Malaysian corporates could become irrelevant in the blink of an eye if they do not react quickly to changes in the digital economy. Find out how Malaysia can be a nation of disruptors instead of disrupted.

1. MALAYSIA JULY 10, 201724
Malaysia
DIGITAL INNOVATION
OPEN DOORS TO ALL
STAKEHOLDERS TO
REIMAGINE A FUTURE-
READY MALAYSIA.
AN IMPERATIVE TO APPLY
THE NEW. NOW.
TO BE A NATION OF
DISRUPTORS INSTEAD OF
THE DISRUPTED.
But it that enough? “Despite the political rhetoric
from some countries, it is an open, borderless world in
the digital economy, where your traditional competitor
no longer exists. Where the likes of Alibaba have done
what no one thought was possible — it has become
everything to everybody. You could become irrelevant
in the blink of an eye if you do not monitor carefully
and react quickly to the changes,” Azwan predicts.
And that is going to be the challenge for Malaysian
corporates. He believes the convergence of industries
will be one of the biggest challenges. “Globally and
regionally, you have media companies trying to be-
come tech companies, telcos trying to become digital
companies and providing financial services, tech com-
panies aiming to build cars, meter companies wanting
to provide healthcare. I mean it’s all coming at them
fast and furious,” he says.
He believes the danger is that Malaysian corporates
seem to think they are handcuffed to their existing
businesses and business models, or that they are too
big to change. “But really, they have to force change.”
And that involves a relook at what their business is
and what business they really want to be involved in
because the traditional industry verticals are break-
ing down.
“Everybody is rushing to be everything to everybody,
but who is providing the customer experience?” he asks.
“I think that is what people are fighting very hard to
own.” This involves delivering a level of personalisation
and customer service, especially to millennials, that is
digital first, which many digital disruptors understand
I actually
think there
is a massive
opportunity for
Malaysia right
now and we
should seize it
to become a
top competitive
digital economy
because we
are now where
we are [based
on the various
global indices]
as a competitive
nation without
yet taking full
advantage
of the digital
opportunities
available.
— Azwan
BY KARAMJIT SINGH
I
t was the first time in Accenture’s storied history
in Malaysia that the consulting powerhouse had
gone outside the company to recruit a country
managing director. Trying to explain the rationale
for the move, Azwan Baharuddin, the new man in
the hot seat of Accenture’s Malaysia practice, comes
up with a neat play on words.
“Just as Accenture wants to inspire change in its
clients, it too wants to change, to get a fresh perspec-
tive. You could say the decision to bring me in was
almost like an Accenture on Accenture move.”
And while he has settled in quickly, thanks to his
strong background in information communication
technology and accounting, he concedes that the first
few days felt like “it was me against the world” as the
3,000-strong organization in Malaysia adjusted to the
new boss who did not come from their ranks.
The early days of adjusting to and feeling each
other out are now out of the way. In a fast-changing
digital-inspired world, there are too many uncertain-
ties, challenges and rocky situations and Accenture
and its clients need a reassuring voice and a steady
hand at the helm. Witness how Singapore’s central
bank has just talked about allowing the island nation’s
banks to invest in e-commerce companies or payment
platforms, ostensibly as a means to compete against
non-traditional players who are disrupting the bank-
ing space — think Alibaba.
And Azwan aims to ensure that Accenture is that
steady hand they can rely on. One of his remits is to
transform Accenture for the next 20 years — in the
next three!
“That is bold thinking,” he acknowledges. It
has also got him thinking and wanting to play a
central role — not just in Accenture’s future but
in Malaysia’s as well.
And, with future all about digital, riding that wave
to growth and job creation is front and centre as he
aims for Accenture to play a key role in helping both
companies and the government manage to their ad-
vantage this ongoing wave of disruption.
The rate of change is hard to follow he says, citing
some analysts who predict that 40% of the compa-
nies in the Fortune 1,000 will not be around in 2024.
“You are going to see many more Kodaks to come,”
he warns, referring to the US film and camera maker
that has become a poster child for how not to deal
with digital disruption.
He also refers to the “Global Information Technology
Report 2016”, which features the latest iteration of the
Networked Readiness Index. The report assesses the
factors, policies and institutions that enable a country
to fully leverage ICT for increased competitiveness and
well-being.
Malaysia ranks 31 in the world and second in South-
east Asia. It is a digital savvy nation with 145% mobile
penetration, which has produced its share of unicorns,
with JobStreet the first and now Grab grabbing all the
headlines as a disruptor.
‘YOU MAY BECOME IRRELEVANT
IN THE BLINK OF AN EYE’
1 ‘You may become irrelevant in the blink of an eye’

2. MALAYSIA JULY 10, 2017 25
instinctively but which bricks-and-mortar corporates,
complacent with their yearly profits, do not.
“The biggest question at the moment is, how to un-
lock the trapped value of digital (see Chart 1) because
it is the disruptors that are quickest to make money
— not the incumbents.”
Azwan’s own thinking is that, to survive, corporates
need an ecosystem strategy and must select the right
partners to execute for them. These correct partners
could be other corporates and definitely the digital
disruptors. “You can never do this alone,” he says
“those days are gone.”
ROLE OF REGULATORS
It is not just how companies compete that has to
change in today’s digital-infused environment, reg-
ulations must be adapted as well. The secretary-
general of Treasury, Ministry of Finance, Tan Sri Mohd
Irwan Serigar Abdullah, acknowledged this when he
welcomed the inaugural cohort of 56 start-ups from
around the world to the Malaysian Global Innovation
and Creativity Centre (MaGIC) Global Accelerator Pro-
gramme in Cyberjaya last week.
“In fintech, the regulator needs to create rules to
make it easy for SMEs to participate and compete in
the market,” Mohd Irwan said.
To Azwan, regulations can be a powerful tool for
the government to accelerate or slow the pace of digital
adoption. “Do you transform regulation, so we adopt
digital faster to force the change, or do you say, ‘Let’s
manage it to make the change slower so people can
adapt’.” Either way, it is not an easy question to answer,
he notes, because if you don’t change and disruption
comes, regulators will be left behind.
While regulators now face pressure to be agile,
Azwan notes that there are six characteristics that seem
to define the bricks-and-mortar players who have un-
locked the trapped digital value from their businesses.
They are purposeful and aligned to creating inno-
vative services for their customers
They are essentialists that look for asset-free or light
businesses. Where traditional businesses look at their
balance sheets and assets owned, that paradigm has
flipped now and these companies look for asset-light
or asset-free businesses and how they can make the
most of them.
They are hyper-efficient, utilising tools such as ma-
chine learning and Internet of Things to reinvent the
business, where previously they would have looked at
business process re-engineering.
These companies are expansive from the point of
view of establishing a high-value talent pool that
utilises crowdsourcing and a contingent work force.
“It is almost like a utility model of labour here and it
would be a complete headache for human resources
departments to manage,” he acknowledges. But this
approach helps companies tap top talent who only
want to work on exciting projects and call their own
down time.
They are network-centric, but we are not talking
about IT networks here. Rather, they are able to de-
velop deep, broad partnerships in the ecosystem with
collaboration, co-sourcing and so on because no one
party can do it all alone in the digital economy. The
days of asking a vendor to give a quote to solve a
particular problem are drawing to an end.
And, finally, these successful bricks-and-mortar
companies also exhibit a tech-prolific nature whereby
they actively invest in new technologies.
The examples of companies that have captured their
digital value, for example GE, are global examples. Is
there a local catalyst for change? Azwan thinks there
is, provided there are three stronger competitors in the
space, “perhaps” he says. “But when you don’t have
that strong competitive element, it is up to you what
you want to do.” (See Chart 2 for an idea of the po-
tential impact of digital initiatives.)
MALAYSIAN RESPONSE TO
DIGITAL DISRUPTION
Azwan notes that many Malaysian companies have
clearly started their digital journey but that, overall,
they are not keeping pace with the global leaders. “Even
some of our government-linked companies have ap-
pointed chief digital officers (CDOs) and I see that as
a good sign. But they need handholding. What does
the role mean? How do you integrate it with the more
established chief information officer role?”
To him the CDO role is more about questioning and
exploring new ways of doing existing things, about
reinventing the business. The role is definitely not
about technology. But it is also a temporary fix “be-
cause once everything is digital, that CDO function is
not relevant as a standalone anymore”.
Interestingly, Azwan observes that GLCs that operate
overseas and compete against multinational companies
are more forward-looking in their digital approach and
awareness of being asset-light where possible.
While it is easy to look at the doom and gloom side
of digital disruption, Azwan sees great opportunity.
“I actually think there is a massive opportunity for
Malaysia right now and we should seize it to become a
top competitive digital economy because we are now
where we are [based on the various global indices] as
a competitive nation without yet taking full advantage
of the digital opportunities available.”
Surprisingly, in most instances, it is the government
that has set the pace for digital adoption. The Digital Ma-
laysia strategy was developed in 2011, and execution
began in 2012, led by the Malaysian Digital Economy
Corporation and Ministry of Science, Technology
and Innovation. Agencies focused on start-ups,
such as MaGIC, have also been strong drivers of
the various components of the digital ecosystem to
speed up the embrace of digital.
“The launch of the Digital Free Trade Zone is
the latest example of driving home the message
that we as a nation have to not only adapt to, but
lead in shaping the digital economy,” says Azwan.
“Our companies must not wait until they are in
trouble and being disrupted before investing in their
digital capabilities. They have to act now.”
NEAR A TIPPING POINT
He strongly feels Malaysia can do better than its
31st ranking in the Networked Readiness Index. “I
think we are near the tipping point and need to ar-
ticulate the dream clearly, so everyone is marching
to the same tune.”
Azwan sees TN50 [National Transformation
2050] as an important part of this articulation and
even mentioned this in his remarks when his ap-
pointment as Accenture country MD was made.
“Accenture aims to be a key driving force to shape
the nation’s vision for the next 30 years [TN50] to
be ready and relevant for the future. We are firmly
committed to being a part of Malaysia’s advance-
ment into the future in terms of innovation, eco-
nomic growth and social well-being.”
He aspires to help establish Malaysia as an in-
novation hub. With Malaysia already a Global De-
livery Centre for Accenture, with over 1,000 highly
qualified staff that will more than double in the
next 12 months, Azwan sees a future for Malaysia
in the KPO space (Knowledge Process Outsourcing)
where the scale advantage of India and the Philip-
pines is neutralized. And this dovetails with how
Accenture is reimagining BPO (Business Process
Outsourcing), focusing on AI driving insights and
business outcomes, managed by engines, cloud and
platforms with intelligent people managing the role
of robots rather than managing the jobs themselves.
Moving away from such commoditized, low-value
BPO work and shifting its focus to niche technical
skills, knowledge and expertise in advanced and
sophisticated areas of outsourcing is termed as KPO.
To achieve this, he needs local talent to draw
the business from Accenture and once it is estab-
lished here, to drive it forward in an aggressive
growth mode.
Which is why, anyone having a conversation
with Azwan can be assured that at some point,
education will come into the picture. He becomes
animated over the urgency to adapt the education
system to the needs of the digital economy.
“Education provides the future supply side and
when talking about primary and secondary educa-
tion, we need to change the way children think. We
are starting to do that, but it’s hard because their
parents and teachers don’t think with a digital skew.”
Higher education also concerns him. At a time
when Malaysia needs relevant degrees, he feels the
education system is still offering some degrees that
are not relevant. “We urgently need to refresh the
curriculums offered to stay relevant.”
That becomes even more urgent in the context
of the rising concern over job loss from ever more
advanced levels of automation and sophisticated
software that has started to replace white-collar
jobs as well.
“But that is the conundrum of today — when
higher efficiency causes displacements.” But being
the optimist that he is, Azwan feels new industries
and new types of jobs will pop up. But we have to
get used to the fact that there are no longer jobs for
life. “But there will be jobs created that you and I
never dreamed of doing before,” he says.
CHART 1: “TRAPPED” VALUE FROM DIGITALISATION
Value for
industry is
the potential
impact on
industry’s
operating
profits
The social benefits that remain
unrealised after full capture of
value for industry. This value
is ‘trapped’ as no incentive
structures exist to unlock it.
Value for
society
includes the
value for
customers,
society and the
environment
Value for
industry
Trapped
value
Value for
society
(1) Total societal value at stake includes impact on customers, society and the environment; the
impact on external industries has not been considered; (2) Excludes the Extending Connectivity
digital initiatives; (3) Reduction in emissions for oil and gas refers to reduction in CO2
e emissions
SOURCE: WORLD ECONOMIC FORUM/ACCENTURE ANALYSIS
CHART 2: THE POTENTIAL IMPACT OF
DIGITAL INITIATIVES BY INDUSTRY
Cumulative value 2016-2025 to
society and industry (US$ billion)
Reduction in
CO2 emissions
(million tonnes)
Societal1
Industry
Jobs
(000s)
-3,249
NA
2,217
3,158
1,1002
-780
-57
NA
-330
670
223
540
9,878
15,849
289
250
1,2843
-151
608
60
Consumer
Auto
Logistics
Electricity
Telecom
Aviation
Oil and Gas
Media
Mining
Chemistry
5,439 4.877
3,141 667
2,393 1,546
1,741 1,360
873 1,280
705 -405
637 945
-274 1,037
-106 -321
-2 -308