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Irving Low of KPMG: Navigate diverse market dynamics, compliance intricacies, and cultural nuances for successful growth

Low offered a seasoned perspective on emerging trends, corporate governance challenges, and strategic considerations for businesses eyeing the Southeast Asian market.

 Asia, with its dynamic and rapidly evolving business landscape, stands at the forefront of global economic growth, and Singapore serves as a vibrant hub within this thriving ecosystem. As businesses adapt to new challenges and opportunities, we turn to industry leaders for valuable insights.

 Irving Low, who has been with KPMG for more than 30 years, is currently the Head of Priority Client Coverage at KPMG in Singapore and has extensive experience when it comes to the Asian business landscape. His tenure at KPMG has seen him traverse both the London and Singapore offices, contributing significantly to the firm's growth and success.

 As a Partner for over 20 years, Low has held pivotal roles, including heading the Advisory business in Singapore and Indonesia, overseeing People Performance and Culture, and leading Clients and Markets.

 Low's expertise lies in corporate governance, where he serves as the KPMG APAC Leader for Board Advisory Services. His insights into the intricate realm of governance make him a sought-after speaker at board meetings, presentations, and public forums. Furthermore, Low actively contributes to various boards, including the Singapore Tyler Print Institute, Singapore Repertory Theatre, and the Advisory Board of the School of Accountancy at Singapore Management University.

 As a judge in the upcoming SBR National Business Awards and International Business Awards, Low explores the complexities of Asia's business environment, providing valuable guidance for businesses looking to grow and thrive in an ever-changing landscape.

1. As someone deeply involved in the business community, what emerging trends do you foresee having the most significant impact on businesses in the next 5-10 years, and how should organisations prepare for and leverage these advancements to stay competitive?

Over the past few years, businesses have grappled with significant challenges and undergone remarkable transformations, a momentum projected to continue. As we embark on a new year, key areas demanding attention from businesses include supply chain dynamics, emerging technologies, environmental, social, and governance (ESG) considerations, along with a heightened focus on climate action. 

Inflation and supply chain disruption

Amidst inflationary shocks, supply-chain constraints, and increased economic volatility, business profit margins are increasingly being placed under pressure. Business leaders find themselves having to reassess the cost and price risks of their assets and investments. Their challenges will be in maintaining price discipline whilst incorporating prudent risk-sharing measures.

Compounding this is supply chain disruption, caused by geopolitical factors or unforeseen events. Such disruptions have the potential to hamper production, contribute to inflationary pressures and subsequently affect consumer spending patterns. For the foreseeable future, additional disruptions may arise due to macrotrends, including continued geopolitical tension as well as other unforeseen issues.

Digital transformation and emerging technologies such as AI

Generative artificial intelligence (AI) has captured the public’s imagination and is transforming every industry and sector. This is creating new opportunities and challenges for businesses and organisations. From our interactions with sectors, the current trending transformation is for businesses to integrate AI into their systems, processes, and customer interactions. The integration of these advanced technologies can increase insight, enhance efficiency, reduce costs, and accelerate decision-making. 

We will also likely see more developments in quantum computing that promise to solve complex optimisation problems, simulations, and cryptography. For one, it could optimise supply chain management, portfolio management, route planning, and the discovery of new materials with desirable properties.

ESG and climate action

In the last few decades, ESG and climate action initiatives may have been less consistent, with a lot more focus on one-off initiatives. However, in recent years, with the rising ESG and climate change agenda, companies have been re-evaluating their practices and weaving ESG and sustainability into every aspect of their operations, along with their value chains. This comes as businesses realise that failure to incorporate measures that contribute positively to sustainable development could result in reputational damage, regulatory challenges, and operational risks.  

2. With your experience in corporate governance reviews, what are the common pitfalls you've observed in organisations, and how can businesses proactively address these to enhance their governance structures and practices?

Good corporate governance involves effective management of conflicts of interest, appropriate accountability, and robust oversight by the board. These factors are the foundation of a well-managed, ethical, and sustainable organisation. These essential elements form the bedrock of an ethically sound and sustainable organisation, serving as the cornerstone upon which the entire corporate structure and operations are built. However, there are common pitfalls that can hinder the effective implementation of good corporate governance practices which include: 

  • Lack of diversity at the Board – In our Boardroom Diversity 2021 study, 61 percent of respondents in Singapore say they are concerned about the lack of diversity in their boardrooms. Boards play a pivotal role in decision-making, strategy formulation, and oversight, and diverse perspectives contribute to a more robust evaluation of challenges and opportunities. When there is a lack of diversity, especially in terms of background, a narrow range of perspectives prevails. Homogeneous boards with similar perspectives, experiences, and decision-making approaches may overlook alternative strategies, innovative approaches, or potential risks. A lack of diversity can also perpetuate biases within the decision-making process, as individuals may unintentionally favour viewpoints that align with their own backgrounds and experiences. The nominating committee plays a vital role in promoting diversity within the board and should actively incorporate diversity considerations into the board recruitment process.
  • Poor “tone from the top” reinforced by an “echo from the bottom” A poor tone from the top, set by the leadership team, may lead to unethical practices, eroding trust amongst stakeholders. This is often exacerbated by an "echo from the bottom." When leadership fails to set a strong ethical example, it creates a ripple effect throughout the organisation. Addressing this challenge requires a comprehensive approach, involving both leadership recalibration and fostering a culture of responsibility and integrity at all levels of the organisational hierarchy. It is essential for the board, CEO, and senior management to establish foundational elements of their organisation’s culture. One such area is having effective zero-tolerance policies for certain behaviours and communicating this consistently at all levels of the organisation.
  • Lack of awareness of corporate culture – A toxic or indifferent corporate culture can foster misconduct, diminish employee morale, and undermine the long-term success of any organisation. Moreover, it tarnishes the company's reputation, erodes stakeholder trust, and can sometimes lead to legal and regulatory issues. Monitoring the pulse of the corporate culture is an integral aspect of effective governance and a crucial role undertaken by the board. Boards should be vigilant in identifying potential red flags and addressing toxic corporate cultures. They can engage in regular assessments, foster open communication channels, ensure that ethical standards are upheld, and, if necessary, take corrective actions, including leadership changes. Boards may also need to include culture as a discrete agenda item and intentionally integrate culture into discussions about strategy, risk, and performance.
  • Weak processes and procedures – Weak controls and oversight can lead to a host of issues, compromising the effectiveness and integrity of the governance framework. Robust internal controls serve as a safeguard against vulnerabilities, playing an important role in mitigating risks, preventing fraud, and providing reasonable assurance for organisations to achieve their objectives. Strengthening controls is crucial, as it not only enhances the organisation's resilience but also ensures its enduring viability over the long term. To ensure control effectiveness, organisations will need to regularly review and continuously improve the organisation's control environment.

3. How can businesses effectively balance short-term goals with long-term strategic vision to ensure sustained growth and resilience?

Whilst there is no “one-size-fits-all” strategy for integrating short and long-term perspectives, there needs to be a balance between investments in growth options across multiple time horizons and in assets that facilitate the most viable options for the long-term health of the company. Long-term investments contribute to sustainable growth, and whilst short-term gains are important, sustained success often requires a strategic approach that considers the company's longevity and resilience.

Achieving a balance between short and long-term thinking involves a strategic and intentional approach. As a start, organisations may need to move away from one-dimensional business strategies and management practices towards fostering a more adaptive and comprehensive approach. 

Business strategies as well as financial, business, and operating models should be formulated in such a way that they include diverse dimensions, including financial, operational, customer-centric, and employee well-being, whilst also accounting for various time horizons. It should also take a holistic approach that aligns corporate goals with broader societal and environmental considerations. By taking a broad perspective, organisations can strategically allocate their company resources across today’s requirements and tomorrow’s opportunities.

4. What do you believe are the most critical skills and qualities for professionals, particularly in the advisory space, to cultivate to thrive in an ever-changing business environment?

According to the World Economic Forum’s Future of Jobs Report 2023, top skills which are relevant to professionals include cognitive skills, engagement skills, and management skills. Acquiring these competencies is vital for professionals seeking to navigate and excel in the current business landscape.

Furthermore, professionals should also cultivate additional essential skills such as digital dexterity, an innovative mindset, learnability and adaptability, as well as mindfulness and appreciation. 

  • Digital dexterity: The ability and desire to leverage existing and emerging technologies for better business outcomes. It encompasses digital literacy, adaptability to technological changes, and the capacity to navigate a rapidly evolving digital landscape. Digital dexterity is crucial for employees to remain productive, contribute to digital transformation initiatives, and stay competitive in a technology-driven marketplace.
  • Innovative mindset: An innovative mindset involves the inclination and ability to think creatively, generate new ideas, and approach challenges with a solutions-oriented perspective. With this attitude of searching for and delivering better outcomes every day, employees can help their organisations stay ahead of the curve and contribute to problem-solving, product development, and process improvement. 
  • Learnability and adaptability: Learnability involves being open to continuous learning, seeking opportunities for growth, and adapting to evolving job requirements. This is a critical success factor for organisations, as employees who can quickly adapt to new tools, software, and digital processes can help their organisations innovate and stay ahead of the curve.
  • Mindfulness and appreciation: In the workplace, business leaders and employees who practice mindfulness are often perceived as calmer, composed, and emotionally intelligent. Mindfulness can enhance employees' focus, reduce stress, and lead to more thoughtful and informed decision-making. Cultivating mindfulness also contributes to a positive work environment and supports overall mental health of all within the organisation.

5. With your experience working with businesses in both Singapore and Indonesia, what are the key considerations for businesses looking to expand and operate successfully in the Southeast Asian market, and how do you navigate the unique challenges posed by diverse cultural and business environments in the region?

Southeast Asia is a melting pot of cultures, languages, and belief systems and offers many opportunities. However, the diverse ethnicities, religions, and histories in Southeast Asia require a nuanced understanding of local customs and traditions, which in turn influence consumer preferences. 

Southeast Asia is also a region characterised by diverse political systems – each country has its own unique political structure. Hence, as businesses look to expand and operate regionally, they will need a comprehensive understanding of the regulatory environment and political situation. Factors such as industry regulations and standards, as well as tax regulations, play a crucial role in shaping the business framework for these foreign businesses. 

Furthermore, the impact on existing operational processes must also be carefully assessed when entering a new international market. The state of infrastructure development may affect operational and logistical aspects. Businesses may need to evaluate their distribution channels and review existing marketing strategies to align with the characteristics of this region. 

Other considerations to look at are the potential challenges and opportunities in talent acquisition and human resources. Businesses intending to expand into this region will need to consider the compliance intricacies, such as complying with different employment laws and regulations, including hiring practices, termination procedures, and working hours, as well as the cultural nuances—differences in communication styles, work expectations, and business etiquette. Developing work processes that account for these subtleties and cultural intricacies is essential for a successful expansion strategy.  

6. As a judge for the SBR National Business Awards and International Business Awards, what specific qualities and achievements do you look for in businesses to distinguish them as award-worthy?

Investors and stakeholders are increasingly scrutinising companies’ ESG efforts as a broad measure of performance. In addition to this, investors and stakeholders are also evaluating businesses based on their success in meeting customers’ expectations amidst new competitive pressures. 

Equally critical is the need for businesses to reinforce the alignment between business and social strategies. This can be achieved by transparently communicating progress to employees, customers, and other key stakeholders. It is also seen when businesses align the values of their brand with ESG principles, for example, when businesses make ethical and sustainable products more affordable by improving supply chain efficiency and reducing waste, or when businesses encourage customers to make more sustainable choices by offering incentives such as discounts or loyalty rewards. By making it easier and more rewarding for consumers to choose ethical and sustainable products, these businesses will help drive positive change in the market.

Businesses’ social sustainability strategy should also be integrated with the company’s overall long-term business strategy. Beyond recognising the impact of external ESG developments, it is imperative for businesses to understand how these factors can influence their overall business strategy, particularly in addressing social issues. The “S” in ESG considerations should be integrated into all strategic and financial processes, becoming a shared decision-making criterion.  

Finally, in light of evolving consumer preferences and the widespread adoption of technology, businesses are strategically exploring opportunities to diversify their service offerings across multiple platforms. Businesses that prioritise adaptability and diversification are better positioned to thrive in the face of change and emerging opportunities.

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