Slowly, steadily and surreptitiously, a crippling disease is creeping into Singapore’s flagship bearersand turning them into dinosaurs of the modern age. The Great Singapore Bloat is exposing an underbelly that is becoming the blight of a corporate success story that was the envy of many. Singapore Airlines is the latest company to be hit by this disease, a condition common in companies that have become bloated and find it difficult to move fast in a world where their business models are threatened by dropping profits. Neptune Orient Lines fell sick long time ago, couldn’t stay fit and was sold off to a French group, CMA CGM. Singapore Press Holdings is finding it difficult to manoeuvre a tight corner as the age-old media business model is being destroyed by an online world that gives readers so many choices. (Read related: Future of SG journalism)
SIA is the latest to disappoint. Its latest financial results revealed a net group loss of $138 million in the most recent quarter. That the crown jewel of Singapore and pride of Singaporeans has gone into the red was unthinkable as it used to punch above its weight with a smart and shrewd leadership that made a mockery of the big-is-beautiful mantra. From the early 1970s and with just 12 aircraft, SIA outdid the competition from bigger airlines and became the talking point of the travel industry. Today it is struggling to fight off competition from budget airlines and those from the cash-rich countriesin the Middle East.
As it grew bigger and bigger, SIA forgot how to compete in unconventional ways. It is 16 years since a brash upstart, AirAsia, headed by a 37-year-old upstart, took to the skies to shake up the firmament. Yet, instead of competing with the new airline from Malaysia, SIA tried to shut out Tony Fernandes and team from landing in Singapore. Even a bus service that Fernandes introduced to ferry passengers from Singapore to the Senai airport in Johore was thwarted.
SIA’s foray into the budget airlines business was slow and hesitant with a clear decision to take a full stake in Tiger Air only happening last year and allowing Scoot to go long distance only next month. A nimble, lean company would have been faster on the draw. The Great Singapore Bloat prevented SIA from moving faster.
The Neptune Orient Lines story shows a Singapore icon, started in 1968, rising to become a world beater in shipping, even when the industry went into a depression in the early 2000s. In 2003, it raked in a record profit of US$429 million. Four years later, the global financial crisis hit and it was a slippery slope since then with the company not being able to do anything right. It was a company caught in a crisis and madea series of leadership changes to no avail. In eight years it saw four CEOs come and go — with former chief of defence force, Ng Yat Chung, taking over in 2011. Six years later, he oversaw the sale of a Singapore world beater to a French company amidst bitter criticism by Singaporeans. Again, it was the now becoming familiar Great Singapore Bloat narrative with a brand growing too big and not knowing how to manoeuvre itself out of stormy weather.
Singapore Press Holdings had a charmed existence with government rules against competition providing a safety blanket for the company to prosper. But then the disrupter of things is not going to play by government rules and the competition sneaked in via the rule-breaking Internet to eat the media giant’s lunch. Profits have been declining and SPH appears clueless in defending its turf. Its biggest bugbearis a leadership that is fearful of taking daring decisions that will affect its standard bearer, The Straits Times. The paper is the cash cow and going digital aggressively can only mean revenues from ST will be hit hard.
All three companies have been exposed because of a triple whammy of a digital revolution, an uncertain world economy and a clueless leadership. Singapore Inc urgently needs leadership teams that are nimble and daring to cut themselves off the legacy baggage that is weighing the Singapore brand down.
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