Saturday, August 14, 2010

Nazir Razak Outline "Strength In Diversity" Thinking

Speech by CIMB Group managing director Datuk Seri Nazir Razak at the MCA’s Chinese Economic Congress on August 14, 2010.

" It gives me great pleasure to address all of you here today. I must confess that when I was invited to speak at this forum with the theme:

“The Role of the Chinese Community in Achieving the NEM”, my initial thoughts revolved around how to politely decline, for I have neither the oratory prowess of a politician or any direct involvement in the NEM or the 10th Plan for that matter to speak on them with any authority.

After thinking about it however, I decided to accept because the organisers have been kind enough to allow me to share my perspectives on “strength in diversity”, a subject which has great relevance for my firm, and is of great interest to me because I have always found the saying attractive yet the substance rather elusive.

At the recent Malaysian Law Conference I argued that the key strength and competitive edge of Malaysians and Malaysian companies lie in the diversity of our people and how they are able to operate across cultural, racial and religious barriers.

Consequently our people are highly sought after all across the world, and companies from Malaysia have been more successful internationally than those of any other Asean country.

Today, I would like to take this thought further. If diversity is our strength then we should nurture and celebrate diversity and methodically, as a nation, harness diversity as the competitive strength of our companies and of our nation.

Ladies and gentlemen, one of the mega trends of our times is the increasing diversity of the societies we live in, the organisations we work in, and the clients and customers we serve. The world grows ever more inter-connected. This enables the diversification of global economic activity like never before; economic value is now created across value chains that span the globe and investment flows too, are becoming more diverse in their source.

Fifty years ago, flows were almost entirely from the developed to the developing world. Today, we’re seeing the rise of foreign direct investment from trans-national corporations (TNCs) from emerging and transitional economies.

A growing number of these TNCs are emerging as major regional, sometimes even global, players; and the links they are forming with the rest of the world are redefining the global corporate landscape.

Malaysia and Malaysians enter this fray with unique advantages, because in a very real way, diversity is our “home ground”. We are ourselves the product of successive waves of “globalisation” emanating from Asia well before the colonial era. Malaysia sits at the nexus of trade and travel between Southeast Asia, China and India.

The society that we know today is a product of the confluence of cultures, races and religions of peoples brought together in search of opportunity and security. Most of us grew up with diversity as a normal condition of life. Unlike many other societies, our ability to manage diversity is innate, our grasp of its challenges, instinctive.

There is thus great demand and scope for Malaysians in the new management landscape in which diversity is a key capacity.

Malaysia has been a beacon of stability for the past 50 years, some setbacks notwithstanding. Our success over these years has not been in spite of, but because of, our cultural diversity. But now the time has come to go beyond merely managing it, as if it were a problem, but actually tapping it for the power it is.

Diversity is not an accidental feature of Malaysia; and while some people may want it to go away, it is here to stay. We need to climb out of the confines of the view that race is always a problem to be managed with “race relations”, into the freedom of a new national mindset in which we all understand that diversity has become the distinctive economic advantage of our people, and we seek to systematically tap that advantage to make our mark in the global economic arena.

Ladies and gentlemen, the value of diversity is well-understood in the business world. Diversity in portfolios can mitigate risk, diversity in the sales force translates into better client coverage and diversity in thinking broadens the range of our solutions. Diversity fosters the creativity and cultural adeptness needed to build and grow regional businesses.

CIMB has been a great beneficiary of Malaysian diversity.

Our organisation has grown from a predominantly Malaysian investment bank in 2005 into a leading Asean universal bank in just five years. Over this period our market capitalisation went from RM5 billion to RM50 billion; our staff strength has grown from 1,000 to over 36,000 and today, we have over 20 different nationalities within our ranks. Our customer profile too, has changed dramatically, both in number and geographical make-up – CIMB now serves over 10 million customers across Southeast Asia from large corporates to SMEs to individual retail clients.

The diversity of our people, and their very Malaysian ability to adapt to create value across a range of cultural settings, have been key to our success.

Most of you would have probably heard the joke that CIMB actually stands for Chinese, Indian, Malay Bank. We actually love the unofficial moniker, because it so aptly describes what we are. Jokes aside, CIMB really is an amalgamation of Chinese, Indian and Malay banks – Ban Hin Lee/Southern Bank, United Asian Bank and Bumiputra-Commerce Bank.

Hence CIMB is truly 1 Malaysia! CIMB today is an example of a truly Malaysian achievement. Our regional expansion has been built on a distinctively Malaysian ability to build an effective network across Asean, one of the most culturally complex regions in the world. Diversity has been an essential and productive component of our success.

When we merged Bank Bumiputra and Southern Bank four years ago, many said that it was impossible, that the respective working cultures were too different, and that the transition from the predominantly mono-racial setting of each entity into a combined multi-racial environment would be too combustible. Surely we have proven them wrong.

We have demonstrated beyond the shadow of a doubt that the integration of contrasting cultures, divergent methodologies and different values is not only possible but also a source of strength of our franchise today. That integration is held together by people with a distinctively Malaysian capacity to work across cultural difference.

For me, it was the experience of managing the Malaysian CIMB that enabled me to then build and lead a regional CIMB. Malaysia and this Malaysian capability were my bridge to the region. Thus a most Malaysian company has become possibly the truest Asean company. A made-in-Malaysia capability to manage and lead multi-racial and multi-cultural teams is now the kernel of our capacity to build a trans-national business across the larger diversity of Southeast Asia.

Ladies and gentlemen, how do we nurture and take advantage of diversity? At CIMB we say that promoting diversity requires people to go against what comes naturally to them. We learn to identify our group and our personal biases and we tell our leaders to fight against them constantly.

As a personal example, when I took over the helm at CIMB, I resisted the tendency to surround myself with people who thought the same way as I did or with whom I was socially comfortable. Instead, I selected a very diverse management team, in age, race and gender, so that I could draw from our varied perspectives and arrive at better solutions than a homogenous team could have achieved.

Today, if I see an all-Chinese team, or an all-Malay team in the organisation, I ask why; and the leader of the team is set a target of diversification. I insist that at the office we only speak English or the national language (Bahasa Malaysia, Bahasa Indonesia, or Thai) to facilitate diversity.

We have a strongly meritocratic culture in regard of individual performance. This is a basic requirement of a talent-based competitive strategy that can hold its own against the best international competition.

The very same strategy, however, requires that we continually challenge ourselves to build diverse teams in which individual talent can find its best expression.

Group diversity is a goal in itself. The best universities and schools in the world have policies in place to foster diverse academic communities because they know that a more diverse population is likely to be more interesting and more creative.

The demands of meritocracy are balanced with the requirements of diversity and inclusion to create communities that are in fact more productive. Individual merit alone does not get the work done. Results are created by teams, and diverse teams tend to be better teams. In our entry level recruitment we set a specific goal of increasing bumiputra talent so that we have a bigger pool to rebalance our teams at the managerial levels.

Is this NEP at work? Yes. But does it conflict with good business strategy? No. And one day, if the bumiputra content is too high, you may see a policy of higher Chinese or Indian intakes.

From CIMB’s point of view, to serve a multicultural and multi-racial client base, its staff and its leadership too, have to be equally diverse, because our success is ultimately predicated on how well we understand and provide for the needs of our clients.

Diversity and economic transformation (1 Malaysia and the NEM).

The unstoppable forces of globalisation, and the eastward shift of the global economy’s centre of gravity, are playing into our hands. The global economic game is moving onto our home turf. The need to rebalance global trade requires that emerging economies find ways to expand domestic markets, and we find that our backyard is Asean, with its population of 580 million people, that is our true domestic market.

Emerging economies need to participate in the economic resurgence of China and India, and we find that we are located not just geographically, but also culturally, at the meeting point between the South China Sea and the Indian Ocean. We are a lucky country, but we need to do a few things before we can realise our luck.

In recent months the political discourse in our country has become more racial than I ever remember. I hope it is merely the dying spasms of retrograde worldviews, a reflection of anxiety at imminent structural change that we know in our hearts must and can happen; structural change that would catapult us from our present uncertainty to the fore of economic competitiveness.

We need an economic transformation that harnesses the energies of our diversity to our competitive advantage. We are in critical need of a New Economic Model.

Malaysia has the largest number of successful home-grown trans-nationals in Asean. Using the example I know best, I have tried to suggest why this is so, and how it is testimony of the value of our diversity. Malaysian companies are successful abroad because of capacities born of a diverse society. Let us, in pursuing a new economic model, build on that success.

The New Economic Model should leverage our diversity in a methodical way by providing support for more Malaysian companies to expand regionally. What has worked for CIMB and Axiata, YTL and AirAsia can work for Malaysia. Such companies draw on the talent of Malaysians wherever they are located. This, concretely, is how we tap the advantage of having Asean as our backyard. We need even more Malaysian companies, even at the SME level to go trans-national. They can.

So I look forward to the NEM creating a framework for spurring growth and the proliferation of Malaysian trans-national companies: It is not, for instance, clear today how private companies can access co-investment capital or other government support in their international activities.

To state the obvious, the Malaysian Chinese community has a crucial role to play in this strategy. You are no strangers to regional business networks. That network, however, is becoming increasingly diverse, open, international and competitive. Embrace diversity; work with all communities, not only in formal compliance with affirmative action but in building, shoulder to shoulder with them, the regional companies of the future.

Our new and positive mindset about our diversity, expressed as “1 Malaysia”, must be harnessed and developed in the New Economic Model as an engine for the regional growth of the Malaysian economy.

The vehicle for this is the company of the future, a future being built in our region and in which we have a key role to play because if we put our efforts together as Malaysians we have a real talent for building the region’s most successful trans-national companies. These companies can in turn anchor our centrality in the new pathways of global economic activity developing around us."

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