The rich, the good and the ugly

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SOMETIMES, we get the impression that people of a certain social class must know one another quite well.

So when we talk about the super-duper rich, we presume that they not only appear on the same Forbes list each year, but they probably have each other's private numbers on their smartphones.

And it does not really matter which country they come from, or which industry they belong to, because their extreme wealth is the common denominator.

So if you look at the richest men on the 2011 list, you can imagine Bill Gates, at No 2, giving Lakshmi Mittal of India, at No 4, a call that goes something like this, “Hi, Mittal, how much richer are you since I last called? Steel prices are rising but I am not doing too bad myself. Microsoft just dished out US$8.5 bil to buy up Skype. Small change, my man!”

But what is the reality? I suspect that while the pursuit of money drives these people, and they may share mutual public platforms, real friendship among them may not be as common as we think.

Gates and Warren Buffett recently brought together 61 American billionaires to a resort in Tuscon but it was not so much a gathering of old friends but total strangers.

Buffett reportedly knew only 12 of those invited though by the end of the evening, he had made 40 new friends.

The one thing in common for these ultra-rich philanthropists is that they belong to the special club of people who had pledged to give away at least half of their wealth under the Giving Pledge initiated by Buffett and Gates.


So what did these people talk about all evening? Apparently, since there was no real bond of friendship, they saw the meeting as a chance to “meet each other, compare notes, eat and laugh.” At least that's what the Associated Press pieced together by talking to a few of the diners after the event, which was totally off-limits to the press.

When my growing-up boys asked me about the important and rich people whom journalists get to meet in the course of work, I used to tell them that, like the rest of us, “the men pee standing, and have to put on their trousers one leg at a time.”

It was my way to remind them that there are more important things that make up a person's worth than wealth and position.

But there is no denying that these philanthropists have the potential to initiate sea changes if they put their hearts in the right place.

And it is good that other rich people around the world, including in Malaysia, are also embracing this concept of giving away part of one's wealth to address the world's many problems.

I was pleasantly surprised that our very own Dr Jane Cardosa, one of the three dynamic Cardosa sisters with roots in Convent Green Lane and Penang Free School, is a recent recipient of a US$100,000 grant from the Bill and Melinda Gates Foundation to further her research into a vaccine for polio and hand, foot and mouth disease (HFMD).

Hopefully, we will see more Malaysian philanthropic ringgit being made available to produce positive social returns.

Maybe someone should propose a study on how to eliminate the bigots and extremists in our midst who seek to build walls that divide, rather than bridges that unite.

And a further study on foot-in-the-mouth disease, which seems to be pretty rampant among the politicians.

Deputy executive editor Soo Ewe Jin realises that there is much good on the Internet that allows us to connect with worthy causes. But it seems that Malaysian misuse of cyberspace is what gets us the headlines.

Innovation Takes Real Effort, Even For Startups

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Martin Zwilling 

Image via Wikipedia

It seems to be an accepted fact these days that big companies normally innovate by buying a startup with innovative products, rather than focusing on in-house innovations. This is a good thing for entrepreneurs and investors, who can win big, but it’s not a given. I see many startups who seem satisfied with a “me too” approach, building yet another social network or e-commerce site, rather than being truly innovative.

Much has been published on this subject, including a new book “Look at More: A Proven Approach to Innovation, Growth, and Change” by Andy Stefanovich, which is really a guide to established companies for unleashing creativity within their organizations. He asserts that the problem is lack of inspiration, and he supports this with twenty years of real case studies from his own experience.

The good news is that most entrepreneurs and startups have more inspiration than almost anything else, and it sometimes leads to success despite their lack of resources and business skills. Yet even entrepreneurs need to focus on the most effective way to unleash innovation, and maximize their chances for success.


Andy offers a simple mantra for innovation, expressed as “Look at more stuff; think about it harder.” This mantra is complemented by a framework known as the five M’s, which are five key principles for unleashing creativity in any environment:

• Mood. Inspiration and creativity requires the right context of attitudes, feelings, and emotions. Every business leader who wants innovation must constantly monitor and set the proper mood for the environment. You can set the right mood by purposefully disrupting the status quo, initiating change, asking provocative questions, and listening.

• Mindset. This is the intellectual foundation of creativity, the baseline capacity each of us has for getting inspired, staying inspired, and thinking differently. Four thinking disciplines which produce a creative, inspired mindset include changing your perspective, taking risks, finding your passion, and challenging assumptions to embrace ambiguity.

• Mechanisms. These are the tools and processes of creativity that help you engineer inspiration into the way you work and empower your organization to embrace the kind of behavior that fosters innovation. Four key steps include building a context, generating ideas, filtering ideas, and building a blueprint for implementing the best ideas.

• Measurement. Even creativity needs guidance and critical feedback on the qualitative and quantitative performance of individuals and organizations. Measurements send a strong signal of what is important and where people should focus their passion and energy. In addition to measuring results, you need to measure mood, mindset, and the mechanisms above.

• Momentum. This is accomplished by the active championing and celebrating of inspiration and creativity that foster a self-reinforcing cycle for increasing innovation. Momentum is an organizational priority for inspired leaders who have a clear understanding of the other four M’s.

Not everyone has to be a leader for innovation to work. Research has indicated that followers are just as important to consider as leaders when thinking about creating the mood and momentum for creativity, inspiration, and innovation. Likewise, the right mindset alone isn’t enough. You have to be able to convince others and sell your ideas.

Thus, even entrepreneurs must not assume that their efforts and their team will be creative and innovative. “Me too” startups don’t get funded, and they certainly don’t get bought for a premium by the sleeping giants who are looking for outside innovation to kick-start their growth again. Thus I suggest that every entrepreneur and every startup review their own environments for the five M’s, to avoid getting tagged as a “has been” before they even “have been.”

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Should Malaysia's interest rates be allowed to increase?

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A Question of Business by G.GUNASEGARAM

Bank Negara’s move to let rates rise, when it may encourage more money to flow in and economic recovery is nascent, puzzles

IT’S easy to understand why Bank Negara raised the amount of interest-free deposits (SRR - statutory reserve requirements) that had to be kept with it by banks by another percentage point to 3% of total deposits. It is to mop up excessive inflows of money.

But it is puzzling why it decided to simultaneously increase the overnight policy rate or OPR, a gauge of the interest rates the central bank offers or pays when intervening on the money markets, by a further 0.25 percentage point to 3%.

This not only results in an across-the-board increase in the cost of doing business by an automatic increase in the base lending rate (BLR – the reference rate to which most lending rates are pegged), it also attracts further inflows of funds to take advantage of the increased interest rates.

Banks have already raised their BLR by 0.3 percentage point to 6.6% and their deposit rates by a similar amount.

The SRR basically restricts the availability of liquidity by tying up funds so that they remain with Bank Negara. This in turn restricts the ability of banks to lend money, helping to ensure that inflows of money don’t find their way into the system.



Bank Negara takes pains to explain that the change in SRR does not reflect a change in monetary stance and is simply a tool to manage liquidity. It adds that the OPR is the sole indicator used to signal the stance of monetary policy.

The simplest way to interpret the latest move then is that Bank Negara feels that there is some amount of excessive demand and this needs to be cooled down. But how can that be so when the overall economy is by some indications growing by less than 5%.

It would be imprudent to raise interest rates and raise costs for all sectors when say, only the property sector, and that too in only some areas, needs cooling off. This has already been dealt with via administrative measures such as 70% financing for those who already have more than two houses.

Perhaps, the central bank is concerned about inflation. Sure, everyone is. But most of this is caused by rising prices of inputs, especially of oil and commodities, rather than sharply increased demand. Raising rates won’t solve the problem but may curtail economic activity when more of it is sorely needed.

The last reason could be to help depositors get a real rate of return so as to encourage savings. But again, the idea is to get spending up which means one would want to discourage savings right now, especially with so much liquidity sloshing around the place.

One can only speculate about Bank Negara’s reasons for letting interest rates rise, especially since rising domestic interest rates and when US interest rates stay low and close to zero, will attract further inflows of hot money and make liquidity management more difficult.

Since the beginning of last year, the OPR has been increased four times, each time by 0.25 percentage point, to make in all a full-percentage-point rise in the OPR. The BLR would have mirrored largely this rise in OPR too.

If you were paying 5% a year for your housing loan a year ago, for instance, it would mean a significant 20% increase in interest costs. And that applies to businesses too.

Still, the OPR is a half a percentage point below what it was before the onset of the world financial crisis in 2008. From that vantage point, Bank Negara’s rate increase still seems within reasonable limits.

But it has to beware of further interest rate hikes during a period when both confidence as well as economic activity is still not strong, especially when a situation of easy liquidity warrants a lower – not higher – interest rate.

By all means, raise the SRR to rein in liquidity, but be more careful about increasing interest rates – there are many downside perils.

● Managing editor P Gunasegaram feels that interest rates and money, like water, eventually find their own level.