Clean toilets and competitive economies

By Vinod K. Aggarwal, Published The Straits Times, 29 Jun 2012

THE question of how to outcompete others in a given market is not only a concern for firms. At a higher level, governments have long understood that their nations are well served by industries that win in the global marketplace - and have pursued forward-looking industrial policies to help them.

Recently, I asked a high-level Singapore official how Singapore's companies would be able to compete in a world of countries whose companies have greater access to low-cost labour (as in China) and cutting-edge innovation (as in the United States). His response was to ask me: 'Have you seen our toilets at Changi Airport?'

I said that I had, and that they were spotless. He nodded: 'That's our competitive advantage.'

What did he mean? How is winning in markets about clean toilets? The point is that getting service processes right is difficult, and not many do it well. Singapore seems to have what it takes to succeed: the right culture to foster human software.

Globalisation, generally defined as the movement of goods, services, people and capital, has brought us to the point where every government should have as clear an answer. If businesses in China can import capital equipment, secure accounting and consulting services, hire the most efficient workers in the country, and secure financing for any project, how then will you compete? Or rather, what is the differentiating factor that makes your goods and services more desirable than your competitors?

It is no secret that a key element of success is to find and exploit an advantage that you hold over others not only locally but globally. But in rich countries, that goal seems to be pursued narrowly. Consultants impress upon firms that they must create novel products or services that incorporate a significant degree of new intellectual property, and then brand them to give their company a competitive edge.

The comment from my Singapore official suggests that intellectual property is not the only or necessarily the best answer to how to compete. Even though lawyers stand ready to help protect your intellectual property, the global reality is that despite the Trade Related Intellectual Property agreement of the World Trade Organisation, the cost to actually do so will likely be very high.

Of course, this is not to say that trying to develop and protect intellectual property is futile, because it will all be stolen. But neither should anyone fall prey to the notion (as more than one Silicon Valley company has) that simply winning a lawsuit will make them successful in the market. Innovation is a continual dynamic process.

Back to Singapore, and the attention to details that makes its airport so extraordinary. As the official I spoke with noted, the Chinese, Indian and Thai governments can all build, and have built, bigger airports than Changi. They have the resources to hire the world's top designers and consultants. When it comes to day-to-day operations, however, they just do not compare.

As he put it, 'our companies, and government, are good at making things work well'. The beauty of Singapore's airport is not its architecture or size, but its processes - their efficiency and the ongoing commitment to making them still better. Land in Singapore and by the time you get through immigration (a five-minute process at most in almost every case), your baggage will be waiting for you. This is at the 14th busiest airport in the world.

I suspect that Singapore's answer to how to compete is the right answer, too, for many other nations, whether they are willing to embrace it or not. New product and service invention is a key element of staying competitive in today's global economy, but it is not enough. Neither are all the millions that multinational corporations spend on marketing to cast their products in the most appealing light. Such efforts are necessary, but not sufficient. In globally competitive markets, the notion of 'the devil is in the details' becomes essential. Ironically, it may be the minutiae that separates those who flourish from those who fail.

The more that details matter, the more an obsession with getting process right becomes the great differentiator. The customer service representative committed to solving a problem, the engineer who makes a computer ever-so-slightly easier to use, and the man who takes pride in keeping the airport bathroom's floor well scrubbed are the secret weapons targeting seemingly inconsequential details that companies (and governments) so often fail to deploy. All the hardware (broadly speaking) in the world cannot ensure a winning edge - you need to get the human software right.

Browse the self-help bookshelf and you will see that the aphorism 'don't sweat the small stuff' has become pervasive. Of course, you cannot let every little thing that you confront become a major crisis. But when it comes to competing in markets, it is by focusing on the details, the 'small stuff', that most countries stand the best chance to win.

The writer is a professor and director at the Berkeley Apec Study Centre at the University of California at Berkeley. This article originally appeared in the Harvard Business Review Blog Network.