Tuesday, 30 July 2013 00:28
Blue chip companies like JKH down by 4% in Q2 2013
Overall exports down by 4.6% in HY 2013
Global GDP outlook slashed downward in 2013
Private sector down?
Last week, we saw Sri Lanka’s premier blue chip company John Keells announcing their performance in the second quarter of 2013. Overall profitability was down by 8% whilst the top line was flat, which indicates that Sri Lanka is up for some tough times in 2013.
The logic in taking JKH’s interim performance as an indicator of the general business health of Sri Lanka is because the areas of business that the company operates in are of diverse natures and can reflect the performance of the country as a whole. This includes logistics, consumer and retail, with brands like Elephant House and Keells, tourism and leisure, with brands like Cinnamon Hotels and Walker Tours, whilst also having IT in the portfolio, not to mention the aggressive push in the property segment.
If we take the leisure sector, performance is down by 22% which is interesting given that the company operates hotels across the country and if the tourism numbers are increasing, how is this not reflected in the star class category of the hotel chain?
This justifies the cry by senior hoteliers that we are not attracting the correct segment of travellers into the country and it needs attention from policymakers. Last month, I was at a tourism meeting where a Senior Advisor for Tourism for US President Barack Obama’s administration, Dr. Cihan Cobana, shared some insights.
He pointed out that Thailand and Malaysia invest around $ 30 million each on driving tourism in key markets globally. Brand USA has engaged a fat budget to attract high-end Chinese visitors to the United States. I guess it’s time that Sri Lanka looks at its tourism promotion agenda given the performance of the private sector in the last quarter before we lose the steam due to entrenched global competition.
Dry to wet market?
Some data that has emerged on the retail industry reveals that a recent trend seen in urban markets is that consumers are moving from the dry market, meaning supermarkets, to the wet market – meaning the ‘pola’, due to pressure on the purse. The JKH interim report mentions that profits are down by 36%, with the overall volumes down on drinks and ice creams, which are indications of the slowing down of consumption at the trade end.
The weather could have had an impact but the news as of now shows that even the mobile phone market is facing rough times with many companies shedding money spent on marketing. We will have to see how the rest of the year unfolds, given the upcoming elections which will result in trade activity getting disrupted at the retail end due to election rallies and aggressive promotional campaigns by political candidates.
A point to note is that Sri Lanka is registering a floating population of around a million people due to upbeat tourism and the drop in volume of consumer products is in fact greater than reported due to the diversion on consumption is my view.
If we are to take a view of the non-traditional sectors of Sri Lanka, we can see that things are rough once again. Overall exports of the agricultural sector has declined by 2.4%, natural rubber by 53% and coconut related exports like coconut kernel, fibre and shell products have declined by 53% resulting in a drop in overall money circulation, which means that purchasing power is challenged.
Overall export volumes declining by 4% is worrying given that the manufacturing sector’s exports have crashed, with a 10.8% decline. I guess one will have to understand the implications of such trading downwards. What is more of a concern is that in key growth countries globally like India and China, the exports are declining by 4%, which needs serious attention so that course correction can be done with a private-public partnership.
The World Bank in its latest report has indicated that growth in 2013 will be lower than that in the last year and that the expansion of the economy will be slower over the next two years, given the bubble formation that took shape in certain markets in the last two years. But now that the bottoming out has happened, there will be a gradual upward movement. I guess Free Trade Agreement discussions with China and Japan are timely so that when these trade arrangements come to play, Sri Lanka will be ready to exploit these opportunities. What this means is that 2013 will be rough year to ride.
Impact on a corporate executive
Last week, I got some staggering data from a leading private sector blue chip company that revealed that 87% of their senior management either had diabetics, high blood pressure or was overweight. The analysis of the company showed that if the employees embarked on a strong fitness initiative, the overall productivity would increase and their ability to deal with economic challenges would be better.
If I track back to the summer program that Harvard University staged for the top 50 emerging leaders of the world, the first task was the health check that we had to undergo that was mandatory. The findings presented sure caught our attention. There was one CEO who was 52 years in age but due to his fitness and control food intake, his real age was around 41 years, whilst a youngster who was just 35 years old, reflected a body condition that was of a 50-year-old due to excessive smoking, incorrect eating habits and the absence of exercise.
The point highlighted was how could a person lead an organisation when the body is unfit and lethargic with poor reflexes. The solution recommended was that we must practice a discipline called corporate athleticism which was an interesting concept, given that many of us worked out five days a week. Let me explain.
Apparently, if a corporate executive is to work at a high energy level equivalent to a professional athlete, the only way out is to increase his stamina levels just like a top athlete today. However, there many differences between the two. A top class athlete like Andy Murray competes only once a month and maybe at eight tournaments a year. On the other hand, a corporate executive has to perform each day for almost a 12 hour duration at peak performance.
Another difference is that an athlete takes up to three months off as a break for a year whilst a corporate executive will get a maximum of two weeks off. The lifespan of a top athlete’s career is between 10-15 years (if one is lucky) whilst a corporate executive will have to perform for 40-45 years. What this means is that when you start working at the age of 20, you must continue until 65. This very clearly demonstrates that a corporate executive today needs to be fitter than a professional athlete if one wants to be competitive in today’s corporate world.
Becoming a corporate athlete
As per the originators of this concept – Dr. Jim Loehr and Tony Schwartz – the essence of becoming a corporate athlete has four key capacities that need to be developed so that performance can be at a very high level. They are physical capacity, emotional capacity, mental capacity and spiritual capacity.
Physical capacity development
Physical capacity is essentially the capacity to continue working for long hours at peak performance. How one can develop this is by taking a brisk 45-minute walk three times a week. The objective is to get your heartbeat up to 120 beats per minute. Then, this should be followed up with a 15-minute routine that includes stomach exercises and stretching. In essence, it’s only an hour’s dedication that is required. The rest of the two days must include a lightweight training session so that energy can be built. The maximum weight should be 50 kg. The objective is to stretch the muscles up to the point of tearing and then following up with a day of rest so that rebuilding takes place. Once this becomes a ritual, it’s very interesting. Maybe joining a gym and getting a trainer’s assistance can help.
Emotional capacity development
The next building block to become a corporate athlete is working on the emotional capacity of oneself. This is where a close relationship with a human being is a must during a working day. All it takes is a 2-3 minute telephone call where intense closeness has to be achieved, so that certain positive hormones are released. If this is not done, research reveals that there can be emotions that get into the system such as self-pity and boredom that elicit negative emotions which are very harmful to health.
Mental capacity development
The next skill that is required to be developed is called knowledge management. This has to be done daily. All it takes is reading one article that is mentally stimulating and thereafter reflecting on that for just 2-3 minutes. This can be done in the evening and all it takes is a total of 20 minutes. Once again, it’s all about habit formation. This can be also done by watching TV programs such as ‘The Buck Stops Here’ on NDTV or by watching CNN’s ‘Boardroom Discussions’ where a top global CEO is interviewed for success stories in business.
Spiritual capacity development
The last building block. But remember that this is not about one’s religion. It is more to do with understanding the values which are deep within you. In essence, your purpose in life. The challenge is to find out the deeper reasons for your behaviour that motivate and excite you. This is what spiritual capacity development is. It’s very important to become a corporate athlete. The challenge once again is making this a routine in your working week.
Whilst the economic landscape looks rough for 2013, one way that Sri Lanka can be ready for this challenge is by getting into corporate athleticism. The challenge is to make this behaviour natural – unless you have your gym kit in the vehicle, you should not leave home. Also, you will come to a point where foregoing a cocktail party to do your cardio workout/weight schedule will not be a choice but a way of life. At this stage, you can be termed a corporate athlete and then you will suddenly experience that working at high peak performance is equal to playing a game. Then, you have really mastered the art of being a corporate athlete.
To summarise, it’s three days of cardio walks and then two days on a weights schedule with two days of rest after each weight training session. A few more tips in the life of a corporate athlete:
1) Have 5-6 small meals a day (a snack at 10 a.m. and 4 p.m. is all it takes)
2) Develop a routine for sleeping, with 6-8 hours of sleep a day being a must.
3) Make a five-day workout during the week a ritual.
4) Be proud that you are a corporate athlete – do not be shy to practice emotional capacity building.
(The author has a black belt in karate. Professionally, he serves the United Nations (UNOPS) for Sri Lanka and Maldives. He has twice won the Marketing Achiever award in Sri Lanka and Business Achiever Award in Sri Lanka and South Asian region and is currently reading for a doctoral degree in business administration. He is an alumnus of Harvard University (Boston). The thoughts are strictly his personal views.)