In 2010, buildings consumed around 40% of global energy and contributed to a third of global greenhouse gas emissions (UNEPSBCI-GlobalCompactsBrochure, 2010). Without visionaries to innovate new clean-tech solutions for buildings, the amount of greenhouse gas emissions from buildings is set to double or even triple (Eco-Business, 2016). Thankfully, we have many of such visionaries in Singapore and from 2005-2013, the number of green buildings has increased a hundred times to 1700(BCA, 2013). I had the pleasure of speaking to one such visionary, Mr Andy Lai CEO of OTTO Solutions.
Established in 1992, OTTO solutions has a total contract value of $100 million and employs more than 100 staff. A one stop solutions provider, OTTO solutions creates value for their customers through their eco-friendly approach to L.E.A.D.S (Lighting, Electrical & Mechanical, Automation, Design and Smart Energy).
Trends in the region
The Asian region will consume around 45% of the world’s energy by 2030 and thus Mr Lai sees an urgent need for buildings to be smarter and cleaner. For example, China’s 13th five year plan aims for 50% of all new urban buildings to be certified green buildings, which is an encouraging step forward but also reveals that half of China’s new buildings will not meet the green standards (World Economic Forum, 2015). Even as a regional leader in clean buildings, two-thirds of Singapore’s buildings are still not yet Green Mark Certified, which leaves a lot of buildings to be improved to hit the BCA’s target of 80% by 2030 (The Straits Times, 2017)
Riding on the trends
To lead the clean revolution for buildings, OTTO offers a suite of eco-friendly solutions. One of the most innovative solutions from Mr Lai is the energy audit in which OTTO conducts an assessment of the energy needs and efficiency of a building’s lighting. From this assessment, OTTO will then curate eco-friendly methods to reduce energy consumption. In this manner, existing buildings can easily be turned into environmentally responsible building, which not only protects the environment but also reduces lighting and maintenance expenses.
Operating in Singapore
Mr Lai has identified the lack of skilled manpower that understands clean technology, understands the company’s product and possesses the capability to innovate new solutions as a challenge of operating in Singapore. Hiring difficulties is also felt by 1 in 4 Singaporean SMEs, albeit lower than 1 in 2 Singaporean SMEs in 2014 (Dpgroup, 2017). In this regard, SPRING Singapore has launched the Human Capital Movement and among other types of support, works with key influencers to highlight good career opportunities in SMES and also increases the number of SME-student engagement events such as career fair and networking sessions (Spring, 2016).
Additionally, Mr Lai has highlighted that while Singapore has one of the best business environments in the world, ranked 2nd by the Ease of Doing Business Index (Doingbusiness, 2018), more can be done to reduce regulations as he feels that the regulations can be cumbersome at times, especially with regards to hiring. This sentiment is also echoed by KPMG’s Budget recommendation which calls for more flexible policies to help companies go digital. In the recommendation, KPMG highlighted that “the Employment Pass framework could be relaxed to encourage firms to bring in foreign talent with key skills, such as cyber security experts”. (The Straits Times, 2018)
Challenges in expanding overseas
OTTO has expanded into the ASEAN region and from Mr Lai’s experience; he has identified the lack of awareness to be a barrier when venturing overseas. A 2017 study on 20 of Klang Valley’s (Malaysia) construction players revealed a below average level of awareness and knowledge on green housing, with almost all of the respondents indicating building cost to be the main reason for not adopting green projects (Rumaizah Mohd Nordin, 2017). Therefore a significant amount of convincing is required to persuade property developers that the higher upfront cost is worth the long term energy savings that come with eco-friendly solutions.
Mr Lai also faces difficulty in finding talented staff to fill overseas positions. One of the reasons for OTTO’s success is Mr Lai’s enterprising spirit and is a criterion in his selection of staff to send overseas. However this quality is scarce given that the fear of failing is deeply ingrained in our society (Techinasia, 2016). NUS president Shih Choon Fong has also urged Singapore to “lose its risk-averse mindset and foster a culture of exploration and experimentation” (The Business Times, 2016).
Enabling overseas expansion
To instil the spirit of entrepreneurship among the youth, Mr Lai regularly takes in interns and grooms entrepreneurs, encouraging them to believe in themselves and to see failure as necessary to succeed. After my interview with him, I fondly recall him encouraging me to keep on knocking on doors to get more interviews even if 9 out of 10 are rejections as that was the kind of odds he faced when he started OTTO and had to find clients to use his lighting solutions.
Additionally Mr Lai feels that the government can spread more awareness about the importance of reducing carbon footprint. The climate change advertisement shown before the start of movies in Singaporean cinemas featuring a boy discussing climate change with his ah gong is particularly useful in raising awareness, since a wide age range of audience go to the cinemas and the government should build on such efforts.
Mr Lai also feels that regulatory targets should be set and enforced to quicken the pace of the clean transformation of Singaporean buildings. Giving an example, Mr Lai suggested that the government should target that by a certain year, all new buildings must use at least a certain amount of clean-tech lighting.
Planning for overseas expansion
Managing costs and finding talent is two key factors for Mr Lai when he selects countries to venture into. Aside from costs and talent which are fairly easier to study, understanding cultural differences is crucial. One key component is corruption, which can be part of the culture. As such, companies need to study their target markets thoroughly to manage the corruption while retaining the ethical values of a Singaporean company. Mo Ibrahim, founder of Celtel International, a rapidly growing telecom operator in sub-Saharan Africa, offered this advice to manage corruption; “Fund communities, not chieftains”. With this approach, Celtel donated to local schools instead of paying bribes to the tribal chiefs who were in control of the land and in this manner pressured the chiefs into permitting them to do business in the area. Additionally Ibrahim proposes that companies should find local partners to ally with as they have better relationships with the local community and government, however this should not just be a way of “outsourcing” the corruption and companies should find local partners that are also committed to conducting business ethically (London Business School, 2012).
OTTO prides itself in offering the best solutions and this is enshrined in their mission statement. When expanding overseas, Mr Lai says that only by being the best will companies succeed in expanding and Singaporean companies who wish to expand need to refine their solutions to fill market gaps in the target country in order to create value for customers.
Call to Singaporean companies
There are plenty of ways for Singaporean companies to export the Singaporean brand of eco-friendly buildings to the region and there is an urgent need for us to do so. However the task might seem daunting given that the industry is still relatively new and the risk of failure is high. Even so, as Mr Lai advises, failure is necessary for success and if we wait for the industry to attain a “tried and tested” status before going in, either the market will become too saturated to obtain a first mover advantage or the earth will become too polluted to be healed by eco-friendly solutions.
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