Introduction and Context:

Mr. Lee Kuan Yew inaugurates the Hollywood Leadership in Asia lectures and uses the platform to discuss the life and achievements of Howard Waugh, Singapore’s former ambassador to Bangkok and Brussels.

Selfless Service as Ambassador:

Howard Waugh served as Singapore’s ambassador to Bangkok from 1967 to 1971 and to Brussels from 1972 to 1974. Remarkably, he did this without accepting any remuneration for his services. He was also Singapore’s permanent representative in Geneva.

Early Life and Education:

Born in 1917 in Singapore to a Chinese immigrant, Waugh was educated in Singapore until the age of 11. He was then sent to China for further education, eventually earning a BA from Nanking University.

Academic Journey in the U.S.:

In 1944, Waugh moved to the United States to study agricultural economics at Cornell University. There, he met and married Li Lianfeng, another graduate student from Hunan, China.

Entry into Business:

After his studies, Howard Waugh was sent by his father-in-law, a successful entrepreneur, to Thailand and Burma to work in the tungsten and tin trade. He was initially inexperienced in business but received detailed guidance from his father-in-law.

Transition to Entrepreneurship:

Waugh eventually branched out on his own, mastering the trade and production of various products like tapioca and glass noodles. Alongside his wife, he modernized the glass noodle production process. He expanded his ventures into flour milling, jute sorting, and vegetable oil production among others.

The Journey from Manager to Entrepreneur:

Howard Waugh initially began as a manager under his father-in-law but later evolved into a successful entrepreneur. His development from manager to entrepreneur is presented as an inspiring path for others who start their career as managers.

End Note:

The lecture serves as a tribute to Howard Waugh’s diverse achievements, from diplomatic service to entrepreneurial success, illustrating a life of noteworthy evolution and contribution.

Entrepreneurship Defined:

Mr. Lee Kuan Yew mentions a definition of entrepreneurship from the Center for Entrepreneurship at Babson College, describing it as an “opportunity-obsessed, holistic in approach, and leadership-balanced” way of thinking. He expands by contrasting entrepreneurs and managers. Entrepreneurs, he says, focus on identifying opportunities for wealth creation while managers focus on optimizing available resources.

Innate Qualities:

Mr. Lee posits that entrepreneurs and leaders are mostly born with innate qualities that enable them to excel in their fields. Using the analogy of different types of Labrador retrievers, he suggests that no amount of training can instill in someone the innate traits necessary for significant improvement in leadership or entrepreneurship.

Cultural Influence: The British Case:

He delves into the cultural aspects that influence entrepreneurial spirit. He cites the British as historically innovative but lacking in the ability to commercialize their inventions. This, he argues, is due to a culture that esteemed old wealth and the landed gentry over the new rich, inhibiting entrepreneurial initiatives.

Changing British Attitudes:

He notes how Margaret Thatcher transformed British attitudes towards wealth and entrepreneurship in the 1980s. Thatcher’s policies privatized nationalized industries and encouraged private enterprise, leading to more profitable companies.

American Entrepreneurial Spirit:

Mr. Lee contrasts this with the United States, describing it as a dynamic, constantly changing society with no class barriers, fostering a more robust entrepreneurial environment. The U.S. leads the world in patents and has a societal focus on innovation, making it easier to start new ventures.

Entrepreneurial Failure and Persistence:

He observes that in America, for every successful entrepreneur, many have tried and failed. However, this failure is often seen as a stepping stone rather than an end, leading many to try repeatedly until they succeed.

Social Attitudes in Other Cultures:

He briefly touches upon the attitudes toward self-made individuals in countries like Japan, where such people attract ridicule, much like in pre-Thatcher Britain.

This segment of Mr. Lee’s presentation offers a multifaceted look into the nature of entrepreneurship, the role of innate qualities, and how cultural attitudes can shape or impede entrepreneurial ventures.

Social Hierarchy in Traditional China:

Mr. Lee Kuan Yew discusses how traditional Chinese societies have long held scholars in the highest regard, followed by farmers, workers, and merchants. This hierarchy, shaped by an agrarian economy, has persisted in popular culture and has been a staple in other East Asian societies like Japan and Korea.

Lack of Entrepreneurial Culture:

Lee notes that the social hierarchy impacted the career choices of bright individuals, steering them towards scholarship and government service through the imperial examination system. This has led to a lack of a strong entrepreneurial culture in societies influenced by Confucianism, including present-day China, Japan, Korea, and Singapore.

Western Contrast:

Lee contrasts this with the Western world, specifically the UK and the US. In the UK, top graduates also opted for civil service roles until the late 1980s when the financial sector became lucrative. In the US, the trend has generally been the opposite: top graduates often go into business, which has raised concerns about a lack of talent entering government roles.

Entrepreneurship: Nature vs. Nurture:

Lee’s initial belief that entrepreneurs are born, not made, evolved through observations of businessmen in Hong Kong and Singapore. Hong Kong benefited from an influx of ready-made entrepreneurs fleeing Communist China, which sparked an entrepreneurial culture. In contrast, the lack of such a culture in Singapore resulted in a workforce that is efficient but not naturally inclined to start their own ventures.

Case of Taiwan:

Lee also discusses how Taiwan’s economy benefited from a mix of mainland bureaucrats and native entrepreneurs. Mainlanders controlled large state-owned enterprises, while native Taiwanese started small and medium enterprises, contributing to Taiwan’s economic dynamism.

Summary:

In essence, Lee argues that a society’s historical and cultural backgrounds profoundly influence its governance and entrepreneurial tendencies. His observations suggest that entrepreneurial spirit can be nurtured, depending on societal norms and historical factors.

Banking Challenges:

Mr. Lee Kuan Yew starts by highlighting that Singaporean banks were initially hesitant to lend to traders who wished to set up factories. This reluctance was due to the banks’ lack of experience and expertise in assessing and managing the risks associated with such ventures.

Formation of Development Bank of Singapore (DBS):

To tackle this problem and to combat high unemployment, Singapore was compelled to create the Development Bank of Singapore (DBS). This institution was designed to undertake the financial risks of new manufacturing initiatives.

Genesis of Government-Linked Companies (GLCs):

DBS’s establishment eventually led to the formation of Government-Linked Companies (GLCs). Mr. Lee states that this development was necessary due to the scarcity of local entrepreneurs and their lack of capital or interest in starting these new ventures.

Government as Entrepreneurs:

Government ministers took up the task of initiating new businesses, acting essentially as entrepreneurs. Lee mentions several ministers like Goh Keng Swee, Hon Sui Sen, and Lim Kim San as key figures who launched successful enterprises in various sectors.

Necessity Driven Success:

Lee emphasizes that these ventures were born out of necessity, with the government viewing their entrepreneurial role as nothing unusual. The teams were highly motivated due to the existential challenges facing Singapore, and there was a high level of commitment to succeed.

Change in Motivational Structure:

With the passage of time and the stabilization of the economy, the “do or die” mood that initially propelled these GLCs has faded. Lee states that they now have to motivate managers of GLCs using more conventional methods, such as profit-related incentives and stock options.

Entrepreneurial Traits and the New Rich:

Lastly, Mr. Lee Kuan Yew observes that while the allure of wealth is universal, successful entrepreneurs possess extraordinary qualities. These include high energy levels, a unique mindset that sees opportunities instead of problems, and a keen sense of profitable products or services.

In summary, the talk outlines the challenges, necessity-driven solutions, and the evolving management paradigms in Singapore’s journey to economic stability and growth. It sheds light on how governments can effectively act as entrepreneurs in the absence of a strong entrepreneurial culture, and how motivational structures must adapt over time.

Global Entrepreneurship Monitor Findings:

Mr. Lee Kuan Yew discusses a 2001 Global Entrepreneurship Monitor (GEM) report, which highlights the challenges facing Singaporean startups due to the small size of the domestic market and regional economic weaknesses. As a result, startups seeking funding need to show a capability to penetrate global markets.

Low Entrepreneurial Activity:

The GEM report ranked Singapore third lowest in entrepreneurial activity among its studied countries in 2001, with a rate of just 5.2%, only slightly above Japan and Belgium. This rate was significantly lower compared to the 11.7% seen in the United States.

Notable Exceptions:

Despite these hurdles, Mr. Lee mentions several successful Singaporean entrepreneurs such as Sim Boon Woo, Wong Nit Leong, and Kwek Ling Beng. He suggests researching the traits these entrepreneurs share to better understand what makes them successful.

Role of Circumstances and Culture:

Mr. Lee asserts that circumstances and culture significantly influence how entrepreneurial a society is. He compares the Chinese populations in Indonesia and Malaysia, who have become entrepreneurs due to being largely excluded from bureaucratic and military roles, with the situation in Singapore.

Limited Business Participation:

In Singapore, individuals who might otherwise be entrepreneurial have been absorbed into roles in politics, the bureaucracy, and the armed forces, leading to fewer entrepreneurs. This is part of the reason for Singapore’s low entrepreneurial activity rate.

Flexibility and Change:

Despite these challenges, Mr. Lee suggests that Singaporeans could adapt over time. He attributes this flexibility to Singapore’s young society and its immigrant background. However, he indicates that changing societal values and culture through education will require time and effort.

In summary, Mr. Lee delves into the difficulties Singapore faces in fostering entrepreneurship, influenced by factors ranging from market size to societal roles. The role of culture and circumstance in shaping entrepreneurial activity is emphasized, as well as the potential for change through concerted effort.

Income Disparity and Entrepreneurship:

Mr. Lee Kuan Yew discusses the relationship between income disparity and entrepreneurial cultures. He cites a GEM study showing Denmark and Finland as more egalitarian societies compared to the United States, which has higher income disparity. The implication is that a society willing to tolerate income inequality may have a more dynamic entrepreneurial culture.

Features of American Entrepreneurial Culture:

Mr. Lee identifies four salient features of the American entrepreneurial culture: an emphasis on personal independence, respect for those starting new businesses, acceptance of failure, and tolerance for high income disparity.

Egalitarianism in Singapore:

He notes that Singapore has aimed for an egalitarian society for over 30 years. To foster entrepreneurship, he suggests that Singaporeans must be willing to accept greater income disparities.

Global and Domestic Changes:

Mr. Lee outlines the significant global and domestic changes that Singapore has witnessed. These include the end of the Cold War, the rise of China, and Singapore’s own transformation into a manufacturing base and financial center. He argues that Singapore must focus on higher-value sectors to attract foreign direct investments.

Education and Skill Level:

Emphasizing education, Mr. Lee says that Singapore has achieved widespread secondary education. The challenge now is to improve the quality of education at each level to remain competitive, especially against lower-wage workers in countries like China.

Entrepreneurial Expansion:

He calls for more Singaporean firms to expand regionally and for individuals to consider entrepreneurship over salaried jobs. He highlights that being entrepreneurial does not only mean starting new companies but can also involve taking existing businesses or professional services in new directions.

Government Role and Mindset:

Mr. Lee addresses the government’s plan to release officers to the private sector but cautions that mindset changes are required for entrepreneurship to flourish. He also mentions the need to remain competitive in tax regimes compared to markets like Hong Kong and Taiwan.

Preserving Strengths:

In conclusion, he emphasizes that the remaking of Singapore doesn’t mean abandoning its strengths. Rather, the goal should be to build on what has been achieved while adapting to changing global conditions.

In summary, Mr. Lee Kuan Yew delves into the complexities of fostering a robust entrepreneurial culture in Singapore amidst global and local changes. He discusses the relationship between income disparity and entrepreneurship, the importance of evolving cultural values, and the roles of education and government policy in this transformation.