and develop a pool of leaders.

6. Have the skills of a juggler

Great ideas are no good if they are not implemented. Organisations need a juggler's 'head-to-hand coordination' skills to thrive in times of uncertainty. Banyan Tree, for instance, has centralised coordination of policies but heavily decentralised implementation.

7. Put first principles first

In a time of confusion, when faced with multiple issues and pending decisions, one needs, above all, clarity of thought. 'You have to have a clear idea of what are your first principles. You have also to find out what you know, what you don't know and what you need to know.'