It's the people, stupid !

This blog is a follow up on the one I wrote a while ago on the smiling curve. Next one will be about the REAL challenges for Thailand with respect to AEC.

So let’s say you are aware that the future is not at the bottom of the smiling curve. You decide to change your business model and move either upstream, in more R&D and component design, or downstream, to develop a brand and services. Hooray, problem solved !

Maybe. Let’s take a look at HTC. Up until a few years ago, HTC was the FOXCONN of today, doing the OEM assembly of hand phones for others (and doing it quite well). HTC understood the concept of the smiling curve and knew there was no profitable future in remaining an assembler. The company launched its own sleek designs and a cool brand, and was for a while the darling of investors and consumers alike (timeframes in the mobile phone business are short). Today HTC is struggling for market share against Apple or Samsung: from a 10.7% market share in Q2 11 HTC dropped to 4% end 2012 (source www.idc.com and Wall Street Journal 12 November). Its stock price trades as one sixth of its all time high at the beginning of 2011.

What went wrong ? It is not sufficient to just update your business plan and corporate website. A key challenge HTC has been confronted with is that it has not been able to build up its people’s competencies in hardware and software that would allow it to come up with products and applications that can challenge the competition (reported in Global Times China on 13 October). Although HTC continues to develop and bring to market new models, it seems the company is relegated to playing catch up with the big players. Not a recipe for survival in the long term (which means 2 years in mobile phone business) !

Having a fresh strategy going forward is definitely necessary for getting out of the smiling curve. But a company needs to drill down into every aspect of its business to evaluate the impact of this new strategy, and address the gaps. Designs and capital investment are very tangible elements of a new strategy and they can in the short term give the impression the execution is well on its way. Yet what really makes the difference is how people’s competencies are developed to fit with this new strategy. Any deficiency in this area will show its ugly head a few years down the road.

It might have been the economy in the past (http://en.wikipedia.org/wiki/It's_the_economy,_stupid) but in 2012, it's all about the people,  stupid !

What’s your name ? Fine, thank you.

When discussions take place around the challenges of AEC Asean Economic Community 2015 (soon-to-be AEC 2016), one easy topic that is always debated is the lack of English proficiency of many Thais. At a seminar I attended recently, the audience “voted” on the challenges for Thais in AEC 2015 and English language came up as the top of the list with nearly double the number of votes on the second in the list (international experience).

Is the mastery of English really the top issue that would hold back international development for Thailand around the AEC ? I think this is a false problem that hides the real one.

Of course, there is room for progress. But a lot has changed since I arrived in Asia 20 years ago. It used to be that only the lucky few who studied several years abroad were capable to communicate in English. Great progress has been made since, through teaching courses, exposure to international exchanges (mostly by email) and internet-based communication tools.

Tourism has been Thailand’s main economic pillar for years. The level of English proficiency has not been a brake (some other things have …). In fact, the great majority of tourists coming here don’t speak English themselves. I recall the Italian tourist, gesticulating in rapid-fire Italian, perplexed that the hotel staff didn’t understand him. What is the worldwide leading tourist destination ? France. Try and ask for directions in English anywhere in France. Bon courage !

Oh, but we are talking about business, not tourism. So let’s take a look at China. Not really on the top of the ranking as far as English proficiency is concerned. Yet this does not seem to have stopped them from doing business with the world ! And no, the rest of the world has not learned Chinese in the last 20 years. People just live with and struggle through the language issues that occur anywhere in the world when people communicate in a language other than their mother tongue.

I don’t believe English is the main challenge for Thailand going forward. I have a pretty clear idea of what it is, and it will be the subject of my next blog. In the meantime, I invite any of you reading this  to share your thoughts on what you think this main challenge is !  Let me know in the comment section or email me directly at peter@asioconsulting.com . I look forward to the comments !