Economies of scope: Singapore’s alternative approach to progress

In the relatively short time since it became independent in 1965, Singapore has made giant strides. The country illustrates well the power of local systems solutions, purpose-driven networks, and inducing all parts of the government and all stakeholders to work together

Arun Maira

[Image by Jason Goh from Pixabay]

Note: We invited members of our network to share their thoughts and perspectives on the three big themes and thought leader essays which formed the core of the masterclass. This essay builds on them. You can read them here: bit.ly/TransformingSystems.

I returned to hazardous pollution levels in India’s National Capital Region last night. Last week I was immersed in a learning journey in spotlessly clean Singapore. Singapore is a remarkable country. Very small: 5 million people on a tiny island. It moved up from ‘third world’ levels of development to become a developed country within a few decades. A country to which people from even the most advanced Western countries now come to see how it works. In fact, I was included in the learning journey to Singapore by a German think-tank.

My first visits to Singapore were in the 1960s shortly after Singapore became an independent country. Then, remarkably, I was with a team from the Tata group in India, invited by the Singapore government not to learn but to teach Singapore: to teach Singaporeans how to develop skilled workers for the many Western MNCs that the government was inviting to invest in Singapore. Singapore has come a very long way since then. Comparatively, India is still at the starting blocks with miles to go yet for improving its own education and skill development systems.

How has Singapore learned and improved so fast? This was the question we explored on the learning journey. We met leaders in many institutions: the Lee Kuan Yew School of Public Policy, the Centre for Liveable Cities, the Lien Centre for Social Innovation, the School of Continuing Education and Lifelong Learning, the Centre for Artificial Intelligence, the Singapore Housing Board, and many others. On the side, with the help of a friend from India in Singapore, I met many students and faculty at the National University of Singapore (NUS) and the Singapore Management University, and at the ‘consulting club’ run by students, who were interested in ideas in my book, Transforming Systems: Why the World Needs a New Ethical Toolkit. Our learning journey concluded with a masterful wrap-up by Tharman Shanmugaratnam, Senior Minister and Coordinating Minister for Social Policies.

Local solutions to global problems

Singapore is a small, land- and water-constrained country which is getting the most out of what it has by inducing all parts of the government and all stakeholders to work together. Singapore cannot have economies of scale comparable with other countries. Its remarkable progress is the result of an alternative approach—of harnessing ‘economies of scope’. The dominant theory of management is to obtain economies through scale, by doing a few things on a large scale across a large geography. Which requires coordination at many levels—at the centre, in the middle and on the ground, of what these specialised organisations in business and in government do. The theory of ‘economy of scope’ says that complex systems produce better outcomes when coordination of their many different parts happens closer to the ground where outcomes are produced. Trade-offs between needs and resources are best adjusted on the ground closer to reality rather than in high-level meetings between many agencies.

While they have adopted the globally fashionable term ‘smart cities’, their thrust is to create ‘liveable cities’

Singapore officials say that, while they deploy digital technologies extensively and have adopted the globally fashionable term of ‘smart cities’, their thrust is to create ‘liveable cities’. Therefore, coordination of service delivery is thrusted down to citizens, in community centres within the housing estates, where citizens are encouraged to participate in the governance of local schools, libraries and public health services, and are provided facilities to interact in sports and cultural activities and build a community spirit. Singapore illustrates very well the benefits of changing the dominant ‘theory-in-use’ in management and governance, from the prevalent one of ‘global solutions to complex global problems’ (in which complex problems are kicked upstairs to central governments and to the United Nations to solve), to an approach of ‘local systems solutions to global systemic problems’. Swati Ramanathan and Nachiket Mor have explained the benefits of this approach brilliantly in our masterclass in their articles on governance of cities and health services in India. Debashis Bhattacharya has commented on this too (you can read the responses, including his, in this shared Google Doc: bit.ly/TransformingSystems).

In his thoughtful and comprehensive note (in the shared Google Doc), Anil SG has explained how small, producer-owned enterprises create equitable growth. Shanmugaratnam also emphasised that more policy attention must be given to the needs of small enterprises, rather than large ones, to obtain inclusive growth. In Transforming Systems, I provide a systems’ diagram of the ‘circular economy’ to explain the vital role that collective enterprises owned by small producers will play to reduce the increasing wealth inequalities in India and around the world. 

Systems thinking

Singapore is investing heavily in education all the way up from nursery schools to world class universities. What is noteworthy are the innovations in the education system to promote inter-disciplinary studies and develop the discipline of systems thinking. For example, undergraduates from various academic streams in NUS, ranging from science and economics to liberal arts, mingle in five colleges where they live, each with a cross-cutting theme of learning, such as systems thinking, community work, and social studies. They collaborate on college projects on these themes, in addition to their faculty’s specialised curriculum. My young guide was a fourth year student in economics, who belonged to the college that was focused on systems modelling. He was engaged with college mates from various disciplines to make a systems model of the causes and effects of population growth. He was delighted to see the diagram in my book, Transforming Systems, which combines cultural and economic determinants in population dynamics.

Eighty percent of Singapore’s citizens live in homes leased to them by the government. However, the Singapore Housing Board sees its mission not merely as a providing of good housing, which it does very well. It describes its mission as building communities, to do which it must understand both sides of the housing system—its ‘concrete’ side, as well as its softer ‘social’ side too. It is continuously listening to the interplay between the two sides in its interactions with citizens. Thus, for example, it is continuously assessing whether the digital infrastructure it is building for communities provides the benefits the communities want. Personally I was delighted, as Chairman of HelpAge International, to see how much attention is given to the needs and wants of the elderly in the design of digital facilities and services. The elderly are seen as a necessary part of a healthy, integrated inter-generational system, rather than as an economic burden to be taken care of in specialised facilities.

The purpose of the enterprise

Mark Zuckerberg’s fall from grace is as remarkable as was his meteoric rise. From the young visionary in a college dorm, who invented a technological innovation with which billions of citizens all over the world could fulfil their social needs, he is being unmasked in the US Congress as a thick-skinned money-maker who is using citizens’ personal data to make billions of dollars for himself and other financial investors in Facebook.

Singapore ranks very high on both, the ease of doing business by businesses, as well as the wellbeing and ease of living of its citizens. When Shanmugaratnam was asked how the Singapore government was balancing the needs of citizens with the demands of businesses, he said the government must be clear about its purpose, just as capitalist business enterprises are clear about theirs. All institutions are designed for a purpose. The purpose of capitalist business enterprise is to make profits for investors and increase their wealth. A business corporation’s governance is designed for this purpose, and its success is measured by how well it performs by its yardsticks. Whereas the purpose of governments, whatever their form—whether elected by universal franchise, or whether they are unelected, single party governments—is to fulfil the welfare and security needs of citizens. Business institutions are not designed to provide many social goods, nor should be expected to. Whereas governments must learn to provide these public goods if they cannot yet, and not pass on their responsibilities to the private sector, by privatising education and public health for example.

Business leaders are realising that they cannot stay stuck in the ideological rut that the business of business must be only business, which has driven the growth of economies around the world for the past forty years. When business leaders, such as the Business Roundtable in the US, try to break out of this paradigm, they are pushed back. The Economist has reminded them of their legally encased fiduciary responsibilities to their investors. These business leaders are good men and women trapped within institutional walls they cannot easily break out of.

Technologies are evolving rapidly, and institutions of government and business must evolve too. New concepts of ‘social enterprises’ and ‘impact investing’ are emerging. The ethics of a ‘for profit’ enterprise will be different to the ethics of an enterprise that is ‘not-for-profit’. They respond to different societal needs. Is improvement of social wellbeing the core purpose of the enterprise? Or, is profit the underlying purpose of the enterprise masked beneath a veneer of social responsibility? If financial profit is only a means to the end, how should the fulfilment of the enterprise’s core purpose be measured? Clearly, the success of the enterprise should not be measured by the financial size of a ‘social enterprise’ and its valuation when its investors exit it. Even though these are being adopted as surrogate measures of the success of social enterprises and impact investments.

Non-quantifiable qualities of systems, such as well-being of citizens, and fairness and justice, slip out of sight

‘What we measure is what we get’, is a fundamental principle of management. In his insightful article, Ajit Rangnekar, former dean of the Indian School of Business, has highlighted the consequences of measuring the performance of complex systems—corporations and even countries—with financial measures: profits and share values for corporations, and GDP for countries. Non-monetisable (and non-quantifiable) qualities of systems, such as well-being of citizens, and fairness and justice, slip out of sight. 

Platforms, movements, and networks

Platforms, movements, and networks fulfil different purposes. Technology has enabled the creation of platforms that provide enormous reach and that have reduced the costs of transactions. Amazon, Google, and Facebook are the most successful technology-enabled platforms. As for-profit enterprises, their success is evident in their huge valuations in the stock market and the wealth they have created for their promoters.

‘Movements’ are formations of large numbers of people who move together towards an objective. India’s freedom movement, the civil rights movement in the US, and the Arab Spring were movements of people for a cause. They had a purpose to fulfil: to harness dispersed energies to topple an established order. No doubt, technology platforms have provided a very effective means for movements to organise themselves, as they did for the Arab Spring movements, for the citizens’ protests in Hong Kong, and many other uprisings around the world. It is no surprise therefore that governments are very wary of the power provided by technology platforms to citizens’ movements.

Platforms do not create movements: they only enable movements. A common purpose forms movements that may use platforms to amplify their power. Several commentators—Harsh Vardhan, Sudipto Patra, and Rajesh Srivastava, as well Kiran Karnik and Ravi Venkatesan who have contributed thoughtful articles to the masterclass, have emphasised the centrality of common purpose for the formation of movements and networks.

A distinction between movements and networks is worth noting. Movements are often against something, and they dissipate when the job is done—when the wall has been breached and the entrenched order has been toppled. However, the building of something new in place of what has been removed requires more sustained action and over longer periods of time. Movements arise to topple powerful organisations. Lacking any vision of an alternative form of organisation, they invariably replace one organisation with another similar one—one political party with another, one authoritarian government with yet another.

Whereas movements often require only the same capability from a large number of people—metaphorically all putting their shoulders to the wheel—all signing a petition, all squatting on the road, all donating a small sum of money, or all lighting a candle—networks require different forms of contributions and different capabilities to be combined to create something new in place of what has been removed.

Networks require sustained commitment from diverse participants to a common cause, the realisation of which cannot be marked by an event. Networks need more structures to coordinate an ongoing sharing of diverse resources, as well as more collaborative governance, than do movements.

A network is a different form of organisation—tighter than a movement, and looser than a hierarchical organisation. The architecture of strong networks follows the principles of ‘complex self-adaptive systems’ in nature. These are: permeable boundaries within and around them; minimal, critical rules for the management of their processes; diversity and flexibility in their resources; and aligned aspirations of their members. These rules are explained further in Transforming Systems.

The purpose of our lives

In his comment, Balaji Gopalan has given the masterclass a beautiful quotation from the poem ‘To Forgive’.

“We are the centre of our world

But so is everything else

At the centre of their own worlds”

“Who am I? What is the purpose of my life? And, when will my life’s work be done?” These are questions I have asked myself many times. I notice that many successful people, who have earned a lot of wealth through their innovations and investments, or earned well from success in professional careers in business and consulting, are asking themselves these questions. I am meeting many young people who are asking these questions much earlier in life before they have become rich and successful and have no wealth to ‘give back’. They want to shape a better world for everyone.

The social and natural world of which we are all small parts, and the condition of which we are unhappy with, has been shaped by our ways of thinking and doing. As Albert Einstein is supposed to have said, to expect to solve the big problems we confront with the same thinking that created the problems is madness. These young people, as well as the older ones who want to make the world a better one for everyone, need a new tool-kit. The new toolkit must be founded on new ways of thinking and being.

The new ethical toolkit I offer for their consideration, to young and old change-makers, in Transforming Systems: Why the World Needs a New Ethical Toolkit, is based on three new ways of thinking: ethical reasoning, systems thinking, and deep listening—especially to people not like us.  

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About the author

Arun Maira
Arun Maira

Former Chairman, BCG India & Member, Planning Commission

Former Member, Planning Commission of India
Former Chairman, Boston Consulting Group, India
Chairman, HelpAge International

Any discussion on policy and the future of India is enriched with Arun Maira’s views, and not just because he was a member of the Planning Commission of India for five years till June 2014. Arun is one of those rare people who have held leadership positions in both, the private as well as the public sector, bringing a unique perspective on how the two can work together to foster growth for India. He has led three rounds of participative and comprehensive scenario building for the future of India: in 1999 (with the Confederation of Indian Industry), 2005 (with the World Economic Forum), and 2011 (with the Planning Commission).

In his career spanning five decades, Arun has led several organisations, including the Boston Consulting Group in India. In the early part of his career, he spent 25 years in the Tata group at various important positions. He was also a member of the Board of Tata Motors (then called TELCO). After leaving the Tatas, Arun joined Arthur D Little Inc (ADL), the international management consultancy, in the US, where he advised companies across sectors and geographies on their growth strategies and handling transformational change.

Another decade later, Arun was back in India, this time as the Chairman of the Boston Consulting Group, a position he held for eight years till 2008. The other leadership positions he has held include being the chairman of Axis Bank Foundation and Save the Children, India. He was also board member of the India Brand Equity Foundation, the Indian Institute of Corporate Affairs, and the UN Global Compact, and WWF India.

Recognising his astute understanding of both macro as well as micro policy issues, Arun has been involved in several government committees and organisations, including the National Innovation Council. He has been on the board of several companies as well as educational institutions and has chaired several national committees of the Confederation of Indian Industries.

In 2009, Arun was appointed as a member of the Planning Commission, which is led by the Prime Minister of India. At this minister-level position, he led the development of strategies for the country on issues relating to industrialisation and urbanisation, and drove the formulation of policies and programmes in these areas. He also advised the Commission on its future role.

With his vast experience and expertise, Arun is indeed a thought leader. He is invited to speak at various forums and has written several books that capture his insights.

His recent books include An Upstart in Government: Journeys of Change and Learning; Redesigning the Aeroplane While Flying: Reforming Institutions (published in May 2014); Remaking India: One Country, One DestinyTransforming Capitalism: Improving the World for Everyone; and Shaping the Future: Aspirational Leadership in India and Beyond.

His book, An Upstart in Government: Journeys of Change and Learning (Rupa), was published in August 2016. The theme of the book is: the progress of nations and organizations has to be a cooperative endeavour. A good society is one that enables each individual to realize his or her aspirations. Everyone must cooperate to create such a society. The book should be of great interest to leaders in government, in the private sector, and in civil society organizations also. For they must all create better cooperation systems within their enterprises and with each other too.

Listening for Well-Being: Conversations with People Not Like Us, was published in 2017. The book is an incisive analysis of the causes for the increasing divisiveness in societies, aggravated by the shallowness of public discourse, and the break-down of communications between people with different beliefs and histories. He suggests ways to reverse these dangerous tendencies and make the world better for everyone.

His latest book is titled Transforming Systems: Why the World Needs a New Ethical Toolkit. In the book, he says, while economies have been growing, systemic problems of social inequality and environmental unsustainability are becoming intolerable. This realisation led to the Sustainable Development Goals, which all countries signed up to achieve. A new toolkit is required to attain these goals that go beyond the precepts of good business management and prevalent best practices in government as well as civil society organisations. This toolkit has to be founded on disciplines of systems thinking, ethical reasoning and deep listening.

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