Deloitte Private Southeast Asia leader on the 'new normal' in Singaporean businesses

Richard Loi is one of the judges at Made in Singapore and Designed in Singapore Awards 2020.

Richard Loi is the Southeast Asia leader for Deloitte Private, and leads the family enterprise consulting practice at Deloitte in Southeast Asia. He helps business families to thrive and prosper across generations, both from business and family perspectives. He is also a Deloitte audit partner based in Singapore, and has more than 30 years of public accounting experience serving public and private clients across various industries.

As one of the judges in SBR Made in Singapore and Designed in Singapore Awards, Singapore Business Review sat down with Richard as he talked about the digitisation trend and the “new normal” in Singaporean businesses.

Which particular markets or sectors are your main focus? Can you share with us your work experience or any backstory that has contributed to your career?
I have over 30 years of public accounting experience and serve as an audit partner on complex global engagements. Besides providing audit and advisory services to listed companies, multinationals and local private companies, I have also advised companies on their IPOs on the Singapore Exchange, and led special investigations and system audits.

In my role as the Southeast Asia Leader for Deloitte Private, I am dedicated to serving the needs of high-net-worth individuals, family businesses, and private enterprises in the region by accelerating their business growth and preserving their private wealth, whilst protecting and extending their legacy.

I also lead the Family Enterprise Consulting practice for Deloitte in Southeast Asia, helping family businesses to flourish across generations. I work closely with families in Singapore and Southeast Asia to help them articulate their vision and values. I advise families on their governance structure and succession planning, and bring alignment across family members through the creation of the family constitution and agreement so that it meets the needs of the family members for the future.

Tell us about the biggest trends you've observed amongst Singaporean companies for the past six or 12 months. How has the pandemic affected these?
Measures put in place by governments and authorities to curb the spread of Covid-19 have resulted in widespread disruptions for businesses. The most dominant trend that we see is digitisation. Looking at the consumer industry as an example, physical retail locations will face a prolonged reduction in footfall, posing viability issues for companies that are not able to digitise. There has been a significant acceleration in consumer online sales, with companies rushing to shift their offerings to digital channels to sustain demand. More than ever, customers will expect a seamless omni-channel experience with new shopping and delivery options that affect margins. The pandemic has also accelerated adoption of different business models such as telemedicine.

In addition, there has been an emergence of pop-up ecosystems, as value chain disruptions lead to more and creative partnerships, which may in turn cause companies to further invest in developing the mindset and agility to collaborate across sectors in the ecosystem. On the other hand, companies are also focusing on cost management. This is a critical priority to ensure business based on cash flow requirements to manage lower margins and revenues.

To comply with safe distancing measures, many organisations have eased into working remotely through virtual communication and collaboration channels. These modes of virtualisation are likely to stay for good in the workforce.

These trends, accelerated by the COVID-19 pandemic, show that the world will be in a state of constant change. It is therefore important for family businesses to pay fresh attention to succession planning during this period. It is an opportune time now for family businesses to engage with the next generation family members – a unique feature that is typical for family businesses. The next generation serves as a readily available resource - an “extra pair of hands”, as well as a valuable sounding board for innovative ideas. Since many of the next generation are digital natives, they can also seize this opportunity to prove themselves, and their active engagement in the business in these unprecedented times could be the crux that determines how well the business recovers and thrives in the new normal.

Which sector did notably well during the pandemic? What do you think contributed to their success or resilience?
Businesses deemed “essential”, such as supermarkets in the retail sector, and pharmaceuticals in the healthcare and life sciences sectors have remained resilient during the pandemic.

Another group of companies could also have an additional edge over other types of organisations. The family businesses, with their streamlined enterprises, tend to have direct access to leadership, which allows information to be conveyed to the top quickly, and they can be more nimble in maneuvering the uncertain business landscape.

Further, these family businesses can thrive in these volatile times by leading with trust and in turn, inspiring trust. It is through trust that the business originally flourished and connects the business to its stakeholders. The mutual trust that they have within the company has led many family business leaders to move swiftly to protect the health and safety of their employees and customers, reset their business priorities, and support the communities in which they operate through corporate social responsibility efforts.

Family governance also becomes extremely important with both the family and the business growing more complex amidst COVID-19. Families with good governance structures can organise themselves, clarify decision-making processes to manage expectations, nurture the relationships amongst family members and guide the relationship between the family and the business – all of which build trust and clarity, which help family businesses to remain resilient in these uncertain times.

What does the 'new normal' in Singaporean businesses look like? What has changed in the new norm and what should companies prepare for?
Digitisation is now a “new normal” for private businesses, as it presents a significant opportunity for competition in new markets and sectors.

Before COVID-19, many private businesses were already focusing on digitisation to optimise processes, improve products and customer experiences, and develop new products and services. The urgency to digitally transform has since grown, and the resistance that some private enterprises may have previously experienced toward digitisation may be waning by necessity.

In addition, private enterprises in Singapore are the least likely to have active cybersecurity plans, which potentially reduces stakeholders’ trust. Since cyber threats can also affect the family’s privacy and personal assets, having a robust cybersecurity system is more important for family enterprises than other types of organisations. Thus, it is imperative for private enterprises to invest in cybersecurity capabilities from an operational standpoint.

The new normal will also see an increase in remote working – the way we work will no longer be the same. One of the operational challenges that we have observed amongst family businesses in Singapore with regard to remote working would be their cultural preferences for face-to-face interactions for fear of losing trust. To overcome this, effective family governance is required to encourage regular two-way communication, which helps to contribute to greater harmony amongst family members and provides for long-term succession.