Evolution of Thai management post-crisis

(Part One of Three)
August/September 1999

Thai managers are definitely unable to do business as they did in the past. The economic bubble has blown away. The real demand is in place. In almost every industry, volume has dropped dramatically. For example, the first 6 months of 1998 saw automobile sales dropping by around 75% compared to the same period in 1997. Real estate showed a negative growth of 80%, brand name clothes declined 30%, medicine declined 30%, and soft-drink declined 10%. Only Instant Noodles reported 25-30% growth! Instant Noodles in Thailand cost around 5 Baht while rice with curry on the street (considered as local fast food) costs between Baht 15 - 20. In short, Instant Noodle sales growth was one of the key indicators for the economic down turn in Thailand (the same as the sales of potatoe's may increase in the West during economic downturn).

The business game has changed. Thus, whether we like it or not, Thais must change the way they do business. The question already answered is "Why we have to change?". The next critical question that many Thai managers are asking themselves right now is what do we need to change? This month's column attempts to answer this question. In addition, it will show how we can change. Within this content, the Thai managers can complete the complete jigsaw regarding change after the Asia Crisis consisting of the What, Why and How.

The following is based on my many years of experience as a local employee working in American, European and local Multi National Corporations (MNC) over 13 years plus, over 4 years total working experience as management consultant providing thought leadership and management development to private enterprises (both local and MNC), state enterprises and government organizations. It also includes the perspectives of senior Thai and non-Thai business leaders.

"As Is" Analysis

Marketing:

Implication: These companies will definitely have share of voice in the consumer mind now and of course in the future. Thus, sales volume maintained now will increase when the recovery comes. It will ensure that in the future, these companies will gain more market share.

Production:

Implication: These companies will achieve better manufacturing output in term of quality, delivery and productivity. Thus, the unit cost and product quality will be much cheaper and better than local manufacturers. Hence, economies of scale will be maximised.

Human Resources:

Implication: They will have a better trained Human Resource ready for the good economic times.

Management Perspective:

Implication: The damage from the crisis for these countries will be minimized. They will have a better chance to succeed when recovery comes.

Information:

Implication: It is not easy any more to do things that are not transparent. Thais have to be more careful about business ethics, media exposure and sensitivity of information to the public. This will create a good Corporate Governance society.

Looking Ahead - The Thailand Trends

• From Local Ownership to Foreigner Ownership
• From Protected Market to Deregulated Market
• From bubble Economy to Real Demand
• From Diversification to Focus
• From "Pay by the market" to "Pay by Performance"

Trend One: From Local Ownership to Foreigner Ownership

Implications:

• Thais will have to do business more transparently. In the past, Thais used to do business in more gray areas. For example, if Thais have to contact government officers, some portion of the expense went on "Tea Money". In some cases, they may not have paid this Tea Money directly, but would incur heavy expenses in business entertainment. This may not be easily accepted by new foreign partners and indeed, many foreign investors are aware of this kind of practice.

• It is imperative that Thai managers use English more as the medium of business communication. The old belief of some Thai Managers who are not good at English is that "As long as you work in a Thai firm, you are not required to be efficient with English" is losing credibility fast. Such an attitude will create chaos in most organizations.

• Thailand has never been colonized unlike Singapore or Malaysia. Thais use English as a second language. Many young executives graduated from overseas are capable in the use of English. Unfortunately, they form the minority in the organizations and the majority of Thai executives in local firms are incompetent in English. Worse still, English competency of Thai employees at lower levels are far below level again. Many Thais are too shy to speak English with foreigners because they are afraid that they might use it incorrectly.

• Thais have gotten used to foreigners coming to Thailand working to adapt themselves to Thai culture. But now the game is different. The new foreigners are now share holders or new bosses. They came in with high expectations in return for their investment. It is now the Thais turn to understand their culture and work with them effectively. Thais have to start to learn how to work in multi-cultural environment.

To be continued...

In the final part of the trilogy leading up to the New Year, I will cover the skills areas Thai managers need to develop to be successful in the Year 2000. These are:

• Being A Change Agent
• Being careful about Relationship-based decisions
• Being More Assertive
• Conflict Management
• Planning
• English Communication Skills
• Computer Skills
• Being more Creative
• Learning how to learn
• Mental Therapy
• Being the Facilitator
• Management By Simplicity

Kriengsak Niratpattanasai
DBS Thai Danu Bank, Bangkok, Thailand