Symposium on Managing NPOs’ Challenges in the 21st Century
28–30 November 2006, Kuala Lumpur, Malaysia

It is always a great pleasure for me to be here in the beautiful city of Kuala Lumpur. This time it is even more delightful as we are here to celebrate the 40th anniversary of the NPC, Malaysia. On this auspicious occasion, I would like to extend my warmest congratulations to Dato’ Nik Zainiah Nik Abdul Rahman, Director-General of the NPC, Malaysia, and her colleagues in the NPC on this proud and historic occasion for their organization. Dato’ Nik is a staunch and fervent supporter of the APO. With her support, the NPC, Malaysia hosts as many as eight multicountry APO projects and deputes several dozen resource persons every year. In celebrating this landmark anniversary, it is also our hope that the next 40 years will be full of milestones and achievements as well.

I would also like to bid a very warm welcome to all the distinguished resource persons and participants taking part in this symposium. I am particularly glad to see so many NPO Heads and senior NPO executives in this meeting.

It is important, when we gather on such occasions, that we not only review our past achievements but also prepare ourselves for future challenges and opportunities. The APO is very happy to organize this symposium in collaboration with the NPC, Malaysia to take a fresh look at future issues that NPOs will have to address.

This symposium was motivated by the realization that the world is changing rapidly and NPOs’ strategies and activities must be adapted to fit new realities in the 21st century. I would like to speak today about some of the aspects that many NPOs need to address if they are to remain relevant in the economic development efforts of their countries.

Sweeping deregulation is taking place in virtually all APO member countries and the scale of this will only increase. Both taxpayers and the market are demanding less intervention by governments, even in terms of promotional activities. This means that countries have no option but to move toward smaller governments. As a result, the revenue base of NPOs will likely shrink, if not already shrinking, as government contributions in both direct funding and indirect subsidies decline. Therefore, I see expanding the current revenue base as a major challenge for NPOs.

The deregulation makes the markets in which NPOs are operating more competitive and dynamic. The Markets demand continued innovations and expansion of client networks. It is thus important for NPOs to explore ways to enhance their competitiveness by offering more valuable services to their customers. This will almost certainly require NPOs to review their competitive advantage and focus more on niche markets.

The issue of the competitive advantage of NPOs leads us to a second challenge in the global economy. Know-how that can be utilized for productivity improvement is certainly a big plus for NPOs. It is one form of competitive advantage on which NPOs can continue to build their growth strategies. The market, however, is changing rapidly. Emerging factors like advances in information technology, rapid pace of urbanization, and accelerating economic growth are shifting the GDP structure in favor of the service sector in many countries.

According to published data, last year the average contribution of the service sector to overall APO member countries’ GDP was 53%, as compared with 31% and 16% for the manufacturing and agriculture sectors, respectively. I must mention here that in tandem with national economic growth, the contribution of the service sector is on the increase in all member countries. For example, the service sector in Malaysia last year contributed 44% of GDP and that in Japan close to 72%.

Traditionally, given its importance in the national economy, most NPOs have focused their attention on the manufacturing sector. Therefore, productivity improvement in the service sector is still a new area for most NPOs. Our experience suggests that productivity improvement in the service sector is more complex and demands greater efforts than that in the manufacturing and agriculture sectors.

One of the main reasons for this complexity is that the quality of services required by customers is more diverse and intangible as compared with the quality of products. Furthermore, the types of interactions between service providers and customers are also more complicated. It is, therefore, critical for NPOs to understand the dynamics of this emerging sector and refocus their current productivity know-how to accommodate its challenging productivity needs.

One of the important elements that NPOs must consider in addressing their future challenges is the development of the capacity of their staff. Human resources development is always critical when an organization is trying to create or maintain competitive advantage. Training and retraining together with attractive benefit packages have always been a must for staff capacity building and organizational competitiveness.

However, this leads to another challenge. I have often heard from many NPO heads that retaining capable staff is becoming more difficult and even frustrating. NPOs try to upgrade their staff capabilities to offer better services, only to find that they are being hijacked by other organizations. This is a dilemma we face. When we are successful in training specialists in productivity, they are sought after by our competitors. But we all must understand that job-hopping is a natural part of the market economy.  Therefore, a solution lies in making the workplace attractive, not only in terms of remuneration but also in terms of professional satisfaction, a pleasant work environment, and a sense of pride in working at the NPO. Only then can NPOs reverse this trend.

The list of challenges can go on. However, I feel that the three challenges that I mentioned are common among APO member countries. I sincerely hope that this symposium will be a platform for generating valuable insights that could help us address these three and other challenges that participants may identify.

However difficult some of the challenges may seem, I have no doubt that we will be able to find ways to overcome them. After all, we are productivity specialists and at the core of the productivity concept lies the conviction that one can do better today than yesterday and that tomorrow will be better than today.

I wish you all a very successful symposium. Thank you.

Back to list