Thursday, 26 October 2017

POWERTRAINS - The case for electrification, sustainable mobility

The story of modern powered vehicles began in the late 19th century, when the four-stroke cycle engine was built in 1876, with Karl Benz starting the first commercially produced motor vehicles a decade later.
At the time, the vehicles running on internal combustion engines were subject to the same challenges we face today with alternative powertrains - there was a distinct range anxiety and refuelling options.
Perhaps many are also unaware that during this time, the internal combustion engine faced competition with two other powertrain designs - the steam engine, as well as the electric vehicle (EV).
At the time, internal combustion engines shared a similar market share with electric vehicle, with the rest dominated by steam powered engines.
However, the next few decades saw the demise of electric mobility, as internal combustion engines won the battle in overcoming the anxieties of motorists - it was modestly priced, easy to maintain, travelled long distances and ran on a readily available source of energy.
EVs required bulky batteries, had short storage life and could run less that 100km. The mass production of petrol vehicles by Henry Ford further closed the chapter for EVs - as fuel costs and environmental concerns have resulted in uncertainty in the viability of fossil-fuel based transportation.
While more efficient internal combustion engines made way into the market to address the issue of fossil fuel dependence - alternative powertrains, in particular electric vehicles, are increasing in popularity as a solution to future mobility modes.
Many carmakers took large risks in developing such technology, as the development of EVs are not just subject to consumer range anxiety - the key reason for its historical demise - but also the infrastructure and power grid issues.
A century ago, it was about a few people wanting to move as fast and as far as posible. Today, however, it is about billion of motorists searching for the solution to sustainable mobility.
At least we are clearer about the EV direction than we have ever been.
Numerous cities around the world have set targets for zero vehicle emission within the next one or two decades. This will definitely come with the commitment of improved and more environmentally-friendly power generation and distribution technology in the near future.
While battery technology has improved in terms of weight and energy storage capacities, new breakthroughs are also seen in charging capabilities - charging times are now reduced, and on board charging technology, such as fuel cell and regenerative braking, are gaining traction.
Understanding and adapting to these developments are of high importance, especilally for a car-producing nation such as Malaysia. It is for this very reason that energy-efficient vehicles emerged a core feature in the National Automotive Policy 2014 (NAP2014).
More importantly, the electrification of transportation is not just about powertrains.
This version of electrification now comes with an added twist of "electronification". Simply put, today's electric mobility solutions that complement electric powertrains, such as autonomous driving, advanced sensors, data connectivity and integration with intelligent urban transport systems.
The NAP2014 will be reviewed from time to time to ensure that it stays relevant to the capacity enhancement needs of the domestic industry. I look forward for feedback from all stakeholders on how we can create an industry that can respond to disruptions within the global automotive markets.
The writer is the chief executive officer of Malysia Automotive Institute

Thursday, 19 October 2017

GAME OF GLOBALISATION - Modern battle and its roots in tradition

The celebration of Deepavali, or the festival of lights, finds it roots from Hindu legends that romanticise the triumph of light over darkness, good over evil, and knowledge over ignorance.
Similar to any belief system, Islam included, religions advocate the derivation of success from overcoming negative elements, be it internal or external. It is the concept where evil is characterised as elements that distract us from a proper, or good way of life.
As we sink into our festive moods, I'd like to take this opportunity to relate this age-old concept to the modern daily and professional times we live in today.
Traditional stories of physical wars are obviously an obsolete form of competition. While the barbaric notion of wars involving massive life loss has been replaced with peaceful convention of highly civilised diplomacy, competition is still a relevant and healthy notion - the healthy competitionof ideas, innovation and industry preserves human curiosity and promotes progress of society.
Many articles in this column have discussed the need to develop internal capacities that meet global needs. However, actual quality and perceived quality are two different beasts that need to be tamed in each organisation.
While market size is an important factor, we find many businesses struggling to sell even if they are located within those markets. In a world of around seven billion people, only a handful of brands own a sizeable share of the global smartphone market, with Samsung and Apple holding more than a third of global brand loyalty.
In the 90s, a phone was used mainly for calls and text messages. The major mobile phone brands seemed content that their innovation from wired to wireless communication was revolutionary.
When the iPhone was introduced, it set an entirely new belief system in mobile phones - they traditional from mobile communication devices to a comprehensive lifestyle assistant. Apart from calls and texts, they hailed taxis, gave us cooking recipes, allowed us to watch video and listen to music on demand, and such more at the press of a virtual button.
Today, modern battles are fought to win the hearts of consumers, and those who are able to do so are the winners.
Is it impossible for us? The answer is simple. Was South Korea always known as a car manufacturing? Did Tesla emerge as a spin-off from a major carmaker? Was Alibaba the first e-commerce platform? Major brands did not emerge from just having excellent design teams, large factories or innovative supply chains. While these capabilities are undeniable, the X-factor to their success was the ability to match their products to those who needed them, creaating new blue oceans for them to succed.
In today's era of marketing, saying everything is saying nothing. As businesses, we must be able to identity, in specific detail, what are the solutions we are providing to our clients.
In the fourth industrial revolution, being a big player is no longer a proven advantage. Technology has allowed smaller, leaner entities to find the needed wiggle room to penetrate global markets. The most important is to reach customers and markets that match the strengths of your business and develop a positioning that propagates loyalty through strong customer belief and perception.
The game of globalisation has changed for the betterment of all, and before we fight the good fight, we must believe first and foremost in ourselves.
I'd like to take this opportunity to wish all Hindus a happy Diwali
The writer is the chief executive officer of Malaysia Automotive institute

Thursday, 12 October 2017

PRODUCT CUSTOMISATION - Current advanced practices future fundamentals?

It's funny how American potato chips command a higher price compared to our local chips made from bananas or tapioca.
Processes are most likely the same, yet they differ in perception or "status" as the preferred snack between meals.
The basic principle behind the success of a product is value, with production cost often irrelevent to the purchasing decision of the consumer. Simply put, we will part with our hard earned money when the perceived value of a product or service is equal or exceeds its price.
Perceived value is not just derived from quality and pricing alone. It is also a function of the consumer psychography - the experience, stature, financial flexibility and also the customers' level of need.
It is not surprising why most economocally-developed nations not only possess strong foundations in the optimisation of their manufacturing or service operations, but also have developed an understanding in the psychometry of their customers by tailoring their products to the behaviours and purchasing decisions of different market segments within their ecosystem.
The free market and liberal economic world view, prevalent in the latter half of the 20th century, was perhaps a product of this understanding of consumer behaviour. Naturally, businesses with access to larger markets attained a wider reach for their tailored products and services, and faired better within the globalised economy. With diminishing economic borders in the 21st century, this equalled the playing field between nations with different population size.
As we progress, one key disruption to conventional economic theory was the advent of e-commerce. Connected globalisation had somewhat equalled the playing field between big businesses and small players.
Key examples include Lazada and Facebook, Internet companies that grew in the shadow of much larger competitors to emerge champions of their targeted markets. Interestingly, these companies grew in size with one specialisation - they owned customers without having their own products. They partner other companies, each with their own specialisation, and the interdependence of these large network of businesses contribute to the success of each, perceived as a single brand or entity.
The world speaks of the global value chain concept. As products and services grow in complexity due to technological advancement, it becomes impossible for an entity to invest in all specialisations to bring forth a particular product to the world.
With specialisation being the key word, here, it doesn't matter if you are a car manufacturer, a textile trader or a tapioca chip procuder - your specialisation needs to be matched to the appropriate global value chain for any chance of global success.
Failure to customise products in a world that is growing ever much closer to mass customisation - honing down to specific consumer analytics - may diminish the perceived value of products that are our comparative advantage.
I believe that a shift in focus is required, here, in which funding and government policies must evolve not just in line with changing trends, but rapidly changing economic norms. While fundamentals of marketing and business will remain, business models must keep up with changes in the "rules" of the game.
The best player may no longer score points when the rules of the games change.
The writer is the chief executive officer of Malaysia Automotive Institute.

Thursday, 5 October 2017

SOCIAL MOBILITY - Reaping The Fruits of Soaring Economy

One of the key notions in this column has been the ability to adapt to change. Adaptation to change is not just about survival, but the core fundamentals of emerging as a leader that sets the trends, and nor merely sailing with the winds of change.
Whether or not the sentence above reminds you of the golden days of German rock bands, the point is that Malaysia in must now transition from a nation that adapted to global trends, to an economy that has the ability to set those trends ourselves.
PricewaterhouseCoopers (PWC) forecasts Malaysia to be within the top 25 largest economies in the world by the year 2050.
While this is a good indicator of the growth of our economy, it is based on GDP per capita (PPPs), which therefore requires us to fill in the blanks on fair distribution of wealth in view of our economic growth over the next three decades.
One of the key ingredients to achieve this is the sustainable participation of all walks of life in the Malaysian economy. Whether or not you are a business owner or employed, every Malaysian must be given fair and equitable access to economic participation, but also an environment to develop capabilities and talents in their careers and achieve greater social upward mobility.
To propel ourselves to greater heights, it is important to grow our regional and global presence within the economic arena. I’ve mentioned in numerous articles in this column that achieving sustainability in a liberalised economy is the best bet forward, and economic policies should be geared to assist businesses and people from gaining assistance.
Conventional economic theory dictates that managing our “comparative advantage” is key, i.e. we should venture only into areas that we have a significant advantage over, such as labour costs, logistics and raw material availability.
However, as conventional economic borders are quickly diminishing and business modes changing, conventional wisdom may also need a system update. Economic policy must also gear towards developing such comparative advantage as the diversification allows for faster reallocations should our economic dependancies become obsolete due to rapid economic disruption.
Apart from consistent, forward looking economic policies, the government has implemented countless initiatives to guide business and individuals seeking opportunities to participate in the new economic order, spurred by the fourth industrial revolution.
Examples include the continuous investment and robust development in digital technology, including the establishment of the Digital Free Trade Zone (DFTZ).
The education sector is also going through numerous upgrading in teaching philosophies, such as increased gap bridging and integration among universities and industry players. Programmes such as the CEO@Faculty Programme, 2u2i and efforts to enhance skill levels through Technical and Vocational Education and Training (TVET) are also in progress.
The agricultural sector is also shifting gears. While our comparative advantage in rubber and palm based products remains intact, we are also looking to specialize in higher yield premium agro products such as seaweed, herbs, swift’s nests and our king of fruit, the durian.
It is for this reason that the administration shifted the automotive industry towards gradual liberalisation, through the National Automotive Policy 2014. The automotive sector, despite its size, has always been a prime mover of technology spin offs for the use of other sectors. The massive technology consumption in manufacturing processes assists other industries that consume the same materials and processes, such as plastic, rubber, metal and composites as they spin off the technologies to elevate all sectors.
It is also for this reason that the automotive industry is witnessing a transformation from a domestically driven market to a globally thinking market leader. We will continue to work with both local and global experts and organisations, and allow high value to penetrate our borders. After all, those borders are slowly diminishing anyway.
It is better to be the worst of the best, rather than the best of the worst.
The writer is the chief executive officer of Malaysia Automotive Institute.