When news of a new strain of coronavirus first broke out in December 2019, no one could have imagined the impact that it would have on the entire world. Little did anyone realize that it would be the start of a global pandemic that would ravage economies, disrupt supply chains and fundamentally reshape organizational behaviours.
From left: Edwin Morris CPA, Group Chief Financial Officer, Jebsen & Co. Ltd.; Francis Ngai, Founder and Chief Executive Officer of Social Ventures Hong Kong; and Francis Fong, Honorary President, Hong Kong Information Technology Federation.
As businesses and industries scrambled to respond to an unprecedented situation, many lessons were learned as part of the journey. Earlier this month, a group of industry experts shared these learnings at the Hong Kong Institute of CPAs’ first ever conference for both CPAs in business and practice. Titled “Transcending Together,” the CPA Conference 2021 brought together speakers and panellists to share their experiences and to inspire Institute members and the larger business community to think about the latest industry trends stemming from the pandemic so far.
Lessons from the crisis
During the first panel discussion, the audience heard from Edwin Morris CPA, Group Chief Financial Officer, Jebsen & Co. Ltd., and Francis Ngai, Founder and Chief Executive Officer of Social Ventures Hong Kong (see profile here). Moderated by Francis Fong, Honorary President, Hong Kong Information Technology Federation, the panellists talked about how the pandemic disrupted their businesses, how they responded and the key lessons from that experience.
The panellists started by acknowledging that all businesses today have to deal with operating in a fluid environment that is constantly changing and full of uncertainties.
The overarching recommendation from the panel was that companies need to be more proactive in mitigating their external risks. These include being well-prepared to deal with all sorts of scenarios, having a strong sense of purpose, making sure their propositions stay relevant, and to make long-term plans for purposeful engagement with customers.
Kickstarting the conversation, Fong noted that the last 20 months have been a tumultuous time for all sectors. Those who clung on to the hope that the pandemic would soon pass and did nothing to adjust to their businesses have likely met a dire fate. On the other hand, those who quickly sprang into action and adapted themselves offer us many “survival lessons.”
Morris reflected on the moment Jebsen, a marketing, investment, and distribution organization, realized the severity of the situation around Chinese New Year in 2020. “We knew this was going to be a big deal – you could see what was happening – so the first thing we did was go to our banks in Hong Kong, lock in our money and check that the banks had the money and facilities there for us,” he recalled.
Despite Jebsen being a large organization with many diverse business units, Morris said it was solvency problems that kept him up at night. “What if we couldn’t receive the money that was owed to us? We had to quickly tell our business units to monitor our customers and clients. It came to the point where we would have to assess who would survive,” he said.
For customers who looked like they could weather the storm, Jebsen provided them with support and extended their credit lines, but for those who looked like they wouldn’t make it, Morris said they had to make the difficult decision to pull the plug early on. “We had to cut them off, this was the balance we had to strike,” he said.
Ngai, on the other hand, who comes from a non-governmental organization background, said the pandemic highlighted how fragile Social Ventures’ business model was and how it lacked resilience. This prompted his company to revisit its original mission statement and to think of ways to adjust to the pandemic. “During the pandemic, you could see that our business model was fragile and lacked resilience, so we had to go back to our original vision and mission and try and figure out why we did what we did, and how we could move forward with that vision in a new environment,” he said.
Social Ventures is a company that promotes social change and helps organizations to align their social purposes in order to create a better Hong Kong. Through innovative ideas and capitalizing on the fact that there was growing social awareness around sustainability and environmental issues, it took the opportunity to promote sustainable change, one of its core missions. It did this by partnering with several organizations to roll out initiatives such as Green Monday, a movement that encourages people to go meat free every Monday with the support of its Green Common business, Asia’s first plant-based grocer.
“So, we expanded actually during the pandemic,” he said. “We even expanded to places like Taiwan, Shanghai and Singapore and we’re cooperating with a lot of chains now like Café de Coral and McDonald’s to introduce meat free Monday.”
In both cases, business resilience came from the fact that they were forced to face a situation head-on. For Jebsen, it had to rethink how to deal with dwindling sales considering its overhead was billed to high volume sales. “The pandemic really forced us to look at our entire overhead structure, and ask ourselves: how can we fix this and how can we change the fixed costs to become variable? This isn’t just an accounting issue, this is about the entire organization’s design,” added Morris.
For Social Ventures, much of its support comes from fundraising, and without that, it had to quickly think on its feet to find new ways to raise funds. “Take our ‘Run Our City’ programme for example. Because of the lockdown we couldn’t do this and we lost an important revenue. So we had to adjust our strategy and decided to change it to ‘Run to the Moon’ where participants individually ran, and we added up all the miles in the end to see if we could run to the moon.”
Another lesson for these two companies was figuring out how to be better prepared for future shocks, which involved understanding the businesses’ purpose. “When you do this, it’s good because you are actually reminded of your passion and why you wanted to do any of it in the first place,” Ngai said. “So we always encouraged companies to go back to the drawing board and work out why they decided to go into the business in the first place.”
With purpose and a plan, businesses are better able to deal with any incoming challenges. Ngai noted that the reason why so many businesses failed when the pandemic hit was because they were too short-sighted. Morris agreed, adding that companies that have not experienced a crisis tend to not plan for the long term. He said: “They generally plan for the short term; as long as they are alright today and tomorrow, they don’t think about what might happen later, and that’s where many of them went wrong. They didn’t have the awareness and the ability to suddenly change.”
One of the biggest lessons from the crisis is that companies need to be prepared to embrace sudden change and have a longer-term vision. For example, Fong raised the topic of working from home and impact investing. “The trend now is towards Business 2.0. The Hong Kong Management Association and Social Ventures have already launched ‘Business with Purpose,’” he said, referring to the new platform which was co-created by the two organizations to advance social impact considerations and innovations in business. Some of the activities that they support include talks and seminars, consultancy services, awards and advocacy campaigns in the hopes that it can create a stronger ecosystem to advance purpose-led values and leadership among the business community. “And companies are now talking about this. What is your purpose? Businesses have to think about that.”
Indeed, understanding this purpose is also important in attracting the next generation of workers, who are no longer happy to settle for a role solely with attractive monetary returns. They’re looking for companies with a social purpose. As such, purposeful brand creation is also important for talent attraction and retention moving forward, the panellists agreed.
On that note, Morris conceded that the new normal means that companies have to look inwards and be prepared to face a situation that can change at any time. “Do you have the tools and people in place, and does your company have senior management level buy in? How can you be ready for any of that?”
“The pandemic really forced us to look at our entire overhead structure, and ask ourselves: how can we fix this and how can we change the fixed costs to become variable? This isn’t just an accounting issue, this is about the entire organization’s design.”
From left: Michael Chan FCPA, Co-Founder and CEO of Vis Mobility Limited; Toa Charm, Chairman of OpenCertHub; Dickman Chiu CPA, Group Financial Controller of 100x Group; Andrew Lee, Partner, Greater China Markets, EY; and Jeffrey Chan FCPA (practising), Chairman of the Institute’s Working Group on Practice Management under Small and Medium Practices Committee
With those questions in mind, it was the perfect transition for moderator Jeffrey Chan FCPA (practising), Chairman of the Institute’s Working Group on Practice Management under the Small and Medium Practices Committee, to invite the second panel to share their views on digital transformation and how it has impacted business operations and the accounting profession.
The panellists were Michael Chan FCPA, Co-Founder and CEO of Vis Mobility Limited, Dickman Chiu CPA, Group Financial Controller of 100x Group, Toa Charm, Chairman of OpenCertHub, and Andrew Lee, Partner, Greater China Markets, EY.
Michael Chan said that companies need to understand that digital isn’t the enemy and that it is there to help solve customers’ and businesses’ pain points. There are many innovative technological tools and choosing the right one is really about finding a technology that solves your customers’ pain points.
However, the biggest resistance towards technology, according to Charm, is a fear of the technology itself. “Technology is an enabler, it’s not the enemy,” he said. “If you look at it and say ‘it’s too expensive,’ and ‘it’s too hard to learn,’ you will never change.”
Charm pointed to DBS Bank and Standard Chartered as well as virtual banks as examples of banks changing their business model using technology in order to gain resilience. He said that they had already been finding ways to use technology to enhance their services, and the pandemic simply accelerated what they were already doing. The end result was that it allowed their businesses to grow, because they were digitally ready.
“If you look at it and say ‘it’s too expensive,’ and ‘it’s too hard to learn,’ you will never change.”
Jeffrey Chan agreed that digital transformation is absolutely necessary today, so he asked the panellists: how can the profession prepare for this?
The panellists believe that technological adoption required a mindset change first. But this can prove challenging, noted Chiu. “As accountants, we don’t like change; we go by the rules. But in this change environment, we can’t be the hindrance to any change, we must embrace it,” he said.
Indeed, he said that this is where the profession can actually bring added value to a company. “If we embrace the technology to help customers solve problems, this is the value that the profession is bringing to the table,” Chiu said.
Lee recognized that change can be intimidating. As such, it is important that senior management of all business functions understand the purpose of digital transformation and they need to have a plan and communicate this to their staff.
But firstly, finance professionals were advised to go to the drawing board and think about what they want to transform into, whether it’s in finance or in its business operations. “If you don’t have a clear idea of where you want to get to, then it’s really pointless,” he added.
Also driving hesitation for adopting new technologies is the fear that technologies such as artificial intelligence (AI) and robotics will eventually replace manpower. Lee said that those fears are understandable, but equally unfounded. He argued that professionals should spend more of their time upskilling and to find ways to get the technology to add value to what they are already doing. He encouraged the audience to look at the numerous free programmes set up by the government, associations and education institutions to upskill.
“In the end, humans can’t be replaced,” he said. “The whole world is moving towards adopting new technology, so use your skill sets and keep your profession relevant. Use the technology to enable yourselves to do your jobs more efficiently and to add value to your company. It’s strategic, and besides, you’re also improving yourselves.”
Charm said that the pandemic was a huge wake-up call for businesses globally, and that digital transformation is now part of that change management. “No one likes change, and we’ve already been pushed out of our comfort zone, so any change has to come from having a sense of urgency – it’s the urgency that will drive change,” he said.
Charm then cited a statistic from a study conducted by PwC, which found that by 2030, around 30 percent of the work force today will be replaced by some form of AI. While he said that this doesn’t mean jobs will be lost, it does mean that certain job functions will change, and that CPAs must find new ways to stay relevant and add value using new technology.
Finally, the panellists had some closing remarks regarding technology adoption and change in small organizations versus big organizations. While large companies may have the resources, they are not as agile as smaller companies, Lee said describing it: “It’s like trying to get an elephant to turn around!”
As for small companies, Michael Chan argued that they are just as well equipped to make changes, saying that a lot of the available technology is not actually that expensive.
But at the crux of it all, digital transformation is inevitable. The panellists ended the discussion by encouraging the audience to keep an open mind. “This transformation is really about everyone embracing all the technology and to have a positive mindset change. Ask yourselves: ‘how can I apply these technologies to my daily work?’ This is the challenge you should give yourself,” he said.
“Use the technology to enable yourselves to do your jobs more efficiently and to add value to your company. It’s strategic, and besides, you’re also improving yourselves.”
Kenny Sham Director, Head of Marketing (Hong Kong, Taiwan & Macau)
Given the nature of the toy, LEGO, maker of the iconic toy bricks, has largely relied on brick and mortar retail shops to sell its products. But in 2018, the company decided it was time to move with the times and go online.
The decision paid off, said Kenny Sham Director, Head of Marketing (Hong Kong, Taiwan & Macau) (pictured above), for the LEGO Group during a keynote speech at the CPA Conference 2021. He explained that moving to e-commerce early on helped the company to weather two recent events: the social unrest in Hong Kong and COVID-19. “As people began to stay home, we realized that we had made the right move because people weren’t coming to the stores – they were online,” he said.
During the first half of this year, the LEGO Group’s consumer sales grew by 36 percent, it’s total revenue grew by 46 percent, and its operating profits soared 104 percent, compared to last year.
Aside from going online, Sham also believes that LEGO’s success boils down to the fact that the company started to focus on several key areas. Firstly, when the pandemic hit, the company took the time to understand how its consumers had changed. It then made changes according to these new customer behaviours.
Secondly, LEGO reacted and transformed quickly. “What’s amazing about our product is that it’s really hands-on, once children touch and build our products, that’s when they get addicted and fall in love with LEGO,” he said. “So what were we going to do?” The company rolled out a “Bricks at Home” campaign to help parents and children who were stuck at home. He noted that parents greatly appreciated this, as it meant their children would stay occupied while they worked. So it continued with campaigns to engage with their customers through e-commerce and online channels, partnering with companies such as HKTV Mall to roll out exclusive product launches.
Thirdly, and perhaps most importantly, Sham said, the company held tight to their brand’s core values. “During the pandemic, this really got lost with a lot of companies; they sailed along not really understanding what their purpose, mission and core values were anymore,” he said. Through its monthly brand health check, it realized that issues such as sustainability, and diversity and inclusion were really important to their customers and to their staff, prompting the company to ramp up efforts in this area.
On that note, Sham imparted one last piece of advice: “During a crisis, that’s when you really have to sit down and think about what your brand stands for and what you’re all about,” he said.
For the highlights of the afternoon session, please click here.