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1
About The Editors

Nicholas H. Barker is the Chairholder of the Yayasan Tun Ismail

Mohamed Ali Berdaftar (YTI) Professorial Chair in Leadership at
the Universiti Tun Abdul Razak (UNIRAZAK) in Malaysia. The
YTI Chair is funded by the Permodalan Nasional Berhad (PNB).
Professor Barker is Senior Leadership Education Specialist at the
East-West Center in Honolulu, Hawaii, where he has designed and
directed leadership programs for over two decades. He is also Asia
Pacific Director of TomorrowToday Global, a consultancy firm
specializing in leadership, global trends and strategic foresight; as
well as Visiting Professor of Leadership in the International MBA
Program at the University of Tsukuba in Tokyo. A cultural
anthropologist by training at Cambridge University and St.
Andrews University, Dr. Barker has taught in universities around
the world and worked with senior business leaders from over 75 countries in a wide range of
industries and multinational corporations, as well as the World Economic Forum, United
Nations and Prime-Minister’s Office in the United Arab Emirates. His family manufacturing
business in the UK, Kentmere Packaging, was founded in 1906. Dr. Barker works with
traditional deep-ocean navigators in Hawaii and serves on the Global Education Board of the
Polynesian Voyaging Society.

Nik Rosnah W. Abdullah holds a DPhil from Sussex University,

UK. She was a recipient of a British Scholar Award (2000), jointly
awarded by The Foreign and Commonwealth Office of the UK,
The British Council, and the Department of Trade and Industry,
Britain for her DPhil works, and later a coveted Fulbright Scholar
Award (2005). She holds dual distinguished fellowships: as Senior
International Fellow at Johns Hopkins University, USA (2005)
and as Senior Fellow at Lee Kuan Yew School of Public Policy,
NUS Singapore (2008). Her areas of expertise include public
sector reform and regulatory reform in the health sector. She was
the Executive Director of the International Institute of Public
Policy and Management (INPUMA), University Malaya.
Currently, she is a Professor at Tun Abdul Razak School of
Government (TARSOG) at UNIRAZAK, and a member of the International Development of
Public Policy Alliance, whose headquarters is at the Russian Presidential Academy of National
Economy and Public Administration (RANEPA), Moscow. She was the President of the
UNIRAZAK Case Writers Club (2015-2017) and has worked collaboratively with the Ministry
of Federal Territories and Kuala Lumpur City Hall.

2
Published by

Universiti Tun Abdul Razak Sdn Bhd (UNIRAZAK)

195A, Jalan Tun Razak, 50400 Kuala Lumpur.
Tel: +603 2730 7000
Fax: +603 2730 7070
Email: crm@unirazak.edu.my
Website : www.unirazak.edu.my

Published in 2018

eISBN 978-967-13759-6-9

Copyright © 2018
Universiti Tun Abdul Razak (UNIRAZAK)
Yayasan Tun Ismail Mohamed Ali Berdaftar (YTI)

All rights reserved. No part of this publication may be reproduced, stored in a retrieval
system or transmitted in any form or by any means, electronic, mechanical,
photocopying, or otherwise, without the prior permission of the publisher.

3
Contents
Foreword by Chief Executive Officer of Universiti Tun Abdul Razak………………..5

Foreword by The Vice Chancellor of Universiti Tun Abdul Razak…………………...6

Acknowledgements…………………………………………………………………...8

Preface……………………………………………………………………………….10

PART 1 Introduction……………………………………………………………….16
Crisis Leadership and Resilience……………………………………………………..17

PART 2 Policy Intertwined…………………………………………………………30

Kuantan Mars: The Red Mud Dilemma………………………………………………31
Lahad Datu: We Know the Truth……………………………………………………..46
Looming Storm at Satyam……………………………………………………………55

PART 3 Business Narratives………………………………………………………..63

On Your Smart, Get Set, Go!........................................................................................64
Sightless Healing: The Case of Blind Massage Station……………………………….79
Strategy for Profitable Growth: A Case of Two Generations…………………………84
Uber: Who is the Boss?.................................................................................................93

PART 4 Potential Flashpoints…………………………………………………….104

Living Up to Expectations…………………………………………………………..105
I Could Lead a Horse to Water………………………………………………………116

PART 5 Leadership: An Enigmatic Concept…………………………………….122

From Sejahtera to Maqassid: The Journey of the Jaguh Kampung………………….123

PART 6 About the Authors………………………………………………………..138

4
FOREWORD
As history has shown us time and time again, nowhere does the mantle of leadership
face its ultimate test than during times of crisis. Under such stress testing brought about
by a crisis, resilience forms the sinews that steadfastly keep leadership from fraying
and the organisation from falling apart.

Modern organisational leadership today faces a unique set of challenges brought about
by the contradictions of a post-globalised world. Our world is, on one hand, hyper-
connected and geographically accessible, yet on the other, dangerously fragmented by
rising nationalism, partisanship, and trade rivalry.

It is against this backdrop that Crisis Leadership and Resilience was conceived. It was
also motivated by the dearth of academic literature in such topics that allows students
to use real-life situations, especially in the Malaysian context.

At UNIRAZAK, we believe in spreading the greatest good to the greatest number of

people. It is our aim to curate knowledge and share this with as many of our
stakeholders as we possibly can.

We also believe in integrating real-world experiences into what students learn in their
classrooms. A tool we consistently use is the case study, which facilitates two-way
learning and engagement between our faculty and our students. We find case studies
particularly useful for learning in the area of leadership, one of our fields of expertise
at UNIRAZAK.

To help us act on our beliefs, we are fortunate to have the backing of Permodalan
Nasional Berhad (PNB) for the Crisis Leadership and Resilience project. Through
learning, financial, and moral support via the Professorial Chair of Yayasan Tun Ismail
Ali (YTI), PNB has enabled UNIRAZAK to curate a set of case studies relating to
leadership and resilience in times of crisis.

With the endowment from YTI, UNIRAZAK is also able to share this curated
knowledge with institutions of higher learning and the general public.

We would like to express our gratitude to PNB for their valuable support and patience
in this endeavour of ours. In particular, the PNB Research Institute has proved to be a
nurturing partner in the publication of this book.

Finally, we would like to thank Professor Nicholas H. Barker and Professor Nik Rosnah
W. Abdullah for their wisdom, leadership, and resilience in assembling the various
pieces of knowledge into a coherent whole, and in doing so, making this book a reality.

AMIL IZHAM HAMZAH

Chief Executive Officer, Universiti Tun Abdul Razak (UNIRAZAK)

5
FOREWORD
In recent years, on different continents, we have witnessed earthquakes that demolished
cities, wildfires that burned thousands of acres, and climate and weather disasters that
caused appalling flooding, property damage, and death. Besides natural disasters, the
global financial crisis between mid-2007 and early 2009 caused extreme stress in
financial markets and banking systems. The impact spread from the US to the rest of
the world through linkages in the international financial system, which incurred large
losses, and millions of people lost their jobs.

On our own doorstep, Malaysia has experienced its share of significant disasters and
turbulence in recent years—the military conflict of the 2013 Lahad Datu standoff in
Sabah; the March 2014 disappearance of Malaysia Airlines Flight 370 (MH370) while
flying from KL International Airport to Beijing, China, with all 227 passengers and 12
crew members presumed dead; and later, the demise of MH17 en route from
Amsterdam to Kuala Lumpur on 17 July 2014, killing all 298 people on board. We also
endured flooding across major parts of the country in December 2014. Considered the
country’s worst flood in decades, more than 200,000 people were evacuated and over
20 killed. The flood affected more than 100 health facilities, disrupted education, and
impacted the economy as palm oil and rubber production declined sharply.

These examples, among others, demonstrate that crises and disasters occur far more
frequently than we anticipate, and they remind us of our vulnerabilities, providing
extreme tests for all involved. But more importantly, they serve as a stark reminder of
the crucial role of leadership in cultivating resilience, not just within ourselves, but also
among communities and societies so they can better prepare for, respond to, and
recover from major crises. In the words of Robert Glasser, a United Nations disaster
risk official, crises ‘vividly demonstrate that we need to redouble our efforts to reduce
the impact of such events in the future. If we do not succeed in understanding what it
takes to make our societies more resilient to disasters, then we will pay an increasingly
high price in terms of lost lives and livelihoods’.

UNIRAZAK hosts two full academic programmes on leadership, at undergraduate and

postgraduate levels. The chair in leadership at UNIRAZAK, funded by the Permodalan
Nasional Berhad (PNB), further reinforces the profound importance placed on
leadership and provides academic strength for this vital endeavour. Together, the
programmes and chair in leadership represent UNIRAZAK’s substantial investment in
talent development, designed to nurture agile, contextually responsive, and ethical
leadership for all sectors of society.

This book Crisis Leadership and Resilience, edited by Nicholas H. Barker and Nik
Rosnah W. Abdullah and jointly published by PNB and UNIRAZAK, identifies the key
elements of crisis and resilient leadership which need to be harnessed in order to
prepare effectively for future events. The cases repeatedly highlight that the key to not
only surviving events but also to prospering during hardship is human resilience. The
richness of the case analysis deepens our understanding of human resilience. More than
a set of personality traits of a leader, in the aggregate, groups, organisations,
communities, and societies can learn to develop a culture of resilience to rebound from
the effects of adversity. Crisis Leadership and Resilience provides new insights,
important lessons, and stimulating reading.

6
PROFESSOR DATIN PADUKA DR. SAMSINAR MD. SIDIN
Vice Chancellor, Universiti Tun Abdul Razak (UNIRAZAK)

7
Acknowledgements

I would like to express my gratitude to Dr. Cordelia Mason, former Dean of the
Graduate School of Business at UNIRAZAK, both for her invitation to accept the
Professorial Chair in Leadership at UNIRAZAK, which has been a great honour and
privilege, and for the vision and spirit she embodies in leadership. I am sincerely
grateful to Permodalan Nasional Berhad for supporting the educational pursuit of
excellence and the manifold opportunities it makes possible by generously funding the
YTI Professorial Chair in Leadership.

To Professor Dr. Nik Rosnah Wan Abdullah, a warm thank you for continuing the
legacy left by Dr. Mason, as well as your unwavering friendship. My grateful thanks
are also extended to the UNIRAZAK Case Writers Club, especially during the
‘pressure-cooker’ retreat, the UNIRAZAK Graduate School of Business team for their
constant support, as well as the wisdom and humility of Professor Datin Paduka Dr.
Samsinar Md Sidin, who somehow found time to contribute to this project.

Siti Balqis Mohd Saldi, the illustrious YTI research associate, navigated this initiative
to fruition. Her dedication and commitment, coupled with magnificent hospitality and
kindness in Kuala Lumpur, will always be appreciated.

PROFESSOR DR. NICHOLAS H. BARKER

8
Acknowledgements

Foremost, let me express my gratitude and appreciation to Professor Dr. Nicholas H.

Barker. It was an honour and privilege for me to be able to work with you on this
project.

My heartfelt thanks to Dr. Cordelia Mason, former Dean of the Graduate School of
Business UNIRAZAK, for your trust in me in carrying the task of the YTI deliverables
through case studies. Our numerous conversations over tea had allowed us space for
thinking. My immense gratitude to the UNIRAZAK Case Writers team, mainly
Associate Professor Dr. Leilanie Mohd Nor, Professor Dr. Mohar Yusof, Associate
Professor Dr. Dewi Amat Sapuan, Professor Ravindran Ramasamy, Nor Azami Rosli
and Research Associate Siti Balqis Mohd Saldi for all your consistent commitment and
unfaltering support, without which this project would not come to fruition.

On behalf of UNIRAZAK, may I take this opportunity to thank the Permodalan

Nasional Berhad for the far-sighted generosity in funding the YTI Professorial Chair in
Leadership. We greatly appreciate your gift to UNIRAZAK! The establishment of the
professorial chair has contributed to the substantiation of the Leadership programme at
UNIRAZAK, and provided an excellent way for a focused interaction with the wider
society on UNIRAZAK’s Leadership programme, from the undergraduate B.A (Hons)
(Leadership) right to the postgraduate degree, MBA (Leadership).

PROFESSOR DR. NIK ROSNAH W. ABDULLAH

9
Preface
The Graduate School of Business at the Universiti Tun Abdul Razak (UNIRAZAK)
has established the prestigious Professorial Chair in Leadership, under the direction
of Yayasan Tun Ismail Mohamed Ali (YTI). We are pleased to welcome our second
chairholder, Professor Dr. Nicholas H. Barker from the Leadership Program at the
renowned East-West Center in Honolulu, Hawaii, whose expertise includes crisis
leadership and resilience.

We would like to note our appreciation to Yayasan Tun Ismail Ali and the Permodalan
Nasional Berhad (PNB) for its forward-looking mission and generosity in funding the
YTI Chair in Leadership at UNIRAZAK. We would also like to extend appreciation to
Dr. Barker, who graciously accepted the appointment to the YTI Professorial Chair in
Leadership and has offered an outstanding contribution to this volume, which frames
and illustrates the twin topics of crisis leadership and resilience via two aviation case
studies. We are proud to have him at UNIRAZAK.

Discussion

The Yayasan Tun Ismail Ali Professorial Chair in Leadership aims to accomplish a
number of goals. Of these, the two most important are related to each other— the
International Case Writing Conference held on 17–18 January 2017 and the
compendium of cases. This publication gathers case studies written by different authors
on the theme of crisis leadership and resilience. The objective is to create an intellectual
platform for an interdisciplinary conversation on the role of case studies and practices,
as well as to share perspectives and experiences on leadership.

The publication serves a two-prong strategy: a) to respond to the growing need for
research dealing with Malaysia’s fast-changing leadership landscape, and b) to enhance
teaching in UNIRAZAK’s MBA classes, as well as in some of the undergraduate
classes. Hence, we are expanding the availability of case studies based on Malaysian
organisational settings, each designed to be used as teaching and learning materials for
postgraduate students and specific target audiences.

These cases have been prepared by academic experts trained in case writing. The
majority were written from field interviews and secondary sources, while a handful
were based on only secondary sources. To fulfil the prerequisite that formal approval
be secured from the respective organisation/company or individuals concerned, each
author submitted a case release form giving authorisation for the cases to be published.

Anchored by the UNIRAZAK Case Writers Club (UCW), each case writer underwent
rigorous training that started with a course on crisis leadership and resilience conducted
by Dr. Barker. The course put crisis leadership and resilience in perspective before the
writers went into the field for data gathering. Once the relevant data was obtained,
UNIRAZAK Case Writers Club (UCW) provided a refresher course to all the
participants on case writing. Afterwards, they underwent a ‘pressure-cooker’ session
that focused on writing the case itself, followed by a course on the teaching manual,
both under the tutelage of Professor Dr. Mohar Yusof and Associate Professor Dr.
Leilanie Mohd Nor of UCW. The written cases were then evaluated through peer
reviews coordinated by Associate Professor Dr. Dewi Amat Sapuan, and presented in

10
the International Case Writing Conference held on 17–18 January 2017. The
conference provided another round of evaluation and feedback before cases were vetted
by the chairholder, who ensured that the actual cases and real experiences had not been
compromised. Each case study incorporates an instructor’s manual to elaborate on the
case and assist trainers and facilitators in using the case for educational purposes.

So, in what ways can this compendium of cases contribute to crisis leadership and
resilience? Many, actually. Firstly, with the exception of one example from India, all
are real-life Malaysian cases that showcase the implementation of leadership in terms
of commitment, capabilities, capacities, and resilience (or lack thereof) during crises or
adversities.

Secondly, organisational crises abound and disruption seems to lurk around every
corner. No organisation or company can avoid unexpected crises. In such situations,
leaders are continually put to the test. Heightened uncertainty, time pressures, and low
morale are just some of the factors that can lead to reduced productivity, poor employee
retention, and increased financial problems—any of which can cause organisations to
fail. But some companies bounce back from a crisis faster than others and even perform
better than before. How leaders navigate crises will often determine the success of the
organisation or company. The more prepared leaders are, the more resilient employees
will be and, in turn, the more likely an organisation is to survive and even thrive.

Thirdly, in many ways these cases also demonstrate the difference between companies
that prosper and those that crumble. By highlighting critical events, the cases help us
understand what resilient leadership looks like as it is unfolding. They also help us
internalise key takeaways on how resilient leaders address crises and challenges, as
well as prepare for unexpected change or potential disruption.

Finally, yet significantly, the cases provide insights into how Malaysian leaders
confront their organisational crises. This local perspective offers practical, relevant
lessons for leaders at every level to develop their own skills and knowledge.

In total, ten cases make up this compendium, categorised into four main areas: a) policy
intertwined, b) business narratives, c) potential flashpoints, and d) leadership: an
enigmatic concept. Each is supplemented with a lead case written by Dr. Barker that
frames and analyses the overarching topics of crisis leadership and resilience.

Case type A: Policy Intertwined

1. ‘Kuantan Mars: The Red Mud Dilemma’ by Professor Datin Paduka Dr. Samsinar
Md. Sidin and Associate Professor Dr. Dahlia Zawawi provides an example of a
contemporary crisis in Malaysia and the need for crisis leadership and resilient
leadership at the family, community, and government levels. The bauxite mining case
revisits an environmental disaster that sparked public outrage after it was first reported
in February 2015. The bauxite mining site in Kuantan is primarily in FELDA Bukit
Goh, where mining had taken place on more than 200 hectares of land belonging to
individual settlers. It was reported that only 36 of the 236 sites mined for bauxite were
legally licensed by the state government of Pahang. Besides the illegal operations, the
transportation of the minerals using ordinary trucks resulted in mineral dust polluting
the environment. To worsen the situation, the stockpile of bauxite at Kuantan Port was
not properly managed, and heavy rains caused water to overflow from these piles of

11
aluminium-filled bauxite and enter the rivers. The resulting ‘red sea’ poisoned fish and
other organisms, and the water was polluted with high concentrations of metals, which
threatened the ecosystem and posed a health risk to the public. This case study is
significant as it showcases ineffective leadership in a crisis, which failed to contain the
problem, as well as the lack of control over both bauxite mining and the issuance of
approved permits for transporting the minerals. Although painful at the time, reflective
leaders often learn more from failure than success.

2. ‘Lahad Datu: We Know the Truth’ by Mardziah Hanim Mahazir, Nur Atiqah Abd
Rahmali, and Nurul Afza Hashim is another illuminating case that provides a window
into the infamous 2013 Lahad Datu standoff, a military conflict that many Malaysians
remember. The case narrative unfolds in a compelling way that allows the reader to see
(and feel) the different leadership challenges faced by Pak Kassim. This perspective is
important to understanding the event, which unfolds and escalates over time, gradually
worsening into a genuine crisis. The case deepens our knowledge of what makes a crisis
a crisis (as opposed to an emergency, a disaster, or a catastrophe, as discussed by Dr.
Barker). The case also explores the ways that decision-making is substantively different
in a crisis, and it identifies the key decisions made by Pak Kassim. It also brings to the
fore some pertinent questions, such as: How do leaders change the mind-set of
‘followers’ and help people face a new reality? Can the calmness under pressure
exhibited by Pak Kassim be learned? Can it be taught? If yes, how?

When time is of the essence, how should leaders handle resistance in crisis situations?
Exhaustion is a predictable enemy of leaders during a prolonged crisis. How does this
affect decision-making? What can be done to alleviate exhaustion, both in advance
preparation for a possible crisis and during the crisis itself? What techniques can leaders
use to overcome their own fear and to help followers alleviate acute anxiety? What
types of challenges do leaders face after a crisis is ‘over’?

3. ‘Looming Storm at Satyam’ by Professor Dr. Ravindran Ramasamy and Siti Balqis
Mohd Saldi takes a technical approach to accounting and business corruption. Although
this case looks at the corporate world in India—and is the only case featuring a
company outside Malaysia—the discussion about crisis, resilience, and unethical
leadership that negatively impacted millions of shareholders and stakeholders resonates
internationally. The issues highlighted are similar to problems in Malaysia’s business
sector: the corporate governance debacle, ineffective auditing practices, fraudulent
reporting of accounting results, the failure of regulators and financial watchdogs, and
other issues. The fraud at Satyam began in 1999 but only surfaced on 7 January 2009.
For ten years, nothing out of the ordinary was reported. The employees, internal
auditors, external auditors, and the Audit and Assurance Committee were silent. The
banker who lent millions as loans never suspected any irregular dealings. The Income
Tax Department and other government agencies never complained of irregularities.
Regulators such as the Securities Exchange Board of India, the Reserve Bank of India,
and the Company Law Board never issued a reprimand. Even the regulators in the New
York and Mumbai offices at NASDAQ were in the dark. Only when the chairman of
Satyam admitted that he had meddled with the company’s accounts did anyone realise
something was amiss. Again, this case can be used to explore and deepen our
understanding of what makes a crisis a crisis. When did the crisis start? What were the
milestone events in the evolution of the crisis? Who were the key stakeholders and who
was most affected by the crisis? How could the crisis have been averted? How would
a resilient organisation have handled this crisis differently? How does one develop

12
resilience within and across an organisation?

Case type B: Business Narratives

4. ‘On Your Smart, Get Set, Go!’ by Professor Dr. Nik Rosnah W. Abdullah highlights
the case of a businessman named Hj. Khairuddin, who through hard work and
dedication makes his way up in the business world. The case traces Khairuddin’s
journey from the early 1980s through his later venture into digital telecommunications.
Amidst the backdrop of the economic crisis, Hj. Khairuddin, a lone Bumiputera
businessman with no political affiliation and little financial assistance, plunges into the
telecommunications industry—an unfamiliar arena where a few players with ‘big
money’ dominate. Adding to the challenge, Khairuddin undergoes personal adversity
when his wife and business partner is diagnosed with cancer. Khairuddin puts his
business on hold and helps his wife seek treatment around the world. With her death,
Khairuddin seems to have lost his own battle too. He loses interest in the worldly
matters that previously anchored his life and sells off all his businesses, except for
Smart Digital. But this is only a temporary setback. The case demonstrates
Khairuddin’s agility and versatility. He is adept at reading signs that guide him in his
business ventures, and he relies on self-directed learning and self determination to
succeed. As outlined by Dr. Barker, a number of variables consistently characterise
resilience in a leader confronting crises and facing down adversities, and they are all
present in this case and the insightful instructor’s manual.

5. ‘Sightless Healing: The Case of Blind Massage Station’ by Assistant Professor Dr.
Mohd Yaziz Mohd Isa and Siti Balqis Mohd Saldi is a short but powerful story of
Kasyfan and his two partners, three blind masseurs. The case brings to the fore two
adversities, the first of which is personal crisis, self-leadership, and resilience. Each
masseur experienced the major life crisis of going blind at a young age. Each faced
serious social challenges and loss of self-esteem. Each found his options for gainful
employment severely curtailed. It would take self-leadership and admirable resilience
to overcome such formidable obstacles—yet they did. Conscious of their limitations
but determined to prevail, Kasyfan and his two partners completed their training as
masseurs and opened a blind massage station. This brings us to the second adversity—
their business crisis. The business world does not distinguish whether one is blind or
able-bodied; instead, it presents everyone with challenges and crises. Although their
business itself is not in crisis (in fact, it appears to be doing well), it does experience
competition and expansion challenges that require resilient leadership. For Kasyfan,
who struggles with personal hardships, the added leadership demands seem formidable.
This case looks at the challenges of being blind and running a business, as well as
challenges unique to this particular business.

6. ‘Strategy for Profitable Growth: A Case of Two Generations’ by Associate Professor

Dr. Omaima Eltahir Babikir, Associate Professor Dr. Leilanie Mohd Nor and Professor
Dr. Mohar Yusof is a strong example of crisis leadership and resilience. The case
highlights two important aspects: a) personal adversity and business crisis, and b)
leadership resilience. The personal adversity is Surentran’s dyslexia. Though not a
crisis per se, it was clearly a challenge at school and continues to pose difficulties. But
a key insight into Surentran’s personality is his capacity to ‘enjoy overcoming’
challenges. This is an important sign of resilient leadership—you accept responsibility,
believe in yourself, and motivate yourself to find a solution. As to the business crisis,
with the global financial meltdown as the backdrop, the business experiences serious

13
cash flow problems and debt, and it begins operating at a loss. The stakes are high. This
is where we see crisis leadership kick in and resilience at work. Again, Surentran
accepts reality, takes responsibility, and sets himself to succeed. He also has a higher
purpose, which is to help alleviate world hunger. None of this is easy, of course, and
we see the strength it takes to overcome adversity and the cost of resilience in
Surentran’s emotional reaction when the company hits its goal in 2016.

7. ‘Uber: Who is the Boss?’ by Norizzati Azudin, Mohd Shaiful Ridwan Radzi and Siti
Balqis Mohd Saldi chronicles the emergence of Uber in Malaysia in 2013 and its
subsequent transition to Grab (its rival e-hailing competitor) in April 2018. Utilising
first-hand experience, the case highlights Uber’s diverse marketing strategies, internal
struggles, legal and regulatory challenges, and how the company demonstrated
organisational resilience by managing multiple risks during its operations in Malaysia,
including a lawsuit by 3,000 taxi-drivers in Kuala Lumpur. This case captures a critical
time during Uber’s expansion in Southeast Asia while adapting to complex, rapidly
changing environments.

Case type C: Potential Flashpoints

8. ‘Living Up to Expectations’ by Arliza Abdullah, Associate Professor Dr. Leilanie

Mohd Nor and Professor Dr. Mohar Yusof explores three leadership flashpoints.
Firstly, the case illustrates the potential for crisis, or at least adversity, when control of
a family business transitions from the first generation to the next (third generation
success is often the hardest). Lack of succession planning sets the business up for
destabilising forces. Secondly, the case showcases leadership in adversity—both
challenges faced by the founder, Dato’ Hussamuddin, and also of Syamil as he
encounters resistance and has to prove himself to employees. Syamil has to make a
brave decision and eventually wins his staff over. While this was a private or individual
adversity and not in itself high stakes, the impact would be profound if he had failed
(succession in a family business). Leaders always experience resistance to change, but
this has an additional edge because the resistance is personal as well. Thirdly, the case
highlights resilience. During the succession period, when potential crisis loomed over
the company, why was it ultimately successful? How did the company overcome the
threat of danger so well? It would be easy to give all the credit to Syamil, but the deeper
answer appears to lie in the company culture and values.

9. The case ‘I Could Lead a Horse to Water…’ by Nor Azami Rosli and Amiruddin
Ahmad shines a spotlight on a small setting to illustrate larger insights about leadership.
It features The Public Speaking Club, which is on the cusp of a full-blown crisis. This
sounds like a storm in a teacup, but minor incidents balloon into larger conflicts and
frustrations, escalating into a crisis that threatens the very existence of the organisation.
How do you prevent inevitable problems from spiralling out of control? The case
focuses on the pre-crisis stage. If a conflict persists over time, stakeholders require
resilience to survive. In this instance, Cindy, the chairperson of the club, is highly
resilient. Another aspect of the case is; how do we learn or develop resilience? While
challenges are a natural part of life, surviving and overcoming the kind of situations
faced by The Public Speaking Club builds resilience, however painful and hurtful the
process is at the time.

14
Case type D: Leadership: An Enigmatic Concept

10. ‘From Sejahtera to Maqassid: The Journey of the Jaguh Kampung’ by Dr. Cordelia
Mason and Professor Dr. Nik Rosnah W. Abdullah explores the idea and meaning of
sejahtera and local values such as budi, which embodies the concept of leadership.
Sejahtera leadership was advanced by an authoritative figure in education, Professor
Tan Sri Dzulkifli Bin Abdul Razak, the former vice-chancellor of the University Sains
Malaysia. Consisting of three spheres— personal, relational, and social architecture—
the leadership model is well adapted to the ASEAN region as the concept embodies the
cultural meaning and fusion of naqli (the knowledge from the Quran and hadith) and
aqli (the intellectual knowledge constructed by human beings in consonance with
Islamic tenets). The model can be applied in various ways and contexts to build solid
family ties, harmonious clans and tribes, and cohesive citizens of a nation. The
embodiment of sejahtera leadership has ten dimensions summed up by the acronym
SPICES: spiritual, physical, intellectual, cultural, cognitive, emotional, ecological,
environmental, economics, and societal. As discussed in this case, sejahtera leadership
can serve as a framework to intentionally build resilience on an individual level, at a
team level, or throughout the organisation. Using emotional intelligence, coaching,
mentoring, and other strategies, leaders can cultivate resilience so that it becomes part
of a company’s DNA—a feat best achieved when not experiencing a crisis. The concept
can also be applied when a business is struggling (i.e., during a crisis), and it explains
how leaders can empower employees in order to improve morale and propel the
business forward, while preventing people from becoming overly dependent on the
leader/leadership.

Conclusion

A crisis can be the worst event in an organisation’s history, or it can be an organisation’s

finest hour. The difference depends in large part on leadership. We hope that this
compendium of cases makes a clear argument for developing effective crisis leadership
skills and resilient leadership on individual, team and organisational levels. In addition,
we hope that by gathering cases on leadership, readers will be inspired, leadership
teachers and trainers will be empowered, and our collective understanding of crisis
leadership and resilience will be strengthened and translated into preparatory action.
Moving forward, we encourage you to think about the crises portrayed in this
compendium, as well as the cases that keep dominating news headlines, such as safety
issues, natural disasters, reputational catastrophes, and financial scandals. How is it that
crises seem so inevitable, yet many otherwise excellent leaders are still not prepared
for them? Now is the time to ask yourself: When the next crisis hits, how are you going
to react?

PROFESSOR DR. NICHOLAS H. BARKER

UNIRAZAK Professorial Chair in Leadership

PROFESSOR DR. NIK ROSNAH W. ABDULLAH

President, UNIRAZAK Case Writers Club

15
Part 1
INTRODUCTION
Crisis Leadership and Resilience

16
Crisis Leadership and Resilience
NICHOLAS H. BARKER
UNIRAZAK Professorial Chair in Leadership

Crisis builds character, but it also reveals character. It brings out the best and worst in
people. Some leaders are ‘good in a crisis’, while some businesses handle crisis better
than others. Why do some organisations thrive where others fail? What makes a person
or business resilient in times of turbulence? How can we intentionally strengthen
ourselves as individuals, our leaders, and our organisations?

Leadership always take place in context. Today’s world is characterized by

accelerating, non-linear change, increasing levels of complexity, and growing
interdependence. This is not a crisis, far from it, but it is a new and challenging
environment in which to lead. By shining a spotlight on crisis leadership and resilience
at a predominantly individual level, we hope to achieve three things: First, to develop
knowledge, skills, and expertise to handle crisis situations better. Second, to identify
ways to cultivate personal resilience. And third, to learn how to lead more effectively
in times of normal uncertainty and volatility by becoming more agile, open, and
responsive to change.

Crisis

What makes a crisis a crisis? A law enforcement officer is trained to distinguish

between an incident, an emergency, and a crisis, as well as subsequent escalations such
as a disaster or catastrophe. This is a continuum. One situation often leads to another
and there is operational overlap, but each set of circumstances also has distinctive
elements. Take crisis, for example. A crisis is a time of acute difficulty or danger,
usually sudden, unexpected, and, at times, uncontrollable. This is a decisive moment, a
turning point, and the outcome is uncertain. Put another way, a crisis is an abnormal,
disruptive, and critical time, which could lead to disaster. Some crises explode in an
instant, while others unfold over time—for example, amidst prolonged litigation.
Leaders are urged not to make a drama out of a crisis, but also not to waste a good crisis
as the possibility exists for long-term transformational change. Unlike an emergency,
a crisis does not necessarily require immediate action or intervention by first
responders, such as police, fi re, or medical services (say, for cardiac arrest), but the
stakes are always high and the situation hazardous and stressful. While emergencies
can be routine and predictable, a crisis tends to evolve uniquely, which makes
preparation and training an ongoing challenge. The risk or threat embedded in a crisis
is often new or a one-off concoction of familiar elements, compounded by speed. As a
result, good decision-making under pressure is a key leadership attribute.

Crisis Decision-Making

A decision is a judgement between alternative courses of action. In the workplace,

different types of decisions include routine, operational, strategic, tactical, and
emergency or crisis decisions. Given the pace of change and myriad responsibilities of
office, senior leaders need to be proficient in all types of decision-making. This
includes adopting the right method at the right time for the right situation. A consensus
approach, for example, where everyone must agree to move forward, is rarely

17
appropriate or even possible in a crisis, when a more directive approach is required.

Crisis decision-making (the Greek word, krisis, means decision) is particularly

challenging. Time is of the essence, information is fragmented and incomplete (creating
a distorted picture), and if the situation is also an emergency, the immediate goal is
survival. Decisions must be made in a crisis, even if they are the wrong decisions. There
is seldom a right answer, or at least an obvious right answer, in a crisis. More typically,
there is a hard right and an easy wrong.

Compounding these inherent difficulties, the human body also experiences shock and
pressure in a crisis. Typical physiological reactions include a surge of adrenalin, a
spiking pulse, and soaring blood pressure, coupled with a sickening feeling of anxiety
in the pit of your stomach that can accelerate the onset of panic. Common reactions in
a crisis are known as the ‘4 Fs’: fight or flight, freezing, and fainting. As part of crisis
preparations, leaders should ask team members if they have experienced these or other
strong physical reactions before.

The impact of these physiological changes on decision-making abilities is both

immediate and far-reaching. Typical reactions are as follows: increased possibility of
aggression leading to conflict; uncharacteristically risky decision-making (or decision
paralysis); poor judgement, manifested in knee-jerk or premature choices; memory loss
or an inability to digest relevant information; selective perception such as confirmation
bias, as well as a narrowing of perceptual field (vision loss can be as high as 70 percent
when the human heart rate exceeds 145 beats per minute); and short-termism, an
inability to step back and see the wider picture or long-term implications of actions or
decisions. As a leader, knowing your strengths and weaknesses in a crisis situation is
vital, alongside the ability to manage ego. Seeking help from employees better
equipped to handle a crisis is essential. Temporarily ceding authority, whether formally
or informally, does not mean relinquishing control or loss of status. On the contrary,
this can be responsible, agile leadership in action and a powerful example of how
‘taking charge’ takes different forms depending on the needs of the situation.1 But
above all, surviving a crisis requires a foundational platform of resilience.

Resilience

Resilience is the ability to absorb a severe shock and recover quickly. Both elements—
withstanding shock (robustness) and rapid recovery—are important. In an earthquake,
a high-rise building absorbs energy during stress and rapidly returns to its original form
or position by releasing energy without distortion. The word resilience derives from the
Latin verb resilire, which means to ‘jump back’ or ‘recoil’. However, unlike physics,
human beings and organisations who undergo acute shock rarely return to a pre-crisis
state. Something always changes during the recovery process, which makes going back
to ‘normal’ unlikely, if not impossible. Rather than bounce back, resilience involves
bouncing forward or adapting well to changed circumstances. In the case of companies,
the onus is to become a better organisation by intentionally learning from experience.
Disruption, however painful, is an opportunity for long-term growth. Of course, there

1
In cultures with high deference for authority or positional respect, this approach can
be challenging. But crisis requires behavioural modification by leaders and ‘followers’
alike, as the immediate needs of the situation take precedence.

18
is always a breaking point in crisis. An over-stretched elastic band will snap. Some
people or organisations do not recover from a crisis and some recover but do not learn
and evolve, while others recover and grow stronger—they bounce forward. Friedrich
Nietzsche rightly said, ‘That which does not kill us makes us stronger’, but we should
add, only if we identify and internalise the lessons learned, then practice new
behaviours.

There are many different types of resilience, including on individual, organisational,

and infrastructural levels, as well as resilience in ecosystems, communities, cities, and
even countries. Organisational resilience involves the ability to prepare for systemic
disruption and to cope with anticipated and unexpected threats, such as economic
downturns, cyberattacks, disruptive competition, or natural disasters. Our focus here is
individual resilience with particular reference to leadership. In the past, resilience was
seen as a character trait, which some (lucky) people possessed at birth and others
lacked. Today, it is viewed more as an innate capacity or force which lies within all of
us and which is awakened by life experience. The good news, then, is that resilience
can be learned and developed. Challenges, stress, and obstacles are a normal part of life
and, when handled well, build resilience (severe trauma is different and a separate
case). Leaders, especially senior leaders, require more resilience than most of us.
People depend on leaders, particularly in a crisis, while individuals in high office and
those who lead without authority must overcome complex predicaments and adversity
on a regular basis. Endurance and perseverance differ from resilience, but the ability to
keep going physically and mentally over time is a vital attribute in leadership. An
abundance of stamina, grit, and tenacity enables leaders to withstand hardship, while
performing effectively during prolonged periods of intense pressure.

Can you have too much resilience? A common reaction is, ‘No, you cannot’, but there
are exceptions. For instance, highly resilient leaders are sometimes prone to taking
unnecessary and dangerous risks because they know from experience that, in the event
of failure, they will recover quickly. Winston Churchill defined success in life and
leadership as going from one failure to the next with no loss of enthusiasm. However,
people who are less resilient on a team or within an organisation can be devastated by
failure and will not bounce back (or forward) quickly. The result is loss of productivity
and trust. Prevention is possible. There are always warning signs, and a resilient leader
vulnerable to this type of high-risk behaviour should empower his or her team to
intervene decisively before it is too late. As always, self-awareness and emotional
intelligence in leadership are critical. You lead out of who you are.

Characteristics of Resilient Leadership

Building on the insightful work of Diane L. Coutu2, five characteristics of resilient

leadership are found to be consistently important. These are: Accept Reality, Take
Responsibility, Self-Efficacy, Meaning and Purpose, and Improvisation.

The first characteristic is Accept Reality. Resilient leaders have the ability to stare
down profound, unexpected change and quickly accept a new reality. In a crisis

2
Coutu identifies three characteristics of resilience: facing down reality, the search for
meaning, and ritualised ingenuity. ‘How Resilience Works’, Harvard Business Review,
May 2002.

19
situation, this different reality will be immediate, harsh, and overwhelming. Outbursts
of denial are common. The ability to come to terms rapidly not just with radically
changed circumstances, but also potentially drastic implications and consequences, is
often the difference between success and failure. Coutu gives the poignant example of
Rick Rescorla, vice president for corporate security at Morgan Stanley, who possessed
an exemplary ability to confront and accept reality in a crisis.

Morgan Stanley was the biggest tenant in the World Trade Center in New York City
prior to the terrorist attacks on 11 September 2001, with 2,700 employees located in
the South Tower between the 43rd and 74th floors. After the 1993 car bomb attack,
Morgan Stanley recognized the symbolic power and vulnerability of the World Trade
Center and set up three recovery sites where business could function in the event of a
crisis. President and COO Robert G. Scott remarked later that, ‘Multiple backup sites
seemed like an incredible extravagance on September 10. But on September 12, they
seemed like genius’.

Under Rick Rescorla’s leadership, Morgan Stanley also introduced evacuation drills.
Born in England, Rescorla was a decorated Vietnam War veteran and executed these
drills with military precision. Predictably he was reviled for this, but Rescorla’s goal
was automatic flight response and he believed in the Seven P’s: proper prior planning
and preparation prevents poor performance. Rescorla’s nickname in Vietnam was
‘Hard Core’ because he was unflappable in a crisis.

On the morning of 11 September, when the first plane hit the North Tower at 8:46 a.m.,
Rick Rescorla started to lead Morgan Stanley employees to safety within 45 seconds,
two abreast in the stairwells. Significantly, he overruled Port Authority instructions
delivered over loudspeakers for people to remain at their desks. During the evacuation,
he kept morale high by singing Cornish folk songs. By 9:20 a.m., employees
responsible for operations had walked twenty-two blocks and activated a backup site.

Ten minutes later, senior management had relocated to a new command facility. By
11:00 a.m., Morgan Stanley had posted on television a toll-free national emergency
hotline number, the first of any organisation, including the federal government.

Rescorla accepted a terrible new reality with remarkable speed and had the courage to
take immediate and effective action. When the second plane hit the South Tower fifteen
minutes later, only six Morgan Stanley employees died. In a cruel twist, Rick Rescorla
was one of the casualties, after he called Morgan Stanley headquarters to say he was
going back inside to search for stragglers.

The second characteristic of resilient leadership is Take Responsibility. Behavioural

psychologists introduced the term ‘locus of control’ in the 1950s,33 of which there are
two types, internal and external. A person with a strong internal locus of control
believes they can influence the world around them and attributes success to his or her
own effort and ability. ‘The more I practice, the luckier I get’, said the golfer Gary
Player. People with an external locus of control tend to blame or praise external events
by citing luck, fate, or the will of God. They are more likely to see themselves as

3
Rotter, Julian B. (1966). “Generalized expectancies for internal versus external control
of reinforcement”. Psychological Monographs: General and Applied 80: 1–28.

20
victims, passive bystanders, or spiritual beneficiaries in a world over which they have
little control.

Effective leaders invariably have a powerful yet healthy internal locus of control and
are willing to take ownership and responsibility, even in situations beyond their control
or jurisdiction. These ‘internals’ believe they have power over their lives, while
successfully balancing optimism and realism over what can and cannot be achieved.
Their prevailing attitude is: success lies within your hands if you are willing to learn
and try harder.

Closely linked to a strong internal locus of control is the third cornerstone of resilience,
Self-Efficacy. Leaving aside psychological nuances,4 for leadership purposes self-
efficacy can be sub-divided into self-control and self-confidence.

Self-efficacy highlights your belief in your ability to succeed. This involves being able
to control or regain control of yourself in crisis situations and remain calm while your
mind and body are assaulted by intense pressure. Identifying what is happening and
why, and being able to take corrective action such as modulating breathing, are critical
to grounding oneself in the present moment and being able to function effectively as a
leader amidst shock and chaos. Mindfulness training, including attention control and
emotional regulation, can be helpful. To lead others, you have to first learn to lead
yourself.

Self-confidence involves believing in yourself. Leaders back themselves to succeed in

diverse situations, even if they fail at first or repeatedly, and even when they have no
prior experience of the critical challenge at hand. You might fall six times, but self-
confidence provides the strength and self-belief to get up a seventh time. Likewise, the
magnitude of the task at hand, however daunting, is not perceived to be insurmountable.

Over self-confidence is dangerous, of course, and a precursor to hubris. Positive self-

confidence, on the other hand, helps reduce fear, anxiety, and self-doubt. To paraphrase
Ralph Waldo Emerson, healthy, self-confident leaders trust themselves because their
heart vibrates to an iron string.

The fourth foundational element of resilient leadership is Meaning and Purpose,

specifically the ability to find meaning and take purposeful action in extremis. This
involves sense-making, the process by which we give plausible meaning to experience,
including the unknown and unpredictable. It also involves reframing or creating a
narrative imbued with meaning in order to weave new webs of significance. In both
cases, the result is enhanced motivation and an ability to act purposefully. Achieving
clarity of purpose—why you do what you do (beyond profit)—has become increasingly
important in business. A successful company is often full of employees with high
internal motivation whose own sense of life purpose aligns closely with the mission
and values of the organisation. In sum, what is your why?5

4
Bandura, Albert (1982). “Self-efficacy mechanism in human agency”. American
Psychologist 37 (2): 122–147.

5
Simon Sinek’s influential Ted Talk, ‘How Great Leaders Inspire Action’ (14
September 2009), is recommended, as is Nick Craig’s book Leading from Purpose,
21
In World War II, Viktor E. Frankl, an Austrian psychiatrist who invented ‘meaning
therapy’, survived the horror of Auschwitz concentration camp, while his parents,
brother, and pregnant wife all lost their lives. Diane Coutu (ibid.) highlights the
enduring importance of Frankl’s pivotal work, Man’s Search for Meaning, in which
amidst the most appalling hardship, Frankl realised he had to discover a sense of
purpose to avoid being overwhelmed by atrocity. By building a meaningful bridge to
the future, he learned how to make suffering sufferable and, aided by luck, somehow
managed to survive. In Frankl’s case, purpose involved giving a lecture on his
experiences to help future generations try to understand the incomprehensible. For
other survivors, it was to conduct a symphony in Vienna, or simply to hold their child
again. The common denominator was a concrete goal, a task to finish, a will to live, a
person to become. Frankl realised, profoundly, that even in a concentration camp, it
was possible to retain a sense of dignity and the ability to decide how to react. There is
a space between stimulus and response, he observed, and in that space lies our power
and our freedom to choose. He fully accepted his new reality and took responsibility in
an intolerable situation by creating significance for himself. As Nietzsche put it, ‘He
who has Why to live can bear almost any How’.6

Resilient leaders help people identify or create meaning, find significance, and take
purposeful action in crisis situations. By so doing, they become brokers of hope. Not
false hope, but responsible hope grounded in realistic optimism. Organisations that
truly live their values on a daily basis are more likely to succeed during adversity,
whether via a higher purpose, a set of principles, or a culture of appreciation and mutual
support. Echoing Viktor Frankl, when the South African rugby player and world cup
winner Joost van der Westhuizen was diagnosed with incurable motor neuron disease,
instead of asking why me, he asked why not me—and set up the J9 Foundation to spark
renewed purpose and meaning in the last chapter of his life.

The fifth and final building block of resilient leadership is Improvisation. The French
social anthropologist Claude Lévi-Strauss describes how during an inventive and
resourceful process of bricolage, something is discovered or created (and problems
solved) using whatever materials are immediately at hand. The bricoleur tinkers,
improvises, and finds a clever solution. In the United States, the ultimate bricoleur is
MacGyver, a television character, who attained such heights that ‘macgyver’ is now a
verb in his honour. Entrepreneurs are said to practice digital bricolage, chefs a form of
culinary bricolage, while sculptors perform artistic bricolage.

In a crisis situation, the ability to invent and improvise is critical. Not only is time
limited and information incomplete, but essential resources are often not available.

Hachette Books (2018).

6
In his memoir, Survival in Auschwitz (published in English as If This Is a Man), Primo
Levi, a Jewish chemist and writer, describes how shortly after arrival in Auschwitz at
aged 23, he reached for an icicle outside his window to quench his thirst, only for a
guard to snatch it away. ‘Warum?’, Levi asked (‘Why?’). The guard replied, ‘Hier ist
kein warum’ (‘Here there is no why’). The renowned historian Fritz Stern observed:
‘This denial of “why” was the authentic expression of all totalitarianism, revealing its
deepest meaning, a negation of Western civilisation’. Stern, Fritz (2000). ‘The
Importance of “Why”’. World Policy Journal 17 (1): 1–8.
22
United Parcel Service (UPS), a global logistics company, empowers its drivers to
improvise in order to deliver packages on time. This attribute is part of UPS’
organisational culture or company DNA. After Hurricane Andrew devastated Florida
in 1992, UPS was back in business within twenty-four hours and its drivers delivered
parcels to people stranded in their cars. Utilising bricolage, drawing on reservoirs of
self-confidence, and empowered with a strong sense of purpose, the company absorbed
a severe shock and recovered quickly.

Two Cases

Taken together, these five characteristics form a framework for resilient leadership in
crisis situations: Accept Reality, Take Responsibility, Self-Efficacy, Meaning and
Purpose, and Improvisation.

The following two aviation cases, which took place within a month of each other in the
United States, will illustrate this framework in action.7 In a crisis, there are many types
of failure and success. Our focus will be on the three pillars of Prevention (before),
Response (during) and Learning (after). First, prevention of failure— how to stop a
crisis from arising which never should have happened (or how to prevent a situation
that has started from getting worse). Second, response—how a successful outcome was
achieved through exemplary leadership behaviour when a crisis was unavoidable. And
third, critically, what can leaders and organisations learn from the experience of
surviving a crisis that will build resilience for the future?

Why Aviation?

What is the safest way to travel: train, boat, car, or airplane? Evaluative criteria and
statistics vary, but the answer in terms of accidents per miles travelled is by plane. In
2017, no passengers died in commercial jetliner flights worldwide, making it the safest
year in aviation history. At any given time, ten thousand planes are in the air, carrying
1.2 million people around the world. Achieving zero fatalities is remarkable.8 In
comparison, 1.2 million people are killed on the roads in vehicular accidents (3,288 per
day), over 90 percent of which are due to human error (the primary goal of autonomous
vehicles is to dramatically reduce the number of fatalities). Put another way, more
people die in the United Kingdom falling out of bed than in airplane accidents.

The aviation industry has transformed its safety record in the past fifty years via
innovative aircraft manufacturing, enhanced air traffic control regulation and
procedures, and sophisticated training for pilots and crew. Tribute must be paid to

7
I am grateful to Colonel Daniel Rice, Aviation, US Army, for drawing my attention
to these two incidents as potential crisis leadership case studies. Personal
communication, September 2009.
8
According to Aviation Safety Network (ASN), there were 10 fatal airliner accidents
in 2017, resulting in 44 deaths on-board and 35 on the ground. This included cargo
planes and commercial passenger turboprop aircraft (as opposed to jetliners, which had
no fatalities). 2018 was less successful. 556 people were killed in 15 airliner accidents,
including Lion Air Flight JT 610, which crashed in Indonesia on 29 October 2018,
resulting in 189 deaths. However, 2018 was still the ninth safest year on record.

23
international organisations, including ICAO, IATA, and Flight Safety Foundation. In
the 1970s, over a thousand passengers died every year in airline accidents. (In 1972,
the worst year, 2,373 people died in 72 crashes.) Today, accidents in the skies are
almost always caused by freak accident, human error, or malign intervention, such as
acts of terrorism or pilot suicide. On average, there is one fatal accident for every
sixteen million flights. The most dangerous part of your journey is the drive to and from
the airport.

Other industries and sectors are paying attention to this success and employing pilots
as safety consultants. Interests and challenges sometimes overlap, such as in healthcare.
Like medical operating theatres, the cockpit is a leadership laboratory in which the
quality of decision-making under pressure can be rigorously assessed. Both professions
involve high stakes, a confined space, advanced technical expertise, and a high level of
trust in authority by passengers and patients. Increasingly, information is live.
Combined with flight data recorders (a ‘black-box’, which is actually orange) and
cockpit voice recorders, on-board sensors provide real-time information on aircraft
performance.

But perhaps the biggest breakthrough in aviation has been an industry-wide shift from
a culture of blame to a culture of learning. Rather than try to hide mistakes and bury
near-misses, pilots are actively encouraged to discuss safety incidents to prevent the
same situation happening again. In terms of crisis leadership and resilience, transferable
lessons are plentiful for business.

Case One: Prevention (Failure)—Colgan Air, Flight 3407

Flight 3407 was a commercial passenger flight from New York City to Buffalo Niagara
Airport, which departed on 12 February 2009 from Newark Liberty Airport at 9:20 p.m.
There were forty-five passengers on board and four crew. The aircraft was a
Bombardier DHC-8-402 Q400. ‘Colgan Air’ was the call sign of Continental
Connection, later renamed ‘United Express’ after the merger of Continental Airlines
and United Airlines.

The pilot on Flight 3407 was Captain Marvin Renslow. Aged 47, Captain Renslow had
3,379 hours flying experience, with 261 hours on this aircraft and 109 as captain. The
co-pilot was Rebecca Shaw, 24, who had 2,200 hours of experience, including 772 on
this aircraft.

The Incident

The last radio transmission of Flight 3407 occurred when Colgan Air was three miles
northeast of Buffalo Niagara. First Officer Shaw acknowledged a routine instruction to
change to tower frequency. Colgan Air had been cleared to land on runway twenty-
three when it disappeared from radar. After several attempts to contact the crew,
controllers requested the assistance of other planes in the area to make visual contact
with the missing airplane. Delta Flight 1998 was close by but could not see Colgan Air.
In the cockpit, the first sign of trouble came at 708 metres / 2,320 feet. Less than thirty
seconds later, the plane hit the ground. Flight 3407 crashed around the corner from a
fire station, so emergency response was swift. However, all forty-nine people on board,
plus one person on the ground, were killed, and a house destroyed.

24
Cause and Sequence of Events9

What factors led to this harrowing incident and what happened?

1. Fatigue
• Both pilots, Captain Renslow from Florida and First Officer Shaw from Seattle, took
‘commuter’ flights to save money on a hotel in New York, then waited at Newark
airport prior to their 9:20 p.m. departure. It is likely that fatigue played a role in their
‘red-eye’ decision-making. First Officer Shaw also complained of illness prior to take-
off.

2. Professionalism and Distraction

• The Federal Aviation Authority (FAA) in the United States requires a ‘sterile cockpit’
below 10,000 feet / 3,048 metres, after take-off, and during final approach for landing.
This means non-essential conversation is forbidden by law. In violation of federal
regulations, the two pilots discussed their jobs, the cost of living, recent events, and the
weather.

3. Judgement
• Weather conditions were wintry that evening: light snow and ice, fog, wind at 17 mph
/ 27 kph. Two other aircraft reported icing conditions around the time of the crash.

• Eleven minutes into the flight, the pilots turned on the de-icing system. However,
against National Transport Safety Board (NTSB) recommendations for moderate icing
conditions, the pilots left the plane on auto-pilot (manual operation is only required
during severe icing). Auto-pilot is not recommended in moderate icing conditions as
pilots cannot feel changes in aircraft handling, which is a warning of ice build-up.
Shortly before the crash, the pilots discussed significant ice build-up on the windscreen
and wings.

9
This summary of events is based on the official Accident Report of the National
Transportation Safety Board (NTSB), which was adopted on 2 February 2010.
NTSB/AAR-10/01 PB2010-910401. The legislative mandate of the NTSB includes
‘investigating every civil aviation accident in the United States and significant
accidents in other modes of transportation—railroad, highway, marine, and pipeline.
The NTSB determines the probable cause of the accidents and issues safety
recommendations aimed at preventing future accidents’.
25
• Ice build-up did not directly cause the crash of Flight 3407, but the use of auto-pilot
against official recommendations resulted in the plane being flown 20 knots too slowly
for the conditions.

4. Situational Awareness
• The key elements of ‘situational awareness’ are the aircraft, environment, and
situation. Both Captain Renslow and First Officer Shaw failed to pay proper or
sufficient attention to their cockpit instruments. In preparation for landing, the aircraft
flaps were extended and landing gear lowered. In response, the airspeed indicator began
dropping rapidly (from 189 to 130, at which point it entered the red zone), with no
situational awareness by the crew. The result was the plane began to stall due to low
airspeed and the crash sequence ensued.

5. Aircraft Upset
• During the crash sequence (‘aircraft upset’), the plane began to pitch and roll severely
at 2,330 feet / 710 metres. It pitched up at 31 degrees, down at 45 degrees, then rolled
to the left at 46 degrees, before snapping right at 105 degrees. Passengers experienced
forces twice that of gravity.

• Mercifully, the crash sequence was fast. It took a mere 26 seconds for Flight 3407 to
hit the ground. There was no time to issue an emergency declaration and no
communication took place between the cockpit and flight attendants.

• When pitch-roll oscillations began, the stall-protection system automatically

activated, including the ‘stick-shaker’ and ‘stick-pusher’, which tried to push the nose
of the aircraft down in order to gain airspeed and lift the plane out of the stall. The auto-
pilot also disengaged.

6. Technical Uncertainty
• During the crash sequence, First Officer Shaw did not know whether to raise or keep
the landing gear down or reset the flaps. She asked Captain Renslow what to do.

7. Pilot Error
• Captain Renslow manually fought the shaker, trying to pull it back and keep the plane
aloft. This further slowed down the plane, which exacerbated the stall. The official
National Transport Safety Board (NTSB) report into the accident said the pilot ‘used
excessive force on the control column (“shaker”), which caused the aircraft to enter an
accelerated stall’.

• The report concluded the accident was due to ‘pilot error’. A three-dimensional (3-D)
animated reconstruction by the NTSB of the landing approach leading to the crash of
Flight 3407 can be found below. Please review this in order to assess the leadership
response. It lasts 2 minutes, 38 seconds and stops before the plane hits the ground.
http://www.youtube.com/watch?v=lxywEE1kK6I

Case Analysis
Our focus in this case is crisis prevention. This tragic accident was preventable.
• What questions need to be asked in the aftermath?
• What caused this accident: pilot error or systems error?
• What transferable lessons can we learn and apply from this incident?

26
Case Two: Response (Success)—Cactus Air, Flight 154910

Flight 1549 was a commercial passenger flight from New York City to Charlotte, North
Carolina, which departed on 15 January 2009 from LaGuardia Airport at 3:24 p.m.
There were 150 passengers and five crew on-board. It was a full flight.

The aircraft was an Airbus 320. ‘Cactus Air’ was the call sign of US Airways, now
‘American’ after US Airways merged with American Airlines.

The pilot of Flight 1549 was Captain (‘Sully’) Sullenberger. Aged 57, Captain
Sullenberger was highly experienced with close to 20,000 flight hours and twenty-nine
years as a commercial pilot, carrying over one million passengers. His first solo flight
was at the age of sixteen. Sully was trained in the United States Air Force Academy,
where he won an award at graduation for Outstanding Cadet in Airmanship. He did not
experience combat, but twelve of his fighter pilot colleagues were killed in military
training. Prior to Flight 1549, Captain Sullenberger had never experienced a serious
safety incident in his commercial aviation career, but he had developed an air safety
course for US Airways.

The first officer on Flight 1549 was Jeff Skiles, 49, also a highly respected and
experienced pilot. This was First Officer Skiles’ first flight since completing ‘transition
training’ for the Airbus A320. In layman’s terms, this was his first day in the office.
First Officer Skiles had not met Captain Sullenberger prior to this four-day trip,
consisting of seven flights (15 January was the last day).

Patrick Harten, 34, was the air traffic controller (ATC) responsible for Flight 1549 at
LaGuardia Airport. Mr. Harten was located on Long Island at the New York Terminal
Radar Approach Control (TRACON). His father was an ATC and Patrick had ten years’
experience guiding planes to runways. He had been at work for fifteen minutes when
Sully called.

Cause and Sequence of Events

1. Bird Strike
First Officer Skiles was flying the plane during take-off and the initial ascent to 15,000
feet / 4,572 metres. This was not unusual; it was ‘his turn’.

Two minutes into the flight, a ‘bird strike’ happened at 3,200 feet / 975 metres. The
plane was hit by a flock of Canadian geese (a feather was found afterwards in the left
engine), which Sully described as ‘louder than the worst thunderstorm in Texas’. About
six geese were involved, each weighing 8–18 pounds with six-foot wingspans, in V-
formation.11 There was a foul smell of incinerated geese or ‘bird slurry’.

10
This account is based on the following sources: The official Accident Report of the
National Transportation Safety Board (NTSB), which was adopted on 4 May 2010.
NTSB/AAR-10/03 PB2010-910403. Sully: Miracle on the Hudson, by Chesley B.
“Sully” Sullenberger III, with Jeffrey Zaslow. William Morrow, 2016 (2009). Fly by
Wire: The Geese, The Glide, The ‘Miracle’ on the Hudson, by William Langewiesche.
Penguin, 2010 (2009).
11
Canadian geese had been forced to settle permanently in the New York City area to
27
Bird strikes are not uncommon or a significant cause for concern. Commercial pilots,
Sully included, will experience four or five in their career. Usually there is minor
damage to the aircraft, possibly a cracked windscreen, but nothing serious or life-
threatening. Aircraft engines are rigorously tested for bird strikes by firing chickens out
of a cannon at 250 mph.

2. Lost Thrust
Following the bird strike, both engines on Flight 1549 immediately lost all power or
thrust. The plane was now effectively a glider. This was exceptional for two reasons:
first, the incident happened at low altitude. In the very rare circumstances when this
occurs, total engine failure and loss of thrust tend to happen at high altitude, such as in
volcanic ash cloud, with sufficient time to restart the engines. Second, power loss
normally involves single engine failure (not double). If one engine is functional, a pilot
can still land an aircraft. In this case, irreparable damage occurred instantly in both
engines.

To make matters worse, in fact the worse-case scenario, the incident happened over
New York City, the most densely populated metropolitan city in the United States.

First Response

Captain Sullenberger took control of the plane (‘my aircraft’) and asked First Officer
Skiles to review the emergency checklist procedures for restarting engines, a
complicated and technical sequence of events. The Quick Reference Handbook
contained about 150 checklists. The dual engine failure checklist alone was three pages
long. To cut costs, US Airways had recently removed all numbered tabs from the
handbook, making it slower and more difficult to locate the relevant section.

Captain Sullenberger informed Air Traffic Control of the incident and requested
permission to return to La Guardia. The two runways at La Guardia are short and
surrounded by water, bridges, causeways, and an expressway. There is little margin for
error in a populated area.

Sully decided La Guardia was too far away and asked if an emergency landing could
be attempted at Teterboro Airport, which was seven miles off to his right. Permission
was granted, but Sully quickly decided this was also impossible and informed ATC that
he would land in the Hudson River. At this point, Cactus Air was 900 feet / 270 metres
above the George Washington Bridge. The plane was falling 1,000 feet / 305 metres
per minute, the equivalent of an elevator descending two floors per second. The plane
did not plummet out of the sky, as reports suggested. Descent was smooth and gentle,
which helped passengers remain calm.

Ninety seconds before landing, Captain Sullenberger instructed the flight attendants to

enable the state government to raise revenue by selling hunting licenses. The geese
population increased from 200,000 in 1970 to over 4 million. However, the geese that
hit Flight 1549 were migratory. A cull took place after the incident and 2,000 were
rounded up within a 5-mile radius. It was a bad time to be a Canadian goose.

28
 prepare passengers for an emergency landing (‘brace for impact’). The flight attendants
could not see out of the windows and were not aware that the aircraft would attempt to
land on water. Twelve passengers had read the safety card. Thirty-three of 150
passengers grabbed a life jacket before leaving the plane.

Six minutes after take-off, an ‘unpowered ditching’ took place at 125 knots / 143 mph
in the Hudson River near midtown Manhattan. It took 208 seconds (3 minutes, 28
seconds) from bird-strike to landing. All passengers were safely evacuated from the
partially submerged plane and taken to shore by rescue vessels in the vicinity. There
were no serious injuries or fatalities. Some passengers returned to La Guardia and
continued their journey. The National Transport Safety Board (NTSB) described the
incident as ‘the most successful ditching in aviation history’.

Water Landings

Intentional water landings are exceptionally rare. In the history of commercial aviation,
the number of large, wide-bodied jetliners that have made successful water landings is
zero. Several small passenger jets landed on water in the 1950s and 1960s, and, of
course, many World War II pilots ditched on water and survived.

Pilots have minimal training to land aircraft on water, and Captain Sullenberger had
neither practice nor experience. Simulations do not exist as the situation is deemed too
abnormal and extreme. The full extent of Sully’s preparation was one theoretical
lecture: nose up, landing gear retracted, fly slowly, wing flaps down.

Captain Sullenberger knew the odds were stacked against him when he made the
decision to ditch Flight 1549 in the Hudson River. In his view, this was the best option.
Sully made a crisis decision. He had less than two minutes to execute.

Please review the 3D reconstruction of the flightpath and water landing of Flight 1549,
including original audio tracks:

http://www.youtube.com/watch?v=tE_5eiYn0D0&feature=player_embedded&fmt=18

The crisis situation that Captain Sullenberger faced was not preventable. Life is
uncertain and unpredictable. This incident was no one’s fault. What matters is the
response of the leader to a radically new and unexpected situation.

Case Analysis
How did Sully respond to this crisis? What did he do well?

Now, compare and contrast the two cases:

• What went right and what went wrong?
• What could have been prevented and what could not?
• In the space between stimulus and response (where we choose how to react), what
were the key differences in pilot behaviour and how did this contribute to the radically
different outcomes?

Part 2
29
POLICY INTERTWINED
Kuantan Mars: The Red Mud Dilemma
Lahad Datu: We Know the Truth
Looming Storm at Satyam

30
Kuantan Mars: The Red Mud Dilemma
SAMSINAR MD. SIDIN
Universiti Tun Abdul Razak

DAHLIA ZAWAWI
Universiti Putra Malaysia

Listen to Us

8 Jan 2016, Kuantan

RESIDENTS IN CENTRAL MALAYSIA SUFFER SIDE EFFECTS OF BAUXITE

MINING

PAHANG, Malaysia: Along a dusty red road in Malaysia’s central Pahang state, a family-run
restaurant is struggling to survive.

Salwani Tajuddin said that in almost two decades of running the eatery, she has never seen
business as bad as when bauxite mining came to town.

‘This is where we make a living. If there’s dust everywhere, this whole kitchen covered in
dust, how are we going to run our business? Serve customers sand? Serve them dust? It’s
tough’, she told Channel NewsAsia.

The process of mining and transporting bauxite, an aluminium-making ore, has left layers of
red dust coating everything from trees to cars in certain areas around the state capital of
Kuantan.

Bauxite mining began in Kuantan in 2013, but demand soared after Indonesia banned exports
of mineral ore to encourage domestic processing. Demand from China then shifted to Malaysia.
The Southeast Asian nation supplied some 20 million metric tons of bauxite to China in the
first 11 months of 2015.

It has been a lucrative business for the state. Pahang made US$10.7 million off bauxite exports
in 2015. But this is of little concern to residents who are worried about the environment and
their health.

It is something even those who benefit from the pollution, like car wash owner Natrah Mohd
Yusof, fear.

‘For our business, we’re happy’, she said. ‘But now I’m sick, I’m coughing’. There are also
fears of health risks from contaminated water. Rivers and seas have begun turning red after
heavy rain, something residents blame on the mining. The federal and state governments said
they are aware of the concerns and are analysing water pollution levels. They are also
suspending all mining activities in the state for three months beginning 15 January.

31
At a joint press conference with Malaysia’s Minister for Natural Resources and Environment,
and Pahang Chief Minister Adnan Yaakob urged residents to stay calm.

‘Remain calm, we are doing everything possible to assist them’, he said. ‘We are not in
denial…. we’re not playing the blame game, but we are doing our fullest to make sure that the
welfare of the people at all times supersedes any other benefits, including monetary benefit’.

The suspension period will be used to clear existing stockpiles and enforces stricter regulations
in an industry that may be tainted with corruption.

‘There is a lot to do’.

Malaysia’s anti-corruption commission is trying to clamp down on this, detaining four

government officials on Wednesday suspected of taking bribes from illegal miners. Given the
state of the business, the opposition member of Parliament for Kuantan, Fuziah Salleh, believes
a longer suspension may be needed.

‘I think (the suspension) is a step forward considering what has happened, considering that the
damage to the environment is very, very extensive’, she told Channel NewsAsia. ‘I think we
have achieved one step. But there is a lot to do. I doubt three months is enough’. However, for
those who work in the bauxite industry, three months is long enough.

‘We just want to work. If we don’t work one day, our kids don’t eat, no one eats’, one contractor
lamented.

This is ultimately why many Kuantan residents like Salwani are torn as well about a complete
shutdown of the bauxite industry. They know that without it, there would be a loss of income
for fellow residents, especially those who have allowed mining to take place on their oil palm
estates.

‘We don’t rely on bauxite mining so it’s okay, but we pity those who work in the industry’,
said Zulaiha, Salwani’s sister. ‘If it stops, what can they do? Their land is now unusable’. For
now, however, the state government has indicated it has no intention of putting a permanent
end to this lucrative industry.

Source: Sumisha Naidu, Malaysia Correspondent, Channel NewsAsia,

Posted 08 Jan 2016 23:28
URL: http://www.channelnewsasia.com/news/asiapacifi c/residents-incentral/
2409926.html#
Televised report: https://www.youtube.com/watch?v=ORkGFGCzos8

A cup of coffee in hand, Razak Basri sat and pondered how the bauxite mining scandal has
kept him and his team at the Mineral and Geoscience Department Malaysia (JMG) racing
against time to research and address the issue and to allay public concerns.

The press conference on 6 January 2015 announced a three-month moratorium on all bauxite-
related activities in Kuantan. Pahang’s bauxite industry had been told to clean up its act, with
the government slapping a three-month mining ban starting January 2015. The ban would be
extended if the companies failed to comply with the new rules to tackle rampant illegal mining

32
and pollution. An estimated 1,200 hectares of land in Kuantan had been dug up for bauxite by
miners without crucial rehabilitation measures put in place once mining ceases.

The decision made at the cabinet meeting was to temporarily suspend bauxite mining for one
month to study whether such activities complied with environmental laws. However, any
decision for a complete stop still lies with the Pahang government, which has the final say over
land use in the state (Ibrahim and Nazari, 2016).

Table 1: Chain of Events on the Bauxite Crisis

Date Event(s)
14 February 2015 Pahang state government to stop iron ore and bauxite mining activities
if there was no solution to the complaints about pollution from
residents and road users around Kuantan Port

22 July 2015 FELDA stopped all bauxite mining applications and activities in Bukit
Goh, Pahang

30 December 2015 The sea off Pantai Batu Hitam turned bright red after a downpour

8 January 2016 Federal and Pahang governments are called to come up with a holistic
solution to the bauxite mining issue in the state

12 January 2016 Pahang police created nine 24-hour inspection centers for lorries
carrying bauxite to ensure public safety

15 January 2016 The three-month moratorium on all bauxite mining activities in

Pahang was announced

22 January 2016 Four individuals held in the bauxite graft probe

23 January 2016 Approved permit (AP) given for bauxite exports to clear stockpile

27 January 2016 60 percent of bauxite-affected areas were cleaned

16 February 2016 Group educated settlers on protection from bauxite pollution

The Authorities

The JMG was established as a result of a merger between the Geological Survey Department
and the Mines Department on 1 July 1999. The merger was aimed to strengthen and coordinate
the activities of the two agencies, which were under the Ministry of Primary Industries (KPU)
at the time (Mineral and Geoscience Department Malaysia, 2015).

The vision of the department was three-fold: JMG was a government agency vested with the
authority and expertise to lead any investigation, research, and services in the field of mineral
and geoscience in the country. JMG’s focus was to conduct mineral exploration in order to
increase the mineral inventory of the state, mineral commodity profile analysis, and strategic
planning to address current challenges. In addition, JMG was to ensure that quarrying and
mining activities were carried out in an orderly, safe manner and in compliance with the laws.

33
Apart from conducting research and development (R&D), JMG also provided survey and
geoscience services involving geological mapping, underground water resources, engineering
geology, geological disasters, environmental geology, marine geology, geophysics, remote
sensing, mineralogy, petrology, and other areas of geosciences (Mineral and Geoscience
Department Malaysia, 2015).

Federal Land Development Authority (FELDA)

FELDA was founded on 1 July 1956 when the Land Development Act (1956) came into force.
Its main objective was to reduce rural poverty through the resettlement of the poor to newly
developed areas. The agency assisted settlers in establishing smallholding farms that grew cash
crops. Basic infrastructure like electricity and piped water were brought in, while amenities
such as schools, medical centres, and places of worship were built in these settlements so that
the pioneering families could comfortably live there. The settlements were reserved for the
Malays, who made up the majority of the Malaysian population. As of 2000, a total of 9,000
square kilometres of FELDA land was comprised of mostly oil palm plantations.

Starting with an initial capital of RM10 million, the first settlement in Ayer Lanas, Kelantan,
was opened in 1957, consisting of 16.2 square kilometres of rubber trees. By 1958, five other
settlements were established. While its initial role was to develop new land for plantations
through effective agricultural management among the settlers, FELDA over the years moved
into commercial ventures like property development, industry, hospitality, catering services,
and other business activities. By 1990, FELDA stopped recruiting new settlers. The
government had by then entrusted FELDA to continue by its own financial means and become
a statutory body that could generate income through various businesses to support its
development projects (FELDA, 2014).

FELDA Bukit Goh in Kuantan was used primarily for bauxite mining, which took place on
more than 200 hectares of land belonging to the settlers. Of the 233 families involved, only 62
had permission from FELDA to obtain a state-issued mining license. FELDA management was
concerned about the plans for these sites as they were no longer suitable for future oil palm
cultivation. There were also claims that some of the settlers were cheated by contractors who
illegally carried out bauxite mining activities on the land. It was rumoured that the settlers were
offered advance payment of between RM200,000 and RM400,000 to enable bauxite mining
activities to be carried out.

34
 Photo 1: The Location of FELDA Bukit Goh
Source: http://4.bp.blogspot.com/-
AAduYmKGEiw/VcrhxtJLkxI/AAAAAAAAFoM/oRAbyMlMrRE/s1600/map%2Bisu%2Bb
auksit.jpg

Worldwide Bauxite Mine Production

Bauxite, a type of aluminium ore, is considered one of the main sources of aluminium in the
world. To produce aluminium, bauxite is crushed and purified through the Bayer Process 1. It
is a heavily energy-intensive process and, thus, is often produced in regions where energy costs
are the lowest.

1
The Bayer process is the principal industrial means of refining bauxite to produce alumina
(aluminium oxide). According to the Aluminium Association website, the Bayer process is
carried out in four steps. First, after the bauxite is crushed, washed, and dried, it is dissolved
with caustic soda at high temperatures. Next, the mixture is filtered to remove impurities, called
‘red mud’, which is properly discarded. The remaining alumina solution is transferred to tall
tanks called precipitators. In the precipitator tank, the hot solution starts to cool and aluminium
hydroxide seeds, very small particles, are added. The aluminium hydroxide seeds stimulate the
precipitation of solid aluminium hydroxide crystals. The aluminium hydroxide settles at the
bottom of the tank and is removed. Finally, the aluminium hydroxide is washed of any
remaining caustic soda and heated to remove excess water. After this process, alumina
(aluminium oxide) emerges as a fine white powder. It looks much like sugar used in baking,
but is hard enough to scratch a pane of glass (The Aluminium Association, 2016).

35
 Photo 2: The Bayer Process to Extract Alumina from Ore (Bauxite)

Australia, China, and Brazil are the leading countries in bauxite mine production, generating
81 million, 47 million, and 32.5 million metric tons of bauxite respectively in 2014 (The
Statistics Portal, 2015). At the same time, while the United States’ revenue from aluminium
manufacturing decreased from US$43.5 billion in 2008 to US$37 billion in 2013. The global
demand for aluminium was expected to increase by 5.1 percent in 2015. Presently, the Huntly
mine in Australia owned by Alcoa World Alumina is one of the largest bauxite producers in
the world. China’s Chalco is one of the largest producers of primary aluminium in the world,
with an output of 3.8 million metric tons of aluminium in 2013 (The Statistics Portal, 2015).
Chinese aluminium production continues to rise, and is gaining a significant share of global
output with new smelters in China’s north=western provinces, while other provinces
keep older plants alive (Home, 2015).

Malaysian Bauxite Industry

Bauxite shortages in 2016 and beyond have presented opportunities for many producers all
over the world. Malaysia was a small player in the global bauxite industry, but strong demand
from China fuelled a red boom in the country. In 2013, for example, Malaysia reportedly
produced 208,770 tons of bauxite, a tiny figure compared to world leader Australia, which
produced 81 million tons. The following year Malaysia’s production saw a three-fold jump to
962,799 tons (Mineral and Geoscience Department, 2015). In 2015 alone, Malaysia produced
an estimated 20 million tons to overtake Australia as the biggest bauxite exporter to China. The
staggering jump in production was partly to fill a void left by Indonesia, which restricted
exports in 2014 to compel local companies to develop smelters, add value, and create more

36
jobs. Strong demand from China over the past few years has made bauxite mining a lucrative
business in Malaysia.

Malaysia surprised the bauxite market by its ability to partially replace Indonesia in meeting
Chinese demand. As China became increasingly reliant on Malaysian bauxite, the need for
more expensive Pacific and Atlantic ores was reduced for the immediate future (Ling, 2015).

Indonesia’s Mineral Ore Export Ban Takes Effect

Indonesia, one of the world’s largest mineral resource suppliers, instituted a ban on the export
of certain raw minerals/unprocessed mineral, including bauxite, nickel, tin, chromium, gold,
and silver.

Despite strong opposition from both foreign and domestic miners and the potentially
detrimental impact on Indonesia’s own revenue streams, President Susilo Bambang
Yudhoyono signed off on the ban, which started at midnight (Indonesia time) on Sunday, 12
January 2014. The ban was mandated under the Indonesian Mining Law passed by the
Parliament in 2009, which included a provision that mineral ores must be processed at smelters
in Indonesia from 12 January 2014 onwards.

After significant lobbying against what was originally proposed as a blanket ban on all mineral
exports, last-minute amendments were made to exclude copper, iron ore, lead, and zinc
concentrates. The exempted minerals are exported by 66 companies, including US mining
giants Freeport-McMoRan and Newmont Goldcorp, which together produce approximately 97
percent of Indonesia’s copper. The exemptions are also likely to reduce any negative impact
on Indonesia’s own foreign revenue.

Based on preliminary information about the Indonesia export regulations, the 66 companies
will be able to export concentrates for three years, but that right is conditional upon an agreed
level of investment in domestic processing infrastructure by 2017.

Regardless of the exclusions, Indonesia’s shift in export policy is likely to have global
ramifications and stands to threaten its own nickel and bauxite industries, whose shipments are
worth more than $2 billion annually. Similarly, the global nickel and bauxite industries, and in
particular Chinese steel and aluminium factories that make everything from kitchenware to cars
and building components, may suffer as they find supply costs increase. Australia has
significant reserves of bauxite (which is the initial raw mineral used in aluminium production)
in Queensland, Western Australia, and the Northern Territory, and so miners of the commodity
could benefit.

It is understood that the rationale for the ban is to promote domestic processing and motivate
infrastructure investment in Indonesia’s lucrative resources industry, creating more local jobs
and ensuring profits stay (i.e., are taxed and/or reinvested) in Indonesia. However, there is
concern that the nationalistic policy may lead to mine closures and consequent job losses, as
well as drain Indonesia’s finances through lost royalties and taxes.

37
While the exact details are yet to be released, under the regulations miners may be obliged to
invest in infrastructure and build smelters by 2017, which some in the industry have indicated
may be economically unviable.

The Indonesia government is expected to reveal more precise details of the revised export ban
and related regulations. However, some immediate impacts are already showing and include:

• Freeport, Indonesia’s dominant copper producer with 73 percent market share, has not made
a shipment from its remote Papua port since mid-December 2013, and it is reported that more
than 100 mining companies have either reduced or shut down their operations due to the
uncertainty of the proposed bans.
• Thousands of mine workers have already been laid off ahead of the ban, sparking protests in
Jakarta. The National Mine Workers Union is encouraging mining workers to protest against
the export ban and regulation, and it is reported that Indonesian police have been stationed at
ports and around mines.
• The Indonesia Mineral Entrepreneurs Association has indicated that it plans to challenge the
ban in the Supreme Court and Constitutional Court, the two highest courts in the country.

Source: The Specialist. 15 January 2015. Indonesia’s mineral ore export ban
takes effect. Retrieved on 25 February 2016 at http://www.grtlawyers.com/
indonesias-mineral-oreexport-ban-takes-effect

The Process

Mining

The media reported that only 36 of the 236 sites mined for bauxite were legal. This meant that
for every one legal mining site being excavated for the valuable mineral, there were at least six
illegal ones. Also revealed was the presence of certain individuals who would buy the illicit
stocks from these miners and facilitate their export to China. These unscrupulous illegal miners
had no qualms in digging up bauxite-rich land in Kuantan, which they secured from
landowners. These landowners hoped to make millions by leasing out their bauxite-filled lands.
Transporting the illicit cargo to the ports was a relatively easy affair as there were ample lorries
on standby to make as many trips as needed between the stockpile areas and the port. In the
early days when the mining industry was picking up, agents would connect these illegal miners
to lorry operators to facilitate the transportation of the illicitly extracted material.

Transportation

The bauxite needed to be transported to the port. The mode of transporting the minerals to the
port was another issue. It was claimed that each day more than 50 percent of about 800 lorries
used for transporting bauxite were regular wooden-bodied lorries. Based on information from
the Land Public Transport Commission (SPAD), this type of lorry is not permitted to transport
any form of minerals. A source said that using ordinary trucks to transport the bauxite was not
suitable as the dust from the minerals would pollute the environment in the areas near mining

38
sites. As the trucks were not covered, or were loosely covered with canvas, evidence of the
bauxite was apparent on the route between the mines and port.

In addition, the issuance of the 13D form by the State Land and Mines Department (PTG) was
also a major concern. The form contained information on the volume of earth a lorry was
allowed to carry per trip from a specific area. There were many loopholes and lack of control
over the issuance of these forms, also known as ‘dockets’, which had to be kept inside lorries
that were transporting minerals. Companies with approved permits could apply for as many
dockets as they wanted, but some abused the system by securing extra dockets, going beyond
the designated areas, and not specifying the type of bauxite being transported.

Stockpiles at the Port

Kuantan Port Consortium Sdn Bhd was entrusted to store the bauxite before being transferred
onto the ships for export. The monthly export of bauxite from Kuantan Port would be limited
to two million tons, lower than the volume of bauxite at no less than 27 million tons were
extracted between January and November 2015. At the same time, there were reports of bauxite
storage in Kuantan Port not being managed properly. This was said to be the cause of seawater
in the surrounding area, especially in Pantai Batu Hitam and Pantai Balok, turning red, and thus
turning away many tourists. Heavy rain had caused the pile of bauxite containing aluminium
to go into the rivers before flowing into the sea. Left unchecked, this can threaten the
ecosystems and pose risks to public health. There was also news of fish and other organisms
dying from poisoning due to the ‘red sea’ phenomenon, as well as concerns about water
containing high concentrations of metals posing cancer risks to humans. Additional threats
were changes in deoxyribonucleic acid (DNA) and the possibility of mutations in future
generations.

Existing stockpiles of bauxite at the Kuantan Port, as well as those held by the 11 operators,
were exported in order to reduce the possibility of further pollution from surface runoff. The
stockpile owners were told to take steps to mitigate pollution, including building washing bays,
before the stockpiles are allowed to be exported. Those who failed to clear their stockpiles
within the three-month period would lose their approved permit (AP) to export. A central
storage for bauxite stockpile was slated to be built on 200 hectares of land near Kuantan Port.
The storage area was to be equipped with drainage and filtration systems, along with washing
bays, to prevent air and water pollution, thereby adhering to proper engineering designs and
industry standards. Pollution-mitigation measures, such as drainage as well as slopping and
retention ponds to treat runoff, would also be put in place. Barriers, such as hoarding and
fencing walls, were to be constructed around the stockpile area. Only legal bauxite miners
would have access to the central stockpile.

At the time of writing, the federal government had decided not to issue any more APs unless
the rules were observed. The AP issuance had been limited to the monthly capacity of the port
and would no longer be issued to individuals. This was to fit the capacity of the port, which
was no longer allowed to hold on to any stockpile. No less than 300 APs for bauxite mining in
Kuantan had been issued since bauxite was first found.

39
Meanwhile, the ongoing clean-up of affected areas was carried out by the Public Works
Department and the Ministry of Urban Wellbeing, Housing and Local Government through
Alam Flora. The Kuantan Port was also expected to do its own proper cleaning as it was said
to be the main contributor to the red water situation in the affected rivers and sea.

The Investigations

Four enforcement officers from the Pahang Land and Mines Office were detained by the
Malaysian Anti-Corruption Commission (MACC) for allegedly accepting bribes from illegal
bauxite-mining operators. The four, aged between 30 and 39, included a senior officer within
the Pahang Land and Mines Office. They were believed to have taken more than RM100,000
in bribes from the operators. MACC was also expecting to make more arrests involving both
bribe recipients and givers.

MACC’s crackdown came barely 24 hours after it was confirmed that elements of corruption
were found in the Pahang bauxite-mining activities. In a statement, MACC said that its
investigations revealed corruption was practiced by several parties involved and pledged to
take action against those participating in the graft practices and abuse of power.

Has It Ended?

16 January 2016, FELDA Bukit Goh

Razak stopped his car near the mining site at FELDA Bukit Goh. He noticed that where once
the area was congested with vehicles, only silence greeted him. He saw small groups of workers
chatting away but the machines were left idle. From afar, he could see the security tape placed
at the mine to cordon off the bauxite piles.

A worker passed by and smiled. He decided to have a little chat.

Razak: Tak kerja ke hari ni? (Not working today?)

The worker stopped before responding.

Worker: Mula-mula saya ingat kami boleh mula kerja. Tapi semalam datang pegawai letak
perekat keselamatan. Maknanya belum boleh lagi. Jadi saya dating jaga mesin sahaja.
(Initially, we thought we could work. But yesterday an officer came by and put up this security
tape. Guess that’s a no-go. I am here just to look after the machines.)

Razak nodded and the worker walked over to his friends. Mining operations have left many
areas covered in red dust and created worries about river and seawater contamination. Although
the government did not intend to impose an outright ban on Pahang’s bauxite industry, they are
serious about finding a long-term solution to the issue. Razak had compiled all the reports
necessary to evaluate the crisis before developing a plan to rectify the problem. Decisions must
be made. The team was going to meet early tomorrow morning. Razak had looked at the data
over and over again. But today he just felt the need to visit the site. Slowly, he walked back to

40
his car. Many questions were on his mind. He sighed. Tomorrow would be a very long day.

Case Analysis

• How can a leader develop resilience in people, communities, and society to help combat a
crisis?
• What are the competencies required in crisis leadership?
• What characteristics need to be embedded in training designed to develop ethical leaders, so
as to prevent similar incidents from occurring in the future?

41
APPENDIX 1

Photo 3: Bauxite

42
 Photo 4: The River Polluted by Bauxite Debris
Source: http://www.sistemguruonline.my/2015/12/kuantan-dalam-bahaya-ancaman-
bauksit.html

Photo 5: Transporting the Bauxite

Source: http://www.themalaysianinsider.com/malaysia/article/pahang-putrajaya-to-decide-
on-bauxite-mining-by-end-of-the-month

43
 Photo 6: Bauxite Mining
Source: http://www.therakyatpost.com/news/2016/01/04/human-blockade-planned-over-
kuantan-bauxite-mining/

Photo 7: Kuantan Port

Source: http://www.thestar.com.my/news/nation/2016/01/22/wan-junaidi-government-
issuing-aps-to-clear-bauxite-stockpiles/

44
References

The Aluminium Association. 2016. ‘Alumina Refining’. Retrieved on 25 February 2016 at

http://www.aluminium.org/industries/production/alumina-refining

Federal Land Development Authority (FELDA) website. Retrieved on 23 February 2016 at

http://www.felda.net.my/index.php/en/

Home, A. 9 June 2015. Reuters. ‘Bauxite supply no hindrance to China's aluminium boom’.
Retrieved on 23 February 2016 at http://www.reuters.com/article/us-bauxite-alumina-ahome-
idUSKBN0OP25220150609

Ibrahim, D., and K.C. Nazari. 3 January 2016. The Malaysian Insider. ‘Pahang has final say
on stopping bauxite mining, says minister’. Retrieved on 23 February 2016 at
http://www.themalaysianinsider.com/malaysia/article/pahang-has-final-say-on-stopping-
bauxite-mining-says-minister

Ling, W. 14 April 2015. The Independent Authority. ‘Chinese demand for 3rd party bauxite
to increase 50%’. Retrieved on 22 February 2016 at http://www.crugroup.com/about -
cru/cruinsight/chinese_demand_for_3rd_party_bauxite_to_increase

Mineral and Geoscience Department Malaysia. 2015. Retrieved on 22 February 2016 at

http://www.jmg.gov.my/en/

Naidu, S. 8 January 2016. Malaysia Correspondent, Channel NewsAsia. ‘Residents in central

Malaysia suffer side effects of bauxite mining’. Retrieved on 22 February 2016 at
http://www.channelnewsasia.com/news/asiapacific/residents-in-central/2409926.html#
The Specialist. 15 January 2015. ‘Indonesia’s mineral ore export ban takes effect’. Retrieved
on 25 February 2016 at http://www.grtlawyers.com/indonesias-mineral-ore-export-ban-takes-
effect/

The Statistics Portal. 2015. ‘Major countries in worldwide bauxite mine production from
2010 to 2015 (in 1,000 metric tons)’. Retrieved on 22 February 2016 at
http://www.statista.com/statistics/264964/production-of-bauxite/

45
Lahad Datu:
We Know The Truth
MARDZIAH HANIM MAHAZIR
Universiti Tun Abdul Razak

NUR ATIQAH ABD RAHMALI

Universiti Tun Abdul Razak

NURUL AFZA HASHIM

Universiti Tun Abdul Razak

Prologue

Pak Kassim was invited to celebrate the 206th Police Commemoration Day at Felda Sahabat.
It was an annual event held to commemorate the hard work and sacrifice of national security
forces in keeping and protecting the peace, prosperity, and sovereignty of the country. This
year, the event was particularly meaningful for Pak Kassim as it gave him the opportunity to
pay tribute to the fallen heroes of Lahad Datu. These heroes gave up their lives to protect the
security of his village.

After a minute of silence, a police officer who was involved in the Ops Daulat operation related
the real story of the event to Pak Kassim and the audience.

‘I was in the commando squad since 2003. The intrusion in Lahad Datu gave me the
opportunity to gain real-life experience in a war situation and fight terrorists’, said the officer
as he began his sharing.

‘That day was like raining bullets. I felt death was eminent. One of my friends who was lying
next to me had succumbed in the battle. I never thought the gunshot had killed him until I patted
his back to ask him to retreat. He was lifeless. After the shootout, I was attacked by the terrorists
who slashed me with machetes. Fortunately, I was able to fight them off or I would have broken
my neck.

‘There was blood everywhere and I ran into a small house. There I hid with the bodies of my
team members. It was a terrible sight to see, but that will never discourage me from serving the
country. I could only pray at that time.

‘What we have today came at the price of sweat, blood, and tears, and even the lives of these
heroes. To the fallen heroes of Lahad Datu, we salute you. Your sacrifices shall forever be in
our hearts’, said the officer as he ended his speech.

The words of the police officer remained in Pak Kassim’s mind. As he drove home, his
memories wandered to the invasion. It was on the morning of 12 February 2013 that Pak Dollah
had rushed to his house to inform him that strangers armed with guns had arrived at their beach
on the previous evening.

46
The Man behind the Scenes

Pak Kassim was a reputable village headman in Kampung Tanduo. His experience while
growing up shaped his outlook as an adult. Being the eldest of eight siblings, Pak Kassim was
greatly influenced by his father, who was a soldier. His father gave him a piece of advice that
made him strive to be the best person he could be.

‘You are a ruler over them, but Allah is the Supreme Lord over you, so lead them into the right
path’, his father told him.

Hence, from a young age, he has been taught to carry out his responsibilities as a leader,
especially when his father was away. It was this trait that helped him perform his duties as the
village headman.

Pak Kassim was known as a person who favours open communication and encourages
discussion. This form of communication seems simple but actually requires much effort. For
him, open communication and monthly meetings with the villagers were important as they
allowed everyone to be more engaged and accountable within their community. This also
helped to ensure that the villagers were in agreement about goals they wanted to achieve for
the community. Pak Kassim’s form of leadership had allowed the villagers to live in peace for
the past five years.

However, he was greatly tested in 2013 when he had to make a life-or-death decision on behalf
of his people. Pak Dollah and a group of fishermen had delivered the unpleasant news about
armed strangers in their midst, which put Pak Kassim in a dilemma. He knew the people were
frightened and worried, but getting the police and military involved might lead to problems for
the village.

‘Should I stay silent and watch the intruders destroy the peace in this village and cause us to
live in fear, or should I take a chance and inform the authorities?’ he muttered to himself.

‘Keeping silent means we are allowing them to take charge of our land. For the sake of
Kampung Tanduo, I am going to tell the truth to the police even though the consequences are
hard to imagine. This is my ultimate decision!’ said Pak Kassim upon making up his mind.

Wasting no time, he rode his motorcycle to the Kampung Tanduo Police Station. The police
station was rather desolate that hot afternoon. There were only four police officers going about
their tasks. Pak Kassim, breathless and anxious, approached one of the officers on duty to lodge
the report. The police officer appreciated his courage and effort in making the report. Pak
Kassim felt relieved, as well as validated in his decision.

Pak Kassim realised that in such circumstances, he needed to go against his normal practice
and instead make an independent decision. However, he was also aware of the challenges
stemming from his decision. He needed to ensure that the villagers could see the big picture
and understand the decision and how it would impact their village.

47
The Wake-up Call

On the early morning of 12 February 2013, the villagers of Kampung Tanduo, a remote village
in Lahad Datu, were awakened by the presence of a group of Sulu gunmen. They have arrived
to claim Sabah on behalf of the self-proclaimed Sultan of Sulu. Hailing from the southern
Philippines, the group first entered Malaysian waters by boat and gathered in stages at
Kampung Tanduo. Upon being discovered by the fishermen, the group then broke into smaller
units and spread out into several locations in the village.

The Malaysian government’s initial response to the incursion was to conduct intense
negotiations to pressure the group to abandon their mission and leave the area without any
bloodshed. The negotiation process began by trying to persuade the group to peacefully return
to their country, but negotiations with the Sulu gunmen went on for more than two weeks
without any sign of success.

The Sulu gunmen had laid down three conditions for the Malaysian government. Firstly,
Malaysia must recognise the Sulu Sultanate. Secondly, Malaysia must acknowledge that a part
of Sabah belongs to the Sultanate. Finally, the group demanded a sum of US$7.5 billion from
the Malaysian government as compensation to the group, using the argument that Malaysia had
occupied Sabah since 1963.

Not knowing whether the negotiations had failed or succeeded, Pak Kassim called the police
officer on duty for information. According to the officer, the negotiations were still in progress
as reaching an agreement had become more complicated and time-consuming than expected.
Pak Kassim was also informed that the Malaysian government was trying its best to negotiate
directly with the so-called sultan in Manila.

Pak Kassim reflected on these conversations, but he had no clue what might happen to his
beloved Kampung Tanduo in the future. Pak Kassim and the villagers had hoped that the
government would come to an agreement with the negotiating parties. He was hoping that the
Sulu Sultanate would agree to the terms as well, thus avoiding bloodshed. It dawned on him
how important the negotiation process was for maintaining peace in Kampung Tanduo.

Save Your Life!

It was 7 o’clock in the evening on 28 February 2013 when Pak Kassim received a phone call
from the police officer. ‘This is a serious thing, sir!’ he replied. His wife, Mak Munah, saw the
deep frown on his face. She knew something was wrong. ‘Anything wrong?’ she asked after
Pak Kassim got off the phone. Pak Kassim stared at his wife and said, ‘We have to go. This
place is not safe anymore. The police officer has instructed us and all the villagers to leave
immediately’.

Before he could explain further, Mak Munah cut into the conversation: ‘But dear, it is getting
dark out there. Why do we need to rush?’ Pak Kassim summoned his inner strength and calmly
said, ‘Our neighbours have been attacked by the Sulu gunmen. We should leave this place
immediately so that no one will get hurt’. He then left to spread the message to all the villagers.

48
In order to ensure the successful relocation of the villagers to the evacuation centre, Pak Kassim
worked closely with his committee members. They went door to door to disseminate the
information on the relocation process, and they convinced people to leave their homes that very
night. Pak Kassim believed that by performing this task as a team, it would enable him to
accomplish much more than he could by himself. This concept of synergy is how teams achieve
success.

It was cold and dark that night. The villagers were ready to leave their homes. It was with deep
sorrow that they gathered at the main road of Kampung Tanduo in accordance with the
instructions given by Pak Kassim and his team. The journey required the evacuees to pass
through the oil palm estate while carrying their bags. Just as they were about to begin the
journey, Pak Kassim heard the sound of a shotgun, which echoed like a warning to the bandits.
But then he heard another shot and felt confused and alarmed. Later, he was informed that the
police were shooting at the invaders.

On hearing the shots, he rushed to the villagers at Lorong 4 and told them to stay calm. Pak
Kassim was relieved to find that the authorities had sent a group of ‘evacuation specialists’ to
assist and safeguard the villagers during their flight. After an hour had passed, the majority of
the evacuees had arrived safely at the main road of Kampung Tanduo. Pak Kassim told the
evacuees that the transportation, which could ferry more than 80 people per trip, would be
arriving soon to take them to the evacuation centre at Felda Sahabat. He also realised the tense
atmosphere was exacerbated by tiredness, crying, and the deeply uncomfortable situation they
were in. The villagers were sad and fearful about facing this new reality.

While waiting for transportation to arrive, Pak Kassim tried his best to comfort his people and
ensure that everyone was safe. Pak Dollah quickly approached him, with a grim look on his
face.

‘Tok, villagers from the coastal area have also been affected. Their houses have been seized by
the Sulu gunmen, and they’ve been chased away from their own homes! And sadly a number
of children were traumatised by the incident’, reported Pak Dollah.

Pak Kassim clenched his fist and said, ‘The Sulu gunmen are terrorists! This is too much!’

‘But Tok, we found out some shocking news from our people. There was a woman at the coastal
housing estate who had just given birth a few hours ago, and she has been in so much pain
heading here. As soon as the midwife cut the umbilical cord, they immediately packed all her
belongings and came here. I just asked her where she found the strength, and she told me that
what matters most is the safety of her child’, said Pak Dollah.

Pak Kassim was amazed and realised that the villagers would be brave for their loved ones.

‘I know our villagers are in so much pain, but we are stronger than we think. I believe
everything happens for a reason. The hard times that we go through will make each of us
stronger so we can protect each other and appreciate what we have while we have it. Alone we

49
can do so little, but together with the security forces we can do so much. Let’s put our trust in
them”, said Pak Kassim.

After a long wait, the transportation finally arrived. Pak Kassim, together with the village
committee members, assisted the evacuees to ensure that they arrived safely at the centre in
Felda Sahabat. It took about two hours to transfer the evacuees. Even though Pak Kassim was
exhausted, he continued to check that each of the villagers had arrived and that no one had been
left behind.

After a hectic night, Pak Kassim was rewarded with a glass of water by his lovely wife. ‘It has
been a long night for everyone here. Thank you for bringing us safely to our destination’, said
Mak Munah, who appreciated her husband’s devotion towards her and the villagers.

Besides performing his responsibilities, Pak Kassim encountered two major challenges. Firstly,
he had been instructed not to tell the villagers why they needed to move in order to avoid
alerting any informants or terrorists. It was very important to control the frustration and fear
among the villagers. Secondly, he had to deal with some resistance from stubborn villagers
who wanted to stay back at their homes, though they would have faced a high probability of
being attacked by the Sulu gunmen. Pak Kassim believes that persistence was the key to his
team’s success.

Altogether, 2,800 people from 12 villages were evacuated to Felda Sahabat during the
intrusion. As the village headman, Pak Kassim counted on others to help him handle this
difficult situation. All the affected villages were given generous aid from the government and
strong assurances from the security forces. This assistance gave him the courage and spirit to
lead and protect his people.

The Bloody Friday

At the evacuation centre, most of the villagers waited patiently for updates on the situation. All
of them were hoping for a peaceful settlement through negotiations. Unfortunately, Pak Kassim
and other evacuees learned that the negotiations had failed. The Malaysian authorities refused
to entertain the demands made by the group. This resulted in an all-out military attack by the
Malaysian government. The first shootout between Malaysian security forces and the group of
Sulu gunmen occurred on 1 March 2013 when the latter tried to break a police blockade in
Kampung Tanduo. This marked the beginning of bloodshed. The incident left two Malaysian
police commandos dead, and 12 Sulu gunmen were killed.

A day after the two police commandos died in Kampung Tanduo, the evacuees received news
from Kampung Simunul. While the day had begun like any other, by the late afternoon a large
group of policemen had marched into the village. Their arrival was followed by the deafening
sound of gunshots. It was raining bullets in Kampung Simunul as a group of Sulu gunmen had
ambushed the police. The news reported that six Malaysian police commandos and seven Sulu
gunmen were killed. It was also reported that the bodies of four policemen had been mutilated,
with one beheaded.

50
News of the incident spread like wildfire as people became gripped in fear. Tension grew at
the evacuation centre. It was difficult for the villagers and the rest of the country to face the
fact that Malaysia was being invaded. The nation was at war. Pak Kassim could feel the
heightened nervousness among his people.

‘Our worst fears are happening, Tok. What is going to happen next, and what will be our fate?’
asked Pak Dollah anxiously, speaking for both himself and others who felt the same way.

‘Keep calm, Dollah. Put trust in the government and let’s show them our support.

They are trying their best to save our villages. Let’s pray for them’, replied Pak Kassim, trying
to play down the situation.

At the same time, Pak Kassim was also trying to hide his uneasiness because his people were
relying on him. Pak Kassim said to himself, ‘I must first overcome my fear, and only then will
my people do the same’.

Thus, to maintain their trust, he knew he needed to cultivate the right attitude in himself. He
had to stay strong for his people.

Ceasefire? Too Late Now!

Earlier in the conflict, the Malaysian government warned the group of Sulu gunmen to leave
before authorities took action against them. This caused many Malaysians to think that the
government had been too lenient. The Philippine government also advised the Sulu gunmen to
leave Sabah and even offered to dispatch a war ship to bring them home, but the intruders
rejected the offer.

While negotiations might still be possible before or during a war, the window closes once it
becomes clear that one side has the upper hand. The losers are then left to surrender or accept
the consequences of the war. That happened with the Sulu gunmen. Although the self-
proclaimed ‘Sultanate’ of Sulu requested a ceasefire, it came too late and was no longer
acceptable.

‘Do not test our patience. Our patience has reached the limit’, said Malaysian Prime Minister
Datuk Seri Najib Razak at his press conference rejecting the ceasefire. ‘Now there is no more
grace period for the group to leave; three weeks to talk has expired’, he added.

‘After all the crimes that their people have committed and the outcome has now become
obvious, only now are they asking for peace talks? Is there any necessity for a peace talk now?
Are they in any position to seek a peaceful settlement? No way!’ said Pak Kassim, expressing
his satisfaction with the decision made by the Malaysian government.

The incursion had by now constituted a clear and present danger to Malaysia’s sovereignty.
The nation was gripped by the harsh reality that peace and security could be taken away if its
guard was down. With the revelation that eight police officers had been killed, the decision was

51
made to launch an offensive action called Ops Daulat on 5 March 2013 against the enemy.
Through news updates, villagers at the evacuation centre were kept informed of the operation’s
status.

At dawn, the skies in Kampung Tanduo were filled with security forces aircraft. They had
launched airstrikes in an effort to flush out the Sulu gunmen. A sea blockade ensured that the
terrorists couldn’t get critical reinforcements and supplies, while also preventing the possibility
of escape. The subsequent offensive operations forced the terrorists to be on the run, scattering
in small groups and trying to escape. In the final stages of the operation, ground troops went
door to door to sniff out possible intruders. By the end, the invaders had suffered heavy losses
and their network of supporters crushed. A total of 13 Sulu gunmen were killed.

A Conversation

Hearing the news made the evacuees both relived and worried at the same time. Most of the
villagers at the evacuation centre had avidly discussed the decisions and actions that had taken
place.

‘That is the way!’ Pak Dollah muttered to himself. ‘We were being too kind-hearted to those
arrogant people’.

‘They killed our policemen and cold-bloodedly dismembered their victims. When our security
forces succeeded in ridding us of them, the “sultan” suddenly woke up from his fantasies,
pleading for a truce’. Pak Kassim continued his angry speech: ‘No! Now he must accept the
consequences!’

‘Moreover, Dollah, we must never allow the gunmen to escape under a ceasefire as they can
regroup and launch another assault later’, continued Pak Kasim. ‘If the “sultan” does not want
to see his people killed or apprehended, he has no choice but to surrender unconditionally. The
gunmen must turn themselves in, especially their chief, who must face the consequences of
Malaysian law’.

At the same time Pak Kassim shared his feelings, he could hear a group of teenagers discussing
the situation. ‘I don’t know what to make of it’, one said. He overheard other comments from
some of the young girls: ‘I feel nervous staying here. The earth rattles every day and I feel like
crying. I pray that the Almighty will safeguard the people here who are poor and helpless’.

He approached the group. ‘Stay calm, girls. I feel your worry. All of us are experiencing turmoil
right now. But remember that we have our country’s heroes out there putting their lives at stake
in a dangerous operation. Let us pray for their safety and that they can defeat our enemies’,
said Pak Kassim, trying his best to assure them.

52
A Painful Memory

Kampung Tanduo was finally secured by security forces and declared free from threat on 11
March 2013. Pak Kassim and all the evacuees stayed at the centre until they got the much-
awaited news that they could return to their villages. As Pak Kassim finally walked into the
village with his people, they were devastated to see that their houses were riddled with bullet
holes. Bodies of killed intruders had been left untouched, and dried blood was visible
everywhere. Many homes had been burned down during the battle between the security forces
and the terrorist group.

On the way to his house, Pak Kassim came across a young boy who was collecting some of his
belongings. He said that his family was not ready to move back. Unnerved, Pak Kassim could
sense that the intrusion had left bitter memories for the villagers. For him, life must go on.
Despite losing much of what they had, Pak Kassim hoped that people would regain the courage
to rebuild their lives and look forward to a more peaceful future.

After the conflict, the security forces continued to monitor and secure the affected villages in
order to restore people’s confidence and ease their return home. At sea, where many villagers
earn their livelihoods, maritime forces continued to conduct security operations, particularly in
the eastern Sabah waters.

Schools quickly reopened and public amenities were re-established under the close watch of
security forces, which were now located among the villagers. The fear triggered by the
terrorists was neutralised by continuous aerial surveillance and patrols of armoured vehicles,
as well as through the direct engagement of ground troops with local residents. At sea, the
visible presence of maritime forces sent a clear message to any would-be intruders.

Like any normal day before the incident, Pak Kassim started his day at the jetty in Kampung
Tanduo, where he bought fresh fish from the fishermen. There, he spotted Pak Dollah busy
sorting his daily catch.

‘How was your catch today, Dollah? Manage to bring back a lot?’ asked Pak Kassim.

‘Not like usual, Tok. Just enough to get by. We are not going too far today. We’re staying away
from the affected area’, replied Pak Dollah.

‘Oh really, the area is still off limits?’ asked Pak Kassim.

‘It’s not like that, Tok. The area is permissible, but I’m still afraid there could be trouble. If the
police came across armed intruders in boats, we could get caught in the middle of it’, said Pak
Dollah.

Another fisherman joined their conversation: ‘Many of the big boats, including mine, are still
not travelling very far away. We’re afraid the armed men might seize the boats and keep us
captive until the taukeh pays a ransom to get back his boat.

53
‘I don’t fancy being shot by the police or the gunmen. I just want to fish because I have mouths
to feed’, he added, showing his frustration at not being able to go fishing that day.

The words of the fishermen and Pak Dollah remained clearly in Pak Kassim’s mind as he drove
home. Even with the marine police and security forces watching closely, most of the fishermen
were still nervous as they ventured out to sea again after a two-week hiatus.

Pak Kassim learned that the villagers were still traumatised by the incidents and were
struggling to resume their daily lives. The roar of jet fighters, the bombing, and the shooting
had been terrifying. His people had painful memories that could not be easily erased. As the
village headman, Pak Kassim understood that he had a huge responsibility to help his people
cope with the aftermath of this traumatic event. But how would he go about realising that
obligation? He prayed to God Almighty to give him courage and protect him in his endeavour.

Epilogue

As a result of the incursion, intensive efforts were taken to build trust between the authorities
and local communities. The Eastern Sabah Security Command (ESSCOM), based in Lahad
Datu, was established to protect 10 eastern districts, namely Kudat, Kota Marudu, Pitas,
Beluran, Sandakan, Kinabatangan, Lahad Datu, Kunak, Semporna, and Tawau. The districts
were known as the Eastern Sabah Security Zone (ESSZONE).

Monthly meetings and talks with local people were conducted, and authorities participated in
local programmes and events such as open houses, cultural shows, and other festivities. This
helped build strong relationships between the authorities and local communities, who felt more
at ease in their presence.

Additionally, through this continuous engagement, Pak Kassim could witness the strong ties
developing among villagers and government authorities, and watched as villagers grew more
willing to provide useful information in the fight against outside threats. Pak Kassim felt
blessed that the relationship between the authorities and villagers was helping to dispel the fear
and trauma that had lingered since the attack. His dilemma had been overcome and he was able
to carry out his responsibilities in leading his village in the face of a new reality.

Case Analysis

• When time is of the essence, how should leaders handle resistance in crisis situations?
• What technique can leaders use to help overcome their own fear and to help followers
alleviate acute anxiety?
• What qualities does Pak Kassim possess that help him influence others?

54
Looming Storm at Satyam
RAVINDRAN RAMASAMY
Universiti Tun Abdul Razak

SITI BALQIS MOHD SALDI

Universiti Tun Abdul Razak

Introduction

Around the world, people pursue vocations or engage in entrepreneurial activities to earn a
living. Becoming an entrepreneur, in fact, is often lauded for creating new jobs, improving the
economy, and generating personal wealth. Many agencies and governments encourage their
young citizens to become entrepreneurs with incentives and education. But sometimes core
ethical concerns are downplayed. For example, entrepreneurial activities should not hurt others,
the environment, or the economy, and they should be within the boundaries of the law. In
addition, moral principles should guide a business. Consider the ownership of assets, which is
often collective. To acquire assets, millions of individuals invest in companies in hopes of
receiving returns with little risk involved. The expectation is that the company is governed and
managed by reputed individuals with ethical principles, who take the utmost care in investing
funds, bearing in mind that they are accountable to investors. The corporate governors (the
directors) are expected to follow established conventions and principles, which in turn
contribute to the economy and the wellbeing of society. But there can be weak links in the
process, and corporate governors are no exception. The following episode uncovers
monumental ethical failures that took place in India’s corporate world.

Satyam Computer Services Ltd.

With 10 engineers, Ramalinga Raju and his brother Rama Raju established the Satyam
Computer Services Ltd., a software business located in Andhra Pradesh, India, on 24 June
1987. The company was listed on the Bombay Stock Exchange in 1992, with the owners
holding 18.78 per cent of total shares.

Significant milestones for the company are as follows:

Formed a joint venture with Dun & Bradstreet for IT services-1985

Listed on NASDAQ, USA-1999
Listed on New York Stock Exchange-2001
Revenue crossed the US$1 billion mark-2006
Ramalinga Raju received the Ernst & Young Entrepreneur of the Year award-2007
Revenue exceeded US$2 billion-2008

Satyam Company Turns to Asatyam Company

(Ending happier times)

However, unknown to many, over the years Ramalinga had quietly manipulated the company’s
accounts via three areas.
55
Area 1: Generating Invoices (Show all)

For any company, an invoice is generated upon receipt of an order. Since this was a software
service provider, Satyam prepares bills based on the number of hours needed to finish the job,
while staying within perimeters to meet profit margins. Six departments were involved in this
process. First, Operational Real-Time Management captures the existing schedules and
availability of employees required to carry out a new order. A function involved in on-time
activity computes the hours required to implement the project. Simultaneously, the Satyam
Human Resource Information Network searches for experts and project leaders who can carry
out the work. Then, the Project Billing Management System prepares the bill for the order and
sends a copy to the Satyam project repository. Finally, the bill is sent to the client for approval.
If the client approves, then the bill is uploaded into the invoice management system for
accounting. This procedure was controlled by board members and internal and external
auditors, and was visible to all of them.

Area 2: Generating Invoices (Show none except owner)

In order to tackle urgent orders and also to give overriding powers, the owner was given another
route to create bills through Excel porting, which is handled by a selected group of employees.
This route, however, was invisible to others. These invoices were created to satisfy prominent
and well-known customers, speeding up orders and avoiding the queuing system. Though the
intention was good, it was misused by the promoter. He created several non-existent customers
and boosted revenue. The prepared software was never delivered and cash never received.
Within a period of six years (from 1 April 2003 to 31 December 2008), 7,561 fictitious invoices
were created. The value of these invoices was 51,180 million rupees (US$1.14 billion at an
exchange rate of 45 INR = 1 USD).

Area 3: Cash Mismanagement

Between 2003 to 2008, there were an average of 40,000 employees at Satyam. The owners had
overstated the employee number as 53,000 and diverted 13,000 fictitious employees’ salaries
amounting to 200 million rupees every month to their personal accounts (200 X 12 X 5 =
12,000 / 45 = USD 267m). On investigation, it was found that there were 10 fixed deposits in
the bank amounting to 33,201 million rupees (US$738 million) that were fictitious.

Maytas (reverse spelling of Satyam)

The diverted funds were invested in Ramalinga’s sons’ companies, Maytas Properties and
Maytas Infra. These two companies were family owned and the shareholders were extended
family members. The companies dealt in real estate and infrastructure development. Maytas
Infra was awarded a controversial contract to develop Hyderabad Metro Rail, while the Andhra
Pradesh government had paid 18,000 million rupees (US$400 million) to Maytas Infra towards
work on the Jalayagnam irrigation project.

56
Looming Storm

Ramalinga made all these fictitious transactions and diverted large amounts of money for
several years. The gap between the real financial position of the company and the imaginary
financial position grew without the knowledge of others. He tried to bridge the gap himself but
could not. So he devised a plan. He proposed to the board of Satyam to take over both arms of
Maytas and pay compensation to Maytas shareholders. None of the board members objected
and a resolution was duly passed. But the American depository receipts (ADRs) listed on
NASDAQ fell by 55 per cent in one day, causing distress in the stock market.

The Final Straw That Broke Satyam

None of the stakeholders in Satyam moved—including external auditors and independent

directors—when the Maytas shares and assets acquisition by Satyam took place between 16
December 2009 and 22 December 2009. Satyam had to abort the purchase deal of the two
Maytas companies only after a revolt by shareholders, and while its stock on the New York
Stock Exchange had plunged by 55 per cent. On 23 December, the World Bank initiated action
against Satyam for improper and secretive conduct and barred Satyam from doing business
with it for eight years. This action created ripples not only in the stock market, but also on the
board. One of the independent directors resigned citing the abovementioned accusations.

Satyam’s Well-Reputed Board of Directors

At the time of the World Bank’s reprimand, there were 10 directors on the board at Satyam.
Ramalinga, the chairman, had an MBA degree from Ohio University in the United States. He
had received many awards from both local and internationally recognized bodies. They include
the Ernst & Young Entrepreneur of the Year Services Award 1999, Dataquest IT Man of the
Year Award 2000, Asia Business Leader Award 2002, Ernst & Young Entrepreneur of the
Year 2007, and the Golden Peacock Award for Corporate Governance 2008. Many of these
awards were revoked after the scandal came to light. His brother Rama was the managing
director of the company, with an MBA degree from Loredo State University Texas in the
United States. The other members of the board were Rama Rao (an IAS officer), Mangalam
Srinivasan (senior fellow at Harvard University), Vinod K. Dham (inventor of the Pentium
chip), Krishna G. Palepu (professor at Harvard Business School), Mohan Rao (dean of Indian
Business School), Ram Mynampati, Raju (director of the IIT, Delhi), and Prasad (former
cabinet secretary, Government of India).

Reward for Loyalty

All members of the board were well-respected and handsomely paid by Ramalinga. Their pay
package included allowances, consultation fees, and share options. In one instance, Gupta, a
serving director, received stock options at 2 rupees against a market price of approximately
500 rupees. He exercised them and gained 53 million rupees in 2008. Palepu, a non-executive
director who was working in the United States, received in 2007 alone a consultation fee of
US$200,000 for professional services and consultations, apart from the director pay package.
These pay-outs cultivated an attitude among board members that they should be loyal to the

57
promoters rather than express independent opinions, and should avoid dissent on important
decisions. The minutes of the board meetings show that there were no dissenting voices during
discussions or when making decisions.

Internal Auditors

The internal auditors are employees of a company. Their duty is mainly to check for errors
through control accounts and to prepare reconciliation statements whenever there seems to be
a disagreement in figures. In this case, the first failure was with the internal auditors, who failed
in the above duties. They did not verify the cash disagreement (false fixed deposits were made),
even as sales revenue and debtors were growing disproportionally because of the insertion of
fictitious sales through Excel porting by the promoters. The total employee numbers shown on
accounts was 53,000, but the actual number was approximately 40,000. In a big company like
Satyam, this could never happen without internal auditors noticing. It seemed the internal
auditors were mere spectators to the activities carried out by the promoters. Their lack of action,
however, may have been due to fear or loyalty to the people who appointed them, rather than
discharging their roles and responsibilities.

External Auditors of Satyam

PricewaterhouseCoopers (PwC) was the external auditor of Satyam. The firm remained silent
for some time after the scandal broke out. However, due to the media glare, PwC issued a brief
statement that the audit was carried out over the years based on sound accounting and auditing
principles, and that clientele confidentiality prevented them from going public with the details.
They explained that they were conducting process audits rather than transaction audits as
Satyam was a service-oriented company rather than a manufacturing company. Even so, an
end-to-end process audit would have revealed the discrepancy in invoices prepared and
approved, and invoices that were entered into the Oracle financial accounting system. A
cursory glance of fixed deposit certificates produced by the company would reveal that it
contained neither receipt numbers nor signatories’ names, positions, and employee numbers in
the bank. An external auditor not only needed to physically verify the existence of the asset,
but also to confirm that the amount existed via a confirmation letter from the banks. No
confirmation was sought by the external auditors from the banks even though the amounts
involved were significant. It appeared that the external auditors were taking instructions from
owners and neglected their duties, obligations, and liabilities to the shareholders and
stakeholders.

Audit and Assurance Committee

The Audit and Assurance Committee should have met periodically to discuss current matters.
However, no records were available on Audit and Assurance Committee meetings. Was it
wilful negligence or a deliberate act to circumvent the underlying dubious transactions?

58
Regulators Reaction

Satyam was listed on NASDAQ, the New York Stock Exchange, and the Bombay Stock
Exchange; hence, the company had three regulators. All three regulators only took notice after
the resignation of Ramalinga, the chairman, who admitted that he meddled with the accounts.
When Ramalinga tried to buy his sons’ companies, Maytas Properties and Infra, the investors
in New York dumped Satyam shares, causing the price to plunge by 55 per cent. This was
followed by the World Bank’s actions, which barred Satyam from doing business with it and
prompted Ramalinga’s resignation. Afterwards, the Indian company Law Board suspended the
Satyam board. Foreign associates such as Bank of America and State Farm Insurance
terminated their dealings with Satyam, while Credit Suisse suspended its coverage. The New
York Stock Exchange halted trading of Satyam’s stock, while Indian regulators and the
National Stock Exchange of India gave a lukewarm response, saying they would stop the stock
from trading only if the company was found guilty. The commotion caused the share prices to
hit a low of 11.50 rupees on 10 January 2009, falling from 544 rupees in 2008.

Promoter Shareholding Decline (red flag)

Owners are usually substantial shareholders in a company. At Satyam, the owners held 18.78
per cent of equity at the time of incorporation in 1991. This gave confidence to other investors
to invest in the company. The substantial shareholding also allowed Ramalinga and his family
to run the company as chairman and managing director. It gave them the power to recruit
employees and make veto decisions. During the course of business, the owners cleverly and
cunningly reduced their holdings at opportune times without others knowing about it, thus
reaping personal benefits—akin to a captain jumping ship in times of distress. As of December
2008, just prior to the scandal, the owners held only 2.18 per cent of the share capital. This
amounted to insider trading as they had better information about the company than outside
investors. The owners borrowed a hefty amount of 19,546 million rupees by pledging these
unreliable shares with nonbanking financial institutions. This was cheating.

Silent Suffering of Investors

The loss suffered by individual and institutional investors was unbearable. The banks lent
money by taking these shares, which had lost millions of rupees as collateral. Many individuals
had parked their retirement benefits and savings in these types of reliable companies, hoping
to get good dividends and capital gains. Now they were put in a precarious position. Where
will they go? Institutional investors such as gratuity funds, pension funds, and insurance
companies invest substantial amounts in these shares as they are liquid, stable, bring steady
growth, and offer good dividends. One man’s action had wiped out almost everything. On
average (average price in 2008 was 227.5 rupees, and in 2009 it was 19.76 rupees), the investors
collectively lost at least 14.163 billion rupees (US$3.15 billion).

59
Long-Term Effects

While Satyam’s fraud started in 1999, it surfaced only on 7 January 2009 when Ramalinga
admitted that he meddled with the accounts. For 10 years the connected agencies were silent.
No one raised any red flags. The top-most governing body, the board of directors, never
recorded any dissent on any of the decisions made in board meetings, including the final
meeting in which they discussed the takeover of Maytas Property and Maytas Infra. The
internal auditors, external auditors, and the Audit and Assurance Committee never suspected
problems with any of the dealings and accounting transactions. The banker who lent millions
as loans and overdrafts never questioned the financial position and lent liberally, taking Satyam
shares as collateral. The income tax department and other government agencies dealing with
tax matters never complained of any misdealing. Regulators like the Securities Exchange Board
of India, Reserve Bank of India, and the Company Law Board never reprimanded the company.
The Satyam employees who were highly educated and dedicated never expressed any
dissatisfaction or raised any issues about career advancement and work conditions. Every
stakeholder was silent over the 10-year period. This was surprising. These events would be
viewed by external parties and international stakeholders as signs of the general weakness of
India’s systems, which are riskier than others. This assessment then ruins the reputation of
various Indian agencies in matters relating to investment and business dealings, especially
where foreign direct investment is concerned. The severe wounds inflicted to the corporate
body will take a very long time to heal. It will take much more time to bring back investors’
confidence.

Table 1: Chronology of events of the Satyam fraud

16-Dec-08 Satyam announced the $1.6bn acquisition of two companies controlled by the
family of Ramalinga Raju, chairman of the IT outsourcer. However, Satyam
aborted the deal seven hours later due to a revolt by investors who opposed the
takeover. Satyam shares plunged by 55 per cent in New York.
17-Dec-08 Ramalinga said Satyam is considering a share buyback in a move to regain
investors’ confidence after its stock plunged. Citigroup, JP Morgan, and Merrill
Lynch downgraded Satyam and slashed their share price estimates by half. Satyam
shares ended the day down 30.2 per cent in Mumbai.
23-Dec-08 The World Bank barred Satyam from doing business with it for eight years in one
of its most severe penalties ever meted on a business partner. On that day, the stock
dropped a further 13.6 per cent, its lowest in more than four-and-a-half years.
24-Dec-08 Mangalam Srinivasan, an independent director at Satyam, resigned following the
World Bank’s critical statements and the botched attempt to buy two companies
controlled by Ramalinga’s family.
25-Dec-08 Satyam asked the World Bank to withdraw the “inappropriate” statements about
the Indian outsourcer and to issue an apology for the harm done to the company.
27-Dec-08 Satyam postponed a board meeting set for 29 December, where it was expected to
announce a management shakeup, to 10 January. The move aims to give the group
more time to mull options beyond a possible share buyback. Satyam appointed
Merrill Lynch to review “strategic options to enhance shareholder value”.
29-Dec-08 Three more directors quit the company as the independence of the board members
is questioned.
2-Jan-09 Satyam said its founder’s stake fell by a third to 5.13 per cent.

60
5-Jan-09 Satyam shares tumbled 9 per cent after the London-based World Council for
Corporate Governance, which awarded Satyam a Golden Peacock the previous
year, said it was seeking legal advice to understand the mechanics of the aborted
takeovers as part of its effort to re-assess whether Satyam still deserved the award.
7-Jan-09 Ramalinga resigned after he admitted to falsifying Satyam books.
7-Jan-09 Ramalinga, founder and chairman of SCSL, confessed to fudging accounts to the
extent of about Rs 7,000-crore (Rs 70 billion) in a letter to the board.
9-Jan-09 Ramalinga and his brother Rama (managing director of erstwhile Satyam
Computers) were arrested by the Andhra Pradesh police on charges of forgery and
cheating. The Central Government suspended Satyam's board.
10-Jan-09 The Company Law Board (CLB) suspended the Satyam board; the government
nominated Deepak Parekh, Kiran Karnik, and C. Achuthan to the board.
13-Jan-09 Government ordered Serious Fraud Investigation Office (SFIO) to probe the
scandal.
2-Feb-09 Mahindra & Mahindra (M&M) expressed interest in acquiring Satyam.
5-Feb-09 Government-appointed board named A.S. Murthy as the new chief executive.
11-Feb-09 The new board met to select prospective bidders for 51 per cent stake in Satyam.
17-Feb-09 Satyam case was handed over to Central Bureau of Investigation (CBI).
18-Feb-09 Government asked Company Law Board to replace the boards of Maytas Infra and
Maytas Properties.
6-Mar-09 The Securities and Exchange Board of India (SEBI) gave approval to sell 51 per
cent in Satyam.
4-Apr-09 CBI filed its first charge sheet.
13-Apr-09 Tech Mahindra, through its subsidiary Venturebay Consultants, acquired Satyam.
22-Nov-09 CBI filed its second charge sheet.
7-Jan-10 CBI filed the third charge sheet.
Feb 2011- Mahindra Satyam paid $125 million and $68 million to settle US lawsuits and
Apr 2012 Aberdeen UK claim, respectively.
25-Oct-11 Trial court framed charges in the case.
2-Nov-11 Trial began.
4-Nov-11 Ramalinga, along with two other accused, received bail from the Supreme Court
as CBI failed to file the charge sheet even after more than 33 months of being
arrested.
25-Jun-13 Mahindra Satyam merged with Tech Mahindra, creating a new entity with
revenues of $2.7 billion.
9-Jan-14 Ramalinga's wife, Nandi Raju, and sons Teja Raju and Rama Raju were among
the 21 relatives who were convicted by the Economic Offences Court for default
in payment of income tax.
8-Dec-14 Ramalinga and others convicted by an Economic Offences Court in connection
with complaints filed by SFIO.
9-Apr-15 Ramalinga and nine others sentenced to seven years' rigorous imprisonment in
connection with the case probed by CBI.

61
Case Analysis

• What are the accounting issues involved in the above case? Discuss the relevant accounting
standards that were not complied with by the management of Satyam.
• What are the red flags ignored by the internal auditor and external auditor of Satyam? How
did these auditors fail to detect such a high magnitude of fraud?
• What are the corporate governance issues that the case portrays? How could these issues be
addressed by other CEOs in other companies to avoid this type of fraud?

62
Part 3
BUSINESS NARRATIVES
On Your Smart, Get Set, Go!
Sightless Healing:
The Case Of Blind Massage Station
Strategy For Profitable Growth:
A Case Of Two Generations
Uber: Who Is The Boss?

63
On Your Smart, Get Set, Go!
NIK ROSNAH W. ABDULLAH
Universiti Tun Abdul Razak

Prologue

January 2015. With his head pounding and his body bathed in sweat, Khairuddin pushed aside
his blanket and sat up on the bed in the dark. From the bedroom window of his sprawling
bungalow the enormous star-filled sky radiates on him. Slowly his mind drifted to the kenduri
tahlil that he held earlier in the evening. For the past three years he had held the yearly kenduri
tahlil in remembrance of the untimely and sad demise of his wife. He heaved a big sigh and
thought of the past few years.

Over a short space of six years, from late 2009 to the present, he lost his wife and his life turned
topsy-turvy. He was entangled in several lawsuits, which resulted in the loss of his properties
and the companies that he had built over many years. He struggled to recover from the tragedy
of his wife’s death. Although his toughest times were almost behind him, he continued to be
depressed. How could someone who became a millionaire at the prime age of 30 take such a
turn for the worse? Something was not quite right.

It was now almost 3 a.m. Khairuddin stretched and gave himself a shake. Fully aware of life’s
fragility, he suddenly bolted upright, awake. A decision had to be made. ANIARA SpaceCom,
a company based in the US state of New Jersey, indicated that it wanted to explore a business
cooperation with him. Should he ignore ANIARA SpaceCom’s request or push ahead?
Depressed and still suffering with grief, Khairuddin does not want to be in the present, let alone
to focus on his future.

Khairuddin, the Man in Charge

Khairuddin, the president and CEO of Smart Digital Communications Bhd (Smart), was a self-
made man who rose from humble beginnings. His parents were poor, but he was motivated by
his hardship.

‘I was just a poor kid and I never dreamed I would be in a position where I have authority in a
company, let alone build a company. Coming from a typical poor family, I grew up without
much help and had to struggle’, Khairuddin said.

Through sheer hard work, dedication, and determination, he made his way up in the business
world. Besides Smart, he owned several other companies, including Darul Laksana Sdn Bhd,
Advanced Electronics Sdn Bhd, Smart International Sdn Bhd, Smart Cellular Sdn Bhd, Smart
Broadband Satellite Sdn Bhd, and Smart Broadband Sdn Bhd.

It all began in the early 1980s. At age 23, upon completion of his diploma in accountancy,
Khairuddin joined Singer in 1982 as an internal auditor. A year later, Khairuddin was promoted
to inventory control manager when Singer Malaysia Bhd was bought by Vincent Tan (who

64
later became the founder of one of Malaysia’s largest conglomerates, Berjaya Corporation) and
changed its name to Regnis.

Khairuddin was hungry to take on everything, and he oversaw 40 employees. Not long
afterwards, he shifted back to the Audit Division of the company, assuming the position of
branch audit manager. His talent in auditing was spotted by Arastu Sdn Bhd, an electrical
appliance company of Kompleks Kewangan, under the Permodalan Nasional Bhd (PNB)
Group. There, Khairuddin again climbed the corporate ladder, this time to the title of
management examiner audit manager. He married his wife at the age of 27, and a year later
they had a son.

The following year, in 1986, Khairuddin was made redundant by the PNB Group. He joined
an engineering company, Kejuruteraan Sinar Selasih Sdn Bhd, which dealt with air-
conditioning. This was a departure from his background in accountancy. As a man ruled by
passion and drive, Khairuddin spotted new opportunities. He knew that sales in air-
conditioning was rising as demand was fast-growing.

‘With our tropical weather, it would be hard to imagine that the need for air conditioning will
go away’, he said.

Hence, despite switching industries and being a novice in engineering, he quickly taught
himself the fundamentals and set about reforming the small engineering company from a Class
D mechanical and electrical company to a Class B company. In 1991, as the company was
growing, he left.

With RM200,000 in cash, he formed Darul Laksana Malaysia Sdn Bhd, dealing in refrigeration.
Darul Laksana obtained a contract worth RM5 million from Hati Budi Nominee Sdn Bhd, the
company that owned Renong Bhd and UEM, two giant names during that era. Darul Laksana
also provided major refrigeration systems to factories, handled mechanical and engineering
projects for Proton, and supplied and installed a cabin shelter for a telecommunications tower.

In the early 1990s, new technologies emerged, including the one-way, high-speed satellite. In
tandem with these emerging technologies, Malaysia was considering a move to give its
population access to satellite reception. In 1994, the then minister of information, YB Datuk
Mohd Rahmat, announced that Malaysia would launch an open skies policy for its
telecommunications companies, which could access satellite signals to build global businesses.

The National Telecommunications Policy (NTP) (1994–2020) provided guidelines to all

parties—providers, investors, and the government—on matters of investment, human resource
development, network and service facilities, absorption of new technology, and research and
development. The NTP outlined the creation of high quality, high-tech, cost-effective, and
sophisticated telecommunications services on par with those found in developed countries. In
the international arena, the NTP was created to ensure that Malaysia was a competitive
telecommunications service supplier and premier market leader known throughout the Asia
Pacific region and the world. Many new companies were licensed to provide certain services,
such as mobile phones, pagers, trunked radio, two-way radio systems, and other value added

65
services. The government encouraged the local telecommunications industry to gear itself
towards the export market on a large scale.

Khairuddin read these as signs of the emergence of a robust telecommunications sector. Being
a visionary person who thought in terms of the bigger picture, he understood that the status quo
would be unsustainable and that he needed to ride the wave. There were not many ‘Bumiputera’
entrepreneurs in this new satellite sector (see Exhibit 1), and Khairuddin saw opportunities. ‘If
things are changing, we need to react, to adapt, and to move’, he said.

Hence, in 1995 Khairuddin set up a subsidiary company under Darul Laksana called Samart
Corporation Malaysia. Khairuddin then worked on building a network for Samart Corporation
Malaysia. He tapped Samart Corporation PLC Thailand, an established company that started
in 1955, to be the distributor for the satellite equipment (satellite dish and decoder) in Malaysia.
Khairuddin was working to obtain a satellite VSAT licence under the Ministry of
Telecommunications Malaysia, with Darul Laksana proposing to build a factory at Bukit Kayu
Hitam to produce satellite dishes. In December 1996, the company finally obtained the
VSAT13 licence for a fee of RM100,000.

At the time there were only four companies in Malaysia, including Samart Malaysia (the
subsidiary of Darul Laksana), which possessed the VSAT licence. With the licence, Darul
Laksana signed a unique agreement with Perbadanan Kemajuan Negeri Selangor (PKNS)
giving Darul Laksana access to all the rooftops of PKNS’s residential and commercial
buildings for telecommunications and antenna installation.

But it was not all smooth sailing. As with many businesses, Samart and his other companies
faced major challenges, including an economic crisis. Khairuddin, though, took setbacks in
stride and usually knew what needed to be done to solve the problems.

‘I was just an ordinary guy with no political affiliations. But I was always positive and
optimistic in my outlook and far from naïve. I perceived experiences in a positive light even
when things were heavy going. In whatever I did, I made sure that the requirements were
complied with and my services could not be faulted. I managed the perceptions and
expectations well’, Khairuddin said.

Smart Digital Communications Berhad (Smart)

Smart Digital Communications Berhad (Smart) was formed in 2000. Smart originated from
Samart Corporation Malaysia, which was formed in 1995. Samart Corporation Malaysia was a

13
VSAT stands for Very Small Aperture Terminal Satellite. Early earth stations in commercial
systems were very large and expensive (around US$30m). There was a need to make the system
more affordable to the end user, and to increase transmit power from satellites and with higher
frequencies. The requirement, therefore, was to have smaller earth stations of antenna size. The
underlying objective of the VSAT system was to bring the service directly to the end-user so
that it was more efficient and faster, with a reduction in distribution cost.

66
joint venture with Samart Corporation of Thailand, with 51 per cent and 49 per cent shares
respectively. The company was created to pursue satellite equipment sales and satellite services
opportunities in Malaysia.

The joint venture of the two companies came about in an interesting manner. In 1995, the
president and CEO of Samart Corporation Thailand agreed to sign a memorandum of
understanding (MOU) as partners in trading with Samart Corporation Malaysia, and he came
to Kuala Lumpur for the signing ceremony. Armed with his ingenuity and planning skills,
Khairuddin seized the opportunity to turn the table to his advantage.

The event was held at a luxurious five-star hotel filled with all the glitterati from the
telecommunications industry and media. On the day of the event, Khairuddin orchestrated it to
be a signing ceremony for a joint venture (JV) between the two companies, instead of a MOU.
The president and CEO of Samart Corporation Thailand was taken by surprise, but nevertheless
signed the JV, with 51 percent of shares belonging to Darul Laksana Sdn Bhd and 49 per cent
of shares to Samart Corporation Thailand.

Two years after Samart Malaysia was formed, Asia was hit by a financial crisis in July 1997,
creating difficult conditions for businesses to make any headway. To try to withstand the
challenges, Khairuddin purchased the entire 49 per cent share of Samart Corporation Thailand,
thus making Samart Corporation Malaysia 100 per cent fully owned by him. Hence, Smart
Digital Communications Bhd (Smart) was born (see Exhibit 2).

Prior to acquiring the 49 per cent of Samart Corporation Malaysia, Khairuddin had learned that
Telekom Malaysia had bought over a 40 per cent share of Samart Corporation Thailand.
Khairuddin could see that with the acquisition of stakes in Samart Corporation Thailand,
Telekom Malaysia had become an indirect shareholder of Samart Corporation Malaysia.

However, things were not so rosy for Khairuddin on the home front. The economic meltdown
posed great challenges for him. Being an associate company to Telekom Malaysia had not
brought any significant changes as Samart Corporation Malaysia could not participate in any
businesses and tenders given out by Telekom Malaysia.

Nonetheless, Samart Corporation Malaysia’s relationship with Samart Corporation Thailand

allowed the Malaysia company to supply antennas to NTV7, which had just started its
operation. It supplied the TV antennas in US dollars despite the fluctuations in currency and
got into trouble with NTV7 for short delivery due to a drop in the ringgit.

The Smart group of companies, based in Selangor, Malaysia, consisted of Smart Digital
Communications Bhd and its subsidiaries, Smart Broadband Satellite Sdn Bhd (SBSSB) and
Smart Cellular Sdn Bhd (SCSB). Apart from its role as a cellular infrastructure provider, the
company also focused on satellite communication applications such as high-speed internet
access, interactive distance learning, and interactive TV. By utilizing satellite as a platform, the
system bypassed the bottlenecks associated with terrestrial infrastructure. Smart provided high-
speed internet access via satellite to universities, colleges, and schools, as well as to various
corporations and small- and medium-sized enterprises and industries through its marketing

67
partners. Smart maintained more than 2,000 operational sites on its Linkstar platform, using
transponder on the Telstra 18 through its satellite teleport in Kuala Lumpur. Its VoIP (voice
over internet protocol) revenue was expected to be significant, together with the IP video
content and high-speed internet access services.

Smart was a private Bumiputera company, wholly owned by Khairuddin with paid capital of
RM20 million and assets worth more than RM120 million. The funding was made through
internal means. Funding had always been a major constraint as not many banks understood
Smart’s business. Smart had, however, become among the largest companies in Malaysia
involved in cellular infrastructure. It was licensed with NFP, NSP, and ASP under the
Communications and Multimedia Act 1998 (CMA). Smart was a fully licensed Malaysian
telecom operator providing voice, data, and video services to consumers and businesses, with
100 per cent coverage of Malaysia and Asia. It utilized technologies designed for consumers,
including VoIP, broadband access, IPTV, and Wi-Fi.

Since 1998, Smart had operated on a more than 3,500-site broadband access network across
Malaysia and a 24/7 network operations centre. It had also installed and commissioned 2G/3G
microcell solutions for all Malaysian mobile operators. Smart had also developed partnerships
with both large international suppliers and distributors, such as Loral Inc. (satellite operator
and manufacturer), Inmarsat (mobile satellite services), and NewSkies (satellite operator).

Smart provided an in-building cellular enhancement system14. It made a major breakthrough

when its clientele expanded to include the major mobile network operators, including Telekom
Malaysia, Digi, Celcom, and Maxis. Besides these important companies, more than 250
shopping malls and buildings were also Smart’s clients (see Exhibit 1).

During this time, cellular business was the ‘new money’ for Smart. Khairuddin, with his
calculated risk-taking skills and low fear of failure, started two companies called Smart Cellular
Sdn Bhd and Smart Broadband Satellite Sdn Bhd. Through his planning skills, Khairuddin then
transferred the VSAT licence from Darul Laksana (which by that time had become a dormant
company) to Smart, its subsidiary. During the economic crisis, from July 1997 through 2000,
Malaysia was hard hit. The financial meltdown caused problems for Samart Malaysia in

14
The in-building enhancement system is commonly implemented in conjunction with a
distributed antenna system (DAS), a telecommunications solution which is used to extend and
distribute the cellular signal of a given mobile network operator (hereafter abbreviated as an
MNO) within a building. Below ground level, large buildings and high-rises are examples
where mobile phones are unable to properly reach the carrier’s macro or outdoor network. In
these environments, the in building cellular enhancement system will connect to the carrier’s
signal source, which is typically a bi-directional amplifier or a base transceiver station. This
signal source transmits (and receives) the mobile network operator’s licensed radio frequency.
This frequency is then transported within the building using coaxial cable or optical fibre cable.
In-building coverage antennas are strategically placed to provide the best overall coverage for
users, reinforcing the signal penetration of voice and data frequencies in low signal areas and
in dead spots within structures.

68
penetrating the market. Khairuddin knew he needed to respond to the changing realities. He
did this by creating a partnership between Smart and the telecom company Hong Kong Cable
and Wireless (later PCCW Ltd.). He negotiated with them on the one-way high-speed satellite,
getting them to use the actual telecommunications equipment for internet connections. Through
his perseverance, a memorandum of understanding was signed between the two companies,
with Darul Laksana agreeing to buy the equipment from Hong Kong Cable and Wireless and
selling it in Malaysia. Smart branched out into Southeast Asia, and signed up a local partner,
Speedcast, a Hong Kong–based broadband satellite services provider backed by AsiaSat. The
one-way satellite products that the company purchased from Hong Kong Cable and Wireless
had 64,000 bps (bits per second) capabilities, with coverage encompassing one third of the
world—which means customers could be from anywhere in Southeast Asia. Customers paid
subscription rates to Smart.

The satellite dishes were supplied by Smart in container loads, with 900 units per container
going to Sabah and Sarawak. This process continued for a few years.

On top of running his business, Khairuddin accepted a position as senior consultant at

CapGemini, a UK-based company with regional headquarters in Singapore, in 1999.
CapGemini is one of the world’s foremost providers of consulting and technology services.
Khairuddin saw CapGemini as a training ground for him since the company had clients
worldwide.

While working as a consultant at CapGemini, Khairuddin bought a company called Advanced

Electronic Sdn Bhd, which dealt in electrical appliances and had an annual turnover of RM120
million. It was clear that Khairuddin had strong coping skills, as he was juggling between
managing his string of companies in Malaysia and being a consultant at CapGemini in
Singapore.

It was also at this time that his wife joined Advanced Electronic as its executive director. While
the company manufactured equipment such as televisions and refrigerators under the ECE
brand, it faced stiff competition from China. Khairuddin felt that he needed to see for himself
how his competitors in China were doing. It was on his visit to China that it dawned on him
that Advanced Electronic was in a sunset industry. The manufacturing of products had been
extensively outsourced to China, and Khairuddin sensed his business would not work. So he
stopped manufacturing and instead ordered his products from China and rebranded them under
the ECE label. In 2000, he sold Advanced Electronic to Idris Hydraulic Malaysia Bhd for an
undisclosed amount.

In 2001, Smart partnered with Jaring. Jaring was appointed as a distributor for its broadband
satellite service. In return, Jaring allowed Smart to set up its teleport (Exhibit 3) on its premises.
In 2003, the Malaysian government had expressed its intention to purchase a broadband
network to service 10,000 schools in the country. Smart was subcontracted to deliver 2,000
connections via VSAT (see Exhibit 2). Many of these schools could not be reached by the
terrestrial network and would have to be served via satellite. Major problems followed as many
of the sites could only be reached by boat or 4-wheel drive vehicles and had inadequate
infrastructure, such as the absence of a power supply or generators connected to the schools.

69
To top it off, Khairuddin had to work with a tight deadline. Despite the challenges, he
persevered and managed to deliver all the satellite connections and commissioned work.
In 2004, Smart Digital Communications Bhd entered into a partnership with MoBif Bhd to
deploy satellite services for the whole of Malaysia (see Exhibit 3).

My Passion Died

Despite being a leader in the growing digital communications market at the start of 2009,
Smart’s overall performance was in decline. Smart was caught flat-footed with their bet on the
Ku-Band Surfbeam (see Exhibit 4) network, which was draining resources faster than it could
cover. The company was bleeding due to the high costs of transponder and internet for the Ku-
Band network that it had subscribed to. The original idea of working with a DTH (direct-to-
home)15 company faltered when it became known that Smart was trying to insert itself into the
space segment business.

Smart was growing too big and too quickly, such that work was not properly delegated and
executed, resulting in miscommunication and missed payments. Payments for the cellular
business were not prioritized over the satellite business, despite the cellular business being the
core revenue-earner at that time. This led to the supplier feeling side-lined. With little personal
contact, the supplier decided to sue for an outstanding payment that could have been readily
resolved.

Preoccupied with helping his wife battle cancer, Khairuddin devoted little time to challenging
the frivolous lawsuit. After a drawn-out battle, the lawsuit was retracted. However, it triggered
a cross default with another loan agreement which was not yet due. Compounding the
problems, the tax department claimed that Khairuddin had unresolved personal tax issues
involving millions of ringgits. Khairuddin knew the reasons behind the decline and lawsuit. As
he lamented:

‘Over the past six years, I have had some difficult times in my life. In 2009, my wife was
diagnosed with stage-4 breast cancer. I was devastated. I put all my businesses on hold to take
care of my wife and focused on helping her battle cancer. I brought her to see some of the
world’s best oncologists, who did everything they could until we were being told there was
nothing more they could do. Although she was sick for some years, it was still a shock for me
to see the pale, wasted shadow she had become. I could barely recognize her. Prior to her
illness, she would pride herself with her get-up-and-go attitude. She was stylish and was a
person who could not sit still.

‘In 2013, she succumbed to the disease. Her death seemed surreal. This turn of events was
painful. I hit the lowest low and my motivation for business dipped to its lowest ebb. It was
during this period that I also got entangled with lawsuits, the result of not tending to my
business. Finances being tight, I sold all my properties except for the house that I lived in. I

15
A method of receiving satellite television by means of signals transmitted from direct-
broadcast satellites.

70
also sold my companies and fleet of luxury cars like Mercedes (I love Mercedes and had six of
them of different models), Alphards, Muranos, and the like. It suited me fine as I no longer find
enjoyment in them as much as I had before. Now I drive a modest car, nothing ostentatious.
‘My (late) wife and I, both of us were focused on two things: our family and our business. We
have three children. We were nothing less than obsessed with our business. My wife was also
my business partner. Whenever we have business dealings, she would be by my side and help
fill in the gaps, delighting the prospective clients with her conversations and knowledge of any
current industry scenario. That gave me time to put my thoughts together and make mental
notes and calculations on the business dealings.

‘Our family travelled around the globe together, combining business and holidays several times
a year. Until now I have not gotten over the loss of her. Her clothing, shoes, and her numerous
designer handbags that filled up a whole huge room in the house are still intact.

‘My world had changed when she died. My passion for business slowly withered and died. I
sometimes feel that I want to give up on the world which had given me so much. During those
years of my grief, I turned to religion. I had come to grips with a life of moderation, a far cry
from the excesses I had enjoyed previously.

‘In the face of adversity, however, I have not lost the basic tenets of my 3Ps: persistence,
perseverance, and patience, elements that I hold dear. Religion brought to me a fourth element
as well: the emotional and spiritual quotient which I feel helped complete the 3Ps. All
combined, they have infused me with the strength I need’.

Epilogue

By the middle of 2014, business was slowly beginning to be important to Khairuddin again.
But he is now 57 years old. Knowing his most productive years are winding down, could he
pick up where he left off and move forward on a deal with the US company ANIARA
SpaceCom? Could he repeat even half of the success that he had achieved before? Could he do
it single-handedly without his late wife? Or, should he relish some peaceful years, continue the
religious life he had turned to … and just simply be? To return to the frenetic pace of the
business world would require a reservoir of courage. But then, he thought to himself, he had
built up that courage across a lifetime of struggle and survival. The only thing he was sure of
was that whatever decision he made would have a long-lasting impact on his life. And he needs
to decide fast.

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 Table 1: Summary of the Case in Chronological Order:

Year What Happened Remarks / Illustration

About Khairuddin, a 1. President and CEO of Smart Digital
self-made man who rose Communications Bhd (Smart), subsidiary of Darul
from humble beginnings Laksana Sdn Bhd

2. Owned companies:
 Smart Digital Communications Bhd (Smart)
 Advanced Electronic Sdn Bhd
 Smart International Sdn Bhd
 Smart Cellular Sdn Bhd
 Smart Broadband Satellite Sdn Bhd
 Smart Broadband Sdn Bhd

Smart is a Bumiputera company wholly owned by

Khairuddin with paid capital of RM20 million and
assets worth more than RM120 million, funded
through internal means.
Smart was among the largest companies in Malaysia
dealing in the cellular infrastructure business, and
was licensed with NFP, NSP, and ASP under the
Communications and Multimedia Act 1998.
1982 The journey began in Gained diploma in accountancy.
1982, at the age of 23 Started work as an internal auditor with Singer.

1983 Age 24 Promoted to inventory control manager; 40

employees reported to him.
Later promoted to branch audit manager in the Audit
Division.
Left Singer to join Arastu At Arastu Sdn Bhd of PNB Group, Khairuddin
Sdn Bhd, an electrical worked as management examiner audit manager.
appliance company of
Kompleks Kewangan
under the Permodalan
Nasional Bhd (PNB)
Group
1985 Age 27 Married his wife.
1986 Age 28 They had a son.
1986 At age 28, made Khairuddin joined Kejuruteraan Sinar Selasih Sdn
redundant by Arastu Bhd, an engineering company dealing in air-
under the PNB Group conditioning.
He reformed the company from Class D category to
Class B.

72
1991 Age 33 As Kejuruteraan Sinar Selasih Sdn Bhd grew,
Khairuddin left the company. With RM200,000 in
cash, he formed a new company, Darul Laksana
Malaysia Sdn Bhd, dealing in refrigeration plants.

1991 Darul Laksana, obtained Darul Laksana provided major refrigeration

a RM5-million contract systems, such as chiller and refrigeration plants to
from Hati Budi Nominee factories. It obtained a contract in mechanical and
Sdn Bhd, the company engineering works for Proton, supplying and
that owned Renong Bhd installing cabin shelter for a telecommunications
and UEM, two giant tower.
names during the era.
Early New technologies Malaysia considering providing its residents with
1990s emerged, i.e., the one- access to satellite reception.
way, high-speed satellite
1994 Malaysia announced an The government encouraged the local
open skies policy for telecommunications industry to gear itself for the
telecommunications export market on a large scale.
companies. The National There were not many Bumiputera entrepreneurs in
Telecommunications the satellite equipment field at the time.
Policy (NTP) (1994-
2020) enacted.
1995 Set up Samart Samart Corporation Malaysia JV partnered with
Corporation Malaysia, a Samart Corporation PLC Thailand (started in 1955),
subsidiary company with 51% and 49% shares respectively, to pursue
under Darul Laksana satellite equipment sales (satellite dish and decoder)
in Malaysia.
At the time, there were only four companies dealing
in satellite equipment in Malaysia, including Samart
Corporation Malaysia.
December Smart Corporation Built factory at Bukit Kayu Hitam to produce
1996 obtained the VSAT satellite dishes.
license at a fee of With the license, Darul Laksana signed an
RM100,000 agreement with Perbadanan Kemajuan Negeri
Selangor (PKNS) giving Darul Laksana access to all
rooftops in PKNS residential and commercial
buildings for telecommunications and antenna
installation.
1997– Asian financial crisis hits Smart partnered with Hong Kong Cable and
2000 Malaysia Wireless (later PCCW Ltd.). The one-way satellite
products purchased from Hong Kong Cable and
Wireless had 64kbps capabilities, with coverage of
one-third of the world—or all of Southeast Asia.
Smart branched out into Southeast Asia, signing up
the local partner Speedcast, a Hong Kong–based

73
 broadband satellite services provider backed by
AsiaSat.
1998 Smart in partnerships Smart operated on a more than 3,500-site broadband
with international access network across Malaysia and a 24/7 network
suppliers and operations centre. The company installed and
distributors: Loral Inc. commissioned 2G/3G microcell solutions for all
(satellite operator and Malaysian mobile operators and had a breakthrough
manufacturer), Inmarsat when its clientele expanded to include major mobile
(mobile satellite network operators: Telekom Malaysia, Digi,
services), and NewSkies Celcom, and Maxis. More than 250 shopping malls
(satellite operator). and buildings also became Smart’s clients. Cellular
business was the ‘new money’ for Smart.
Khairuddin then transferred the VSAT license from
Darul Laksana (which had become a dormant
company) to Smart, its subsidiary.
1999 Khairuddin became CapGemini was one of the world’s foremost
senior consultant at providers of consulting and technology services. For
CapGemini, a UK-based Khairuddin, CapGemini could serve as a training
company with regional ground as it has worldwide clients.
HQ in Singapore
1999 Khairuddin bought Khairuddin juggled managing his companies in
Advanced Electronic Malaysia— i.e., Smart Digital, Darul Laksana, and
Sdn Bhd, dealing in Advanced Electronic Sdn Bhd —with being a
electrical appliances consultant to CapGemini in Singapore.
with RM120m a year
turnover.
2000 Smart Digital Darul Laksana increased the paid-up capital and
Communications Bhd purchased the 49% share of Samart Corporation
(Smart) was born. Thailand, thus making Samart Malaysia
Corporation 100% fully owned by Khairuddin.
Samart Corporation Malaysia became Smart Digital
Communications Bhd (Smart).
2001 Smart partnered with The partnership allowed Smart to set up its teleport.
Jaring, a distributor for
broadband satellite
service.
2003 Malaysian government Smart was subcontracted to deliver 2,000
wanted a broadband connections via VSAT. Major problems ensued as
network to service many sites had inadequate infrastructure and could
10,000 schools in the only be reached by boat or 4-wheel drive vehicles,
country. but had to work within a tight deadline.
2004 Smart entered into Deployed satellite services for the whole of
partnership with MoBif Malaysia.
Bhd.

74
 2009 Khairuddin’s wife was Khairuddin faced personal challenges.
diagnosed with stage-4
breast cancer.
2009 Despite being a leader in Smart was growing too big and too fast. Khairuddin
the growing digital put his business on hold to help his wife battle
communications market, cancer.
Smart’s overall
performance declined.
2013 Khairuddin’s wife Khairuddin faced adversities:
passed away.  He lost his wife
 He got entangled in lawsuits, the result of not
tending to his business
 Finances were tight—he sold his properties,
fleet of luxury cars, and companies
2014 Could he move forward
to strike a deal with the
US company ANIARA
SpaceCom?

Case Analysis

• What do you understand about crisis from reading the case study?
• How does a leader manage through a crisis?
• What does it take to practice resilient leadership?

75
Exhibit 1: VSAT and WLL

Exhibit 2: Teleport

76
 Exhibit 3: Via Sat Surf Beam

Exhibit 4: Smart Digital and Partnership

The Star Online, Friday, 8 October 2004

MoBif, Smart Digital sign satellite pact

MoBif Bhd and Smart Digital Communications Bhd have entered into a partnership to deploy
satellite services for the whole of Malaysia.

The uniqueness of this partnership allows MoBif to bring about solutions to the internet
surveillance industry, voice over broadband with the ready infrastructure of satellite broadband
services as provided by Smart Digital to most corners of Malaysia.

From left: Smart Digital Communications Bhd President & CEO

Khairuddin Abd Rahman, Smart Senior Vice President Rey Chan, MoBif

77
 Bhd Chairman Dr Wong Say Ho, and MoBif CEO Kevin Leong at the
signing of a joint venture agreement between the parties.

‘With our core business in the internet surveillance systems, we are aware of the importance of
the broadband infrastructure to better enhance the marketability of our product line. Our
partnership with Smart Digital is timely and has provided wider opportunities for MoBif’s
products’, said MoBif CEO Kevin Leong at the signing ceremony yesterday.

MoBif started its operations in 1999 and started to market its home-grown brand in the internet
surveillance system in Malaysia in 2000. In May this year, it was listed on the Mesdaq.

‘If you monitor our counter, our share price is staying quite strong and steady since then’, said
Leong. ‘We are committed to this business’.

MoBif’s products are being marketed in other countries, namely, Australia, the US, China,
Thailand, Vietnam, and Singapore.

Read more at https://www.thestar.com.my/business/business-news/2004/10/08/mobif-smart-

digital-sign-satellite-pact/#rQ5iVeFDTfSSvJim.99

78
Sightless Healing:
The Case of Blind Massage Station
MOHD YAZIZ MOHD ISA
Universiti Tun Abdul Razak

SITI BALQIS MOHD SALDI

Universiti Tun Abdul Razak

‘I hope that we never lose sight that blind massage is synonymous with genuine massage’.
—Kasyfan Adnan, massage therapist and owner/partner of Blind Massage Station KL Sentral

It was another bustling weekend in March 2017. At last, the partners of Blind Massage Station
KL Sentral got a short break to discuss the future of their massage business. The visually
impaired partners—Kasyfan Adnan, Azman Mat Ali, and Mat Rodzi Hanapi, or Cikgu Mad as
he is commonly known—had to figure out their next move for the massage station. Work was
already underway to add more rooms on the third floor of the four-storey shop lot, but the
expansion had been put on hold indefinitely.

While the work was originally expected to be completed in June 2017, the partners had to iron
out some issues before moving forward. By expanding their business, the partners were worried
about the demands required of the team. As it was, they had been constantly scrambling to get
their operations under control. Besides raising more capital to fund the expansion, new partners
would have to be chosen. Was the potential revenue of new partners sufficient to offset the
added costs? Are the masseurs themselves ready to step out of their comfort zones and face
new challenges? How are they to assess the relative value of their services?

The partners felt like they were at a crossroads. Beyond practical matters related to the
expansion, they had to contend with the challenges of their vision impairments. All of them
had faced obstacles to get where they were. For visually impaired people, employment
opportunities can be severely limited, including engaging in entrepreneurial activities. In a
perfect world, visually impaired people would be given the same rights as everyone else, but
in reality ableism is entrenched and society tends to treat people with impaired vision as a
separate and unequal group. They are often marginalised and given fewer chances to improve
their lives.

This was the case for Kasyfan and his two partners. Despite their visual impairments, they have
the same intellectual capabilities as able-bodied people. The three masseurs had the skills and
experience to build a resilient future for their blind massage business. And they shared those
skills with others who faced their challenges.

‘We choose them (the employees)—those with the right attitude—right after they finished
training at the Gurney Training Centre for the Blind (GTC), and we nurtured them so that one
day they will become owners of their own business’, Kasyfan said with his deep voice.

79
The Three Blind Masseurs

Kasyfan was born in 1975 in Kampung Tabuan Melayu, a predominantly Malay village about
10 kilometres from Kuching town in Sarawak. As a child, he enjoyed going into the nearby
forest to search for wood to build chicken coops in his backyard. He was interested to making
a living from raising chickens. However, his parents would worry if he wasn’t home before
dark. They knew that their curious and adventurous son also suffered from retinitis pigmentosa,
a form of genetic retinal dystrophy or degeneration. It was during his teenage years that he
began to experience progressive loss of vision.

At the age of 22, he became visually impaired. Devastated and faced with the loss of self-
esteem, he was convinced that he would never be able to lead a fulfilling life. According to the
World Health Organization (WTO), a visually impaired person is three times more likely to be
unemployed. Because of this, there is a universal need to improve understanding among the
general public and decision-makers about the contributions that visually impaired people can
make and about their need for employment opportunities.

Visual impairment, also known as vision impairment or vision loss, is characterised by a

decreased ability to see—to a degree that is not fixable by the usual means, such as glasses. As
of August 2014, an estimated 285 million people globally were visually impaired. Of that
number, 246 million had limited vision and 39 million were blind. About 90 per cent of people
with poor vision lived in developing countries and were over the age of 50. Despite the high
numbers, visual impairment rates have actually decreased since the 1990s. Visual impairment
comes with considerable economic costs, both directly due to the cost of treatment and
indirectly due to the decreased ability to work.

In 1997, Kasyfan was given an opportunity to attend a one-year training in blind massage at
the Gurney Training Centre for the Blind (GTC) in Kuala Lumpur. The training centre operated
under the Malaysian Association for the Blind (MAB) KL Sentral, and Kasyfan’s training costs
were borne by the Sarawak Social Welfare office. During training, he was taught the practical
and theoretical aspects of massage, reflexology, anatomy and physiology, and oriental
medicine. In 1998, after successfully completing the training, Kasyfan became a qualified
masseur.

Like Kasyfan, partners Azman and Cikgu Mad, who is a well-recognised trainer at the MAB,
are also visually impaired. Cikgu Mad developed cataracts, a common eye disorder, at the age
of 10. His parents were paddy farmers in Pendang, Kedah. Because they were so poor and
naïve, they failed to diagnose his deteriorating vision early enough to halt the damage, and they
could not afford proper treatment. In the case of Azman, he became visually impaired when
his retina was injured after being hit by the ball during a soccer match in his teenage years.

The Malaysian Association for the Blind (MAB)

The Malaysian Association for the Blind (MAB) was a tax-exempt voluntary society serving
visually impaired people. The association provided many services to assist the blind, as well as
providing education to prevent avoidable blindness. Established in 1951 by the then

80
Department of Social Welfare to look after the general wellbeing of the blind, its activities
eventually spread from Kuala Lumpur to other parts of the country, and to other venues and
formats. These included educational programmers, rehabilitation courses, vocational training,
and placement services. Its rehabilitation courses included traditional massage therapy and
vocational training, such as agriculture (e.g., planting of fruit trees, vegetables), horticulture
(potted plants, nurseries), animal husbandry (rearing chicken, ducks, goats, and fish), and
handicrafts (rattan and mengkuang crafts).

In recent years, the MAB had reached out to visually impaired people in rural areas, where
rehabilitation and training services were provided through its community based rehabilitation
(CBR) programmers. The association worked towards creating greater public awareness about
the abilities and capabilities of the visually impaired. To do this, it continuously introduced
new courses and acquired new skills.

The office of Malaysian Association for the Blind (MAB),

Jalan Tebing, Brickfields in KL Sentral

Blind Massage Station KL Sentral

Blind Massage Station KL Sentral (Blind Massage Station) started as a partnership in 2003,
occupying the second floor of a four-storey shop lot at No. 7, Jalan Tun Sambanthan 4, KL
Sentral. The shop lot was owned by Haji Daud, who charged his tenants monthly rental fees of
RM3,000 per floor.

At its KL Sentral office, Blind Massage Station provided a full range of massage services and
foot reflexology at a rate of RM50 per hour. There were seven masseurs on hand to serve
customers, and all the masseurs were visually impaired. Despite their impairments, they all
demonstrated unique talents in massage therapy.

After nine years in operation, Blind Massage Station experienced rapid growth and garnered
positive responses from customers, resulting in the 2014 opening of another location, Blind
Massage Station Subang Jaya at Taipan Square. While all masseurs began as apprentices, their
business skills were nurtured along with their massage skills so that they could become partners
and owners in the future. Among the skills they were taught were how to be a successful
entrepreneur and how to be resilient.

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‘The masseurs are now able to earn a comfortable living without depending on others, and
they too are able to live their lives all on their own without depending on others’, said Kasyfan.
Radzi, Rafi, and Khairul, for example, had started as masseurs at the main KL Sentral office,
but had branched out and now owned their businesses with the Subang Jaya branch of Blind
Massage Station.

Kasyfan stressed that being blind enabled the masseurs to fully focus on the sense of touch in
a way others could not, making blind massage a more authentic and superior experience. While
many believed that massage was primarily sought out for relief from certain physical ailments,
Kasyfan noted that the more frequent reason was stress. Most of their customers were
businessmen and white-collar workers who used massage therapy to alleviate the stress of their
jobs. Beyond stress relief, massage could also heal injured, tired, and overused muscles,
especially among athletes.

‘Through massage, one could get total relaxation and even cure some sports injuries as it has
therapeutic effects’, explained Kasyfan. ‘Just because massage feels like a pampering treat
doesn’t mean it is any less therapeutic’, he added.

In fact, some of their customers were national athletes who needed help to prepare for a
tournament and/or to recover from strenuous training.

Kasyfan (right) with Cikgu Mad at the Blind Massage Station in KL Sentral

As with any successful business, though, expansion posed challenges for Blind Massage
Station. This stage can often be fraught with both opportunities and perils. Despite the quick
expansion and apparent success of the business, Kasyfan was burdened with headaches, which
little by little he discussed with Cikgu Mad. One of his concerns was that the existing masseurs
were not ready to raise capital and become partners. It had been Blind Massage Station’s
business strategy to make its existing masseurs partners when they were ready.

Kasyfan pondered whether the business expansion was too ambitious. Even though they had
built a thriving business, he felt that it was growing too quickly, and at a time when competition
was stiff. He worried about maintaining top-quality service and a spotless reputation. He was

82
also concerned about how much they should charge and whether their services were priced
right. Listed prices for their massage services were:

Table 1: Quoted Price

Price of service Body Massage Foot Massage Back Massage Acupuncture
(per hour) (per hour) (per hour) (per hour)
Quoted RM50 RM50 RM50 Not available

Kasyfan and Cikgu Mad tossed around their thoughts and ideas. ‘But you know … the required
skills to run a massage business can be learned when one has a good training support system
in place’, Kasyfan said to Cikgu Mad. He knew that most of their customers were satisfied.

‘But in KL Sentral, there are lots of other massage centres competing for business. It does not
help that the environment around Brickfields and KL Sentral is dirty, while some competitors
have poor customer service and taint the entire industry in this area’, Kasyfan continued. There
are also some competitors that are engaging in sex-related services. They are doomed as
sooner or later they will be subjected to raids and fines from the local authorities’.

All of these factors and others, including customers who were unwilling to wait during peak
hours, had affected the industry. Even Blind Massage Station was seeing a decline in
customers. Kasyfan sighed and wondered what else he could do to grow his customer base.

Case Analysis

• How do you assess the environment for opportunities, and how can Blind Massage Station
diversify beyond offering its traditional massage services?
• What are the key resources for Blind Massage Station and its competitors?
• How does the company assess the relative value of offering a superior massage experience?

83
Strategy for Profitable Growth:
A Case of Two Generations
OMAIMA ELTAHIR BABIKIR MOHAMED
Universiti Tun Abdul Razak

LEILANIE MOHD NOR

Taylor’s University

MOHAR YUSOF
Universiti Tun Abdul Razak

SURENTRAN SOMASUNDRAM
Universiti Tun Abdul Razak

18 June, 2010

It was a rainy Friday night when Surentran arrived home. His father, Somasundram, was resting
on the green sofa in the living room. Papers were scattered on the brown coffee table.

‘Hi, Appa’, said Surentran, as he looked at his watch, concerned that his father was up past
midnight.

‘Hi, boy’, his father replied solemnly.

Surentran asked, ‘Are you okay, Appa?’

Somasundram nodded and said, ‘Amma prepared you your favourite meal, poriyal. Go and eat,
then. Tomorrow you can look through those papers. Good night, son’.

Somasundram tapped his son’s shoulder as he walked to his bedroom. Surentran sat down on
the sofa and scanned through the papers on the table. His mind drifted to the subject that
occupied his life—running the family business, Menglembu Food Industries.

‘A business with RM10 million in revenue, with investors wanting a piece of the pie’, he said
to himself. He could hear his stomach growl. He pulled up one of the papers. An alarming
number seemed to glare at him in reproach: ‘RM2 million in debt’. He walked slowly to the
dinner table and whispered to himself, ‘Two months, and I will find a solution’.

Somasundram—How It All Began

Somasundram started selling Kacang Puteh in 1981. As a young man in Ipoh, he pushed his
cart to the cinemas and parked next to the other street vendors every day. He was up by 4 a.m.
and left his house soon afterwards to sell his snacks. At noon, he went home for lunch and a
short rest before returning to the city at 4 p.m. His long day ended at 9.30 when he headed back
home for the night.

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Kacang Puteh, which literally means ‘white beans’, is actually a variety of colourful nuts, such
as cashews, peanuts, chickpeas, and green peas. Back then, the hawker would roll some papers
(old newspapers or the yellow pages of telephone directories) into a cone and fill them with the
Kacang Puteh.

By 2002, Somasundram’s business had expanded. He had bought three shop lots in Ipoh, which
were also turned into his operations plant. His products were not only sold in Ipoh, but also
other parts of the country, such as Kuala Lumpur, Penang, Malacca, Seremban, and Johor. One
of his most popular items were white sugar-coated peanuts, which customers perceived to be a
sweet, healthy treat packed with protein.

The Family

Somasundram and his wife, Karpahadevi, were blessed with two boys, Surentran and Kumaran,
and a girl, Thilagavathy. The hard-working Somasundram took care of his family and his
children’s educations. He encouraged his children to study hard and advised them to pursue
their dreams. His wife ensured that their home was blessed with good home-cooked meals and
love.

Figure 1: The Somasundram Family Genogram

Surentran—The Boy Who Would Be a Great Entrepreneur

At the age of seven, Surentran began his training in the family business. On most afternoons,
he would rush home from his primary school, SRK Guru Kalgidhar in Buntong, for a quick
lunch before heading to the shop to help out at peak hours.

Surentran then attended the Anglo Chinese School (ACS) Ipoh from 2000 to 2006, where he
showed his own entrepreneurial streak by providing tutoring sessions to his classmates.

In 2007, Surentran began his degree programme at Universiti Sains Malaysia (USM), and it
was during his first year at the university that he was diagnosed with dyslexia. One of his

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lecturers found something amiss in his writing and spelling. However, with his strength in
mathematics, Surentran managed to overcome his challenges.

‘Thinking back, I was really good at mathematics and numbers, but when it came to writing
essays and such, I would memorise 200–300 words and rearrange them on paper. I guess
sometimes I forgot the order in which the words were spelled. The dyslexia have never been a
hindrance. I have faced many challenges growing up. Yet somehow I have always enjoyed
overcoming them’, said Surentran.

It was during his second year at USM that his father’s business started to face cash flow
problems. This drove Surentran to find ways to earn extra income in order to help his father,
who was paying the university tuition fees. In 2008, he started Eduguide Tutorial Services to
conduct tutoring sessions in mathematics, a subject he excelled in. The private tutoring sessions
became so successful that he went on to set up two tutoring centres under a newly established
company, Ultima Learning Technology Sdn Bhd in Penang. The venture was targeted to not
only USM students, but others as well.

In 2009, Surentran established another company, Menglembu Foods Industrys, to sell his
family’s Kacang Puteh products in Penang and Kedah. It was a strategic decision as the new
company was able to more effectively market to and supply companies in the northern region.
It was also meant to assist his father in generating more sales during the economic crisis that
hit the nation. The synergy between the family business, Menglembu Food Industries, and this
new marketing arm, Menglembu Foods Industrys, was positive, and Surentran became the
right-hand man in his family’s business.

Meanwhile, Surentran paid his way through university with the revenues earned from the two
tuition centres. In 2010, he graduated with a bachelor of applied science (B.A.Sc.) in analytical
chemistry.

Upon his graduation, he went back to Ipoh to support his father’s business, while also running
his own. At this juncture, the Kacang Puteh business was doing well. Having two companies
helped to widen its distribution network, and demands for Kacang Puteh increased
dramatically. Menglembu Foods Industrys continued to expand and acquire more machinery
to increase production volume.

The Crisis

In 2008, the financial crisis had hit most of the world, and Malaysia was no exception.
Somasundram started to face some financial challenges in 2009. Suppliers demanded prompt
payment, yet his key customers who bought large quantities in bulk were delaying payments
due to him. Somasundram continued to supply these key customers even though past payments
had not been settled. His objective was to continue selling Kacang Puteh, with hopes that the
debts would be collected in due time.

Because Somasundram felt a sense of responsibility towards the creditors and banks, he
continued to make payments and instalments, even as his own debtors were failing to pay him.

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As cash flow problems mounted, Somasundram remained calm and had faith that he would
soon be paid. However, he kept the problem to himself because he had always been the one
who managed both operations and financial aspects of the business.

But stoicism would not resolve the problem. Somasundram did not realise how the cash flow
would impact the business, and by 2010, his debts had amounted to RM2 million. He owed
both suppliers and the banks, and to make matters worse, the business was now operating at a
loss.

The Strategy

31 August 2010
At the company’s meeting, Surentran, flanked by his brother Kumaran on the left, faced his
father in the boardroom.

‘I did not sleep well the night Appa showed me the accounts. I went to the office early that
Friday morning. I wanted to start early because I wanted to make sense of the numbers. I had
to find a way to save our father’s company, our father’s personal debts, and, most importantly,
our family business. I had spent more than two months planning this. Kumaran is aware, as I
have also discussed it with him’, said Surentran as he began his strategic plan presentation.

As he explained the plan, his father looked upset and angry. Surentran recalled his childhood
where he helped out at the family store every afternoon, and how those were the moments he
loved. Kumaran gave him a slight nod, assuring him that he should carry on with the
presentation despite angry stares from their father. Fuelled by a great sense of motivation and
determination, Surentran quietly vowed, ‘If you really want something, you will find the way’.

Surentran said to his father:

‘Kumaran and I are aware that Appa is not well and has some serious health issues. We feel
that Appa should relax and find treatment for the illness. We also feel that the financial debts
and loss recorded by the business would only make it worse for Appa’.

Surentran took a deep breath and continued,

‘Appa, I am proposing to buy the business from you instead of you selling off the business to a
third party to pay your debts’.

Case Analysis

• Explain how and why business planning was important to Menglembu Foods Industrys?
• Discuss and analyse the strategic plan for 2010–2015 and how it was applied.
• In the context of the case, was the Kacang Puteh business sustainable? Discuss.
• Propose a strategic plan for Snack Boss Sdn Bhd for the next five years, from 2015–2019.

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Appendix A

THE STRATEGIC PLAN – IMPLEMENTED FROM 2010 TO 2015

Somasundram sold the grinding mill to Surentran during the process of transferring the
business to him. Surentran explained:

‘I told my father that I have decided to buy the grinding mill from him for RM1, but I inherited
RM2.1 million in debt. It was a massive problem and it took me nearly one-and-a-half years to
put things in order’.

The strategic plan for turning around the company focused on the following:
1. Operational strategy
2. Business strategy
3. Corporate strategy

Operational strategy

Surentran used his knowledge to produce better-quality food products. Besides being a
passionate entrepreneur, his strength was having a background as a chemistry analyst. It helped
him to improve the formula of the food products.

Surentran was confident about his trans-fat–free products and knew how to market them. In
explaining quality, Surentran said:

‘My education is in my snacks. I have been able to use my knowledge of chemistry from USM
to make my snacks. From the type of oil and how its temperature reacts to the ingredients, to
how long we must cook the snack so that it retains optimal nutrients with optimal taste, nothing
is left to chance’.

Business Strategy

Surentran planned to expand the distribution of the snacks beyond Ipoh, Penang, and Kedah.
He worked on improving the brand, Snack Boss, and set targets to export to Europe, China,
India, Singapore, and even New York City. He carefully planned the market penetration
strategy, covering market research, export requirements, packaging requirements, and learning
about local cultures and taste buds.

Corporate Strategy

Surentran also added new products in an effort to be known as more than just a Kacang Puteh
business, as he has plans to enter international markets. He wanted Snack Boss to be a major
player in the snack foods business, selling more than 60 types of snacks in different
categories—namely, crispy chips, crunchy nuts, as well as spicy nuts and chips. The products
would also include maruku kari, kacang kari, and curry-based nuts.

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Not stopping at snacks, Surentran also had plans to enter into the biryani market by providing
his own version of healthy and affordable biryani rice. This was sparked by his ambition to
alleviate world hunger.

2012

Surentran incorporated Snack Boss Sdn Bhd. The plan was to address issues about the direction
of the company, especially in regards to sustainability and expansion, such as:
a. Bigger factory
b. Global market
c. Talented workforce with shared values as he considered all employees to be part of the family

Surentran wanted to include customers’ inputs to improve the quality of the products. He also
set a goal of hitting 90 per cent local market and 10 per cent international market share by 2014.
By 2015, his target was to increase the international market share up to 40 per cent.

2014

Delivering his year-end speech at the staff meeting in Snack Boss’ headquarters, a visibly
moved Surentran announced:

‘I cannot thank you more—every single one of you. All of you have been so committed and
dedicated in ensuring we reached our target this year. My family and I couldn’t have done it
without each one of you. Thank you, everyone. Thank you from the bottom of our hearts.
Together we have achieved our RM6 million target for 2014’.

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Appendix B:

Figure 2: Snack Boss’ brand and products

90
Appendix C:

Figure 3: The staff during a strategic meeting

(Kumaran in green shirt seated in front).

Figure 4: Surentran conducting a meeting with

his staff for way forward 2015 and beyond.

Figure 5: Surentran with his staff at

the main office building.

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Appendix D:

Figure 6: The Rex cinema in the

80s (above) against that of 2016
(below).

Figure 7: Yau Tet Shin Street in

the 80s (above) against that of
2016 (below)

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Uber: Who Is The Boss?
NORIZZATI HJ AZUDIN
UNITAR International University

MOHD SHAIFUL RIDWAN RADZI

UNITAR International University

SITI BALQIS MOHD SALDI

Universiti Tun Abdul Razak

Prologue

On Monday morning, 26 March 2018, Balqis walked under overcast skies near Universiti Tun
Abdul Razak when she heard her phone ding, announcing a new email. Easily distracted, she
tapped on her phone, curious about the contents. It was a promotional email from Uber, which
read:

RM3 off for 15 rides*

Dear Balqis,

The struggle is real—but we’re here to make it easier with 15 free rides worth RM45 this week!
From running weekly errands to morning drop-offs, we’ve got you covered anytime from 26
March to 1 April 2018.

Tap the link below to apply the promo code, and start riding. GET YOUR FREE RIDES NOW
WITH UBER!

Balqis was used to getting promotional emails from Uber. She regularly used the service,
preferring Uber’s app over Grab’s. Balqis felt that Grab’s promotions were too complicated.
They would be limited to a certain number of redemptions, and only available during off-peak
hours—from 10 a.m. to 4 p.m., or 8 p.m. to 6 a.m.—or on certain weekdays and weekends.
Despite getting loyalty points on Grab Rewards and reaching gold status, Uber’s offers were
more simple and the service had perks she liked.

For example, she found its app to be extremely helpful in overcoming language barriers,
especially when travelling with her mother outside Malaysia—to Barcelona, Madrid, Lisbon,
Istanbul, Moscow, St Petersburg, Rio de Janeiro, São Paulo, and, recently, Cape Town. With
the Uber app, drivers only asked for her name and confirmed her destination before ferrying
her there. The messaging tool on her Uber app also translated her messages to drivers in their
language, and vice versa.

Ultimately, Uber won out. Balqis used their service all the time and had largely forgotten about
Grab—until that cloudy day on 26 March 2018, that is. Back at work, Balqis got another email,

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but this time from Grab. Balqis was surprised at the heading that read, ‘Welcome Uber to the
Grab family!’ She proceeded to read the email:

Dear Valued Customer,

Grab and Uber are coming together to serve you better.

For years now, our two companies have pushed each other to outdo ourselves. To be more
inclusive and accessible. To better understand our customers. And to innovate products that
anticipate each and every one of your needs.

And now, we’re coming together to serve you better. As one, we will be able to combine our
strengths into a unified platform that serves the daily commuting, delivery, and payment needs
of millions of people across nearly 200 cities in Southeast Asia.

We’d like to thank you for making this happen. Not just for the support and trust you’ve shown
us over the years, but for being the driving force behind the both of us. We look forward to
sharing even more milestones with you in the months ahead.

We’re in the midst of combining our operations and will transition all Uber services over to the
Grab app by 8 April 2018. So you’ll be able to continue using the Grab app as you normally
do.

We understand you’ll have a few questions. So we’ve prepared some answers here for you. As
always, if there’s anything you’d like to know, feel free to contact us.

Sincerely,

All of us at Grab

Balqis was surprised to read this. How could this be? Just then, the church clock nearby struck
noon and Balqis remembered that she had an errand to run. She opened up her Uber app and
tried to activate the RM3 discount she had received earlier.

The app was loading for quite some time, searching for available drivers, until Balqis realised:
There were no Uber drivers at all in the Uber app’s map.

Grunting with disgust, Balqis downloaded the Grab app to book her ride.

Introduction

Uber Technologies Inc. (Uber) is a tech start-up that provides ride-sharing services by
connecting independent contractors (drivers) and riders with the use of an app. Uber has
expanded its operations to 58 countries, including Malaysia, and is valued at approximately
US$41 billion (RM176.3 billion). Using Uber costs much less than a taxi or other transportation
service in Malaysia. Nevertheless, Uber’s rapid success is creating chaos—legal problems,

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social issues, and technical obstacles. The transportation industry in Malaysia, especially taxis,
are against what they called ‘unfair’ and ‘unethical’ business practices. They argue that Uber
has unfair advantages because it does not need the same licensing and other requirements as
they do. A group that claims to represent 3,000 taxi drivers in Malaysia filed a lawsuit at the
High Court in Kuala Lumpur to compel the Land Public Transport Commission (SPAD) to ban
Uber’s services for allegedly ‘stealing’ their customers.

On the flip side, Uber has been highly praised for giving independent contractors an
opportunity to earn money, so long as their car is less than eight years old. It also offers
convenient ways for riders to get to their destinations at reasonable rates. However, its ‘surge
pricing’ system has been criticised for increasing its fares during high-demand times. In
Malaysia, Uber’s drivers bump up prices during festivals and peak hours. Another challenge is
competing with the popular Grab services. Despite challenges, ride-sharing is still widely used
across the country. According to Tan Sri Syed Hamid Albar, chairman of the Land Public
Transport Commission, 80 per cent of the public prefers using Uber and Grab services.

This case studies various issues related to the impact of these new services in Malaysia,
especially on how Uber helped hundreds of drivers in a challenging economy. The authors not
only rode in Uber cars, but also got behind the wheel themselves to experience driving for the
company. Their personal insights, combined with interviews, helped them understand the
issues and reach conclusions about the future of ride-sharing in Malaysia.

Uber Technologies Inc.: Malaysian Opportunities and Challenges

Background

The story of Uber began in Paris in 2008. Garrett Camp had sold StumbleUpon to eBay, and
as hanging around with another innovative entrepreneur by the name of Travis Kalanick. Camp
wanted to tackle taxi problems in San Francisco. The original pitch involved splitting the costs
of a driver, a Mercedes-Benz S-Class vehicle, and a parking spot in a garage between himself
and Kalanick. They would also share an iPhone app, of course. By March 2009, Camp had a
prototype in the works. The name was UberCab. Camp was running StumbleUpon full-time
and had hired Kalanick as UberCab’s chief incubator. Together, Kalanick and Camp designed
a mobile application (app) for iPhone and Android smartphones that enabled customers to get
an estimated time of arrival from the driver, using an integrated GPS system.

The mode of operation for Uber is through mobile apps communication, where consumers pay
for ride-for-hire services through a third party, known as a transportation network company
(TNC). Drivers use the UberX platform to scan or take a picture of the rider’s credit card with
the smartphone’s camera. Uber does not maintain automobile inventory for drivers, such as a
fleet of taxicabs or limousines. Instead, each driver-for-hire is responsible for his or her own
personal automobile, gas, insurance, and maintenance of his or her own car.

Uber first entered the Asian market via Singapore in February 2013. The company began beta-
testing its product in several other Asian cities soon afterwards and made its way to Kuala
Lumpur in late October 2013, making it the sixth city in Asia to host the company.

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In Malaysia, Uber began operations in Klang Valley and gradually expanded to Selangor state,
in the northern part of Negeri Sembilan and the south of Perak. Uber gained popularity because
its app allows users to contact any driver in the near vicinity. Drivers use the Uber app to
provide them with directions. There are now over 20,000 active driver partners and 200,000
unique riders, the majority of whom are in Klang Valley, Penang, and Johor Bahru.

Uber’s Marketing Strategy

Uber Malaysia Sdn Bhd is a fully owned subsidiary of Uber Technologies Inc. Its mission is
aligned with the Malaysian government’s, which encourages people to use public transport
rather than driving individual cars. Like other companies, Uber understands the Malaysian
target market and maintains a strong marketing mix to succeed. Malaysians are known to be
among the top users of smartphone apps in the world, and Uber takes advantage of this. To
establish a strong presence, Uber used the following marketing strategies:

Early Adopter Advocacy

Word-of-mouth marketing was essential to Uber’s marketing strategy. Uber made its presence
felt by sponsoring events, giving first-time riders free training, and adopting a hyper-local
strategy tailored to each new city it entered.

Referrals
Early adopters were able to take advantage of Uber’s referral program to give their friends free
rides, while earning credits for themselves. This ‘give money–get money’ program gave first-
timers a more convincing reason to try the service. It was very successful both for Uber and
some super-fans, who earned referral credits. Drivers also got referral incentives, thereby
making acquisition on both the customer and contractor sides faster and easier. To this day,
referrals are an integral part of Uber’s marketing strategy.

Reviews
One difference between Uber and traditional taxis is that the transportation disruptor has rating
systems for both drivers and passengers. Drivers are probably more motivated by their ratings,
and even passengers feel appreciated. Either way, the system promoted trust in Uber and better
behaviour on the part of both drivers and passengers.

Partnerships

Uber implemented a number of partnerships to entice both first-timers and loyal customers to
try out the service. In Malaysia, for example, Uber engaged in a strategic partnership with
Standard Chartered Bank. Under the bank’s membership reward programme, card members
were eligible to earn cash-back rewards of 25 per cent from their Uber rides. Uber also made a
strategic investment when it partnered with Toyota, one of the best-selling carmakers in
Malaysia. Toyota leased their vehicles to Uber drivers on a trial basis, and the programme
received positive feedback from Uber drivers and riders.

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A Loyalty Program
Unknown to many, Uber’s marketing strategy also included a loyalty program for two years.
‘Uber VIP’ was exclusive to loyal riders—customers who had taken more than a hundred rides.

An Omni-Channel Approach
The most crucial aspect of Uber’s marketing strategy, and the product itself, was its seamless,
multi-channel nature. Uber set out to reimagine the entire ride experience, making it simple
and enjoyable from beginning to end. The company tackled it from all angles, including mobile
hailing, seamless payments, better cars, no tips, and driver ratings. The product became
ingrained in customers’ lives in a wholly revolutionary way, toppling the old method of hailing
or dialling a cab.

Take a Stand on Environment

Uber utilised Earth Day to advocate for the environment. Through a one-day campaign, Uber
vowed to donate one dollar from every split-fare Uber ride to the Earth Day Network, which
works to plant trees. Uber used this promotion to incentivise passengers to carpool and cut
greenhouse gas emissions.

Products
Uber’s product is application (app) based. Consumers use their services by downloading Uber’s
app to their smartphones. When they want to request a ride, they use the app to contact a driver
in the vicinity. The Uber app also allows customers to track the location of the car, and it alerts
them when the car arrives.

Uber offers several different services, including UberX, UberXL, and UberBlack. UberX is the
low-budget option, while UberBlack is for consumers who want their own private driver in a
high-end sedan. However, in Malaysia, a driver who owns at least a 2012 model vehicle can
start in the UberX category and be upgraded to UberBlack upon completing a hundred trips.
UberBlack drivers also enjoy higher pay. The UberXL category is comprised of seven-seater
MPVs (multi-purpose vehicles).

Price
Uber charges are impacted by the 25 per cent rate that UberX and UberXL drivers are charged,
or the 28 per cent rate for UberBlack. This means that if the rider is charged RM20 ringgit for
a trip in UberX, the driver will have to pay RM5 (25 per cent) to Uber, while making RM15
ringgit profit. However, those charges are reduced depending on the total number of rides.
Programs such as Earnings Boost let Uber drivers plan their week and earn up to two or three
times the normal fare rates in Klang Valley, where demand is tremendously high during peak
hours. In some situations, especially school holidays and festive seasons when demand rises,
Uber’s surge pricing has sparked criticism. During peak hours, prices rose up to three times the
normal price. Uber responded by claiming that its price hikes encouraged more drivers to pick
up passengers in popular areas like the city centre. It can also be argued that surge pricing
increases the number of drivers on the road during high-demand times, thus allowing people to
find a ride at all, even if the price is higher. It is estimated that the number of drivers increases
by 70 per cent to 80 per cent due to surge pricing. Uber, however, still has work to do creating
a pricing strategy considered fair by all its users.

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Promotion
Uber has engaged in a number of promotional activities to make its brand known. Often it
adopts buzz marketing strategies and devotes local attention to its services. Uber Malaysia
General Manager Leon Foong said that from a policy and regulatory standpoint, Uber wants to
work actively with the Malaysian government to help achieve the goal of increasing the use of
public transport. He also said that the Land Public Transport Commission (SPAD) is looking
to reform the taxi industry and improve the quality of service, and that these values are shared
by Uber and the government. In terms of buzz marketing, Uber said it would deliver Xiomi
Inc.’s new flagship handset, the Mi Note, to buyers in Singapore and Kuala Lumpur. Uber users
can use the app to buy the new Mi Note a day before it goes on sale on Xiaomi’s website. The
purchase will be charged to the user’s Uber account, and the handset will be delivered shortly
thereafter to his or her physical location.

Challenges
Uber faces a number of challenges, including internal struggles, legal and regulatory
challenges, and global issues that affect companies more widely. In Malaysia, after a long
battle, the government is considering regulating Uber. However, it faces challenges from
existing public transporter communities over licensing issues. Uber will have to adapt its
strategies to address these domestic challenges and other hurdles.

Trust is another challenge for Uber. The company operates in an industry where trust between
strangers is vital. This trust ensures a safe and comfortable ride for both passengers and drivers.
Uber has developed a rideshare rating system to help guarantee trust and reliability. Low ratings
indicate riders’ dissatisfaction with a driver, which results in drivers having to take remedial
classes to improve the quality of their services.

There have also been cases where people claimed that a driver chose passengers and
destinations, and would reject requests if the route was undesirable. Uber policy strictly
prohibits this practice. However, an investigation among Uber drivers found that this claim was
purposely made to tarnish Uber’s reputation so that people would lose confidence in Uber
services. The research discovered that some of the drivers refusing service were actually
employed by rival transportation businesses, such as traditional taxi companies. They
registered to be Uber drivers and engaged in sabotage practices. While Uber has clarified that
it is not in competition with taxis, some 102 taxi drivers are planning to sue the Land Public
Transport Commission (SPAD) for alleged negligence in not banning Uber and other operators.
The taxi drivers claim that their livelihoods have been affected due to these alternative services.

Managing Risks
Eventually, Uber will need to raise its prices and reduce the number of generous incentives;
however, doing this will make it easier for new competitors to operate. Competing companies
tend to start in a city, or handful of cities, where they can reach large numbers of people, then
expand from there. Consumers install apps for the different ride providers and decide on the
cheaper or preferred option. In fact, Uber drivers do not dominate the market, especially during
off-peak hours or for long-distance rides. Their luxury-car drivers are especially sensitive to
maintenance issues—such as gas prices, tyres, brakes, oil changes, and insurance—where
making a profit requires them to be selective about their services.

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A major concern for Uber is how to reduce greenhouse gas emissions. The company has
released three environmental initiatives, with the latest being the option to carpool. This new
initiative gives Uber customers the option to share rides with other passengers on the same
route. Uber believes this new feature benefits all stakeholders—customers ride at a discount,
drivers make more money by going longer routes, and emissions are reduced as fewer cars are
on the road. In addition, the carpool programme can help manage urban growth, relieve traffic
congestion, and expand public transportation—all while reducing greenhouse gas emissions.

The long-term sustainability of Uber depends on managing future risks in five key areas:

• Drivers: The number of disgruntled drivers could skyrocket if Uber increases its profit-share
deductions. With recent laws mandating healthcare insurance, drivers may require coverage,
which is costly. Training programmes to improve driving skills could reduce risk from
negligent drivers, and thus decrease liability insurance costs.

• Competitors: Uber’s business model can be found in similar ride-for-hire services, although
comparison studies showed that Uber drivers benefitted more by driving during peak hours and
heavy traffic. If other companies imitate Uber’s revenue-boosting tactics, it could encourage
more competition from ride-for-hire services, in addition to ongoing competition from taxis,
airport limos, car rentals, mass rapid transit, and more.

Customer Base: Increasing demand for ride-for-hire services requires more attention to safety
improvements and developing rates that benefit both riders and drivers. The future risk of
unpredictable demand could be met with product diversification. Currently, Uber only offers
technology oriented products, and it must continue to be competitive in an industry where there
is intense competition over rates.

• Technology: Customers are wary of downloading apps, and some online businesses have
been hacked and their credit card data stolen. Uber can improve its cybersecurity to reduce the
risks.

• Customer Satisfaction: Some customers have experienced long waits, cancellations,

inexperienced drivers, and sexual harassment. Uber should be receptive to consumer
complaints and address them thoroughly to improve customer satisfaction.

While there is a benefit of being the first and the biggest, that doesn’t guarantee future success,
unfortunately. Overall, to predict whether Uber’s success will be sustainable, we need to not
only understand what business models and market strategies apply, but also how flexible and
responsive Uber’s team is in dealing with both external and internal challenges. The main
question is whether Uber can succeed when the drivers are considered merely people behind
the wheel, or whether drivers should be regarded as bosses of their own businesses. Perhaps,
by making them feel secure and empowered, Uber’s services could be improved.

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Conclusion
Uber faces a number of marketing challenges, including legal issues brought by taxi services
in Malaysia. Despite the challenges, the company has become popular among consumers.
Recently, the Malaysian Cabinet officially gave the Land Public Transport Commission
(SPAD) the go-ahead to regulate Uber. The ride-sharing services will officially be part of the
public transport landscape of various cities, which was a huge relief to both riders and drivers.

Looking at the Malaysian market, Uber sees a bright future with abundant expansion
opportunities. It is therefore important for Uber to ensure the safety of both riders and drivers.
They should adopt controls to ensure that drivers using Uber apps obey the rules and
regulations. If it wants to expand to more states in Malaysia, Uber should also tackle the issue
of angry taxi drivers sabotaging the company’s reputation. Currently, with support from SPAD,
the expansion has begun, and reports estimate that there will be 150,000 new individual drivers
to provide services. But Uber will have to tackle trust issues among customers to achieve long-
term market success.

On the issue of empowering Uber drivers, this study found that while Uber drivers feel that
they are working for the company, they also feel like their own bosses. They set their working
hours, and this flexibility has prompted more drivers to sign up. Drivers feel ‘free’, as they are
not bound by any routine or regulation, and decision-making falls entirely within their control.
People enjoy the chance to be their own boss, and Uber can capitalise on these feelings to forge
positive relationships with drivers and ultimately improve their service.

Update
On 8 April 2018, Uber Malaysia transitioned their services to the Grab platform. The
Singapore-based Grab had acquired Uber’s operations in Southeast Asia, effectively taking
over the US-based firm’s activities in Malaysia, Indonesia, Singapore, the Philippines,
Thailand, Vietnam, Cambodia, and Myanmar.

However, the Uber app can still be used in over 80 countries around the world, such as Brazil,
where sharing a ride with other passengers is the default selection in Rio de Janeiro, São Paulo,
and other cities. As at January 2019, Uber also operates in Cape Town, South Africa.

In addition to Grab, Malaysia hosts many other industry players, such as MyCar, Dacsee,
PickNGo, the luxury e-hailing service BlackLane, and Riding Pink, which caters to female
users. Grab has also expanded to GrabFood and GrabDeliveries, as well as offering cashless
payment options and subscriptions packages, which let Grab users select a range of prepaid
services for a cheaper price.

Epilogue
Having no choice but to use Grab on the day her Uber app vanished, it did not take long for
Balqis to achieve Grab’s platinum member status. Balqis was quite pleased with herself as she
enjoyed the new perks, such as faster bookings and being put on priority lists when booking
rides during peak times—two bonuses that cut the number of long waits and last-minute
cancellations from Grab drivers. Despite her initial reservations, Balqis had become a satisfied
Grab user.

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Case Analysis
• What are Uber’s marketing strategies for encouraging Malaysian customers to use its service?
• What are the 4Ps Uber used to start its service business in the transportation industry?
• What are the four key areas Uber needs to focus on to sustain its business in the long run?

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Appendix

Description UberX GrabCar Economy

Commission 25% 20%
Base Fare (in RM) 0.95 1.00
Per KM Rate (in RM) 0.60 1.10
Per Minute Rate (in RM) 0.25 0.00

Non-peak hours with smooth traffic – about 21 minutes

Description UberX GrabCar Economy

Base Fare (in RM) 0.95 1.00

Per KM Rate (in RM) 14.3 km x 0.60 = 8.58 14.3 km x 1.10 = 15.73

Per Minute Rate (in

21 mins x 0.25 = 5.25 0.00
RM)
Total earnings before 1.00 + 15.73 + 0.00 =
0.95 + 8.58 + 5.25 = 14.78
commission (in RM) 16.73
Total earnings after
14.78 - 25% = 11.09 16.73 - 20% = 13.38
commission (in RM)

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Peak hours with heavy traffic - about 40 minutes

Description UberX GrabCar Economy

Base Fare (in RM) 0.95 1.00

Per KM Rate (in RM) 14.3 km x 0.60 = 8.58 14.3 km x 1.10 = 15.73

Per Minute Rate (in

40 mins x 0.25 = 10.00 0.00
RM)

Total earnings before

0.95 + 8.58 + 10.00 = 1.00 + 15.73 + 0.00 =
commission (in RM)
19.53 16.73
without price surge

Total earnings before

commission (in RM) 19.53 x 1.5 = 29.30 None
with price surge (1.5x)

Total earnings after

commission (in RM) 19.53 - 25% = 14.65 16.73 - 25% = 13.38
without price surge

Total earnings after

commission (in RM) 29.30 - 25% = 21.97 None
with price surge (1.5x)
Based on the basic fare structure above for Klang Valley, Uber is a good platform for drivers
to earn more in heavy traffic conditions. However, Uber also charges a higher commission at
25 per cent, while Grab’s commission is lower at only 20 per cent. Grab, on the other hand,
offers a flat rate regardless of traffic conditions, while Uber’s price surge in heavy traffic
conditions, even after the commission, is a clear advantage to the driver.

Note:

All the authors experienced riding Uber. In Malaysia, Norizzati took more than 100 trips, while
Mohd Shaiful both rode and drove Uber on several trips for the purpose of writing this case.
Siti Balqis has used Uber in many countries, including Moscow and St Petersburg in Russia in
2016 (Uber in Russia merged with Yandex in 2017); Istanbul, Turkey, in 2016 (banned by the
Turkish government in 2018); and Rio de Janeiro and São Paulo in Brazil in 2017, where she
found the Uber app to be very helpful in overcoming language barriers as the majority of
Brazilians only speak Portuguese. At the time of writing, Siti Balqis had recently taken Uber
rides in Cape Town, South Africa, where the company is still flourishing after government
regulations were relaxed in 2019.

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Part 4
POTENTIAL FLASHPOINTS
Living Up to Expectations
I Could Lead a Horse to Water…

104
Living Up to Expectations -
A Second Generation Challenge
ARLIZA ABDULLAH
Taylor’s University

LEILANIE MOHD NOR

Taylor’s University

MOHAR YUSOF
Universiti Tun Abdul Razak

Syamil felt a welling of emotions as he addressed the research team: ‘Sometimes Dato’ will
tell the staff, you can be very successful in business, but when you don’t have the desire to do
good deeds and focus on heaven, you will not be happy even though you are very rich. But if
you have this drive to conduct business the right way, knowing that this is your ticket to enter
heaven, then your character would be …’ Syamil’s sentence was abruptly cut short as Dato’
Hussamuddin Haji Yaacub walked into the room to meet the research team from UNIRAZAK
and Babson College.

Syamil tapped his cousin Akmal’s shoulder and said, ‘Let’s make way for the professors to
speak to Dato’. Then he shook hands with the research team, telling them, ‘Do drop me an
email or give me a call if you need further information. I’ll be happy to sit down and share
more’.

As Syamil returned to his office, the clock at the corridor showed 12 noon, 7 September 2016.
His thoughts honed on the theme of the case being researched—how family character equates
with business character. ‘Hmph, a tall order for me, but it was and still is an interesting
challenge’, he muttered to himself, then smiled.

The Company
Kumpulan Media Karangkraf Sdn Bhd (Karangkraf) was a family business founded in 1978
by Dato’ Hussamuddin Haji Yaacub, along with his elder brother, Fickry Haji Yaacub, and
their cousin, Mohamed Nasir Haji Hamzah. Together, they aspired to cultivate the reading
culture in Malaysia. Their first foray into the publishing business began a year earlier, when
Hussamuddin, who was in his final year of studies for a bachelor’s degree in economics at
Universiti Kebangsaan Malaysia, used his own money to publish a book by Johan Jaafar,
Kajian Sejarah Melayu.

During the early years of the publishing venture, through the mid-1980s, the focus was on
school books. The team then moved into magazines and novels, with publications such as
Mingguan Kanak-kanak, Bacaria, Watan, Media Hiburan, Majalah Remaja, and Majalah
Nona. In 1996, Karangkraf became the first publisher in Malaysia to introduce desktop
publishing software and, in 2000, launched its first website, www.karangkraf.com.

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Karangkraf continued to expand its business over the years. In 2006, the company ventured
into newspaper publishing by launching Sinar Harian in Kota Bharu. With Sinar Harian,
Karangkraf prided itself as being the first hyperlocal newspaper which provided local news
reporting by writers based across Malaysia. The content of Sinar Harian consisted of 50 per
cent state-focused news, with 32 dedicated pages of community and district news. By 2010,
Sinar Harian had a presence in 11 states. In 2016, the publication had two million registered
subscribers, making it the online news portal with the highest traffic in Malaysia. At the same
time, Karangkraf had become Malaysia’s largest independent publisher and printer, with 50
per cent share of the national magazine market.

The Family, the Company Culture, and Values

The founders were brought up according to Islamic teaching and traditional Muslim values and
virtues. They strongly believed that characteristics such as generosity, gratitude, caring,
integrity, and humility were important in building a strong foundation for the company. Thus,
strong family values, caring (based on the spirit of Zakat, one of the five pillars of Islam), and
integrity (based on the Islamic virtue of self-assessing right and wrong) were incorporated into
the organisation—and not just within the multi-generational family members, but also within
employees.

These values were also encapsulated in the core organisational capabilities (publishing,
printing, and news reporting) and corporate identities (brands, slogans, taglines, and corporate
social responsibility programmes). For example, Sinar Harian’s tagline, ‘Telus dan Tulus:
Kebenaran di sebalik berita’, which translates to ‘Transparent and Honest: Truthful news
reporting’, is based on integrity. Hussamuddin attributed his values and virtues to his
upbringing, which emphasised the importance of religion, family, honesty, and humility.

‘The secret of our success has been our people. We have a very strong corporate culture. Our
people understand their contribution to the company and the group’s contribution to the
nation. We have a clear set of corporate values that all of us have to live by in our work—
clarity, passion, innovation, teamwork, trustworthiness, sincerity, and caring’, said
Hussamuddin.

Character building was also of utmost importance to Hussamuddin. His late father was an
adventurous person who instilled the entrepreneurial spirit and a love of acquiring knowledge
in his children. They had to work in the family bookstore and were encouraged to read while
they were at the shop. ‘Your life has to be simple, but you must work hard’, his father advised.

Hussamuddin’s family was also brought up with the notion that family is never left behind. No
matter how hard things get, sharing and giving were key not just among the immediate family,
but also with everybody around them. Family members often got together, and the same was
true for the workplace family at Karangkraf.

The employees were close-knit. Many had stayed with the company for over 20 years. In
Karangkraf, staff were treated as part of the family and, in return, they gave their best to the
company. The founders firmly believed in the principle of ‘caring is sharing’, and this was
demonstrated by their generosity towards their employees. They had helped with paying off

106
employees’ debts and medical treatments. Weekly potlucks in every department were another
way which the company instilled caring and integrity in the organisation. This practice also
created a sense of family among the employees.

However, Hussamuddin also believed that blood relatives could be either an asset or a liability
to a company. Relatives could be loyal, thus making them assets. But if relatives took
advantage of their positions and did not put in their best efforts, then they would be liabilities
to the organisation.

Relationship between Values and Practices

Value Meaning of Value How it is practiced How it is integrated
in the family and in the firm
by employees
CARING The caring value is based on  Care for INFORMAL
the spirit of “Zakat”, which is employees MECHANISMS:
one of the Five Pillars of  Care for  Makan or
Islam. It can be defined as learning weekly potluck
alms-giving and is the sessions in
practice of charitable giving every
by Muslims based on department.
accumulated wealth, and is
obligatory for all who are able Makan is a Malay
to do so. word meaning
eating.
INTEGRITY This value is based on the  Journalistic self- FORMAL
Islamic virtue of “self- censorship in MECHANISMS:
assessment” of right and Sinar Harian  Corporate core
wrong. It is based on the values:
character of Prophet Concern, Passion,
Muhammad called, “siddiq”, Trustworthiness,
which means truthful in Innovation,
words and deeds. Teamwork,
Sincerity
 Tagline:
Energizing soul
& mind
 PEDULI CSR
programs
Figure 1: The Relationship between Values and Practices

Second Generation
In 1996, founders Hussamuddin, Fickry, and Nasir decided to bring the second generation into
the business. Syamil and Akmal were hired and groomed for upper management. Soon after,
Firdaus, Hussamuddin’s eldest daughter, also joined Karangkraf.

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By 2015, there were 15 family members working in the organisation. Comprised of both the
first-generation founders and second-generation employees, they held various positions as
directors, heads of divisions, and middle management. (Refer to Figure 2: Yaacub’s family
genogram and family members who worked for Karangkraf).

By bringing family members into the company, Hussamuddin realised that animosity and
conflict between siblings and cousins could flare up if preventive measures and mechanisms
were not put in place. Thus, in 2000, the founding generation, led by Hussamuddin, initiated a
management succession plan.

The succession plan was part of the corporate governance and performance initiatives to
professionalise management, especially at the executive level. Hence, the second-generation
family members underwent these initiatives as they carved out their careers in Karangkraf.

Figure 2: Yaacub’s Family Genogram and Family Members Who Worked for
Karangkraf in 2013.

Challenges and Opportunities for the Second Generation (Syamil’s Perspective)

‘It is hard being the second generation. A newbie entrusted to take over and earn the trust of
employees who are older and have been in the company much longer. You are fighting against
the perception that you got the job just because you are family. Being the second generation,
it not only means proving yourself to the employees, but to the founders as well. You want to
make sure that you make a difference in the company and not just carry on the tradition’, said
Syamil.

Syamil went to work at Karangkraf a week before his cousin, Akmal. Having graduated in
computer system networking and telecommunications from the University of Missouri, Kansas
City, in 1995, Syamil had worked two years in a medium-sized local IT company before joining

108
the family business. Upon joining Karangkraf, their uncles wanted Syamil and Akmal to learn
the ropes from the bottom.

Syamil and Akmal started as management trainees in 1996, where their uncle Fathihi took them
under his wing. Among their first tasks was to learn the financial aspects of the business. After
six months of management training, Syamil was entrusted with the graphics department. He
had barely settled into the job when he had to make his first big decision.

At that time, Hussamuddin was on the verge of buying printing equipment that cost almost
RM1 million. One of his trusted vendors had recommended the equipment, and he seemed
convinced that it was a great purchase. Based on past experiences, Syamil knew that
Hussamuddin was inclined to make purchasing decisions based on trust rather than the merits
of the actual product. Hussamuddin believed that the person he trusted would always provide
the best products and services for the company.

‘What should I do? Where do I start? Hussamuddin already had someone in mind for the
project, but I feel that I need to study this closely first before I make my decision. It is too much
money to spend on something I know so little about’, Syamil said.

So Syamil did his homework and went to Singapore and Germany. During these business trips,
he met with several other vendors and looked at various alternatives. Syamil needed to fully
understand the whole process—such as the flow of the operation and the criteria and
specifications of the equipment. In short, he wanted every little detail to make a well-informed
decision. After all, it was his responsibility and he was accountable. Not long after, Syamil
presented his recommended printer to the board, and they agreed to purchase the one he
suggested.

Syamil faced another challenge in commissioning the printer. Kassim Zakaria, the manager in
charge of graphics for over 20 years, was already unhappy with Syamil.

Kassim had given up half his office space when Syamil was assigned to the printing division.

‘Kassim thought that I was privileged, inexperienced, and would not be able to contribute much
to the organisation. He was also pushing for the machine that Hussamuddin was advocating.
So, when I managed to convince the board to purchase the printer which I had proposed, there
were many objections, both from Kassim and the other employees. They did not want to learn
to run the machine. Everybody came up with excuses. It was really difficult for me’, recalled
Syamil.

Despite the protests, Syamil persevered and trained employees from the printing division to
operate the printer. He even did the work himself. Within a month, the machine had proven to
be the better decision—a job that would have taken three hours could now be completed within
an hour.

After his first success, Syamil began to feel more comfortable in his position as he continued
to get his ‘hands dirty’. He gained respect from the employees and they began to cooperate
with him.

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Walking in the Shadow
During the first 10 years at Karangkraf, Syamil felt that he was in the shadows of his uncles
who founded the company, as well as his father who had worked there. His father was well-
liked at Karangkraf, and the employees were always comparing him with his father. His father
was a patient man and spent a lot of time talking to the employees.

‘I had lost my temper once with an employee in front of the others. This employee had been
gambling with money he borrowed from the other employees, even from me. But Hussamuddin
talked to me after the incident. He told me that I should relax and calm down before I address
the employee. He said that he supported me in whatever decision I make, but I should be calm
when talking to my employees. He told me not to let anger get the best of me. I am grateful that
I have my uncle to guide me. He is my mentor. I must say, after that incident I learned to spend
more time talking and listening to the employees so I can understand their problems better and
be able to advise them too’, said Syamil.

However, Syamil’s earliest training was with his mother. He said his mother once told him that
since he was the eldest among his siblings, whatever his brothers did, being the eldest meant
that he had to guide the younger ones. This was also something that Hussamuddin told him.

‘I subscribe to the management style of seeing another person’s perspective. So, if I want to
get things done, but at the same time I know that I have opposition, I will put myself in his shoes
and then make the decision’, Syamil explained.

Syamil also enjoyed being in the field. He was willing to do the job first before he instructed
employees to do it. He believed in not only getting his hands dirty first, but also getting buy-in
from employees. Syamil thought that a leader should first talk to employees to gather their
ideas, and not just impose ideas upon them.

Restructuring and Rebranding Karangkraf

In 2009, Karangkraf underwent some restructuring and rebranding activities. The Karangkraf
media group (officially Kumpulan Media Karangkraf) consisted of five business groups: Grup
Sinar Karangkraf (newspaper), Grup Percetakan Ultimate (printing), Grup Buku Karangkraf
(book), Grup Majalah Karangkraf (magazine), and Grup Niaga Karangkraf (other businesses),
as shown in Figure 3 below.

Figure 3: The organisation chart of Kumpulan Media Karangkraf after the

restructuring in 2009.

110
 Key Events for Karangkraf

YEAR EVENT

1978 Hussamudin, Fickry and Nasir founded Karangkraf in a

shop lot (CO), School Books (PUB)
1983 Magazines and Novels (PUB)
1996 Introduced Desktop Publishing Software (PUB)
2000 First web presence: www.karangkraf.com (CO)
2002 Moved to Shah Alam on 2-acre land (CO)
2003 Awarded Malaysia Book of Records for Publisher with the
largest Malay magazine titles (30) (PUB)
2005 Awarded ISO 9000:2001 to Ultimate Print (PRINT)
2006 Launched Sinar Harian in Kota Bahru (NEWS)
2009 Rebranded and restructured into Karangkraf Media Group CO - Company
(CO)
2010 Sinar Harian in all 11 states in Peninsular Malaysia, PUB - Publications
launched sinarharian.com.my (NEWS)
2012 Expanded to a new 15-acre Karangkraf Complex (CO) PRINT - Printing
2013 Fickry passed away (CO), Sinar Harian in 8 states in NEWS - News
Peninsular Malaysia (NEWS)

Table 1: Chronological order of events took place at Karangkraf.

Syamil’s Accomplishments
A few years after he joined the company, Syamil proved that he was not just the owner’s
nephew. He was a capable leader who could make a difference with new solutions and changes
he brought to Karangkraf. In 1998, he introduced desktop publishing for the editors, the first
for a publishing company in Malaysia. This helped editors from the newspaper and magazine
divisions meet their printing deadlines.

Syamil looked for more areas to improve. He saw that their computers were out of date and
needed upgrades. Instead of outsourcing the job, Syamil took it upon himself to upgrade the
computers, buying parts from Imbi Plaza and installing them on the existing computers at the
office. This led to thousands of ringgits in savings for the company.

In 1999, Syamil started an in-house IT department. He improved communication among

employees by implementing email, which was a faster and more economical way of getting
things done.

Syamil was also the person who led Karangkraf into the online media world. He created an
interactive presence for the company, leveraging social media and targeting a broader section
of the market. In 2010, he collaborated with his cousin, Akmal, to bring Sinar Harian online.
They equipped news reporters with Blackberry devices so that reports could be sent directly to
the newsroom in real time, and even directly to the newspaper’s online page. This contributed
to their successful strategy of becoming a ‘hyperlocal’ and unbiased newspaper.

111
In collaboration with his other cousin, Firdaus, Syamil brought Karangkraf’s magazines and
books online. Three magazines went digital in order to attract a younger generation of readers.

By 2012, Syamil was made one of three executive directors in Karangkraf and led Grup
Percetakan Ultimate. With so much experience, Syamil felt that he had proved himself as a
worthy second-generation leader of this family business.

Years before, Hussamuddin had challenged the second generation to create value-added
services for the customers and to increase productivity. The newcomers were tasked to achieve
this through innovative products, services, and processes, as well as effective financial
management, rather than through cost-cutting. They have continuously accomplished this goal,
ensuring growth and sustainability of the business.

By 2013, the company was moving rapidly into digital media, while also maintaining a printing
services business, which was the largest in the country and also the firm’s largest revenue
contributor. In the same year, Karangkraf’s revenue was RM500 million (approximately
US$151.5 million), with 1,500 employees.

On 2 November 2016, Syamil received an email from one of the researchers indicating that the
case ‘Family Character Is Business Character’ had won the best paper award at the recent STEP
Conference in Boston, USA. Syamil smiled as he recalled the faith and trust Hussamuddin had
placed in the second generation of the Yaacub family.

Hussamuddin reflected on his confidence in the next generation: ‘I think over the past 35 years,
we have created a very strong corporate culture and corporate governance. And because we
came from a strong religious family, I believe the new generation has been well prepared to
take over the company by maintaining the existing values, but adapting to the changes of the
new business scenario. After spending over 15 years of succession planning, Insha’Allah, the
company will be in good hands. The challenge for them is to bring the company to a higher
level. With the inner strength of the company, the resources we have, and the values in all of
us, success is the only way for us’.

A challenge, indeed, which Syamil agreed to take on more than 20 years ago.

Case Analysis
• Discuss the challenges faced by the next generation of leaders at Karangkraf, using examples
mentioned in the case.
• In the case of Karangkraf, examine the differences between management succession and
ownership succession.
• What motivates Syamil as he leads Karangkraf?
• Discuss the similarities and/or differences between Hussamuddin’s and Syamil’s leadership
styles.
• Projecting 50 years ahead, how might values and culture play a part in Karangkraf’s continued
sustainability?

112
 APPENDIX A:

APPENDIX B:

Expansion to the 15-acre Karangkraf Complex

113
APPENDIX C:

Karangkraf Online Mall launched in 2014

APPENDIX D:

Karangkraf is the largest publishing company in Malaysia, with hyperlocal newspaper Sinar
Harian; 200 books a year; and 30 magazines, such as Impiana, Nona, Wanita, Pa&Ma,
Hijabista, Maskulin, and Remaja

114
APPENDIX E:

115
I Could Lead a Horse to Water…
NOR AZAMI ROSLI
Universiti Tun Abdul Razak

AMIRUDDIN AHMAD
Universiti Tun Abdul Razak

January 2017
2.30 pm

Over a hundred students and four teachers serving as facilitators attended the half-day public
speaking workshop at the MARA Junior College in Port Dickson, Negeri Sembilan. Heading
back to Kuala Lumpur after the successful event was the Public Speaking Club team, led by
Cindy. The teams consisted of lead trainer Abdullah, who was assisted by Lina, Chandran, and
Daniel, while Azmi volunteered.

The workshop had been divided into two sessions, with the first session focused on theory and
the second on practical skills.

‘It was a successful workshop. I could see smiling faces on the students from morning until the
end of the workshop’, said Cindy, who has vast experience in public speaking. As the club’s
chairperson, who had travelled all over the country to train members, she was pleased that the
workshop had earned the club RM5,000, which was paid by the college.

Cindy was certified as a trainer by the Human Resource Development Fund (HRDF) in 2009
and received a master’s degree in economics from Nuffield College, University of Oxford. She
briefed her team members on the positive response from MARA Junior College, which wanted
to engage the club to be its training provider for public speaking. She also shared some concerns
about her ambitious plan to establish new club branches and activities. She was particularly
worried about retaining existing members and recruiting new ones.

‘You know, I have difficulty in getting support from members, especially on securing new
projects and promoting new members’, lamented Cindy. She complained that in order to do
something, she always had to get the ball rolling, and that she usually ended up doing
everything on her own. She remarked that the response and feedback from members were very
slow. Even calls for meetings among committee members were an issue as most people didn’t
turn up.

‘Cindy, we all know that you are the backbone of the club, but you also need to consider that
listening to ordinary members is also important’, responded Abdullah, the 51-year-old owner
of Décor Enterprise. Abdullah, who joined the club four years ago, said the club could increase
the number of new members by improving the quality of in-house trainers. This would enhance
the credibility of the club among outsiders and create more potential for the club to be a
preferred training provider in public speaking. ‘We need to upgrade our people first before
embarking on mass recruiting efforts’, Abdullah reiterated.

Cindy showed irritation at Abdullah’s opinion, but she kept quiet.

116
‘I agree with Abdullah. We need to have a dedicated trainer who is willing to go the extra mile.
It is not too late. We still have time to get and train them to become good’, added Chandran,
the driver for the trip. Prior to becoming a member in 2013, Chandran, now retired, was a civil
servant working with a government agency for almost 25 years. He currently operates a small
family business with his wife. Chandran is well-liked by Cindy, not because of his valuable
opinions on matters, but due to his availability to carry out tasks. He is also a very active
member who attends most meetings and contributes to club activities. As a retiree, he is flexible
with his time and able to travel throughout Peninsular Malaysia to promote the club.

This has allowed Cindy to take advantage of Chandran’s kindness and availability. The trip to
MARA Junior College was sponsored by Chandran, from the transportation to all the costs
incurred along the way. However, being a good assistant to Cindy does not mean she would
listen to Chandran’s opinion. Upon hearing Chandran’s support for Abdullah, Cindy
sarcastically instructed Chandran to just focus on his driving.

‘But Cindy, we have our own reasons for joining the club. Of course, the main purpose is to
develop our public speaking skills. But the problem is, work and family commitments are my
number-one priority. I have three small kids at home that I have to care for after office hours.
In my mind, I am only an ordinary member and not full-time staff’, said Lina, expressing her
annoyance at Cindy’s treatment towards her team members.

Lina, who is an executive in a telecommunications company, had joined the club a year ago.
As to the reason why, Lina said she wanted to develop her confidence in terms of public
speaking. To go on this trip, she had to ask her mother to babysit her three children because
her husband is in the military and currently based in Sabah for six months. As much as Lina
appreciates the value of being a club member, she admitted that she could not give 100 per cent
commitment to attend the twice-a-month meetings. Lina was also troubled by the fact that she
had quite a substantial amount of outstanding club fees, which she needed to settle to avoid
dismissal. Cindy, on the other hand, constantly reminded Lina to pay her fees immediately.
Lina is not alone in facing outstanding fees as other members also faced similar unpaid bills.
The club is beginning to become like a full-time job instead of a part-time activity, and this has
affected Lina’s motivation.

‘The club is a good training platform for members. There are two types of people—one looking
for personal development and the other to get a certificate to be a qualified trainer. I chose the
second as time doesn’t permit me to be actively involved in every meeting’, said Daniel, who
was in agreement with Lina, Abdullah, and Chandran. Daniel had been a member for two years.
He has worked at an oil and gas company for 20 years and plans to own a training centre upon
retirement in a few years. Since joining the club, he won a second-place speaking award in a
competition. But due to his full-time job, he missed several club meetings, though he does
make an effort to join external programmes which interest him. For Daniel, joining the club
was for his personal gain and development, rather than to help recruit more members for Cindy.

Azmi, a lecturer who joined the club three months before, chimed in, ‘With all due respect, Ms
Cindy, the way you speak your mind in our WhatsApp group is very disturbing. You are too
ambitious in trying to launch six new branches by the end of the year. Where will the money
come from? You keep complaining that the club does not have enough money to spend. The
fees are only enough to cater food, room rentals, and utilities. Sometimes, when the cash
balance goes red, I know you have made up the shortfall using your own money. I think we
need to change the way we do things’.

117
Despite being a newcomer to the club, Azmi was among those who regularly attended
meetings. He paid his fees and participated in most of the club’s activities. Although he was in
favour of recruiting more members, he remained apprehensive about opening new branches
due to the club’s insufficient funds. He observed the way the club operated and found that it
needed to fi ne-tune its activities. In his opinion, retaining existing quality members needed to
be prioritised and addressed accordingly. By doing this, he thought, the club would attract more
people to join.

It was almost three o’clock in the afternoon when the travellers decided to pull over at the
highway’s rest and relaxation (R&R) area. Maybe the stop could cool the argument flaring up
between Cindy and the other members? Up to this point, Cindy had given no response. She
wanted to say something in reply, but was waiting for the right moment …

The Public Speaking Club (the Club)

The club was established on 31 March 2004 under the wing of Toastmasters International (TI).
Subsequently, on 3 April 2009, the club established itself as a separate entity as it wanted to
focus on public speaking in Bahasa Malaysia.

Since then, the committee members have refined the club structure. Just five years after the
restructuring, the club successfully established five branches—starting with Klang Valley,
followed by Petaling Jaya, Bandaraya, TTDI, and Shah Alam—which are all grouped under
the central zone.

Objectives of the Club

The club’s main objective is to help improve public speaking skills, while at the same time
strengthening the confidence and communication skills of its members. Those who join the
club are required to attend the twice-a-month training session. The sessions are mostly led by
a more experienced member.

In order to expand its membership, the club has spread its wings outside the central zone and
established seven branches—in Johor Bahru, Pulau Pinang, Melaka, Seremban, Ipoh, Sg
Petani, and Taiping. The club is now looking to expand throughout Peninsular Malaysia.

Central Zone South Zone

1. Shah Alam 1. Johor Bahru
2. Bandaraya 2. Melaka
3. Petaling Jaya 3. Seremban
4. TTDI Muar (proposed)
5. Klang Valley Skudai (proposed)
Cheras (proposed)

North Zone East Zone

1. Pulau Pinang 1. Kuantan (proposed)
2. Ipoh 2. Kemaman (proposed)
3. Taiping
4. Sg Petani
Table 1: List of branches (existing and proposed)

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Activities of the Club
Admission is open to those age 18 years and above. The club fee is RM250 every six months.
Presently, the club has 140 registered members. However, only 40 per cent of them are active.
The rest either don’t pay the fees and/or don’t attend the two compulsory meetings per month,
as stipulated in the club rules.

The two meetings that members are required to attend are on public speaking, and members
must present speeches on selected themes. Themes are predetermined by club headquarters,
and each member is given five to eight minutes to speak. The more experienced members help
the other members improve by giving immediate feedback during or after the speech. In total,
all members must complete 28 speeches in order to be awarded a competency certificate issued
by the club. As most members are participants on a part-time basis, the meetings are conducted
on weekday evenings between 8.00 p.m. and 10.00 p.m.

Upon joining, each new member receives a book entitled Fundamentals of Public Speaking,
which is written by Cindy. In the book, members are taught several ways to improve their
public speaking skills. In order to encourage members to build confidence in public speaking,
each branch conducts a training and certification ceremony every six months for members who
have achieved a certain level of competency.

Occasionally, the club will conduct public speaking competitions among members. The events
give members the chance to gauge their confidence level and skills in a more challenging
environment. Members experience the feel of a real public speaking competition. Beyond
branch-level competitions, the club has also organized the Ramadhan Cup, which is held during
the fasting month of Ramadhan every year.

The club also conducts ongoing workshops for members who have qualified as trainers. The
workshops are conducted by existing members and cover topics such as how to become a good
emcee or trainer. Members have an opportunity to become an emcee, speech evaluator, judge,
or a member of a skills-enhancement committee. Other activities, such as debating or reciting
poetry and drama, are also included in every fortnight’s meeting.

Besides training for members, the club provides a wide range of training courses to external
parties. Some of the courses cover basic public speaking skills for youth and adults, emcee’s
basic training for corporate events or weddings, vocal classes, and Mandarin and English
classes. Trainers for these courses are selected from among the club members.

Vocal Class
About six months earlier, Cindy diversified the club activities by establishing a vocal class.
The purpose of the class is to provide a platform for members to learn proper vocal techniques
for singing. A qualified vocal teacher was hired by the club for the monthly class. The class
runs from 9.00 p.m. to 11.00 p.m. and is held every fourth Saturday at the headquarters. A
room has been set aside for the class, and it is equipped with a karaoke set, two sets of
microphones, two medium-size speakers, a big screen, and a small stage. Ten members have
signed up for the class, but only four to six people attend regularly. The fee is RM20 per class,

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and members are required to pay the fee each time they participate. The vocal teacher is paid
according to the standard price structure, which is RM100 per hour.

As the number of members who turn up for the class is often insufficient to cover the RM200
per session, Cindy has used her own money to make up the difference. She reminds all
registered members five days before the class with a WhatsApp text. If she does not get enough
members to commit to the session, Cindy will postpone the class. To date, the class has been
postponed many times due to lack of participation.

Mandarin Class
The club also conducts a basic Mandarin class for its members. The class was established seven
months ago, and is held every Friday evening from 8.30 p.m. to 10.30 p.m. The Mandarin
teacher is a club member. Currently, eight members have signed up for the class. The fee is
RM500 for three months, or 12 classes total. There are four modules taught in this class, which
are basic pronunciation, Hanyu Pinyin reading skills, basic conversation, and a list of words
that are widely used for communication. Each class has a theme, and materials are given to
students. All students are required to communicate in Mandarin, and also to make a
presentation in order to improve their confidence speaking basic Mandarin.

However, attendance has not been very encouraging, despite students having paid their fees.
Cindy is upset with members who have skipped classes without valid reasons. There was even
a class where only one member showed up, although they had been sent confirmation texts via
WhatsApp. Some members fail to pay attention to Cindy’s reminders.

The Club Structure

Cindy - Chairperson
Lina - Secretary
Azmi - Central Zone Coordinator
Daniel - East Zone Coordinator
Chandran - North Zone Coordinator
Abdullah - South Zone Coordinator

Cindy
Chairperson

Lina
Secretary

Azmi Daniel Chandran Abdullah

Central Zone East Zone North Zone South Zone

Figure 1: The Public Speaking Club Organisation Chart

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Meanwhile … back in the car …

Chandran had parked in a shaded area and everyone was happily looking forward to a quick
snack before continuing their journey home. Just as they were about to alight from their vehicle,
Cindy stopped them.

‘You guys! I have been quiet enough all this while … Did I agree with what you said about me?
I don’t think so …’

Cindy burst out in anger. She could not accept the comments made by Abdullah, Chandran,
Daniel, Lina, and Azmi. She felt their attack was baseless. She said that she had led the club
longer than most of them had even been members and that she knew what was best for the club.
The club was not successful because the members were lazy and not willing to do extra work.
She told them that their personal problems, such as Lina’s, were not her concern. Lina,
according to Cindy, should sort out her family problems rather than using them as an excuse
not to be active. Daniel’s focus on personal gain was also unacceptable to Cindy. Daniel should
think about contributing to the club instead of only thinking about himself.

As for Azmi’s remarks on insufficient funds, Cindy said that the shortage was due to lack of
new members and the unwillingness of existing members to settle their accounts. Besides, they
got angry when they were reminded of their outstanding fees.

Cindy became more enraged as she spoke. She released her pent-up anger and frustration
towards her members. ‘I am your leader! You guys need to listen to me and not me listen to
you guys. So, it’s very true now that I could lead a horse to water, but I can’t force it to drink!!’

Cindy reached for the car door handle, got out of the car, and slammed the door hard. Her team
members were left looking at each other in shock. At that moment, they all knew that this quick
and enjoyable snack break was gone. Instead, it had become a nightmare.

Case Analysis
• What is Cindy’s leadership style?
• What are her members’ perceptions of Cindy’s leadership style?
• Suggest ways to reduce conflict between the leader and followers.

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Part 5
LEADERSHIP:
AN ENIGMATIC CONCEPT
From Sejahtera to Maqassid:
The Journey of the Jaguh Kampung

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From Sejahtera To Maqassid:
The Journey Of The Jaguh Kampung 1
CORDELIA MASON
Universiti Kuala Lumpur

NIK ROSNAH W. ABDULLAH

Universiti Tun Abdul Razak

‘Sejahtera is a multi-layered concept covering both the microcosm and the macrocosm—one
reflecting upon the other. It is universal and even “heavenly”.’
—Dzulkifli Abdul Razak

Another Day, Another Group

As his car approached the Merdeka Square in the heart of Kuala Lumpur, Professor Tan Sri
Dato’ Dzulkifli Abdul Razak (Dzul) took in the beauty of the Moorish buildings on his right.
It had always been one of his favourite spots in the city and held many sweet memories.
Although most of his working life was spent in the northern part of the country, Kuala Lumpur
was always home. He wondered what would be in store for him that day. He had just arrived
from Paris the night before and was rather tired.

‘Why can’t I just learn to take it easy and retire in peace like most of my friends?’ he thought
to himself.

In many ways, ironically, although he has formally retired, his life had become more hectic
than when he was leading the Universiti Sains Malaysia, an APEX university of Malaysia.
Besides holding various leadership positions with national organisations, he was also the
fourteenth president of the International Association of Universities (IAU), a UNESCO-
affiliated organisation, and the chair of the Steering Council of the Right Livelihood College
Global Secretariat, based at the University of Bonn, Germany. As the driver turned towards the
roundabout near the Central Bank, Dzul recalled sharing his thoughts in Paris about how
leaders could use the concept of Sejahtera to help reach their sustainable development goals.

For many years, since he had taken the reins at Universiti Sains Malaysia as its vice chancellor,
he had been looking for inspiration on how to be a good leader. As a pharmacist by qualification
and training, many management concepts were not familiar to him at first. However, as time
passed, he gathered more insights and became inspired by various indigenous values of the
Nusantara communities. The various community outreach programmes organised by the
university further fuelled his passion to find out how these local values could be incorporated.

1
Jaguh Kampung, used to refer to Professor Tan Sri Dato’ Dzulkifli Abdul Razak in this case
study, literally means village champion. It usually has a negative connotation of being
backward. However, in an article entitled ‘Je Suis Jaguh Kampung’, the learned professor
argued otherwise, concluding that, viewed comprehensively from a holistic perspective, it is
better to be jaguh kampung—steeped with budi (kindness) and sejahtera (prosperous)—than
one of the scandalous global celebrities whom we often read about (See Appendix 1).

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His efforts had been quite successful.

One of the first adopters of Sejahtera was a group of South Koreans who visited him and set
up a Sejahtera centre upon their return home. In fact, groups outside Malaysia seemed to be
more keen to explore and apply the concept than the locals. This made Dzul determined to
intensify his efforts to promote Sejahtera. He was baffled to see the lack of appreciation of
local values among Malaysians and, since retirement, he had taken the opportunity to reach out
to as many people as possible. He tried to accept every invitation to talk about Sejahtera. Today
was another opportunity. Dzul was off to address a group of MBA students at UNIRAZAK on
the topic of Sejahtera leadership. He alighted from the car and walked towards the lobby.

Sejahtera Leadership—Picking the Essence from the Petals of ‘Sejahtera’ in the

Classroom
The MBA students were excited to meet the Jaguh Kampung. They had just read his column
in The Sun earlier that week and looked forward to meeting him in person. It was their final
lecture in a course on the leadership brand, and Dzul had agreed to facilitate this last session.
The project manager, Nantha Kumar, was fidgety as he conducted his final check:

Projector working—check. Sound system working—check. Caterer has arrived—check.

Mineral water is available—check. When the class rep arrived at the door with the lecturer, the
dean, and the Jaguh Kampung, all were prepared to partake in the three-hour (turned four-hour)
dynamic exchange of ideas.

With a neatly scribbled mind-map of ‘leadership’ and minimal-word visuals, the class rode
their trains of thought to seek the meaning of Sejahtera leadership (SL). Along the way,
questions popped up:

‘How does the notion of the word “lead” fit into current thinking on leadership?’
‘How can we revive notions of leadership altered by colonisation?’
‘How should we view the notions of wealth?’
‘What does being wealthy mean?’
‘How do we equate justice around the world?’
‘How do we form genuine partnerships?’
‘What ethics should we follow?’
‘How do we educate leaders?’
‘How do you practice SL in your daily life?’
‘How can we practice SL in our daily lives?’
‘There are many leadership models. How does Sejahtera leadership fit into the scheme of
things?’
‘How can we create a harmonious balance through Sejahtera leadership? Or, rather, how can
Sejahtera leadership principles be used to create a harmonious balance?’

Dr Zul Bahrom, the dean, was relieved that his idea of bringing one of the most authoritative
figures in educational leadership into his MBA classroom was yielding so much insight. The
students were totally engaged in the discussion. The boardroom of Universiti Tun Abdul Razak
had rarely felt so alive. Inquisitive minds fielded more questions on Sejahtera leadership,

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demanding answers on how leaders in their respective contexts could apply the concept
successfully. Dzul shared his own Sejahtera leadership practices.

Dr Zul was confident that this lively bunch of mature students would be able to integrate what
they had learned today with the leadership concepts covered during the semester. Among
others, they had talked about various topics relating to the personal side of leadership, the leader
as a relationship builder, and the leader as social architect.

When Dzul shared his experiences with the class, he positioned his ideas at the strategic level.
He talked about ‘big’ concepts such as creating vision and strategic direction for the world, and
how Malaysians could contribute to the broader global community. He spoke about how we
need to shape our culture and values by digging into our trove of cultural and social assets, and
to search for gems which we could utilise to craft our common destiny for a sustainable future.

Dzul discovered the beauty of the concept of Sejahtera, and its potential use to promote
sustainable development, during his illustrious career in education that spanned more than four
decades. After his official retirement, he continued exploring how to apply and incorporate the
cultural concepts of Sejahtera and Budi into mainstream thinking in the field of leadership. He
argued that we could use the concept of Sejahtera beyond its use as a common name for villages
and housing areas, or as a slogan to express key organisational values.

To him, Sejahtera embodies cultural meanings which had and could be applied in various ways
in different contexts. Sejahtera was the Polaris2 of our fore-fathers in the Nusantara. They used
it in their quest for the betterment of life—to build solid family ties, to build harmonious and
progressive clans and tribes, and to build a group of cohesive citizens of a nation. It had stood
the test of time and was still in active application—for example, the use of ‘Salam Sejahtera’
as a formal form of greeting in both official and other social functions in Malaysia and
Indonesia. To Dzul, Sejahtera is a resilient concept which could be used to build resilience.

As the class bade farewell to Dzul late that evening, Dr Zul was inspired to soldier on with
Dzul’s ideas and further develop the concept of Sejahtera leadership (see figure 1 for Dzul’s
conceptualisation of the concept). The students felt the same way too. They promised to assist
Dzul on two projects before the end of the first quarter in 2016. They agreed that Sejahtera
leadership could also be used to highlight the importance of building resilience in a balanced
way using the SPICES principles. Their next project would be a session with exchange students
from Babson College near Boston, Massachusetts.

2
Polaris is a metaphor for guide, referring to the North Star as a guide for directions.

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 Figure 1: SPICES OF SEJAHTERA LEADERSHIP
Sejahtera leadership encompasses 10 principles which need to be considered and balanced;
these principles are outlined through the acronym SPICES.
(1) Spiritual aspects
(2) Physio-physical aspects
(3) Intellectual aspects
(4) Cultural and (5) cognitive aspects
(6) Emotional, (7) ethical, (8) ecological, and (9) economic aspects
(10) Societal aspects

Babson’s Take on Sejahtera Leadership3

The one-and-a-half-hour lecture, entitled ‘Injecting Soul into Leadership: Sejahtera in the
Pursuit of Sustainable Business’, had fired the imagination of the young undergraduate
students. Divided into six groups, the US exchange students from Babson College and their
Malaysian friends from UNIRAZAK passionately discussed their key takeaways and how they
would conduct their presentations. They presented varied interpretations of the session.

Universality of Ethics

Group 1 put forth several ideas:

There is a need for Malaysians to discard their inferiority complex in relation to the West. The
world needs to divert from the idea of segmenting East and West. The West should start ‘a life
of subtraction’ and the East a ‘life of addition’. From our observations during our site visits,
we made a deduction that in starting a business Malaysians (citing Karangkraf as an
example—specifically the idea of the founder starting his business as ‘a pathway to heaven’)
begin with ‘heart’/values, while for Americans it is usually an afterthought. Business must be
done in equilibrium, with values and ethics at the centre. In corporate America, businesses are
usually for profit, with ethics as an advertising tool, whereas in Malaysia (at this point of
observation/based on this study trip), ethics and religion were central to the business—
religious obligation is the foundation for doing business. There are still many other ways
outside of religion to be ethical. Ethics is universal—a matter of discourse. We feel Asians are
much more disciplined. In the US, there are ‘many laws to be told to the public, leading to
situations of many legal interpretations of morality’.

The Power of Moderation

Group 2 shared their main takeaways from the session, which were about how businesses
needed to strike a balance:

It is unrealistic to focus on all four areas of concern and best to focus on one at a time. It is a
matter of choice. People want and do need to make money. Everyone is different and it is ok.
The concept of greed can be viewed along the ideas of reasonable profit, of giving back (has
many interpretations) while doing business, or of the negative externalities of greed, such as

3
Note that these are the participants’ opinions and might not be generalisable to the Malaysian
or American contexts.

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pollution. There is power in moderation, to detach from the idea of ‘being amazing’. In seeking
moderation, you do not have to be amazing.

Searching for Their True Soul

Group 3 deliberated on how to apply the concept of Sejahtera leadership into UNIRAZAK and
Babson College’s shared activities.

We could explore this concept further in the future—for example, in student exchange, lecturer
exchange, and the summer programme. Thus far, our understanding of Sejahtera leadership is
its focus on ethics and behaviour. It is a more holistic system, more human-related, less profit-
oriented. Sad to say, businesses have not found their true soul, though there are organisations
which share profits in the form of CSR (corporate social responsibility) activities. We could set
up an E-Sejahtera Leadership, an online platform for start-ups to exchange ideas and thoughts,
and apply what we could to their areas of concerns. The concept of Sejahtera leadership could
mean different things to different age segments, and we could create innovations on how to
reach out to different age groups and how to inculcate Sejahtera leadership values and
principles across the different segments.

Connecting Hearts and Minds

Putting their hearts and minds together, Groups 4 and 5 deliberated on the topic and asked a
pertinent question, ‘How can the heart and mind work together?’ This was what they proposed:

One good way to connect people is through online platforms such as crowdfunding, which can
connect the hearts of entrepreneurs, mentors, and inventors. Members can create their profiles,
tell their life stories, and indicate what their offerings are. This platform can fuel a curious
mind to learn from the experience of others. Sejahtera leadership can guide us in how to
address issues such as private versus collective, dealing with and removing the fear of others,
participating in open-minded collaboration, etc. As for success, it is to be measured through
the lives we live.

Building Muscle through Mentorship

Group 6 focused on identifying the themes in Sejahtera leadership and how to build muscles
in pursing and advocating ideas—that is, the need to be the best in what one sets out to do,
growing from strength to strength. Their basic ideas were:

Ethics and values surround us from infancy. As we start and continue with our lives in this
world, we need mentorship: a champion, a role-model, a figurehead, a big brother or sister—
someone to look up to. We must create a value system to live a good life. We live in a world
where people put ideas in our head, such as racism and such. Thus, we need to put good things
into people’s minds. One powerful concept is that of simplicity. We need to learn to step back
and look at the bigger picture. To ask ourselves what we really need in life and to inculcate the
habit of 3Rs—reuse, reduce, recycle, and perhaps a fourth, REFUSE (not to get, buy, or take
anything you do not need in the first place).

So, who is this Jaguh Kampung who had inspired so many to look into their inner selves and
discover how they could contribute to a better world, especially in the context of sustainable

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development goals? Who is this simple-looking man who was able to encourage two groups of
students, at least, to propose concrete ideas on how they could apply their learning within the
individual contexts of their own lives? Who exactly is the Jaguh Kampung?

The ‘Jaguh Kampung’

The Jaguh Kampung Dzul was no ordinary academic (see appendix 2 for details of his
academic affiliations). Despite the numerous accolades he had received, no reference to Dzul
would be complete without elaborating on his tenure as the fifth vice chancellor of Universiti
Sains Malaysia (USM). It was under his leadership that USM attained the status of APEX
(Accelerated Programme for Excellence)—the only one in Malaysia so far. To be among the
leading research universities was no easy feat. Competition was gruelling, and USM scored
high on all grounds and catapulted its image as the most innovative, with a high potential to be
the most progressive university. During his tenure, the university launched the Innovation
System—The USM Model (figure 2), a framework which helped USM achieve, maintain, and
sustain its activities. The model served as a springboard for USM to achieve its vision of being
a world-class university that gives back to society.

More importantly, it was during this time that Dzul experienced a deep sense of calling to find
out how he could contribute to society as an academic leader. He began to search earnestly
about the meaning of leadership. What are the roles of an academic leader? What does it mean
to be a leader? How can one be an impactful leader?

After leaving USM, Dzul was honoured with numerous awards and opportunities which
brought him many unexpected places. This big-hearted educator was not one to bask in his
glory. Rather, these opportunities were translated into innovating systems which could benefit
the masses. At the very least, they would be translated into paradigm-breaking tools to
encourage others to question the status quo and search for better ways to solve problems. One
of these was Tongyeong, a social innovation. The story of how Tongyeong began is a matter
very close to Dzul’s heart (see appendix 3).

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 Publications • Pilot Plant • Manufacturing • Value diffusion
Patents/IP • Field Trial • Service/Sales • Technology
transfer
Products Lab-scale JV/Export SME/SMIs

University
Cluster/Collaboratory

Figure 2: The USM’s Innovation System Framework

The Mentor and His Life Principles

Dzul’s late father, Datuk Abdul Razak Abdul Hamid, would have been very proud to see how
his son’s influence had spread to South Korea for such a meaningful project. The sole
Malaysian survivor of the Hiroshima bombing, his late father was the most important source
of inspiration for Dzul. He was his mentor. The wealth of wisdom which his father and mother
had given him became an important source of reference for Dzul. One of these was his late
father’s five life principles (see figure 3). These principles had helped Dzul to become more
resilient and to always act with a strong sense of duty. At this point in his life, Dzul’s sense of
duty was to continue advocating for the relevance of Sejahtera leadership.

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 Figure 3: DATUK ABDUL RAZAK ABDUL HAMID’S FIVE LIFE PRINCIPLES
1. Be humble and dignified
2. No aggression in any form—words, behaviour, emotions, or thoughts
3. Act with a strong sense of duty and sincerity, and expect nothing in return
4. Help others, especially the weak and destitute, for there is always sustenance
from God
5. Hold on to our principles without fear or favour, to sacrifice for peace and Sejahtera
Source: Dzul’s recollections

The Next Phase: The Maqassid Journey

The year 2015 marked another phase in Dzul’s academic journey. He was affiliated with
Universiti Sains Islam Malaysia, where he, along with his team of researchers, had spent time
researching various facets of leadership.

Through this laborious effort, Dzul published a book entitled Nurturing a Balanced Person:
The Leadership Challenge. In this book, Dzul reminded us that ‘the focus of an education
philosophy is a quest for truth to give a deeper meaning to life, and the National Philosophy of
Education is well-placed to deal with many issues’. There is also a need to ‘create a certain
level of awareness to ensure the relevance of the philosophy’ and ‘prevent the aims of education
from being eroded both in letter and spirit’.

To achieve these ends, Dzul proposed that we look for a new worldview through the ‘fusion of
knowledge between naqli and aqli’. Naqli is knowledge from the Quran and hadith, while aqli
refers to intellectual knowledge constructed by human beings in consonance with Islamic
tenets.

As an academic leader, Dzul somehow felt he needed to redeem himself. Having a new
perspective on leadership left him feeling that he could have done far more for USM when he
was its vice chancellor. He began in earnest to study the Islamic perspective on leadership.
There was so much to learn. He was lucky to have subject matter experts who could enlighten
him on various concepts. Together, they developed the Balanced Leadership Model based on
the concepts of Maqassid4and Qalb5(see figure 4).

4
An Arabic word meaning goal or purpose.
5
An Arabic word meaning heart. In Islamic thought, the heart is the immortal cognition, where
intentional activities originate, and the cause of intuitive deeds.

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 Figure 4: Balanced Leadership Model 1.0

The Balanced Leadership Model tried to align Qalb6, Adab, and Al-Ghazali’s principal virtues
into a framework to guide leaders. Dzul fervently hoped that this model could be continuously
refi ned as more insights and enlightening moments came forth. He feared the possible harmful
impact of giving undue priority to the economic dimension without allocating significance and
relevance to culture and local community, or even environmental ethics7.

Deep deliberations between Dzul and his team resulted in the conceptualisation of the
Leadership Continuum ++ (see figure 5). In this continuum, Dzul and his team mapped
common leadership concepts against the continuum based on Maqassid Shariah.8

Dzul hoped that these two models could be used to train academic leaders. He felt a sense of
duty to bring the soul back into education, and he wondered whether these concepts could be
incorporated into decision-making. Previously, Dzul had enlarged the spectrum of thought on
leadership by generating ideas like Sejahtera leadership and balanced leadership.

6
Refers to the prescribed Islamic etiquette and behaviour.
7
Chapter 5, page 115 of Nurturing a Balanced Person: The Leadership Challenge.
8
Divine intents and moral concepts upon which Islamic law is based, such as justice, human
dignity, free will, magnanimity, facilitation, and social cooperation.

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 Figure 5: Leadership Continuum ++

Can both of these models, the Sejahtera Leadership Model and the Balanced Leadership
Model, be applied to contexts and situations at other institutions of higher learning, or even to
other organisations in other industries? Can they be used to lead us to a better path?

Although Dzul, the Jaguh Kampung, holds the view that ‘another world is always possible’,
deep in his mind he knew that only time can tell. For now, he must persevere and continue
contributing to the field of academic leadership in any way he could. He must continue to refine
the model to ensure its effectiveness and relevance. He needs a large measure of resilience to
do so.

Case Analysis
• What does it mean to be a resilient leader?
• How does resilience play a role in one’s leadership journey?
• How do leaders overcome personal crises or other challenges? What can leaders do to work
on their weaknesses/issues? This might link to emotional intelligence, coaching, mentoring
work, or other pursuits.
• How do leaders develop resilience? What can they intentionally do to build this capacity on
an individual level?

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Appendix 1: Article—Je Suis Jaguh Kampung
My View – Je suis Jaguh Kampung
Posted on 11 November 2015 – 06:22 p.m.
Last updated on 11 November 2015 – 06:57 p.m.
Dzulkifli Abdul Razak

It was reported that the deputy prime minister recently urged Malaysian youths not to be a
‘village champion’ (jaguh kampung), but to be an international or ‘global champion’. This is a
sensible suggestion which we often hear, and this time while celebrating a winner in the 2015
World Skills Competition in San Paolo last month.

Indeed, Malaysians must strive to go beyond their own confines and reach out even further to
the world at large. In urging so, the term jaguh kampung has often been used in a condescending
way, giving the impression that jaguh kampung is close to nothing. In fact, it is ‘shameful’ to
be one.

This is so because kampung is associated with a location, a backward one in comparison with
cities. It is ulu. No one wants to be part of it, not even a champion. Due to the small-mindedness,
the physical and external dimension of a kampong has become prevalent. Many would be
surprised to note the word ‘compound’ (kŏm’pound’) in English took root around the 1670s,
and comes from kampong (as spelled then). Kampung is suddenly catapulted into the global
arena as in ‘global village’—how much more international can it get?

This is not all. Kampung has its inherent superior values too, beyond just the physical
externalities as noted previously (My View, July 21). Renowned cartoonist Lat has captured
much of these intangibles that were internalised as a living heritage of the kampung. It becomes
the place synonymous with the practice of budi—a word so profound and sophisticated that we
cannot find its translation in any other languages, no matter how international.

Budi is what makes the kampung what it actually is, amidst the rustic environment. Without
the former, the latter is no more than a sleepy hollow, which is what is being observed today,
thanks to physical progress that buried budi as part of modern development. Whereas the two
must go hand-in-hand to create the ambiance of sejahtera (crudely rendered into ‘well-being’)
that has multiple nuances beyond just the physical ones, by which we always take notice and
judge.

Sejahtera is multi-layered, covering both the microcosm and the macrocosm—one reflecting
upon the another. The idea is universal, even ‘heavenly’ as in the salams made mandatory to
Muslims. Its richness envelopes that whole kampong community, and more, as one holistic
entity that builds on humility and respect for values and cultures, so refi ned that it is peaceful
and harmonious. Diversity and differences are celebrated, not just among members of the
community, but also with the mega-diverse natural environment that surrounds it. The concept
is so profound that South Korea has invested US$20 million (RM87 million) in establishing a
Sejahtera Centre with a Sejahtera Forest adjacent to it, located in the city of Tongyeong on the
southern coastal kampung of the peninsula (My View, May 26). This centre aims to conduct
and develop research on sustainable leadership to shape the future communities of the world—

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The future that we want’. Once again, it cannot be more international than that when such a
centre is not even contemplated in Malaysia although it was locally inspired!

With this in mind, when one reads about the planned development of Kampung Baru, the
traditional and heritage enclave in the heart Kuala Lumpur valued at more than US$1 billion,
many questions spontaneously pop up: What will happen to the budi and sejahtera – which are
the essences of any kampung worth its salt? Will they be buried under the modern (an antithesis
to ‘traditional’) high-rise structures that are being showcased? Where indeed is the humility of
the kampung? Or will there be just a small part meant for display, like a ‘reservation’ of sorts
for the paying tourist to sample? A sure signal that tradition is up for sale and is on its way out
once the novelty fades. A tell-tale indicator as to the fate of the local cultures, norms, and values
once the elders are gone. It is no wonder that reportedly the kampung elders have turned
politicians and their developers away several times before insisting that there can be no price
tag attached to it.

It would be most ironic if Malaysia, noted for its Chinatown and Little India as integral parts
of its cultural diversity, has no kampung in the real sense of the word to boot. After all, the
multi-kampung enclave has survived more than a century, full of historical and cultural legacies
to be unlocked and shared with future generations of Malaysians. Thus, ‘dismantling’ its deep-
rooted traditional heritage is just inconceivable.

In a nutshell, viewed comprehensively from a holistic perspective, it is better to be jaguh

kampung steeped with budi and sejahtera rather than being the scandalous global celebrities
whom we often read about.

To this I say, Je suis Jaguh Kampung!

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Appendix 2: Overview of Professor Tan Sri Dato’ Dzulkifli Abdul Razak’s Academic
Affiliations

Current
The 14th President of the International Association of Universities (IAU), a UNESCO-
affiliated organisation, based in Paris.
Chair of Islamic Leadership, Islamic Science University in Malaysia.
Chair of the Steering Council of the Right Livelihood College Global Secretariat based in the
University of Bonn, Germany.
Honorary Professor at the University of Nottingham, Malaysia.
Member of the Asia-Europe Meeting (ASEM) – Advisory Education Hub Committee since
2007.
Member of Muslim-Science.com

Previous Positions
5th Vice-Chancellor of Universiti Sains Malaysia (USM).
President of Association of Southeast Asia Institutions of Higher Learning (ASAIHL) from
2007-2008.
Task Force on Teaching of Science in the Muslim World.
Executive Council of the Association of Commonwealth Universities (2006-2011).
Member of the World Health Organisation (WHO) Expert Advisory Panel on Drug Policy and
Management since 1995 until 2010; and the WHO Scientific Committee of Tobacco Product
Regulation (2004-2006).
Fellow of the Academy of Sciences Malaysia (FASc).
Fellow of the World Academy of Art and Sciences (FWAAS).
Fellow, Malaysian Institute of Management (FMIM).
Honorary Lifetime member of Asian Academy of Management.

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Appendix 3: News Excerpt on Tongyeong
Note: The article posted on his website (figure 3) revealed his feelings of elation about the
social innovation of incorporating Sejahtera in setting up a community.

Sejahtera comes alive in Korea

Posted on 26 May 2015 - 08:40 pm
Dzulkifli Abdul Razak

NOTHING is more satisfying than an idea that is translated into reality, especially a rather
abstract one, as a form of social innovation. This was the case last week in the coastal city of
Tongyeong when the word Sejahtera came to life not only in South Korea, but also the Asia-
Pacific region.

It was in conjunction with a unique occasion to commemorate the official opening of the
Sejahtera Centre and Sejahtera Forest as part of the United Nations University–Institute of
Advanced Sustainability Studies, a recognised Regional Centre of Expertise on Education
(RCE) for Sustainable Development at Tongyeong in the southern tip of South Korea.

RCE Tongyeong is among more than 120 RCEs around the world, of which three are in
Malaysia—Universiti Sains Malaysia (USM) and, more recently, University of Malaya and
Universiti Teknologi Malaysia.

Indeed, it was at USM that the idea of Sejahtera first emerged in early 2000 as an impetus to
ignite transformational mind-set changes in embracing the concept of sustainable development
through education. This was before sustainable development was fashionable in an educational
setting, before the UN Decade of Education for Sustainable Development (2005–2014).

The embodiment of Sejahtera goes beyond the conventional three Ps of Planet, People, and
Profit. Instead, Sejahtera has at least 10 dimensions that could be summed up by the acronym
SPICES—spiritual, physical, intellectual, cultural, cognitive emotional, ecological,
environmental, economics, and societal—and serves as a platform for holistic learning and
living. Not only must each aspect be in balance with itself, but each must be in balance with
all the rest to achieve an overall state of well-being that is lasting (sustainable) over generations.

The last point is pertinent because it implies that ‘sustainability’ is not a new concept that came
about in the ‘80s following the well-acknowledged Brundlant Report, formally known as the
Report of the World Commission on Environment and Development. Arguably, sustainability’
is an ‘ancient’ concept in many indigenous traditions, which have been overtaken and lost in
the drive for modern ‘unsustainable’ development. The result is that development becomes
purely a physical venture and no longer focuses on building ‘collaborative relationships’
between humans, the community, the environment, and also the ‘creator’ as an enduring
lifestyle. In so doing, the fine state of balance is severely offset with a hefty price tag for future
generations.

The Sejahtera Centre at RCE Tongyeong, thus, is a new landmark given its vision of ‘co-
existence’ which is aligned to the idea of ‘collaborative relationships’ in the context of SPICES.

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This is apt as the centre is ‘specifically designed for learning self-sustaining lifestyles and
sharing for a sustainable future’. It is a purpose-built centre—the first of its kind, and part of a
project agreed upon by partners in the Asia-Pacific to serve as an RCE hub. As of last year, 15
countries and 23 cities in the region have joined the initiative with an investment costing US$20
million (RM72.58 million) on a 200,000 square-metre eco-park supported by the Ministry of
Environment, Korea. Alongside are impressive facilities like an aquatic centre, wetlands,
vegetable garden, and a rice field, all co-existing in a natural relationship making up what is
collectively called the Sejahtera Forest.

The forest is particularly meaningful not only because it is next to a national park, but more so
because it is also the ‘living laboratory’ that embellishes ‘the unique traditional culture of the
Asia-Pacific region with the emphasis on coexistence’. There is no doubt that this bold
initiative of ‘collaborative relationship’ rooted in the deeper meaning and philosophy of
Sejahtera will enlighten future generations. It will also help to reclaim the traditional wisdom
and cultural values that have gone astray.

South Korea has demonstrated this well with the concept of ‘saemul undong’ (akin to gotong-
royong) fostered through centres like the Korea Saemul Undong Centre at Gangnam-gu. The
concept was realised in 1970 by the then president, Park Chung-Hee—a contemporary of
Malaysia’s father of development, Tun Abdul Razak, who was also an advocate of gotong-
royong—and has been credited as one of the key concepts that spurred South Korea ahead.

It is not surprising that Sejahtera will take South Korea yet to another level on the path of
sustainable development. For this, RCE Tongyeong and the mayor of Tongyeong, Kim Dong-
jin, in particular must be congratulated for showing visionary leadership that is discerning
enough to be inspired by Sejahtera in paving the way.

Malaysia in this respect should remain thankful for giving Sejahtera a new lease on life on an
international platform, and turning it into reality.

Source: Tan Sri Dzulkifli’s website

Figure 3: News excerpt about Tongyeong

137
Part 6
About The Authors

138
About The Authors
PROFESSOR DR. NICHOLAS H. BARKER
Nicholas H. Barker is the Chairholder of the Yayasan Tun Ismail Mohamed Ali Berdaftar
(YTI) Professorial Chair in Leadership at the Universiti Tun Abdul Razak (UNIRAZAK) in
Malaysia. The YTI Chair is funded by the Permodalan Nasional Berhad (PNB). Professor
Barker is Senior Leadership Education Specialist at the East-West Center in Honolulu, Hawaii,
where he has designed and directed leadership programs for over two decades. He is also Asia
Pacific Director of TomorrowToday Global, a consultancy firm specializing in leadership,
global trends and strategic foresight; as well as Visiting Professor of Leadership in the
International MBA Program at the University of Tsukuba in Tokyo. A cultural anthropologist
by training at Cambridge University and St. Andrews University, Dr. Barker has taught in
universities around the world and worked with senior business leaders from over 75 countries
in a wide range of industries and multinational corporations, as well as the World Economic
Forum, United Nations and Prime-Minister’s Office in the United Arab Emirates. His family
manufacturing business in the UK, Kentmere Packaging, was founded in 1906. Dr. Barker
works with traditional deep-ocean navigators in Hawaii and serves on the Global Education
Board of the Polynesian Voyaging Society.

PROFESSOR DR. NIK ROSNAH W. ABDULLAH

Nik Rosnah W. Abdullah holds a DPhil from Sussex University, UK. She was a recipient of
a British Scholar Award (2000), jointly awarded by The Foreign and Commonwealth Office
of the UK, The British Council, and the Department of Trade and Industry, Britain for her
DPhil works, and later a coveted Fulbright Scholar Award (2005). She holds dual distinguished
fellowships: as Senior International Fellow at Johns Hopkins University, USA (2005) and as
Senior Fellow at Lee Kuan Yew School of Public Policy, NUS Singapore (2008). Her areas of
expertise include public sector reform and regulatory reform in the health sector. She was the
Executive Director of the International Institute of Public Policy and Management (INPUMA),
University Malaya. Currently, she is a Professor at Tun Abdul Razak School of Government
(TARSOG) at UNIRAZAK, and a member of the International Development of Public Policy
Alliance, whose headquarters is at the Russian Presidential Academy of National Economy and
Public Administration (RANEPA), Moscow. She was the President of the UNIRAZAK Case
Writers Club (2015-2017) and has worked collaboratively with the Ministry of Federal
Territories and Kuala Lumpur City Hall.

PROFESSOR DATIN PADUKA DR. SAMSINAR MD. SIDIN

Samsinar Md. Sidin graduated with a Bachelor of Business Administration from Western
Michigan University (1984), and both a Master of Business Administration (1986) and PhD in
Business Administration (1994) from the University of Arkansas, USA. She graduated with
honours and was the recipient of the Wall Street Journal award for best student in economics.
She also graduated in the top five and, as an MBA student, was nominated to represent the
University of Arkansas for the George Hay Brown Award for excellence in marketing. She was
conferred with the honour Darjah Kebesaran Sultan Sharafuddin Idris Shah (D.S.I.S) by the
Sultan of Selangor, Malaysia (2017) and is also a member of Yayasan TM Board of Trustees.

139
Professor Samsinar is currently the Vice Chancellor of Universiti Tun Abdul Razak
(UNIRAZAK).

PROFESSOR DR. RAVINDRAN RAMASAMY

Ravindran Ramasamy joined the teaching profession way back in 1979 at his alma mater
A.M. Jain College at Chennai, India. He initially taught financial accounting courses, later
shifting to investments, finance and direct taxes. After completing his PhD in 1997, his teaching
extended to data analysis and research methodology. In 2001, he completed the CIMA exams
and scored the third-highest mark worldwide in financial accounting (international standards
paper). Presently he teaches Strategic Management Accounting (CPA) at the undergraduate
level, Management Science and Linear Programming and Financial Management at the
postgraduate level, and data analysis and multivariate analysis at the doctorate level. He
successfully guided 12 PhD candidates and hopes three more candidates will submit theses in
2018. He is an associate member of CIMA. His personal research interests are in valuation of
fixed income securities, risk management, derivative valuations and stochastic differential
equations.

PROFESSOR DR. MOHAR YUSOF

Mohar Yusof is Professor of Entrepreneurship and Family Business at the Graduate School of
Business, Universiti Tun Abdul Razak. He has published in several international refereed
journals, namely the International Entrepreneurship and Management Journal, Indian Journal
of Training and Development, Journal of Asia Entrepreneurship and Sustainability, New
England Journal of Entrepreneurship, Asia Pacific Journal of Innovation and Entrepreneurship,
and Journal of Entrepreneurship, Management and Innovation. Since 2009, he has been
involved in two renowned global research projects—the Global Entrepreneurship Monitor
(GEM) and the Successful Transgenerational Entrepreneurship Practices (STEP) on family
business.

ASSOCIATE PROFESSOR DR. DAHLIA ZAWAWI

Dahlia Zawawi obtained her BSc. degree with a double major in Economics and Management
at the University of Missouri–Columbia, USA in 1997. In 2007, she completed her PhD at the
University of Reading, UK with a thesis on cross-cultural values. She is currently at the
Department of Management and Marketing, Faculty of Economics and Management,
Universiti Putra Malaysia (UPM), after serving for three years at the Institute for Social Science
Studies (IPSAS) as the Head of Youth Social Health and Wellbeing Laboratory. She is also an
active executive member of the Case Writers’ Association of Malaysia (CWAM). In addition,
she has conducted trainings and workshops for organizations such as Universiti Sultan Azlan
Shah (USAS), Agensi Anti Dadah Kebangsaan (AADK), Angkatan Koperasi Kebangsaan
Malaysia Berhad (ANGKASA) and UNIRAZAK, specifically in the areas of case writing and
case training.

ASSOCIATE PROFESSOR DR. CORDELIA MASON

Cordelia Mason is the Director of WE4ASIA/Corporate Planning at Universiti Kuala Lumpur.
She is also a Visiting Fellow at the Asian Institute of Finance, an Associate Fellow of MIM
and a member of the Board of Examiners for the Asian Institute of Chartered Bankers. Besides
short stints in the banking and telecommunications industries, she has three decades of

140
experience in academia and has assumed positions as a senior marketing manager, lecturer,
deputy dean, dean, research fellow and director. Dr. Mason enjoys writing and has written three
textbooks for the Malaysian school systems, as well as case studies, quality manuals, lyrics,
curriculum manuals for business and management programmes, 12 revision books,
storyboards, research reports and journal articles. A self-professed informal knowledge broker,
she is ever willing to share what little she knows, and is constantly trying to discover new ways
of learning.

ASSOCIATE PROFESSOR DR. LEILANIE MOHD NOR

Leilanie Mohd Nor is Associate Professor of Family Business and Entrepreneurship at
Taylor’s University, Malaysia, where she also heads the research cluster for Family Business
and Entrepreneurship. She led the Malaysian team for the Successful Transgenerational
Entrepreneurship Practices (STEP) research on family business from 2009 to 2017. Between
2011 and 2014, she was chair of the STEP Asia Pacific Leadership Council and a member of
the STEP Global Board from 2013 to 2015. Between 2003 and 2005, she was a Board Member
of DRBHICOM Information Technologies Sdn Bhd, a subsidiary of a large conglomerate in
Malaysia, DRB-HICOM. Professor Nor was at Malaysia Airlines between 1997 to 2003, where
she was involved in planning and implementing the migration to the then Kuala Lumpur
International Airport. Since 2011, she has trained more than 900 entrepreneurs via the National
Institute for Entrepreneurship (INSKEN) and CIMB BEST (Entrepreneur Skill
Transformation) programs. She has provided consultancy and advisory services to family
businesses and numerous ventures—from retailers to manufacturers, tech start-ups to social
ventures. Her more than 10 years in large companies and 12 years in academia, combined with
her entrepreneurial ventures and knack for marketing, contribute to her competencies as a
researcher, advisor, consultant, coach and trainer.

ASSOCIATE PROFESSOR DR. OMAIMA ELTAHIR BABIKIR MOHAMED

Omaima Eltahir Babikir Mohamed is Associate Professor of Islamic Finance at Bank Rakyat
School of Business and Entrepreneurship. Her area of specialisation is Islamic Finance,
focusing on banking operations, takaful, wealth management and financial planning. She was
a chairperson for the Fintech Session, 4th MFPC International Conference on Islamic Wealth
Management and Financial Planning; advisor and panellist for the 3rd Annual Future of Global
Takaful, “Forging the Next Phase of Growth for Takaful in Asia-Pacific”, 15–16 March 2016
in Kuala Lumpur, Malaysia; advisor and panellist at the 2nd Annual Future of Global Takaful
Conference on 28–29 January 2015, Kuala Lumpur; and guest speaker at the 5th World Takaful
Conference—Family Takaful Summit Malaysia 2014, “Innovating Family Takaful Products
and Linking Better to Consumer Needs” at Pullman Hotel Kuala Lumpur.

ASSISTANT PROFESSOR DR. MOHD YAZIZ MOHD ISA

Mohd Yaziz Mohd Isa holds a Doctorate in Business Administration from the Graduate
School of Management, Multimedia University Cyberjaya, Selangor; a Master of Business
Administration (MBA) from the University of Wisconsin, USA; and a Bachelor of Business
Administration (BBA) from Ohio University, USA. He is also an associate of the Institute of
Chartered Bankers Malaysia (AICB) and a member of Beta Gamma Sigma AACSB
International. Dr. Mohd Yaziz is the Dean of Bank Rakyat School of Business and
Entrepreneurship (BRSBE) at Universiti Tun Abdul Razak (UNIRAZAK).

141
DR. HJH NORIZZATI AZUDIN
Norizzati Azudin is a dedicated academic with more than 16 years of experience in teaching,
research, administration and diplomatic relations. She graduated from Universiti Malaya (UM)
in 2001 with a Bachelor of Arts (Hons), majoring in Media Studies with a minor in Southeast
Asian Studies. Her Master of Science in Corporate Communication is from Universiti Putra
Malaysia (UPM), while her PhD research from Asia e University in 2018 was on Cross-
Cultural Communication in International Business Negotiations. She worked with the first
private university in Malaysia, Multimedia University, then UNITAR International University
before starting her own academy, Ty Academy. Besides Kuala Lumpur, she has lived in
Jakarta, Indonesia and Sao Paulo, Brazil before moving to Jeddah, Saudi Arabia, where she
currently resides. An active researcher and great communicator with a naturally charismatic
personality, she is known as Dr. Ty in the academic industry now. Ty Academy is a start-up
company she founded to help Malaysian postgraduate students in the education industry, as
well as to indirectly support them as freelancers.

NOR AZAMI ROSLI

Nor Azami Rosli is Lecturer of Government and Leadership at Tun Abdul Razak School of
Government, Universiti Tun Abdul Razak (UNIRAZAK). He also taught Public
Administration courses at UUM City Campus. Prior to joining UNIRAZAK, he served as an
operation staff at Universiti Malaya and Open Universiti Malaysia from 1999 until 2008. He
has been an active member of UNIRAZAK Case Writers Club (UCW) since 2009.

AMIRUDDIN AHMAD
Amiruddin Ahmad started his career in the tax department of PricewaterhouseCoopers
Taxation Services Sdn Bhd, Kuala Lumpur, where he worked for six years before joining
Maybank General Assurance Bhd as Group Tax Accountant. In 2002, Amiruddin ventured into
the profession of an academic, working with a public university in Melaka. He had more than
10 years’ teaching experience before joining UNIRAZAK in 2015, and he was appointed
Programme Director for the Bachelor of Taxation (Honours). Amiruddin Ahmad has been a
Chartered Accountant with the Malaysian Institute of Accountants since 1999.

MARDZIAH HANIM MAHAZIR

Mardziah Hanim Mahazir is the Deputy Dean and Lecturer at Tun Abdul Razak School of
Government (TARSOG), Universiti Tun Abdul Razak (UNIRAZAK) and holds a Master of
Public Management from Universiti Utara Malaysia (UUM). She is also a committee member
of UNIRAZAK Case Writers Club (UCW).

NUR ATIQAH ABD RAHMALI

Nur Atiqah Abd Rahmali is the Deputy Dean and Lecturer at Bank Rakyat School of Business
& Entrepreneurship (BRSBE), Universiti Tun Abdul Razak (UNIRAZAK) and holds a Master
of Science in Islamic Finance from the International Centre for Education in Islamic Finance
(INCEIF). She is also a committee member of UNIRAZAK Case Writers Club (UCW).

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NURUL AFZA HASHIM
Nurul Afza Hashim is a Lecturer at Bank Rakyat School of Business & Entrepreneurship
(BRSBE), Universiti Tun Abdul Razak (UNIRAZAK) and holds a Master of Quantitative
Sciences from Universiti Teknologi MARA(UiTM). She is also a committee member of
UNIRAZAK Case Writers Club (UCW).

MOHD SHAIFUL RIDWAN RADZI

Mohd Shaiful Ridwan Radzi holds a Master of Business Administration from UNITAR
International University. He is a Senior Manager with 20 years of System Integrator (SI), SAP,
S4HC and Software Engineering experience, with a strength in project management across
local regions, Southeast Asia and the Middle East. He is a subject matter expert in SI,
automation and the technical/commercial decision process.

ARLIZA ABDULLAH
Arliza Abdullah’s specialization and research interest are in the field of operations
management and entrepreneurship. She holds an MBA from Ohio University and a B.Sc. in
Electrical Engineering from Washington University in St. Louis. Currently, she is pursuing a
Doctorate of Philosophy at Taylor’s University.

SURENTRAN SOMASUNDRAM
Surentran Somasundram is a strategist and entrepreneur with verifiable year-after-year
success in achieving revenues, profits and business growth objectives within start-ups and
turnaround companies with rapid-changing environments. He is the founder and director of
Sukran Strategic Consultancy Sdn Bhd, founder and CEO of Snack Boss Sdn Bhd, co-founder
and COO of Menglembu Foods Industry, and co-founder and COO of EduGuide tuition center.
He holds an MBA (Leadership) from UNIRAZAK and a B.Ap.Sc (Analytical Chemistry) from
Universiti Sains Malaysia.

SITI BALQIS MOHD SALDI

Siti Balqis Mohd Saldi is the Research Associate for Yayasan Tun Ismail Mohamed Ali (YTI)
Professorial Chair in Leadership at UNIRAZAK. She holds a professional accountancy
qualification (ACCA), an MBA (Leadership) from UNIRAZAK, a BA (Hons) in Accounting
and Finance from De Montfort University, and is a student member of Institute of Internal
Auditors (IIA). A Yayasan Sime Darby alumnus, Siti Balqis has a decade of experience within
the Sime Darby Group in internal audit, reporting financials for Sime Darby Hospitality and
Leisure, and led migration and setup projects for Sime Darby Motors and Sime Darby
Healthcare. She then took a diverse path as a learning and leadership development practitioner
at Sime Darby Business School (now Sime Darby Leadership Centre) before leaving to search
for her professional passions. Her first case writing, representing UNIRAZAK, placed
her in the top 6 fi nalists in the 2014 Baylor–USASBE Case Research Competition.

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