Summary: With purpose and entrepreneurial skills, Lee and his colleagues transformed an island of dire prospects into one of the world’s most powerful and promising city-state

Today, Mr Lee Kuan Yew – widely credited as the architect for the success of Singapore – has passed away. In his lifetime, there has been many other political leaders who shaped the world’s history. They were giants like; Deng Xiaoping who oversaw the economic transformation of China; Helmut Kohl who brought about the reunion of Germany. But these leaders came from large countries with a strong sense of identity – were blessed with resources and talent at their disposal. This stands in contrast to what Lee had, when Singapore was booted out of Malaysia in 1965. At that time, there was no precedent for a city-state model and the consensus then was: Singapore will not last long.

Very quickly, Lee and his colleagues had to innovate in order to find ways and means to help Singapore survive in a fast-changing world. They no longer had the backing of any major power, or access to a hinterland so they could not simply follow any political ideologies which were shaping national developments of the day. 1965 was still the era of the Cold War with the world firmly divided between Communism and the Free World. As a group, they had rejected communist ideology but it was still early days in the evolution of the free market economy. So Lee and his colleagues had to operate almost like ‘entrepreneurs’, take different ideas from the world and design a completely different model more suited to the island’s development. In a sense, Singapore became the world’s first ‘city-state startup’.

Meritocracy, the key to success

Many business leaders can easily identify with Lee’s doctrine of meritocracy. For the private sector, meritocracy is simply common sense as it drives performance but for many nations it is almost never adopted as a core tenet for governance. Many prefer to govern on the basis of identity; then provide basic levels of security and opportunities for minorities. But in Singapore, brilliant minds from minority races can rise up to the highest levels in government. The current Deputy Prime Minister and Finance Minister of Singapore is Tharman Shanmugaratnam – whose grandfather was from Urelu in the Jaffna district of Sri Lanka. Shanmugaratnam is widely esteemed as an Asian leader in economics and finance. During the last search to seek a new Managing Director for the International Monetary Fund: global news agencies such as the BBC listed him as a possible candidate to lead the global institution.

Lee and his colleagues strongly believed that providing the best conditions for talented individuals to succeed is the only way – any nation can thrive in the modern age. This belief was one of the reasons why Lee and his colleagues were booted out of Malaysia because they had argued for a political system in favour of meritocracy. Therefore, for the new ‘city-state startup’, they designed new models of national mechanisms to allow talented individuals to rise up regardless of race, language or religion. This was easier said than done because in 1965, Singapore was a multi-racial society with divided loyalties. Many Chinese then, still considered Singapore as a temporary home and China as the motherland. Other migrants shared similar sentiments. Just like any company with a diverse talent pool, Lee had to forge a shared identity to convince them to stay and build their future with the new nation.

Giving everyone a stake in the future

Technically, when a person is born into any country, his/her rights as citizens gives them a stake. But unless you own land, you are not really considered a substantive stakeholder. In land-scare Singapore; with widespread poverty; it was not possible to give everyone a piece of land. So Lee and his colleagues came up with the idea of allowing people to own apartments in public housing through monthly installments instead of leasing. This gave large segments of the population a real and tangible stake in the country as everyone can now own a property with a value that the government will guarantee and improve on. This worked wonders as it was akin to giving shares to every employee, giving them a real reason to fight for.

A pragmatic vision

Singapore, as a small island had nothing much to offer: except the sweat of its people and the depth of its seaport. The unexpected early departure of the British Army in 1971 was not simply a security problem but an economic one as the military bases contributed about 20% of Singapore’s Gross National Product. Singapore then went on a rapid industrialization programme to convert existing bases for commercial use. Lee and his colleagues also decided to hedge their bets with multi-national firms seeking low-cost labour to build products for the world. While other Asian nations decided to protect their industries and adopt protectionists policies, Singapore opened her doors to the world.

Lee Kuan Yew then took on the task of being the salesman for his country. Wherever he went, he promoted the image of Singaporeans as a disciplined and efficient workforce who will be reliable employees for global companies. But making sure that this happens was not easy. Singapore had a history of turbulent relations between employers and unions. Lee Kuan Yew himself rose to power because of his close ties with trade and student unions. But he knew that he had to be pragmatic in order to ensure the livelihood of his people. Lee’s government reorganised the unions and created a tripartite body where government, employers and unions have a forum to discuss and overcome disputes. Lee then put in place tough laws to prosecute anyone who will upset the stability of Singapore with an illegal public strike. During the time of these major changes, his persuasiveness and results-oriented approach won him successive elections during his term as Prime Minister. Today, many of the world’s Fortune 500 companies have presence in Singapore and continue to invest in high-value manufacturing and research facilities.

But Lee and his colleagues did not just stop there. They knew that eventually labour costs would rise and some multi-national firms might leave and set up shop elsewhere. So in addition to ensuring good educational institutions to upgrade the skills of the people; Lee asked civil servants to become entrepreneurs so as to build large government-owned enterprises. These enterprises were given the mandate by Lee to be competitive internationally so as to guarantee a stake for Singaporeans. Today, these companies such as Singapore Airlines, Capitaland and Singtel are among the best known global brands.

Long-term Succession Planning

Singapore is probably the only nation in the world with an elected government that is openly talking about recruiting and preparing the next team of leaders – fifteen years before that group even assume office. Most political parties are busy fighting elections on a year-on-year basis and are only familiar with one strongman. But because a city-state model is inherently more fragile, long-term planning is a trait that is typical of Lee and his ‘entrepreneurial’ colleagues.

Lee’s party, the People’s Action Party(PAP) does not act like a typical political party that is simply focused on fighting to win elections. The core purpose of the party is about leadership renewal for Singapore. So the party does not necessarily draw candidates from among its ranks. The party has a long and extensive talent procurement programme, constantly on the lookout for promising candidates to serve in political office. After the candidates are reviewed internally, these candidates are then invited to a ‘tea session’. When the candidates fit the profile, they are then placed on a standby list. So once elections are near, these candidates are then notified and called to stand for elections. In a typical election cycle, about 25% are new candidates and they come from three categories: the party, the civil service and the private sector.

Lee and his colleagues are so concerned about having bright and younger leaders in government – that in every election cycle – about one-fifth of cabinet ministers retire upon request by the Prime Minister. This innovative practice is extremely hard for many political parties in the world to emulate. But like clockwork, veterans of PAP who have served diligently, step down to make way for younger colleagues. Lee Kuan Yew himself stepped down as Prime Minister in 1990 – at the height of his power. This process ensures that the Singapore government will always have a balanced group of cabinet ministers from a diverse age group. It has senior colleagues who are familiar with the art of public engagement and the finesse of policy making while the young ones bring in fresh perspectives.

To ensure that Singapore continues to recruit the best and the brightest to join the ranks of government; Lee even staked his personal reputation to support the need for high ministerial pay. The pay for Ministers is pegged to the median income of the top 1000 earners who are Singapore citizens but with a 40% discount as a symbolic nod to the ethos of public service. Till today, even after a further downward adjustment of about 30% – the consequence of public displeasure from the last election – the ministers of Singapore are still the highest-paid political leaders in the world.

Lessons for Asian Business Leaders

Some people deride the city-state and call it the ‘Singapore Inc’ since it is run so much like a corporation. But the results speak for themselves: Singapore has been consistently voted as one of the most competitive nation in the world. It has one of the world’s lowest unemployment rate and more than 90% of the population own a property. It has the third-highest per capita income in the world; the world’s fourth-leading financial centre. Even though it is one of the smallest nations on earth, it has a disproportionate amount of global influence. Singapore is frequently invited to G20 summits and to moderate global forums organised by the IMF and the World Bank.

What Lee and his colleagues have proven is this: success is there by design. Here are 5 learning points for Asian business leaders based on the Lee Kuan Yew Way:

1) Make meritocracy and not profit, the key tenet

It is surprising to say this but many Asian companies are not very clear on where they stand on the issue of meritocracy. Western firms go all out to create an equal working environment, but many Asian firms still come across as having policies that prefer a particular race or linage. What Lee has proven is, once meritocracy is guaranteed – you can unleash better performance and foster a higher sense of dedication to the cause.

2) Create a tangible sense of ownership

The way to get employees to fight for you is not simply to offer more pay. The reason why startups like Google and Facebook were able to attract the best of their industries is because they offer stock options. The Lee model proves that once Asians know that they too have a stake in it – even if they come from migrant shores – they can identify with it and give their lives to achieve something great. So even if you are not a listed entity, you can start to offer options to employees where they can have a stake in the business. There are a variety of options available and if politicians like Lee and his colleagues can be creative, so can you.

3) Don’t simply follow trends, think about your people

Lee Kuan Yew and his economic czar, Goh Keng Swee did not simply follow the economic trends of those days – adopting a more protectionist stance in economic policies – because they thought long and hard about how to secure jobs for Singaporeans. They had to make difficult decisions and be pragmatic so that Singaporeans can have a decent shot at being successful. So when you look at business trends, throw in the dimension of what does it mean for your people. How will they cope with it? Once you add in the equation for people, then you will be a lot more realistic in your decision-making. When Steve Jobs wanted to transform Apple upon his second return; he reviewed carefully what the people at Apple can do and not what they could do. He cut down on products so as to focus on the Mac and set the stage for Apple’s revival because he knew his people well.

4) Always seek to control your destiny

Lee and his colleagues were always looking at the changes of the world and finding ways and means to control their destiny as the winds change direction. So when they decided to start building their own enterprises, they did not start from ground zero. They had learnt a lot from multi-national firms and the Singapore government had talented individuals serving in the civil service. So likewise, if your company has been a distributor or manufacturer, you have to constantly think about how to control your destiny. Start finding ways to increase value through innovation or build your own brands before you lose that contract and then everything is lost forever.

5) Long-term success comes from succession planning

Like Singapore – the ‘city-state startup’ – all businesses are fragile entities and the only way to ensure longevity is not to take things for granted. It is a pity that many Asian companies do not wish to talk about succession planning as it is still considered a taboo. But it will happen anyway and if it is too abrupt, it will threaten the good work that you have done. Look at your current management team; review the average age and composition. Management teams today will benefit from a more diverse group to better deal with challenges of the modern age. Then look at your staff, who are those that you can groom? In the Asian context, too many organisations achieve success due to charisma and personality until the next tier of leadership comes in and falters. However, Lee has proved that the best way forward is to establish a strong framework for succession; then passing on baton at the right moment to ensure organizational continuity.

Lee Kuan Yew has been a polarizing figure for his generation but because of him and his colleagues, an insignificant and diverse people can hold their heads up high. From a start-up nation, it is now a significant player on the world’s stage. If you were to live to 91 years old, hopefully you too can say that you have done your part in enabling your company to make the world a better place.

“In the end, my great satisfaction in life comes from the fact that I have spent years gathering support, mustering the will to make this place meritocratic, corruption-free and equal for all races – and that it will endure beyond me, as it has.”
Lee Kuan Yew – One Man’s View of the World

This article was first published in Ceylon Today on 17th of September 2013. This has been republished today to celebrate the legacy of this incredible Giant of History. Singaporeans can all stand tall because of his ideas. He and his colleagues created a fair system that enabled entrepreneurs like myself to thrive. His ideas, in shaping a people, a system of governance, has been a source of inspiration for our firm’s methodologies on effectiveness and organisational longevity. My partners and I have a lot to be grateful for Mr Lee Kuan Yew and we thank God for the life of this man and his ideas.

Graphic: Consulus