July 23, 2013
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Good Morning. It's a pleasure to be with you today.
I appreciate the chance to share my thoughts with you.
Most of you have a special understanding of business, because you created one.
You turned an idea into an enterprise.
You are members of a group of entrepreneurs around the world whose success drives world economies.
You will play a huge part in lifting us out of the worst recession in memory.
I have a personal appreciation of what you have accomplished and the challenges you face.
In the early 1980s, I was consulting with a small technology company in the U.S. called II Morrow.
It was started by a group of engineers who figured out how to adapt the receivers used in marine navigation equipment to aircraft.
I know the thrill of helping a company become the first to market with a breakthrough technology.
And I know the uncertainties and the challenges they face.
Like many of your companies, capital at II Morrow was tight, and it was a lean operation.
I remember the engineers soldering the circuit boards at work and then taking them home to wash them in their own sinks.
We were investing everything we had in R&D but unsure of how the product would be received in the marketplace.
And when our single product was a success, I saw how quickly competitors came in to compete for share in a segment we created.
Our breakthrough product was initially priced at $2,400 but dropped to $1,000 in less than a year.
With other aggressive entrepreneurs following our lead, we had to stay sharp and move quickly to hold our market lead.
That was both an exciting and a scary time.
We took the company public in less than four years, and shortly thereafter, I was named CFO.
After the initial public offering, our start-up was purchased by UPS and I decided to join them.
That was 23 years ago.
I could never have predicted that I would end up being the CEO and Chairman of a company of employing more than 400,000 people.
But I learned invaluable lessons as an entrepreneur running a small business, and they remain with me today:
Lessons about
Many of you in this room have your own stories of dramatic and inspiring growth.
Companies that may have started in the back streets of Singapore are now housed in skyscrapers around the world.
Conversations that were once held around a kitchen table are now being held in boardrooms.
For every smaller company that becomes a giant company, there are thousands that stay in the small to medium range.
You form the backbone of economies here and around the world.
It's said that the real measure of both people and organizations is the size of their dreams.
Technology and globalization have enabled small and midsized companies to dream in dimensions that were inconceivable a decade ago.
But as the economy recovers, the question is: which companies will capitalize on their advantages to position themselves for growth?
My answer to that question: the winners will be the companies that think big.
In my short time with you, I want to explore what thinking big means in the next wave of global growth.
I'll do that from three perspectives.
First, let's look at the realities of our climb out of recession.
To gain a better understanding of the needs and concerns of smaller companies in this region, UPS conducts an annual study called the UPS Asia Business Monitor.
We surveyed 1,200 SME leaders in 12 countries from diverse industries, such as healthcare, electronics, sporting goods, house wares, and garments and textiles.
This survey explores the factors directly impacting your competitiveness.
There were a few key findings. Understandably, managing during the downturn was top-of-mind in the survey results.
Participants said their most immediate worries were declining sales orders, decreasing cash flow, debt, and high business costs.
The participants told us they were confident that the worst of the downturn is behind us.
And finally, they also told us that they believed the economic recovery will be slow, and it will be difficult.
The latest statistics from Singapore's Ministry of Trade and Industry support our finding that recovery will be uneven.
Asia will see fewer orders from the U.S. and Europe, and the consensus for the near term is cautious optimism.
Virtually all of the small companies we surveyed said they are looking for more government support, especially access to financing.
And governments are stepping up.
Earlier this year, governments across Asia pledged a combined $700 billion in stimulus spending, and Central banks slashed interest rates to spur growth and cushion the blow of plunging export demand from North America and Europe.
The Singapore government has also taken action.
It has increased financial assistance efforts and manpower re-training to help businesses cope.
Many of these measures are aimed at helping small to mid-size companies.
So the economic reality is that the recovery will be slow and uneven at times, but we seem to be headed in the right direction.
Let's turn to the second topic: the advantages that Asia's small and medium sized companies have in finding their way back to consistent growth.
One enormous advantage you enjoy: this region is the epicenter of global trade.
It's where infrastructure, technology, and global partnerships come together, fueled by a well-educated workforce.
The region is also developing some of the world's most enlightened trade policies.
One of the most promising is the Trans-Pacific Strategic Economic Partnership Agreement. It could be a step toward an eventual Free Trade Agreement of Asia Pacific, which would involve all 21 APEC countries.
That would be a tremendous development for world trade and provide companies like yours access to new markets within Asia.
Most experts agree that Asia is positioned to be the leader in a global economic rebound.
There are already indications that you are moving faster toward recovery than many other parts of the world.
A quick look at some numbers shows how important small and medium sized businesses will be in the upturn.
In China, for example, SMEs account for more than 68% of China's exports, and 75% of the new jobs created every year.
In Singapore, smaller companies constitute 99% of all businesses, and employ 6 out of every 10 workers.
Doing business in this part of the world provides a solid platform for growth.
It is the ideal region for you to capitalize on what I believe are four key advantages you enjoy.
First, your size gives you the flexibility to adapt quickly.
In large organizations, decisions often have to work their way through decision-making layers.
That complexity can create some formidable barriers to rapid change.
In smaller organizations, you can reach a consensus quickly, because all the key decision makers are probably just down the hall. So there is a much shorter organizational distance between idea and action.
You can also see and move into growth niches that large organizations may not see or may feel are too small to enter.
That kind of focus and agility is a tremendous advantage in an economy where new opportunities will emerge quickly.
Second, you enjoy an advantage of customer focus.
By nature, companies of your size have a smaller customer base.
This allows you to develop more personal relationships with your customers.
You know how to connect and build loyalty with customers.
That connection means you can respond quickly to problems and changing needs, and provide personalized service that is often a challenge for large companies.
Third, you can be innovative, constantly producing new products, new business processes, and new ways to gain efficiencies
You're not afraid to try new things.
And this is important: you can fail fast. That has never been more important than right now. When you see an idea isn't living up to its promise, you can quickly readjust and focus on the next promising idea.
Your final advantage: you have access to technology and logistics partnerships that can give you a presence anywhere.
This may be your most significant advantage, because it changes the game for you.
It simply didn't exist for smaller businesses 20 years ago. You can think big, and compete big without having to create the global infrastructure to actually be big.
These partnerships, wired with the most powerful information technologies available, allow small business owners to focus their time their money, and their people on doing what they do best:
That is a huge advantage.
In summary, you have tremendous advantages:
So, where do you go from here?
That brings us to the final, and most important, point:
How do you leverage those advantages globally?
Economies move at their own pace.
And there is nothing any of us can do about that.
But smaller companies can use their advantages to gain market share now rather than simply wait for the economy to improve.
During a downturn, organizations tend to focus on cost-cutting, and divert attention from the very things that drive future growth.
But the best & strongest companies realize that now is precisely the time to stay focused on the future.
Now is the time that companies should be spending more time than ever with customers - to understand their needs, and to learn how you can impact their performance as they deal with their own downturn issues.
Now is the time to communicate clearly with employees - to make sure they know where the company stands, and to insure that they know the role they will play in future success.
Now is the time to continue to invest in your core capabilities such as new products, R&D, and information technology.
Now is the time that every company should look at their entire operation for ways to create greater efficiencies.
Now, most importantly, is the time for small and medium size companies continue to build alliances - partnerships that leverage advantages and expand the potential for growth.
Our Asia Business Monitor Survey results indicate that companies are, in fact, proactively using the downturn to position for the upturn.
Almost half of the respondents in our survey said they are exploring higher value-added products and investigating new markets.
I have no doubt that some of the most innovative new ideas and business applications will come from Asian small businesses, including those in this room.
Let me share an example of one your peers thinking big... Benz Motorsports, located here in Singapore.
Benz has partnered with UPS and truly is leveraging the way it operates its business to gain a competitive advantage.
Benz is Singapore's exclusive distributor of Italy's Tony Kart products - the premium brand of go-karts used by many of the top racers.
Benz uses UPS to import go-kart chassis, engines, parts and accessories, and we store them at our logistics facility here in Singapore until Benz needs them.
One of our technology solutions is called UPS Quantum View.
That technology provides total visibility for the shipments throughout the delivery process.
So what does all of that mean to Benz?
How does it benefit by leveraging the advantages I've discussed?
First, our logistics facility here means Benz does not have to worry about creating and managing warehouse space.
That significantly reduces its costs, something that is critical to every business all the time, but even more so in this economic environment.
Second, the Benz cars and accessories are delivered just-in-time via UPS from the factory in Italy to Singapore when orders are received.
Because of their partnership with UPS, the team knows that it will get what it needs - overnight, regardless of what happens, or where they are.
Finally, it can monitor its inventory and know exactly where everything is, at every moment, in the supply chain.
Benz can continuously update its customers on the delivery status, and tell them with certainty when their products will be delivered.
That predictability, and the reliability of having a global partner like UPS with a proven track record, is enormously advantageous to a small business like Benz.
It's just one example.
But it illustrates the power of combining location, organizational and partnership advantages to create new possibilities for growth.
In closing, I believe that small and mid-size businesses in Asia have a tremendous opportunity ahead of them.
In the past, small business owners often ran into the realities of operating in a big world.
Today, the environment has shifted... dramatically.
Vision, strategy and confidence can be applied globally regardless of size.
Your companies can compete and win in markets around the world, and compete against anyone.
Certainly, winning today means confronting the worst recession in memory.
But, recessions end, economies heal, and consumption returns.
Pick any point in history, and you'll see that times of great uncertainty are always times of great opportunity for the companies that can see beyond the confusion.
It's time to invest... to plan... to position, and to move forward... with your head up, not down.
It's time to think big!
Thank you.
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