Entrepreneurship secret recipe

If only entrepreneurship were like a secret sauce, people would copy the recipe and reapply it each time they need a dose of it in their newly minted business plans. Unfortunately for most would-be entrepreneurs, this is not the case.

Two speakers with links to the Massachusetts Institute of Technology (MIT) came close when they shared insights and highlights of the so-called 'MIT approach' at a recent forum co-hosted by SMU's Institute of Innovation and Entrepreneurship.

Mr Kivel is currently CEO of TheraGenetics, a London-based company working on commercialisation of diagnostic tests to improve the treatment of disorders such as schizophrenia, depression and Alzheimer's. A serial life science commercialisation veteran, Mr Kivel oversaw the successful acquisition of MolecularWare, an MIT spin-off which he led as CEO from 2001 to 2004.

Mr Califano, on the other hand, manages the operation of the SMART (Singapore-MIT Alliance for Research & Technology) Innovation Centre in Singapore. He founded and held senior positions in many companies in the United States and Asia, including a stint as consulting director of Bio*One Capital Pte Ltd, the biomedical investment arm of Singapore's Economic Development Board. He was also the CEO of Johns Hopkins Singapore and The Johns Hopkins-NUH International Medical Centre.

For both men, a key issue in any informed debate over entrepreneurship is whether it is replicable. In other words, given the same mix of factors, will there be an equal response in terms of number of commercial successes? And if not, is the whole project of trying to teach entrepreneurship simply an exercise in despair?

Risk without failure?

Access to early funding and advice is critical for new entrepreneurs. Finding and tapping into the VC (venture capital) and angel investor communities is absolutely critical.

VCs who have invested their money and are keen to see it multiply will see that they continue to engage with the start-up and help see it succeed. To guard their own interests, the typical venture capitalist will not allow you to fall into a living death situation since that would threaten their own investment.

We're capturing people from each department who would never have thought of starting their own business, noting that these now include life sciences, engineering, computing and even social sciences grads apart from the usual finance and business admin people.

Entrepreneurship involves people with integrity, leadership, a bias to action and ability to attract talent. The theme, 'it takes a village', is echoed at MIT where entrepreneurship is widely practised among the community of interested parties that reinforces the culture and drives further risk taking from the shared experience.

Foreign Currency potential and local loan interest rates

The financial crisis of 2008 brought to an end one of the longest periods of sustained global growth experienced in modern times.

While many Western economies experienced unsustainable, property-fuelled consumer booms, which boosted both their growth rates and their exchange rates, the prolonged phase of expansion allowed many emerging market economies to expand their shares of world trade, increase their currency reserves and improve their fiscal balances to a remarkable degree.

The end of that global expansion was certainly not good news for emerging markets, but its aftermath has revealed this remarkable shift in relative structural fundamentals between the economies of the old and new industrialised worlds.

As the world economy now picks up again, we expect favourable cyclical forces to combine with relative structural improvements to generate significant further capital inflows to emerging markets, driving notable potential strength of their currencies.

Of the cyclical forces, interest rates antheir likely future course are of course critical, but so too the resilience of domestic economic growth, or prospects for commodity prices in the case of the larger resources exporters. Brazil, Indonesia and Turkey offer such cyclical appeal here.

Combining these factors, here are some currencies which offer the most appealing blend of value, yield and cyclical attractions:

 The Mexican peso is among the cheapest of major emerging currencies. It should also be supported by economic recovery, a moderate interest rate pick-up of 4.5 per cent versus the US, and a relatively firm oil price, as Mexico is an oil producer.

 The South Korean won offers value on all metrics and should remain supported by the economic recovery and Korea's current and capital account surpluses.

 The Indian rupee is cheap on most, though not all, value metrics. The currency should be supported by a pick-up in foreign direct investments and overseas corporate borrowings, as well as a policy preference to use the currency to contain imported inflation.

 The Turkish lira is reasonably valued at current levels, and should remain supported by economic recovery and one of the highest yields among the liquid emerging market currencies.

 The Russian ruble is not overvalued and should remain supported by a significant economic recovery, a continuation of firm oil prices and a high interest rate.

 The Indonesian rupiah is neutrally valued, and should remain supported by economic recovery and an improving domestic political situation.

 The Brazilian real has already appreciated significantly, such that it offers no outright value appeal, but the currency remains well placed to benefit from a positive commodity market and good domestic growth. High interest rates are likely to attract foreign capital inflows.

These currencies have the potential to show total returns (interest rate carry plus potential spot currency appreciation versus the US dollar) in the region of 7-10 per cent in the coming year.

As individual currencies always carry certain political and idiosyncratic risks, it important to approach currency investment in a well-diversified manner, spreading exposure across a number of favoured currencies. In this way, a portfolio approach can gain exposure to the overall theme of favourable cyclical and structural drivers of emerging market currency appreciation, while limiting the drawdown risk from any individual currency.

THE credit crisis has brought about a lowering of local interest rates across the board for loans to Singapore SMEs. We have certainly taken advantage of this opportunity by procuring bigger loans for our local company's expansion and development.

LOWER interest rates are indeed a boon to SMEs during good and bad times. Lower interest rates translate into lower cost of capital and ultimately lowers the cost of doing business and improve cash flow.

Pursuit was able to generate our own working capital from internal sources and so did not have to borrow from banks. However, as we continue to grow and expand in the region, we may have to tap appropriate available external financing options to fund our expansion plans. Hopefully interest rates will continue to remain low and attractive. Interest rates to remain at the current level for probably the next six months. However, as the economy continues to grow, pushing up prices and nudging inflation upwards, interest rates may rise in 2011.

Furthermore, the government's Special Risk-Sharing Initiative (SRI) scheme which was introduced during the recession will be discontinued in January 2011 and there is expectation interest rates for bank loans to gradually trend up.

Silence is more than golden ......

It seems that the evidence for the benefits of silence continues to mount these days. Studies have demonstrated that silent meditation improves its practitioner's ability to concentrate.  Teachers who introduce silence into classrooms report that it fosters learning and reflection among the students.

Working adults and professionals involved with conflict resolution have found that by incorporating times of silence into negotiations they were able to foster empathy that inspires a peaceable end to disputes.  [ Maybe this is not workable in tense environment, such as manufacturing industry or shipyards where they are rush for time and schedule and the pressing need to deliver on time the construction project and this led to intense argument and many excuses for delay or work stoppages,etc]

The old idea of quiet zones around hospitals has found new validation in studies linking silence and healing.

If you have the means, you buy your luxury silence in the form of spa time, or products like quiet vacuums, which are always more expensive than their roaring bargain cousins. The affluent pay for boutique silence because, like silk on the flesh and wine on the palate, silence can kindle a sensory delight.

Unfortunately, in a world of diminishing natural retreats and amplifying electronic escapes, this delight is in ever shorter supply. The days when Thoreau could write of silence as 'a universal refuge' and 'inviolable asylum' are gone.

With all our gadgetry punching up the volume at home, in entertainment zones and even places of worship, young people today often lack any haven for quiet. These problems are everywhere, but can be especially acute in disadvantaged neighbourhoods.

Too many people think of silence only in terms of 'being silenced', of suppressing truth. In consequence, silence itself is now often suppressed.

People who appreciate the value of silence have, by and large, done a poor job of sharing their understanding, let alone making silence more accessible. Yet silence can be nourished in our larger spaces not just by way of an inward journey that most people lack the tools to embark upon, but via education and architecture.

Some of the imaginative work is being done today by urban planners involved with soundscaping. It is easier to create oases of quiet - by, for example, creating common areas in the rear facades of buildings with plantings that absorb sound - than it is to lower the volume of a larger area by even a few decibels.

And having access to these green oases can greatly enhance quality of life. A recent Swedish study found that even people who live in loud neighbourhoods report a 50 per cent drop in their general noise annoyance levels if residential buildings have a quiet side. These modest sanctuaries can provide at least a taste of silence, which is then recognised not to be silence at all, but the sounds of the larger world we inhabit: birdsong and footsteps, water, voices and wind.

Even a little bit of silence can create a sense of connection with our environment that diminishes alienation, and prompts a desire to discover more quiet.

The MBA Oath

With my MBA degree,  I solemnly recognise my role in the Singapore society, not many years left though....

•My purpose is to lead people and manage staff and resources to create better value that no single one can create alone.

•My decisions could affect the well-being of individuals and staff inside and outside my organization, today as well as the future.

I shall, therefore, carry out my duty within my ability  :

•I will manage my organization with sincerity and honesty, and will not advance my personal interests at the expense of my organization or the public society.

•I will understand and uphold, in good spirit, the laws and contracts governing my conduct and that of my organization.

•I will refrain from corruption, unfair competition, bias judgement, partiality or business practices harmful to society.

•I will protect the staff rights and dignity of all people affected by my organization, and I will reject any discrimination and exploitation.

•I will protect the right of future generations to advance their standard of living and enjoy a healthy world.

•I will report the performance and risks of my organization accurately.

•I will invest in developing myself and others, helping the management profession continue to advance and create sustainable and inclusive prosperity.

In exercising my professional duties according to these principles, I recognise that my behaviour have to set an example of integrity, eliciting trust and esteem from those I serve or to serve. I will remain accountable to my peers and to the organization as well as society for my actions and for upholding those standards.

This oath, I make freely and upon my esteem honour and dignity.

Why the single EURO currency fail to work?

THE crisis in Greece and the debt problems in Spain and Portugal have exposed the euro's inherent flaws. More than ten years of smooth sailing since the euro's creation, the arrangement's fundamental problems have become to surface with obvious reasons.

The single currency for 16 separate and quite different countries seem to have failed and the shift of single currency meant that individual member countries lost the ability to control monetary policy and interest rates in order to respond to national economic conditions. It also meant that each country's exchange rate could no longer respond to the effects of differences in productivity and global demand trends that have accumulated. The single currency weakens the market signals that would otherwise warn a country that its fiscal deficits were becoming excessive. A country with excessive fiscal deficits needs to raise taxes and cut government spending, as Greece does now, the resulting contraction of GDP and employment cannot be reduced by a devaluation that increases exports and reduces imports.

Why the United States is able to operate with a single currency, despite major differences among its 50 states? There are three key economic conditions - none of which exists in Europe - that allow the diverse US to operate with a single currency: labour mobility, wage flexibility and a central fiscal authority. When the textile industries in America's north-eastern states died, workers moved to the west, where new industries were growing. Unlike the unemployed workers of Greece, Portugal and Spain they do not move to faster-growing regions of Europe because of differences in language, history, religion, union membership, etc. Moreover, wage flexibility meant that substantially slower wage growth in the states that lost industries helped to attract and retain other industries.

US fiscal system collects roughly two-thirds of all taxes at the national level, which implies an automatic and substantial net fiscal transfer to states with temporarily falling incomes.

The European Central Bank (ECB) must set monetary policy for the euro zone as a whole, even if that policy is highly inappropriate for some member countries. When demand in Germany and France was quite weak early in the last decade, the ECB reduced interest rates sharply. That helped Germany and France, but it also inflated real estate bubbles in Spain and Ireland. The recent collapse of those bubbles caused sharp downturns in economic activity and substantial increases in unemployment in both countries.

The introduction of the euro, with its implication of a low common rate of inflation, caused sharp declines in interest rates in Greece and several other countries that had previously had high rates. Those countries succumbed to the resulting temptation to increase government borrowing, driving the ratio of government debt to GDP to more than 100 per cent in Greece and Italy.

Until recently, the bond markets treated all euro sovereign debts as virtually equal, not raising interest rates on high-debt countries until the possibility of default became clear. The need for massive fiscal adjustment without any offsetting currency devaluation will now drive Greece and perhaps others to default on their government debt, probably through some kind of International Monetary Fund-supported debt restructuring.

The euro was promoted as necessary for free trade among the member countries under the slogan 'One Market, One Money'. In reality, of course, a single currency or fixed exchange rate is not needed for trade to flourish. The US has annual trade turnover of more than US$2 trillion (S$2.8 trillion), despite a flexible exchange rate that has seen sharp ups and downs in recent decades. The North American Free Trade area increased trade among Canada, Mexico and the US, all of which have separately floating exchange rates. Japan, South Korea and other major Asian trading countries have flexible exchange rates. And obviously, only 16 out of EU's 27 member states use the euro.

Despite its problems, the euro may survive the current crisis but not all of the euro zone's current members may be there a year from now. In retrospect, it is clear that some of the countries were allowed to join prematurely, when they still had massive budget deficits and high debt-to-GDP ratios. Moreover, some countries' industrial composition and low rates of productivity growth mean that a fixed exchange rate would doom them to large trade deficits.

Some mechanism of enhanced surveillance and control may be adopted to limit future fiscal deficits. But even with a smaller group of member countries and some changes in budget procedures, the fundamental problems of forcing disparate countries to live with a single monetary policy and a single exchange rate will remain.


The euro rulebook doesn't work !

Business Times, Sept2010

WHAT does a country need to do to make a success of the euro? The European Commission and the European Central Bank would say the recipe is simple: Cut your budget deficit, slash wages, keep taxes competitive, boost your exports, and live with austerity.
There is just one problem: Ireland has been following precisely that formula and it hasn't done much good. The government is being squeezed at a time when the cost of bank bailouts is soaring. Blame it on the banks.
If there is one country that proves what a mess the single currency has become, it isn't Greece, or even Spain or Portugal. It's Ireland. When countries break the rules and then get into trouble, it isn't that surprising. But if they stick to the rulebook and still run into as many problems, it suggests there is something badly wrong with the system itself.

There was a stark reminder that Ireland is still a long way from market redemption, almost two years after the credit crunch burst the real-estate and asset bubble that had been building up in the country for most of the past decade.

Ireland now has its lowest rating since 1995. Irish bonds plunged on the news. The spread over German bunds widened to a record.
It isn't hard to understand why the decision was made. Ireland ran a budget deficit of 14.3 per cent of gross domestic product last year, the largest of any euro-area country. The gap will narrow to about 11 per cent this year, according to European Commission forecasts. That is a slight improvement, but hardly enough to reassure the bond market.

There is a mountain of debt building up and the economy remains in a terrible state. Over the past two years, it has shrunk about 10 per cent, one of the worst recessions in the developed world. There isn't much sign of a bounce back, either. The Irish central bank predicts the economy will expand 0.8 per cent this year, a figure it revised up from the 0.5 per cent contraction it forecast in April.

And yet, Ireland has been exemplary in its austerity drive. Public-sector salaries have fallen by an average of 13 per cent. Taxes have been raised where necessary, but not in a way that will hurt business. The Irish have been willing to tighten their belts and adjust to hard times. There was no sign of the street riots, strikes and political protests that took place in Greece.

Ireland is doing exactly what it has been told it should be doing. It is following the path laid down for Greece, Portugal and Spain, and doing so with admirable self-restraint and discipline. There ought to be some reward for all that effort. But there is very little sign of it.

Ireland had one of the most successful economies in the world when it joined the euro in 1999. All it has got out of monetary union is massive financial and real-estate bubbles, the collapse of which will scar the country for a generation.

If austerity doesn't work for Ireland, it is hardly going to help Greece, Portugal or Spain. The whole experiment with monetary union is doomed if the euro's leaders don't jettison their simple recipe.