Leadership at Apex-Pal
Chapter 5
Leadership at Apex-Pal
INVESTING IDEAS: HOT WASABI DREAMS
FOO'S PERSONALITY TRAITS
EMPLOYEE EMPOWERMENT AT APEX-PAL
DOUGLAS FOO's SELF EMPOWERMENT
TRANSACTIONAL VS TRANSFORMATIONAL LEADERSHIP
22 May 2008 marks a new milestone for Apex-Pal; it was promoted from its listing on the second board of the Singapore Stock Exchange to the main board, and it has been 11 years since the opening of its flagship Sakae Sushi outlet in 1997. Growing stronger than ever, Apex-Pal has entered the US market and plans are underway for it to enter the Russian market. CEO Douglas Foo has led Apex-Pal from its humble beginnings to what is now a prominent global sushi chain. Not only did he lead his company to financial success, he also achieved a measure of personal accomplishment when he was awarded the prestigious International Management Action Award (IMAA) in March 2007, in recognition of his innovative excellence in people management. Foo was also named Entrepreneur of the Year for 2002 by the Association of Small and Medium Sized Enterprises (ASME) of Singapore and the Rotary Club of Singapore. He also received the Merit Award for the Yazhou Zhoukan Chinese Entrepreneur Award 2002. The Junior
Chambers of Singapore also named Foo an Outstanding Young Person in 2002 and he was also conferred the Singapore Youth Award (Entrepreneurship category) in 2003, which is the highest award given at that time to a person under the age of 35.
There is no doubt that the success of Apex-Pal has a lot to do with the leadership of its founder. Foo set the direction for the company and has taken the first steps in placing the Sakae Sushi brand on a path towards global expansion, while at the same time preparing Apex-Pal for life after him. This chapter will focus on the leadership of Foo, analysing his leadership style in-depth and how it relates to the Apex-Pal that we know today.
INVESTING IDEAS: HOT WASABI DREAMS
When Foo started Sakae Sushi, he dreamt of building a global sushi chain, much like the McDonald's global hamburger chain. He wanted to build this small F&B company into a world-class Japanese food chain, anchored by numerous successful global brands. Today, that dream is still alive and has continued to fuel his drive and desire for success.
Growing up in a family that values education, Foo was taught the importance of investing ever since he was a kid. His father spent his childhood working in a farm in his homeland in Hainan, China, and that experience shaped the way he nurtured his children, including Foo. Foo's parents gave him limited allowance so that he could not spend on non-essentials. Foo was frugal; he did not spend on luxuries, never took any loans despite going through financial difficulties at times, and only purchased what was necessary. Like many
ordinary Singaporeans, he spent his early life studying hard at school, hoping to pave the way for a high-paying job in the banking sector when he graduated from university. Foo gave tuition classes during his National Service days in order to earn some income, saving most of the cash earned. And during his undergraduate years, he took on numerous part-time jobs, working as a sales assistant in a shoe stall to being a baker in a confectionery. And upon his graduation from the Royal Management Institute of Technology, Melbourne, Australia, he began his career as a salary-man in a large Japanese corporation.
Coming from such a frugal upbringing, Foo's dream of building a global sushi chain is not the dream of a fiery maverick lost in his own ambitions. “I have never thought of becoming an entrepreneur,” he recalled. But just one year into his first job, when the opportunity presented itself, Foo grabbed it. It was a decision that would dramatically alter his career and change his life forever. He ploughed his life savings of nearly $100,000 into a partnership with an Indian counterpart to set up Apex-Pal, a company registered to manufacture and trade garments. The factory, located in India, exported to countries like Japan, Thailand and Indonesia. The business was going strong until China's low-cost alternative surfaced and factories there started to produce garments of similar quality with significantly lower costs. Competition was intense and no production outfit, including Apex-Pal's, could match those low-cost factories from China. Realising that it would not be viable to remain in this business in the long term, Foo parted ways with his partner within a year. That was when it dawned upon him that his company needed a business model with a competitive advantage that would not be easily eroded by the threat of low-cost competitors.
In the attempt to complete the equation for his new business model, Foo reflected on his teenage years when he used to dine at Japanese restaurants. He remembered how he had a fetish for sushi; however, prices were too high for a student like him. The urge to start a Japanese food chain became stronger when he noticed the absence of a global sushi chain. Furthermore, in the late 1990s, there were only a few Japanese restaurants or eateries in Singapore that offered quality sushi and other Japanese dishes at affordable prices. Putting all those facts together, Foo decided to diversify into the food industry — offering great value through good Japanese food and excellent service — and started his legendary journey with Sakae Sushi.
FOO'S PERSONALITY TRAITS
The trait approach to leadership focuses on the qualities that great leaders have. Traits such as integrity, charisma, ambition and courage are commonly cited as being related to effective leadership. We will use the typology of traits as described by Kirkpatrick and Locke who predicted that possession of several key traits will lead to greater commitment from subordinates.1
Drive
When asked what drove him to achieve his ambition and goals, Foo pointed to his childhood and past work experiences. He
was raised in a family that trained him to save and to appreciate the value of money. That same value motivated him to work hard during his university years — sometimes taking on four job shifts — and constantly pursuing business opportunities. Even while in university, his tenacity and ambition could be easily observed. His strong drive was the factor that gave him courage to quickly change gears and to enter the food business when all else failed. It takes more than just financial capital to start a business from scratch; one needs courage and drive to be on the right track.
Foo's drive for success continued even after the Sakae Sushi outlet opened for business at the OUB Centre, right in the heart of Singapore's central business district. Not only did he bring speed into its operations, he also opened four outlets in its second year of operation and granted overseas franchises to business partners in Indonesia and the Philippines. He drove himself to meet his own vision, eventually breaking out of the local market and ventured abroad. To achieve greater presence in Asia, he led Sakae Sushi to penetrate markets even when some of them were relatively new economies. Challenges did not seem to hinder his drive, as he pursued various methods of expansions to successfully open chains in newly emerging cities such as Chengdu, Chiang Mai and Kuala Lumpur. In the growing market of China, where low-cost production continues to be a threat, he was not afraid of opening Sakae Sushi outlets.
Still the CEO of Apex-Pal, after founding it 12 years ago, and still holding 60% equity stake in the company, Foo is a highly driven businessman. He had the option of selling the company, taking the proceeds from the sale to enjoy life a little, and focusing on charitable work. Yet, he opted for the more challenging route, and that was to take Apex-Pal to greater heights in the competitive food market. With the
desire to get ahead of other sushi brands both locally and internationally, Foo continuously challenged the norms by getting into projects deemed too difficult or risky by others. Although few Singaporean brands have successfully entered the American market, Foo was brave enough to launch Sakae Sushi in Chrysler Building, New York, in June 2007. In Mongolia, Apex-Pal signed a Memorandum of Understanding with a local partner to penetrate that market; and in Vietnam, it hopes to go it alone with a direct investment. Apart from that, the company is also eyeing future businesses in Dubai and Hungary.
Leadership Motivation
This particular trait evaluates a leader's desire to gain power, to lead and exercise influence over others. Successful leaders will be able to motivate employees by making them feel that they want to do something, instead of being forced to do it. Leadership motivation looks into the ways Foo influences employees in achieving the desired results.
In this regard, Foo seems to be able to understand his employees at the ‘heart’ level, making sure that they have strong emotional commitment to achieve the end results. He does this by creating an environment where people from different levels of management have the opportunities to contribute to decision-making, especially those who will be most affected by the outcome. If he has a conflict with anyone, he would listen to the person and see if he can agree with the views expressed. If he does not, he will give his take on why things are done in certain ways. He would always want his employees to speak freely and openly without fear. He feels that middle level and front-line employees are more effectively motivated when they can personally relate
to the tasks necessary to implement the business strategy and enhance the chances of its success.
Another way Foo influences his employees is to constantly project himself as “the smallest person in the company,” thus focusing the spotlight on his management team and his employees rather than on himself. In so doing, he makes his employee feel important and committed to the company.
Lastly and most importantly, leadership motivation is not about what one does to others, but about what a leader does to create an environment in which employees are self-motivated to achieve company goals. Foo has succeeded by giving opportunities for management to step up and make their own decisions. Both the marketing and HR managers mentioned that Foo really empowers his employees. His door is always open for queries or criticism of decisions made and he is always available to listen to fresh ideas. Working closely together as a team always, even during a crisis, Foo seldom uses coercive means to achieve desired goals or the company's vision. He does not seek power as an end in itself, but exhibits a form of socialised power for the good of the company and its employees.
Honesty and Integrity
In decision-making, Foo often gives greater emphasis to team discussions rather than relying on his own assumptions. This allows him to build a strong relationship based on honesty, integrity and trust in his employees. Not only does he shun dishonesty, Foo strives to avoid even the appearance of deceitfulness. He is open but discreet and is careful not to release information shared with him in confidence. He wants to gain the trust of his employees and be seen as reliable, as he sets new goals and reviews past decisions.
Foo feels that he would never be where he is in right now, if not for his honesty and integrity. After carefully nurturing employees' confidence, he works hard at not violating their trust or carelessly releasing information that could shake their confidence in him. He seems painfully aware that integrity can be highly fragile and a single dishonest act can nullify years of hard work. Thus Foo and his management team carefully and consistently nurture an environment that encourages truthful behaviour among everyone who works in the company.
Not only is he honest towards his employees, he is honest towards another important group of stakeholders: his customers. A Japanese supplier once tried to offer him some soon-to-expire ingredients at rock bottom prices, cajoling that no customers would know about Apex-Pal using such ingredients. Foo rejected the offer. He commented: “I will not serve Apex-Pal customers food that I will not consume.” It is not just a question of reputation, he said; it is a question of health. He has no intention to compromise the well being of his customers just to make more money for the company.
Self-Confidence
Self-confident leaders tend to be decisive and are likely to generate more trust in their followers, since decisiveness is vital to trust building. Most leadership experts believe that along with knowledge and experience, self-confidence is a trait that can be acquired. In this regard, although Foo was relatively new to business start-ups, he was confident enough to change the business trajectory of Apex-Pal from garment manufacturing to the F&B industry. He did not allow self-doubt to take its toll and affect his strategic thinking or
the morale of his employees. And to his employees, Foo is certainly known to be decisive. Apart from being decisive, he also wants his subordinate leaders to be decisive and assertive enough to make their own decisions and stick to them. This shows the different side of a confident leader, one who is emotionally stable and not afraid to take risks.
Foo admits that impatience is one of his weaknesses, an observation which is reaffirmed by some of the top managers at Apex-Pal. Yet, this weakness did not derail his career because his impatience was balanced by his willingness to admit and accept mistakes. This allows him to handle pressure, prevent angry outbursts, and not undermine interpersonal relationships with subordinates, peers and superiors. His ability in dealing with crises was fully tested during the startup of Sakae Sushi. It was a harsh business environment then. The Asian financial crisis of 1997 burst onto the scene. Rental costs were high and purchasing power low; yet, under his leadership, the company managed to survive that difficult period.
Cognitive Ability
Effective leadership is strongly tied to the leader's level of intelligence in general, though not particularly to academic knowledge. Intelligence is relevant for decision-making, strategy formulation and problem-solving. Intelligent leaders are also more adept in using different tactics to influence and to win arguments, thus boosting confidence in the minds of employees. Based on Sternberg's Triarchic Theory of Intelligence, there are three types of intelligence: analytic intelligence (IQ), practical intelligence (being street-smart) and creative intelligence (creativity).
Foo acquired analytical abilities through his university degree course in business administration, giving him a good command of business jargon, ideas and awareness of expectations in the corporate world. Through his past working experiences, especially during the one year as a salary-man in a Japanese firm, he acquired practical intelligence. And now, as his company starts to make its presence felt in the global F&B market, practical intelligence is something that he acquires and practises every day. This can be seen in how he established the core competencies of Apex-Pal. The company does not simply serve the best cuisine; it is also a technology leader at the forefront of constant innovation (e.g., the patented conveyor sushi belt). Creative intelligence explains the unique innovations he has introduced in Apex-Pal's outlets, including the interactive menu and how customers can refill their ocha (green tea) regularly through the taps conveniently installed at the sushi bars. From another perspective, Foo sees all these achievements as sheer craziness: “Sixty per cent is hard work, 30 per cent is luck and 10 per cent is sheer craziness. Even without the other elements, we might still get by through hard work and probably open one store a year. Luck is important as we came into the market at the right time to fill a niche with our value-for-money proposition in Japanese food. We were also fortunate to make good friends who believed in the company's values and helped it grow. Lastly, we have a propensity for crazy dreams and the willingness to make them come true when no one else would.”
His possession of these three forms of intelligence to a great degree has enabled him to play a significant role in personnel selection and placement. Although his initial foothold in the F&B industry was not backed by any prior knowledge of the business, his practical experience and degree of creativity more than compensate for it. As he puts
it, there are elements of craziness and large degrees of luck involved in success. He puts the rest under the category of hard work. His intense need for achievement led him to discover the extensive technicalities involved in the F&B business. He gathered extensive information and spent the last 10 years of his career life in the same industry, gaining industry-specific experiences.
Knowledge of the Business
Although Foo had little knowledge of the F&B business in Singapore when he first steered Apex-Pal into the sushi business, he soon acquired technical knowledge through personal research. For instance, while on a business trip to Japan, he found that the Japanese people were very health conscious and all the rice eaten by the Japanese was added with Vitamin E. Upon his return, he implemented the same strategy in Apex-Pal. Today, all the rice used in its sushi at all its Sakae Sushi restaurants is enriched with Vitamin E. He also did research on the use of machines in order to cut down on the need for manpower. Some of these labour-saving machines are now effectively deployed at Apex-Pal to reduce labour costs.
In expanding his company globally, he also gained new knowledge through experience, and built on that knowledge to penetrate new markets. For instance, the knowledge gained from entering the Indonesian and Chinese markets provided insights to help him prepare for entry into the Russian market. As such, we can see that Foo was not hampered by any lack of formal education in the F&B business or technical knowledge in the starting up of a sushi business in Singapore. He simply made use of every single opportunity to learn whatever he
could about sushi and other Japanese cuisine to expand Apex-Pal's product offerings to the consumer market.
EMPLOYEE EMPOWERMENT AT APEX-PAL
As a small start-up operating in the heavily competitive F&B industry, Apex-Pal had no choice but to build efficiencies in its business operations through human capital. The need to manage intelligent workers, speed up decision-making and make use of teamwork and solid research support, coupled with the universal trend of having flatter hierarchies, all point to the importance of employee empowerment in the 21st century.
Relevance of Employee Empowerment in the 21st Century
Empowerment is about engendering motivation without the use of force, equipping employees with knowledge, information and decision-making authority so that they can respond quickly to customer demands. The Singapore F&B industry is characterised by high rental, labour and utilities costs; many companies operating in the industry have learned to be nimble and hence cost advantages tend to be temporary while innovation and flexibility are crucial for long-term competitive advantage. As a result, employees become key assets for a firm's competitiveness.2 Corporations need
people who can instinctively act to do the right thing without constant supervision and direction, and employees who share similar aspirations with their employers. These key factors form the foundation for effective empowerment.
The linkage between empowerment and the bottom-line works this way: Because of empowerment, employees will be more efficient and effective, and are therefore able to produce results for customers. This translates into employee satisfaction and loyalty, which in turn enables them to further provide services of value to customers. When customers experience superior service repeatedly, they become satisfied and loyal and keep coming back for more,3 which will mean good business for Sakae Sushi, boosting its sales and profits in the long run.
Empowerment is a key element of Foo's leadership style. With the expressed mission of being the best hospitality provider, employee empowerment is not an option but a necessity. Employees are the ones who serve customers and their level of service affects its customers' and the general public's perception of the chain, similar to the manner inflight service of Singapore Airlines (SIA) affects public impression of SIA. Employees need to deliver value to customers constantly, sometimes even without any supervision from leaders. In the F&B business, empowerment goes beyond providing just good food; it involves providing great value in terms of service. In the case of Sakae Sushi or Apex-Pal, the biggest challenge for Foo is to imbue in subordinates the same vision that he has for the company — that of being the best in the F&B industry by providing great food at great
prices. We shall look at how Foo empowers his employees through the model proposed Quinn and Spreitzer, namely, empowerment through clear vision and mission, openness and teamwork, guidelines and discipline, support and a sense of discipline.4
Empowerment Through a Clear Vision and Mission
Just as a war drum sets the rhythm that boosts the confidence of those warriors who hear it, Foo boosts the confidence of his employees through the vision for the company. “The company's vision is to build global brands,” he commented. He wants Sakae Sushi to be synonymous to sushi: whenever people think of sushi, they think of Sakae Sushi — just as people relate fried chickens to KFC, hamburgers to McDonalds, or pizzas to Pizza Hut. According to Foo, the company mission, to provide good quality food with excellent service, is what keeps people together and moving in a unified direction. It was simpler and much easier for him to communicate the vision when the start-up was still small. As the company grew and as more employees came on board, he relied on two things to accomplish this. Firstly, he had mission statements pasted on walls at corporate office and outlets. Secondly, and most importantly, during interactions with people from various departments, the company vision is often communicated and discussed.
For instance, once a month, Foo will meet with all key staff from corporate headquarters and area managers to update them on the latest developments in the company, including of course, any change in its vision statement. It is hoped that the area managers will then disseminate such important information down to all their staff and service crew.
The effective cascading of its vision is clearly evidenced through the coordinated efforts of employees in delivering values to customers. Foo pays attention to the detailed actions performed by his subordinates. He understands the entire mechanism of selling a plate of sushi: from the dishwashing, preparing the plates, cooking the rice, wrapping them in seaweed to serving the sushi to the customer's table. There is more to selling sushi than just having clean plates; it is about giving value-added service and making the experience of food consumption as pleasurable as possible for the customer. Foo has always been aware of this, and he hopes that such knowledge can be transferred from one generation of Apex-Pal employees to the next.
Having clearly communicated goals empower people such that they understand top management's vision and strategic direction. Further, employees should have the confidence to act autonomously, thus enhancing their core capabilities. Foo has been successful on this aspect. Joyce Lee indicated that she is highly empowered to make decisions concerning daily routines: “Douglas himself believes a lot in empowerment because he believes that he can never be there to make decisions for so many people. So it's always us.” She was in charge of customer complaints and thus knew what it was like to receive them for providing what was perceived as bad service. And in turn Lee empowers her subordinates, who are outlet managers, by giving them clearance to waive charges on meals in extreme cases. Such practices are only workable
when employees buy into the corporate vision, and the top-level leader believes in them. At Apex-Pal, both are present.
Foo is able to quantify his vision; he sets clear goals for the company, especially in light of its expansion to a country like Russia. “They are markets that you really get your first-mover advantage. There's almost no competition to speak of. We hope to reach our 100th outlets mark within these two years. We should be heading towards 500 in the medium term,” he said. Even in the local setting, Foo admitted that initially they were only planning for six Sakae Sushi outlets. It was beyond their dreams that they could expand up to 40. Rather than saying that he and his staff had grossly underestimated their business, he called them “crazy” for being very ambitious.
Though it is indisputable that Foo empowers through vision, the degree of his empowerment will also affect the company's future. As the company is expanding both geographically and operationally, he realised that it would be impossible for him to meet every employee every day. Hence, instead of trying to do everything himself, Foo is now nurturing future leaders so that they will in turn share his aspirations and pass these on to their subordinates.
Lee may have been successfully empowered and empowering at the same time, nonetheless this only supports the fact that she was groomed long ago, having reported to Foo for five years — thus she knows his leadership and vision well enough. For overseas representatives, it is also mandatory that they come back to the Singapore office and get soaked in the culture. But it is unknown to human eyes how long each person takes to acquire an ingrained vision. The spread of vision empowerment in the local hierarchy seems solid at this stage, since Foo has spent most of his initial years in Singapore, which is also where the head office is. When it comes to overseas offices, things become trickier. And with
different modes of expansions, franchisees and joint venture partners coming into the picture, empowerment through vision may not be that effective. Herein lies a challenge which may hinder successful growth, such as the case of the Indonesian franchisee Maspion. Foo noted that the market is ready for further exploration and sales growth, yet the lack of management commitment impedes its progress.
Foo aims to meet the challenge through meetings, training sessions, and quality control seminars. Although the logic behind it is strong, there is no systematic mechanism in place to ensure that the vision is embraced by everyone in the organisation. Are these modes of communicating the vision sufficient to stretch the capabilities of employees? Success of vision empowerment can be tested through the decisions in which future managers will make, conveying their belief in the brand value and culture of the company. Growing diversity, changing demographics and heightened ambiguity will increase confusion in the working environment. All these factors may cloud that vision, as Apex-Pal's business portfolio is further enlarged.
Recommendations
There is no doubt that Foo has given substantial empowerment to his employees; he realises that given the company's robust expansion plans, empowerment is not an option but a necessity. And to remain at the forefront, empowerment should be an ongoing process that is carried out by every leader at Apex-Pal, not only Foo.
The process should start with Foo painting a distinct picture of his vision, how he envisions his dream to be like. Instead of just providing information that Sakae Sushi wants
to be the leader in global sushi market, Foo needs to be able to instil into the employees' minds the notion of Sakae Sushi being the McDonald's in the main streets of any cosmopolitan city. He can go beyond meeting employees, to talking and painting the mental picture to employees. Once divisions get too big for Foo to personally handle, which is most likely the case at Apex-Pal, he needs to continuously communicate “the picture” to department and regional heads as they will be in-charge of spreading it to their subordinates.
Recommendation for overseas expatriates, representatives and partners involves the continuation of ‘soaking’ them in the Singapore Sakae culture. Frequency of such visits to the Singapore office must be increased, especially for the newer outlets, so that those who work in the overseas outlets will share the same culture and vision.
Another method to ensure that people at its overseas outlets embrace the same culture and vision is to have teams bring over local activities. These activities should direct the hearts of both local and foreign employees to the Singapore flavour, constantly reminding them of the taste of home, such as: having a “cook-char-kway-teow-day” for employees, playing tug of war, celebrating Singapore's National Day by having discount offers on that day. These establish a stronger communication channel and visionary link amongst offices separated by geographical distance.
Empowerment through Openness and Teamwork
As a publicly listed company, financial and finance-related information is available to the public. It is natural that employees expect to have a greater amount of information as to what goes on in Sakae Sushi so that they will have a better
understanding of the company's financial situation than the general public. However, in the corporate setting, to prevent leakage of sensitive information, certain facts should only be disclosed to some and not all employees. A balance needs to be achieved between confidentiality and openness so that employees can contribute valuable ideas to help the company progress.
Foo's approach to ensuring constant openness is by continuously being there for his employees, to acknowledge them and to let them know that he is just a door-knock or a phone call away. He remarked during the interview, “… my door is always open. And I would say to them, let's talk.” Ensuring a corporate culture, which exudes a sense to the employees that they are taken seriously, is crucial to countering their imperative demand to know every detail of what the company is facing. Foo made sure that there is room for employee contribution. He does not even address his workers as employees; always referring them as colleagues.
A good example of the openness seen at Apex-Pal is in the expansion plan to Russia. It is known to almost everyone in the company, although knowledge of fine details regarding the project may vary with people's status in the hierarchy. For instance, Joyce Lee indicated that she was kept fully aware of the different initiatives the company was going to pursue in Russia, from the strategic to human resource matters of the expansion.
Corporate culture that emphasises the value of human assets promotes both openness and teamwork. In Apex-Pal, teamwork is also a vital component. Said Foo, “We do not manage teams. We encourage teamwork.” With numerous local chains as well as those operating abroad, both in the forms of direct investment and franchises, having strong teamwork is the backbone of this company. People from different divisions
performing various functions should not only be able to communicate with one another, but they should also be able to work together. Solid proof of how the company managed a crisis as a team was its successful navigation through the negative outlook in the economy following the Bali bombings, spread of SARS and the avian flu threat.
Openness ties in strongly with teamwork. Not only teamwork with subordinates, but taking initiatives and being brave enough to express opinions to leaders are part of cooperating as a team under the umbrella of Apex-Pal. Foo encourages this by giving room to his subordinates to question his decisions: “When I give my views, it does not mean that they must take the view and that it is cast in stone. They will say ‘Oh, that's another perspective’, maybe they can put that into their consideration, and see how they can achieve a better solution.” This approach improves operation of the company holistically by ensuring that the best solutions are always undertaken, and everyone knows that decision-making power is not in the hands of the CEO alone.
In addition, through openness, Foo generates a positive working attitude among his colleagues, resulting in them being more receptive towards his authority and role as CEO. He is extremely reluctant in maintaining distasteful relationships with customers and shareholders, more so towards his own subordinates. Foo is a figure who cares for each person working in the company, but time is the constraint that prevents him from talking to everyone individually: “And I will talk to them, they talk to me, and they discuss issues, and we'll share dreams, and we speak openly. It is through this platform that I hope to get to know them better.” Establishing this type of culture is crucial so that leaders below him can see how he handles subordinates and be more inclined to follow suit. His success in establishing openness was the by-product
of personal values developed through his early childhood and work experiences.
Empowerment with Guidelines and Discipline
Empowerment by allowing subordinates to take control of situations and making decisions need not preclude some form of guidelines from the organisation. Instilling discipline through guidelines that set the boundaries for decision-making is both necessary and healthy as it reduces ambiguity and uncertainty for employees, thereby avoiding the unnecessary chaos that can result from unrestrained empowerment. In the case of Apex-Pal, a certain degree of control is exercised although punishment is highly unlikely. Foo's leadership philosophy hinges on the belief that everyone makes mistakes sometimes, and if those are genuine mistakes, the company should learn from those mistakes in order to make improvements for the future. He believes that punishment stifles growth and hampers creative breakthroughs.
Although there are clear goals at Apex-Pal, the current boundary for decision-making has been set very broadly, blurring the line between right and wrong decisions. Ensuring proper discipline will give the company better control over the quality of the food and service quality delivered to customers, enhancing standards which Foo himself views as currently below what he expects.
Recommendations
Given the lack of proper control and discipline measures at Apex-Pal, the necessity to create boundaries in its
empowerment practices is indisputable. The first priority lies in developing “safety zones” so that employees understand which situations allow for discretionary decision-making and which do not.
With a culture that does not easily dish out punishment, it needs to ensure that those who make the wrong decisions understand the negative impact of their decisions. Poor decisions may be due to two reasons: lack of foresight or uncontrollable circumstances. Apex-Pal should never penalise mistakes that arise from uncontrollable factors but can tie the lack of foresight to a decrease in compensation or bonus package, especially for repeat offenders.
Empowerment through Support and a Sense of Security
Receiving support and a sense of security from top management helps reinforce risk-taking efforts which will lead to innovative outcomes. Despite the controls put in place for Apex-Pal's employees to make decisions on their own, their learning abilities should also be substantiated through managerial support. Foo has made this commitment of high importance by appreciating responsibilities and associating abilities to employee career paths: “At the same time, employers should also give those who have proven themselves in their own fields opportunities to take on more responsibilities. For example, from restaurant manager to becoming area managers, and eventually sending these successful people on overseas stints to take part in overseas projects, so people feel that there is more to learn and opportunities for upward mobility.” As managers take on greater responsibilities, they will always be looking forward to the chance of climbing higher up the corporate
ladder. This, in turn, will lead employees to constantly learn more as they embark on growth opportunities.
Infusing trust into corporate principles in terms of day-to-day decision-making also plays a part in empowerment. Foo hinted that despite his position as the company's CEO — the man who knows the business inside out — he can never make all decisions alone. He needs people to push upwards and help him to make the right decisions at the right time. By firstly ensuring that everybody is on the same ground through vision empowerment, Foo managed to earn trust from his subordinates, valuing their ideas and allowing them to contribute by acting out their own decisions. “You are the boss, you decide” is the saying Foo always chanted to those who sought his approval.
Another aspect of establishing a sense of security involves mitigating conflicts amongst his subordinates, and even conflicts between himself and the various business divisions. Based on our research and interviews conducted, we have not detected any substantial conflicts. Yet, as the company grows through global expansion and chain diversification (entering different market segments and serving various cuisines), potential conflicts may arise among various departments. With the currently used semi-matrix structure, avoiding conflicts is a must. As each manager feels more empowered, his or her self-esteem will be greatly boosted. The challenge is to keep them on track and aligned with Apex-Pal's vision without going astray and without getting into corporate feuds with other divisions. Foo will need to be straightforward in giving his nod to those with the best proposals and not be taken in by managers who have better reputations. Thus, it is even more imperative at this stage for Foo to have a clear-cut definition of the “safe-zones”, emphasising the importance of teamwork on top of individual recognition.
Empowerment and Future Expansion Plans
Foo values and trusts the managers who work under him; they are empowered to set their own goals, and the no-punishment rule serves to increase risk-taking behaviour. Besides, Foo has shown that he is a risk-taker himself and his ambitious vision has taken him to places, leading him to do the unthinkable. Nevertheless, he knows that he cannot be everywhere at anytime, and has empowered a Canadian executive to spearhead the project in Moscow, after she receives proper training on the basics of company operations in Singapore.
The need for empowerment in the 21st century also comes with the necessity for control and safeguard measures. Without the proper mechanisms in place to regulate empowerment in making decisions, employees will not understand the stakes involved. Considerations on what constitute good and also poor decision-making need to be ingrained in the corporate culture. Nonetheless, the need for continuous empowerment is indisputable for the future of Apex-Pal. Foo has done a remarkable job in doing so and things can only get better.
DOUGLAS FOO's SELF EMPOWERMENT
Empowering others starts from one's self. Through his childhood, education and work experience, Foo was able to empower himself. He had a goal in mind. His vision relied on a basic thrust: to achieve higher than market returns on his investment. Although his entrepreneurial career started off with minute gains due to steep competition from China, Foo quickly changed gears and did not give up. His persistence
ignited all kinds of empowerment and helped him to succeed despite adversity.
Foo envisioned building a global sushi chain like McDonald's, even when the sushi market in Singapore was small, and there were more burger than sushi joints at that time outside the United States. Even though it seemed like an elusive vision at first, this dream was not an illusion. He understood the meaning of monetary hardships, the concept of having to earn what he spent and he lived under circumstances which pressured him to always earn more. He confronted all his challenges as he saw that no one else could make it happen — except for himself.
Since childhood, Foo always hated time spent doing nonsensical things. Yet, he had always been open to nonsensical ideas. He had an intriguing curiosity in how money worked and how to earn more, especially after the ‘10-cents coin’ incident he encountered with his father. Once, while trying to go home during primary school, Foo spent 10 cents on a public payphone calling his father to pick him up. Instead of grabbing his car keys, Foo's father scolded him for wasting time and money in making a call when he could have just walked home, as the school was just a short distance away. Foo obliged and walked home quietly. He never forgot the incident and the lesson in frugality.
Henceforth, he went into the sushi business with an end in mind: “An entrepreneur needs determination. You have to have the determination to overcome all obstacles and sometimes even go back to the drawing board, time and time again.” His philosophy is based on personal experience, knowing what it takes to start from scratch and climb the ladder of success. He witnessed himself starting a company on the basis of hard work and he knew how it felt to be treated unfairly. Further, his vision enables him to think
global and to constantly expand the rate of success. With the ongoing expansion of Sakae Sushi chain all over Asia, including the newly prospected city of Moscow, it is clearly visible how the CEO always thinks long-term. “Remember to start small but dream big. Organisational culture should be set correctly from day one, and plans should cover a wider market place, as the local domestic market is small. Don't be complacent and have the idea that it is for trial purposes,” he added.
Foo was able to combine his agility in extending authority, knowledge and financial incentives to his subordinates by creating value for everyone — namely the company's shareholders. Monetary incentives are not his main concerns; he places equal importance in maintaining the health of employees (through special joint programmes with health organisations), commitment to national service and giving to charity. His style of empowerment in the corporate setting started with self-empowerment some 20 years ago.
Bridging the Gap
Although his hard work and tribute to society is known to many, this occurrence does not allow Foo to be a CEO without acting in the best interests of his subordinates. Foo steps in as both manager and leader. He states that whatever processes are necessary to provide values of both service and food creation, he will sit through with the management team to decide and personally work on the mechanisms. In doing so, he bridges the gap that lies between a CEO and line managers, or even those with lower ranks. The company's intention of having a flat organisational structure further illustrates Foo's intention of wanting subordinates to see him
as a friend and someone whom they could relate to as a close leader rather than a distant leader.
Foo mentioned many times that he is the ‘smallest guy’ in the company, and often joked that if there is one thing that should be changed, it would be his current position. He respects differences and the values of those who take up positions in the company and makes sure that performance, credibility and employee satisfaction override his own personal achievements.
TRANSACTIONAL VS TRANSFORMATIONAL LEADERSHIP
Leaders in modern corporate settings have to confront many situations rarely seen in the past. Today's leaders are often called upon to make massive personnel cuts in order to eliminate excessive layers in the organisational structure and to lower staff costs. Leaders are also expected to introduce work teams to enhance organisational decision-making and workflow, and to also constantly re-engineer their business processes in order to increase efficiency and effectiveness. Training and related programmes are expected to be embedded tightly into corporate routines.
Walking in Foo's path, the scenario may even be more complicated. As a leader of exceptional quality, he knows what is at stake. He concentrates on getting employees involved in the organisation and giving them freedom to think, and to perform their best. The key difference between a manager and a leader is that the latter touches the soul as well as the mind of the employees. It pertains to more than just being visionary; it bundles passion, inspiration and imagination into a meaningful whole.
In the ever-changing business landscape, transformational leadership will create the necessary sense of duty in employees' mindsets. The focus has shifted from a transac-tional point of view where performance is strongly tied to rewards, to that which alters mindsets of employees. Transformational leadership will be of greater importance to speed up changes, increase organisational flexibility as the industry becomes more competitive. By using this model, recommendations can be elaborated on how Foo can reveal stronger leadership attributes, to accommodate potential business changes.
Apex-Pal and Transformational Leadership
Transformational leaders change their employees' attitudes, values and beliefs to align them with those of the organisation and steer their followers towards self-development and greater-than-expected accomplishment. Leaders who engage in transformational leadership behaviour have been shown to produce a variety of positive outcomes in an organisational setting, such as high levels of effort, performance and satisfaction with the leader.5 It has also been discovered that transformational leadership has been associated with employee's active commitment to the organisation.6
Currently, Foo is moving at a faster speed compared to the rest of his team. As a visionary, he sets high standards, knowing that he can achieve them. Nonetheless, as he noted in his own words: “There are times when I roll the ball too fast and when I look back, I see that people are struggling with my speed and they need to speed up.” The need to transform mindsets is a necessity in the competitive landscape. In the case of Apex-Pal, Foo needs to transform the attitudes, reactions and expectations of employees in order for the company to remain on the competitive edge. If his entire team or the whole company can keep up with his high expectations, standards will be better set and the vision of being the McDonald's of sushi will become a reality in a relatively short time.
In the following section, the four ‘i's’ (idealised influence, inspirational motivation, intellectual stimulation, and individualised consideration) of transformational leadership will be used to assess and analyse Foo's current transformational leadership capability and provide recommendations for improvements.
Transformational Leadership through Idealised Influence
To begin with, a transformational leader gains respect by appealing to subordinates' ideals and by appearing as role models. A leader does not have to exercise direct or explicit influence over the employee in order to be effective; influence can be exerted in an implicit or indirect manner. For instance, leaders can lead by example through their actions instead of merely through their words. Through interviews with Foo's employees, the strong and positive characteristics highlighting
passion and compassion within Foo are apparent. There is no doubt that he has done great things: leading the company's operations for the last 10 years and still setting future directions. He donated to charity and even gave rewards as an incentive for those completing national service.
He is inspirational, creative and, in his own words, “crazy” enough to go beyond the norm and achieve what other sushi chains have never accomplished. There is also no doubt that Foo knows his team members inside-out: “If you're going to run a team marathon, you have to be aware of the capabilities of all the team players and place them accordingly.”
Nevertheless, becoming a role model is not an easy task. By demonstrating high standards of moral and ethical conduct (which Foo has shown on numerous occasions), idealised influence can be achieved. Yet he realises that more can be done. For instance, he knows that he can work on being more patient with his employees.
Foo needs to consistently set himself as an example to be followed and act on whatever he preaches to his employees. Suggested improvements include having Foo to make explicit his true motivation in pursuing higher goals, and reveal to his subordinates that he is not just rolling the ball too fast but has the capability to make it happen. While doing that, he should ensure employees that they can trust him in leading them to higher expectations. He can also change his image, from that of being compassionate and caring to an ideal leader who strives to make them more successful by championing and supporting their careers.
In addition, Foo can be perceived as more inspirational if he can make more personal sacrifices to benefit others. Up until now, he has sacrificed time for his employees, but sacrifices in other areas can be made. This is a challenge
that comes with corporate growth, as sometimes acts of sacrifices may not be easily observable to employees. Seeing their leaders contribute to their benefits and contributing to peers in need will boost employee commitment not shown previously. Once the culture of sacrifice is firmly established, employees will be more inclined towards following Foo's example.
Transformational Leadership through Inspirational Motivation
Inspirational motivation is displayed when leaders articulate compelling visions of the future, showing how it can be achieved and bolstering confidence that goals can be reached. Such motivation strongly relies on vision.7 To overcome the danger of moving too far ahead of employees, Foo needs to neutralise the biggest difference between him and those working in the company, and that is a gap of inspiration. The vision originated from Foo, although he called it the company's. He is the sole individual who feels, understands and internalises the passion behind the vision. The challenge lies in ‘infecting’ his subordinates with the same vision and passion, especially when Apex-Pal gets bigger and bigger over the years.
Communicating inspiration and engendering visionary motivations that will drive employees to achieve results beyond expectations are necessary. Foo needs to make sure that
everyone is on the same page and is confident of achieving the next set of goals in the company's relentless growth. He can do this through frequent ‘pep-talks’ that engender unity of corporate spirit and focus employees' attention on beating the competition. By introducing competition into the picture (which rarely is a point of consideration for Apex-Pal, as cited by its marketing manager), employees will be motivated to excel and work together towards accomplishing the common goal.
Transformational Leadership through Intellectual Stimulation
Intellectual stimulation is displayed when leaders help followers become more innovative and creative and get them to view problems from different angles. In this regard, Foo has done a spectacular job as he is involved in many team discussions, and he focuses on team building rather than team management. Being a creative soul himself, he is able to challenge others in re-examining critical assumptions. This brings out the best potential in the employees' capabilities. Foo mentioned that in selecting his people, proper educational qualifications are secondary. Personality fit and interest in the business will be foremost in terms of hiring requirements. Careful selection of employees allows Foo to ensure that they possess intellect (practical or analytical), hence the next step is just to stimulate it so that they can contribute the best ideas for Apex-Pal.
Moreover, teamwork led by Foo himself and the examples that he has displayed when working their way out of crisis have managed to intellectually stimulate employees' thinking: “I think, because we're proactive, we're forward
looking, whatever crisis does not have a great impact on us, because the whole team is working very hard to overcome it.” Approaching matters through teamwork, while also giving more heightened leadership impacts allows Foo to structure their mentality. Intelligence goes in tandem with experience and sense of the market. Allowing subordinates to make decisions certainly helps. Looking into the future, risks involved with decisions made by managers should increase. Even so, projects should be more cross-functional to facilitate learning from different parts of the business. Overseas transfer within or throughout departments will also aid in immersing local talents in the overseas environment so that they can think globally.
Transformational Leadership through Individualised Consideration
The ability to transform perspectives of employees from time to time hinges on the ability of a leader to ‘read’ the needs of employees. At the current stage of Apex-Pal's development, it is difficult for Foo to pay attention to the developmental needs of each employee. He does try his best by using performance-based compensation and bonus packages, but coaching each of them individually is practically impossible.
What is necessary for Apex-Pal is to have the norm of individualised consideration embedded into its culture, one that promotes personal coaching and profound relationships among managers in order to meet the developmental needs of their subordinates. Instead of having to individually consider each employee, Foo should lead a handful of leaders and expect them to display attributes similar to what he has demonstrated to them. With such a system in place, leaders
will be able to know the expertise of individuals within their division, thereby delegating assignments to suitable employees and providing them with opportunities for growth. Each leader working under Foo should be constantly reminded that there will be individual differences in terms of needs and desires. These call for recognition from superiors, to combat hurdles that challenge overall corporate growth.
Transforming subordinate leaders is a continuous process that Foo has started ever since the company was formed. Nonetheless, with each passing fiscal year, there are differences in the degree and kinds of challenges that Foo needs to address. It was a point that he clearly stated, “The challenge in operating Sakae Sushi is to be able to keep on restructuring the organisation to keep up with changing business cycles.” Thus, given its current standing in the Asian sushi market, Foo has managed to adopt the approach of transformational leadership. Although not perfect, efforts have been in place and with recommendations as elaborated in the paragraphs above, it is believed that employees will have a clearer picture of what the company wants to achieve. On top of this, they feel that they are part of the company. Through idealised influence, they will be driven to attain the goals and in the medium run, they will become better placed to fulfil Foo's vision.
Transformational Leadership — A Closer Look at Apex-Pal
Contrasting transformational leadership with a well known established theory of transactional leadership, it is interesting how both can be applied in varying degrees in an organisational setting. Transactional leadership is based on the
famous reinforcement theory of motivation, where reward and punishment are contingent upon performance. The basic assumptions underlying this theory are:
- People are motivated by reward and punishment,
- Social systems work best under a clear chain of command,
- When people have agreed to do a job, a part of the deal is that they cede all authority to their manager, and
- The prime purpose of a subordinate is to do what his or her manager tells them to do.
Foo has adopted such a theory as he assigned bonuses and related financial compensation in relation to performance. The frequent approach of having teams in accomplishing projects is also tied to team or group compensation. Nevertheless, with the company competing in a vibrant and growing market for sushi globally, relying on this approach alone is too narrow as it places more emphasis on managing rather than leading.
As overseas projects underway are being managed by cross-functional teams, there is little incentive to clarify proper chains of commands. Resources will be better spent for brainstorming and churning ideas instead. Foo mentioned clearly that he understands how in the long run, money is not the sole objective of both the company and the people. Loyalty, integrity and obtaining satisfaction that one deserves outweigh all kinds of monetary compensations. Nonetheless, he still uses financial bonuses (elaborated previously in human resources issues) to push initiatives. The model, if utilised fully, will be insufficient to support Sakae Sushi's global operations.
All in all, Foo fits the mould of a transformational leader and his style of leadership is perfectly suited to the environment
in which his business operates. A transformational leader puts passion and energy into everything, while placing values for employees as top priority. He cares about subordinates, wants them to succeed and inspires them to have the same drive for success that he has. But he knows that he is not perfect. Relating how he started running Sakae Sushi by having no rules because he trusted that everyone would be mature and would turn up for work on time, he said that he has learned to be wiser over time and realised that he cannot run a company without any rules. He has also learned to be careful in trusting someone, having tasted the sting of betrayal by a disloyal employee in the past, who, having learned everything at Sakae Sushi, used the knowledge to help one of its competitors and even came back to meet up with his ex-colleagues at Sakae Sushi and tried to lower their morale.
Looking into the future, Foo's challenges lie in transforming his teams even further. He needs to continually find the way forward while leading Sakae Sushi to be the McDonald's or Starbucks of sushi. In this regard, he seems to know what he needs to do, as he reflected during the interview: “The challenge is to be able to keep on restructuring the organisation to keep up with the changing business cycles. When you have a business that's growing in size but has no back-up structure in place, the business will not be able to flourish.”