Find out more at btsub.sg/btdeal
You are here
Building a thoughtful business
FOR some companies, maximising profits for shareholders is top priority. And on the other end of the spectrum, there are non-profit organisations with lofty goals of making a social impact, but depend on donations to run. Neither aptly describes the business model of social enterprise group The Thought Collective.
Director and co-founder Kuik Shiao-yin explains: "We call ourselves a social business because we are a 'private limited', so we are clearly a for-profit organisation. But the whole reason why we are trying to make a profit is purely to achieve our mission, which is to make Singapore stronger, from an emotional and social standpoint. That is what compels us to stay in the game."
She may have described it jokingly as the "weirdest reason for anyone to set up a business", but it is something that she and her other two co-founders Tong Yee and Elizabeth Kon - all friends since university days - are dead serious about.
What started as an experimental tuition agency 15 years ago specialising in A-level General Paper (GP) to better prepare students for life outside exams has since mushroomed into an ecosystem of complementary businesses with a total revenue of S$8.375 million in 2016. To date, it includes café chain Food for Thought, content curation and design studio Think Tank that does publishing, learning journey planner Thinkscape, and The Thought Collective, which is a training and social innovation consultancy.
DOING THINGS DIFFERENTLY
Ms Kuik, who also wears an additional hat as Nominated Member of Parliament, says that the business never had external funding - be it from the government or investors. "We are not the most attractive to a philanthropist, and we are not the most attractive option to a venture capitalist either . . . We're in this in-between zone. We have just been very gian (Hokkien for eager) to do it all ourselves, and that's what we have been doing for the past 15 years. Very painfully," she adds, tongue-in-cheek.
When School of Thought first began, the trio were in their mid to late 20s. Ms Kuik was a graphic designer who taught in the private sector, while her fellow cofounders were public school teachers.
But what each of them realised was that youths who graduated from the Singapore education system were somewhat detached and failed to see the bigger picture. At that time, there were also not many GP tutors in the market.
Says Ms Kuik: "We decided to go into it because there was a market gap, as well as a social gap. It's quite a nice win-win."
It was when the tuition group of 20 mushroomed into a group of 100 within a year that two things happened. The first was that they decided to get a bigger space, and second, that they should consider seeing it as a business.
With an initial self-funding of S$40,000, they started the original School of Thought outfit at Beach Road in 2002.
Explains Ms Kuik: "We kind of stumbled into business. We didn't plot to get into it. We were educators, so it was really accidental entrepreneurship. I don't think it really hit us that we were entrepreneurs until very late."
The trio had little experience in business, which Ms Kuik good-naturedly says is their strength and also "severe disadvantage". They might not have formal training, but they had the instinct that the business idea was a viable one.
"We were very fortunate in our first 10 years as we were on the cusp of a few new trends. So that allowed us to not worry about where the money was going to come from."
Despite their ideals of the social aspect of the business, they have never lost sight of what the customers need, says Ms Kuik. In the case of School of Thought, it was that students needed help in the subject.
"We will never say things like, I'm going to guarantee you an A - because that's not the point. Instead, we teach them frameworks and a larger kind of thinking. That doesn't make us the most popular tuition centre in the market because there are others who will tell you that they will guarantee an A. I'm not a big fan of that."
What's a business without some road bumps along the way? It may have been relatively smooth sailing at the start, but it was after a decade in the business that led the co-founders to rethink their strategy.
By 2007, it was not just the School of Thought that was in existence. Their publishing arm Think Tank and cafe Food for Thought also started at that time. When the different businesses first started, there was hardly any local competition. Being the first movers meant that they benefited from an open market, says Ms Kuik.
At that time, there were hardly any tuition agencies specialising in GP. Neither were there local current affairs magazines, nor a thriving independent café scene. Everything changed in 2012.
She says: "The challenge for us, is really a classic challenge for most SMEs right now: how to adopt and survive in a saturated market. But if I look at it from an optimistic point of view, we've actually reached the 15th year mark. We've been in the business long enough to go through a few cycles, so it's not a new story for us."
It was not just increased competition that was the problem. One significant factor that contributed to the struggle from year 10 was the decision to set up a large Food for Thought restaurant at the Botanic Gardens that could accommodate up to 300 people.
She quips: "I think that was a case of biting off more than you can chew, to put it mildly." Prior to that, the group was running two restaurants - one 20-seater and an 80-seater - reasonably well. Due to the scale of the Botanic Gardens outlet, issues such as manpower and capital came to the fore.
It was a "real crash course in risk", recalls Ms Kuik. The episode led the trio to sit down and refine the mission and purpose of their brands. She says: "It stopped us in our tracks to relook what the whole business is about. Because if we are going to keep doing it, in spite of the challenges we now face, what are we really doing it for?"
While their primary aim may be strengthen the social and emotional capital of Singapore, Ms Kuik is fully aware that being profitable matters too. "How we see it - the end goal is the social goal, and we must never lose the plot. But to achieve that, you have to make money - we have to get paid, our families need to be supported, our employees need to feel like they have a financial future with us. So, to me, that's how we balance it."
More recently, another challenge that the company faced was the cost of managing older workers, who progressively become more expensive, but may not be willing to upskill. "That's okay if their skillsets grew and their capacity to generate income to cover their salary grew together, but that's not always the case. And when that happens, you start to see how challenging it is to justify keeping a more expensive older worker who maybe doesn't want to grow his skills versus a much younger hire who is catching up."
Ms Kuik points out that it is a problem that the entire country is facing, and she could empathise as she has encountered it a few times in the course of running the business.
To survive, a business must constantly evolve. A social business is no exception. For example, The Thought Collective used to just be a name that they call themselves, but now, it is a brand that also brings in revenue.
Ms Kuik says that the company is able to come up with specialised solutions for organisations, either through training or customised solutions.
A case in point is Singapore sovereign wealth fund GIC, which approached The Thought Collective to come up with a solution to engage with young people to understand complex concepts such as long-term investment principles and the national reserves - topics that youths may not necessarily be interested in.
"They (referring to GIC) just know us by reputation and were quite open to the kind of solution. They felt by instinct that they could take a risk on us and asked us to propose how to solve the problem."
In the end, the group came up with the idea of an online simulation game - that it designed - on how to survive a zombie apocalypse. Says Ms Kuik: "There is no mention of national reserves or even GIC in the game, but I promise you that that every single choice they make in the game is based on the same principles that you want to teach these kids."
The project was approved by GIC and is still ongoing to date. That is just one of the many different solutions that the group has come up with over the years to help organisations in varying sectors meet their specific needs, ranging from health care to social work.
She adds: "I would say we are deeply interested in helping organisations solve their human problems."
THE ROAD AHEAD
Like many SMEs in Singapore, she sees that the next few years will be challenging. To her, the signs have been quite clear for some time. Plans are still up in the air for now, but Ms Kuik says that scaling down the business is in the cards to ensure sustainability.
Even in an industry as "safe" as tuition, she has observed a crunch happening. More agencies and one-man outfits are offering tuition. And then demographic shifts are happening too - there will be less young people in the years to come. The recent mergers of the various junior colleges further sealed the deal.
Ms Kuik says that she will not be surprised if tuition becomes digitalised in the future - this is an area she is exploring as well. "I don't think any industry can be complacent. And the question is, if you can see what is happening and what you are going to do to survive when it hits. I'd rather go in and be the disruptor than be the disrupted."
She is also well aware that many fellow SME owners are experiencing the sentiment of fear and uncertainty. "I think it's healthy to have a bit of fear. But I think we shouldn't forget that markets are just a collective of human needs. You will always have a business if you are in the business of meeting needs."