There’s an overwhelming stream of published information on how companies can improve performance, grow, and increase their bottom line. Naturally, the vast majority of these insights are derived directly from the business world. But is business the only tributary for strategic information? From a credibility standpoint, it’s a problematic resource. Historically, the long-term health of corporate companies has been extremely difficult to manage. As the fortune 500 list indicates, only 57 companies remain from the original 500 that started in 1955. Perhaps even more disconcerting – the rate which companies are falling off the list is now greater than ever before. If big business cannot serve as a definitive model for long-term growth, is there another option?
Yes. The city-state of Singapore.
Since 1960, only 5 years after the birth of the Fortune 500 list, Singapore has generated growth that would leave any shareholder in awe. Given such a brief time period, the country’s meteoric rise from humble beginnings to a 21st century powerhouse is nothing short of extraordinary.
When compared to other countries, there are key themes which Singapore has pursued with laser-like veracity. The country’s uncompromising attitude towards high-level ideals and big-picture strategy has been economic rocket fuel. When boiled down, Singapore's hyper focus centers on internal investment in human capital, collective motivation, and leveraging trade and strategic alliances as instruments of growth.
The Fortune 500 is more volatile than ever due to the speed with which modern markets can develop and implement disruptive technology. Much like a progressive company devoted to continuous innovation for offensive and defensive measures, Singapore views technological advancement as a national priority. The government also has a firm prospectus on what the future of technology looks like – and they have made bold moves to transition the country into an information and knowledge-based economy. As Clayton Christensen outlines in The Innovator’s Dilemma, companies often put too much emphasis on customers' current needs, and fail to adopt new technology or business models that will meet their customers' unstated or future needs. Developing and maintaining a long-term view has yielded tremendous results for Singapore – an approach which contradicts the short-term, EPS focus of corporate America.
From the ground up, the country has built an educational, political, and business infrastructure that propels technological research and development forward. This foundation has also served as a useful vehicle to attract and support high value industry. Within a corporate context, a similar approach would be the creation of a company culture focused on employee education, management structures, and partner strategies that drive long-term innovation and growth. Can we say that most Fortune 500 companies represent these strategic values? Not a chance.
For Singapore-like growth, what level of dedication to continuous innovation is required? To start, gross expenditure on R&D is constantly rising for the country. From 2011 to 2015, the government invested $16.1 billion SGD in research, investment, and enterprise. In 2011 alone, the country increased R&D by 14.8%. In contrast, public R&D grew .82% during the same year. From these numbers, it is clear there’s a sense of urgency in Singapore’s leadership to invest in research that will harbor further long-term economic and social improvements.
Culturally, there is an extremely heavy focus on educational excellence in Singapore. The country is home to some of the best universities in the world and the concentration of researchers per capita is second only to Finland. The corporate equivalent would be Google-like standards for employee education and development. Through exhaustive recruitment efforts and very high standards for new talent, companies can cement a culture of sustainable excellence – a feature that is notoriously difficult to implement at later stages in a company’s growth.
Within a strategic alliances context, Singapore is a very business-friendly economy, ranking second in the Heritage Foundation and the Wall Street Journal’s Index of Economic Freedom. Determined through metrics that rank trade, investment, and labor freedoms, the ranking highlights Singapore’s willingness to treat foreign business on par with local companies.
It’s common for corporate companies to grow in unnecessary complexity - building internal teams and capabilities for needs that stretch far beyond the established core competencies. As Singapore indicates, a company shouldn’t attempt to do it all. Through cultural cross-pollination and enormous gains generated via trade, Singapore has created a transactional hub that generates enormous economic value. It’s not sustainable for any company to be operate in isolation. Like Singapore, they should constantly be assessing their comparative advantages and seeking ways to gain further economic efficiencies.
The country is currently ranked first in the World Bank’s standings for “ease of doing business” and has been dubbed the “world’s most innovative country” by the Global Innovation Index. From a corporate perspective in 2015, we would likely give that title to Google or Apple. However, despite the astounding success both these tech giants have had, they are far too young for us to determine how their policies, management structures, and strategic planning shapes sustainable, long-term growth. Fortunately, Singapore fills that referential void and provides a useful indicator that innovation-based economic structures do yield sustained growth.