in my previous blog entry i described how we started our journey to transform our organisation in order to create a more adaptive, dynamic, lean and ethical organisation. the model we adopt is based on beyond budgeting principles.

i would like to share a little bit on what beyond budgeting is all about.

the official beyond budgeting roundtable (BBRT) website http://www.bbrt.org/ describes beyond budgeting as follows:

there are 12 principles associated with the beyond budgeting model. the table below lists and describes each principle:

Leadership principles
[table principle|description
Values|Govern through a few clear values, goals and boundaries, not detailed rules and budgets
Performance|Create a high performance culture based on relative success, not meeting fixed targets
Transparency|Promote open information for self management, don’t restrict it hierarchically
Organization|Organize as a network of lean, accountable teams, not around centralized functions

There were two articles in The Star yesterday that caught my attention with regards the need for Malaysia to move towards a more knowledge based, value add economy / society.

The first one was written by Steven C M Wong of ISIS:
http://biz.thestar.com.my/news/story.asp?file=/2009/10/19/business/49131...

many parents like me often raise our arms in anguish over the education system in malaysia. although not very common place, i'd venture to say that many urban parents feel that the current public education system in the country is not designed to produce youths who can create value for our future.

consider the workplace: how many employers would generally prefer recruiting graduates from overseas as opposed to local grads? what are the average chances of being hired if you are a local grad versus an overseas grad?

fluency in english is only one aspect of the capabilities sought here. more importantly, employers seek graduates who have the the confidence to speak, and possess clear mental thought processes when faced with unusual issues, or problems.

much of the blame for the lack of competitiveness of our local graduates lays squarely at our local education system.

this is why those who can afford it, will likely send their kids to private schools.

but what about the rest of us who cannot afford to do so for all our children?

this is our anguish.

Tan Sri Wan Abdul Aziz Wan Abdullah - the secretary-general of Treasury, Ministry of Finance, Malaysia wrote in The Star on 14 September 2009 in relation to Redefining Malaysia's Growth Model.

In it, he writes about the need to address new areas of economic growth - to move away from low value economic activities and reliance on low cost labour. He mentions a number of policy areas, but most importantly is our direction on human capital. Some excerpts from the article:

Now, we are at a critical juncture in our economic development path. While the input driven model was successful in transforming the Malaysian economy, there are now signs that export value-added is stagnating and investment by and large, is not contributing to the widening nor deepening of the product mix.

Depending too heavily on the external sector now is no longer an option. It is also not serving to increase domestic value-added through backward and forward linkages. Furthermore, investment is not building research capacity and domestic innovation capability.

In addition, companies operating in Malaysia are too dependent on cheap and low-skilled foreign labour, especially in the manufacturing and services sectors. Private companies are still reluctant to innovate and invest in labour saving technology and new production techniques. These conditions have led the our economy into the middle-income trap.

Transforming from the above model would require significant upheavel and reforms in a number of areas. The middle income trap that is mentioned above is very dangerous because it is comfortable. Unlike the low levels of poverty that drove our industrial model, the current middle income levels are considered satisfactory for many. Hence, moving out of this comfort zone is going to be very difficult.