Future of Sustainable Economic Growth: Role of Universities

in Finance

By Finance Accreditation Agency (FAA) and Professor Mahendhiran Nair, FAA’s Institute of Higher Learning Forum 2018

In the recent Institute of Higher Learning Forum 2018 organised by Finance Accreditation Agency (FAA), the participants were told that more than half of all current jobs in Malaysia are at risk of being automated.

“We do not have control over the technology revolution, so we should focus on areas that can help shape and influence people. An important sector in this space are the institutions of higher learning that are developing the employees of the future,” said Professor Mahendhiran Nair of Monash University, Malaysia in his keynote address.

Professor Mahendhiran has also shared his thoughts on the following points:

  • Higher education remains the key to economic development for sustainability and plays an important role in the fourth industrial revolution (Industry 4.0) which requires high skilled-talent.
  • The very nature of higher education; how it is delivered and the role of universities in society is changing as a result and will continue to do so.
  • The new and emerging technologies present new opportunities to improve or redefine the university experience.
  • The challenge in the future for Malaysia is not lack of employment, but the shortage of skills that new jobs will demand.

“We cannot control Industry 4.0, so we should focus on what we can do to support students and professionals alike by nurturing, upskilling and preparing them to be more agile in the changing landscape,” he added.

Organisations therefore need to look at new ways to develop their employees. Sustainable economic growth is the topic that underlies the positive enhancement of people’s lives and FAA is committed in contributing to talent development within the financial services industry.

Setting the Scene: What is Shaping the Economy

According to Professor Mahendhiran, there are four forces currently at play, namely globalisation, liberalisation, regionalisation and digitisation.

“Globalisation has been around for a long time, but the speed is morccc e intensive now with the technological advances that are happening. Even developed economies are under a great deal of pressure to keep up with the changes.

“Innovation, product and process cycles are changing so rapidly and in accordance with this, universities also need to keep updating their programmes to ensure that the next generation talent meets the needs of firms,” he added.

Professor Mahendhiran stressed that Industry 4.0 touches on all parts of society and all over the globe, with the potential to transform all aspects of human existence, economic, politics, social and health systems globally.

He also threw a question to the participants on whether firms of today would remain relevant in the future.

“We need to examine the factors of production of this new economy, which is increasingly becoming hyper-converged. Traditional economy is dependent on land, labour and capital. In this traditional economy, the factors of production are caught in the clutches of decreasing returns of scale due to scarcity of these resources.

“However, in the new economy, these factors of production are continuously transforming. Firms are moving from ‘places to spaces’; shifting from a domestic labour pool to a global labour market via outsourcing and the use of robotics and intelligent systems. Firms are transcending local financial markets to global financial markets to draw-in capital to stimulate economic growth.”

He opined that in this new economy, it is information, ideas and innovation that are the factors of production; which are driving this economy and the source of growth today.

To harness these new sources of growth, Professor Mahendhiran insisted that economies need to put in place a dynamic national innovation ecosystem that nurture, sustain and drive new innovative endeavours. Accordingly, the blueprints (7Is) of a strong national innovation ecosystem include the following:

  • Infrastructure and Infostructure that facilitate connectivity to the global economy.
  • Intellectual-capital development that forms the basis of creative endeavours.
  • Interaction in terms of smart partnerships that enhances multipliers effects within the economy.
  • Incentives, both fiscal and non-fiscal that fosters a culture of innovation and creativity.
  • Institutions that lead a vibrant knowledge culture.
  • Integrity, referring to good governance of the resources within the economy to creating value to all stakeholders in the economy.

“Countries that have sound national innovation ecosystems, where all the blueprints are highly evolved are also agile in adjusting to the changes in the global economy. Many of them are also leading the changes taking place in the global economy.

“A key driver in these pace-setter economies are the role of universities; which are playing an important role in developing the talent that power the next generation technology and new sources of growth,” he said.

He added that over the last decade, universities in many of the pace-setter economies are leading the development, jointly with industry and other external stakeholders. The multi-stakeholder partnerships models adopted by universities are transforming these economies from being centralised networks to decentralised networks, and many of them are becoming distributed knowledge networks.

These distributed networks are enabling firms and other stakeholders to extend their reach for resources, markets, technology and innovations. They are also enabling the various stakeholders to enhance their richness in products and services.

Industry 4.0 is the new revolution of distributed and integrated knowledge networks that continuously creating value for the key economic agents that know how to ‘pipe-in’ to these networks. Core to this knowledge networks are artificial intelligence (AI) systems.

To harness the benefits of these knowledge networks, firms, including universities, need to re-develop their organisational ecosystems to incorporate these AI systems. They also need to develop new capabilities and rules of engagement with the external ecosystems (knowledge networks) to benefit from the external knowledge flows.

Firms, organisations and countries that know how to adapt to this new world order will be at the forefront of development, creating new jobs, growth sectors and revenue streams. On the other hand, firms, communities and countries that do not embrace these changes will experience job losses, loss of economic competitiveness and lower quality of life.

“A key outcome of these distributed and integrated knowledge networks is the emergence of technologies such as blockchain, fintech, lawtech, smart-manufacturing, smart-agriculture systems and many other intelligent systems. These systems are enabling firms to cut-down production cycles, improve service quality, improve productivity and reduce cost of production.”

Whilst Industry 4.0 will help firms globalise their operations at a rapid pace, there is down-side to this, in that firms that are not prepared will be quickly “gobblelised” by their competitors with more savvy knowledge systems.

Professor Mahendhiran anticipated that a quarter of current jobs will not exist by 2020.

“Most of the routine jobs and employment that are classified as 3D jobs (dirty, dangerous and difficult) will be replaced by intelligent systems and robotics that can work 24/7 and 365 days,” he cautioned.

How will blockchain impact jobs like accountants and managers in the financial services industry?

“We may no longer need managers who sign off on everything which can be done by rules and algorithms. Fintech, legal, agriculture – all sectors are touched by this new revolution,” he stressed.

What Type of Talent and What Competencies are Required?

Professor Mahendhiran raised the questions of how talents can be developed, and what are the competencies that will be required in the future.

The skill set provided by educational institutions that are more routine will be replaced by more intelligent systems that will cannibalise those jobs. As a matter of fact, the intelligent systems themselves undergo an evolution led by human creativity and ingenuity.

“Perhaps this is what universities and educational institutions should be nurturing amongst future graduates. Give them the context, expose them
to the tools of enquiry that enable them to solve problems and create new systems that continuously disrupt and improve existing intelligent systems,” said Professor Mahendhiran.

He opined that the core competencies required by the new economy should be tied to nurturing the creative-worker with the following skillsets:

  • Critical thinking – ability to challenge the norm, examine alternative ways of doing things and work under constraints that will lead to more efficient solutions.
  • Sound ICT literacy – not only to use the systems to create value, but also assess and analyse the strengths and weaknesses of existing systems.
  • Good technical skills – ability to operate across multiple systems (inter-operability) across diverse industrial sectors.
  • Excellent communication skills – ability to clearly articulate creative ideas and to become a persuasive communicator.
  • Sound multidisciplinary/inter-disciplinary knowledge – not only the depth within a discipline area, but also wide breath of knowledge in other disciplinary areas.
  • Learnability – ability to pick up new skills quickly to adapt, absorb and innovate.
  • Strong power of association – ability to relate to and combine different ideas, innovations and systems to create new value streams (recombinant innovation).
  • Opportunities for experimentation – try different things and trouble shoot existing practices to nurture a risk-taking culture.
  • Strong problem solving and observation skills.
  • Strong leadership skills – to become a dynamic leader who is a “purpose maximiser”, as opposed to a profit maximiser.  

Role of Universities

An accountant of the future will need to have more multidisciplinary knowledge spanning other discipline areas. Similarly, a mechanical engineer in the future will need to know a wide range of subjects, such as biological systems, human systems, entrepreneurship and the like, because biological platforms are converging with technical platforms.

Are universities, educational institutions and professional bodies prepared for this change? Are the current programmes offered by universities, institutions of learning and professional bodies preparing students for sunset industries? Or, are they preparing the future talent to power the next-generation growth industries?

“To nurture the key competencies mentioned above, universities must be key knowledge enablers within a community. Universities are not only suppliers of talent for the workforce but are at the forefront of solving problems for industry and the community.

“Universities must be key drivers for translational research and enabler of the network economy within a community. It must become the “one-stop’ knowledge centre for firms, industry associations, government agencies, community organisations and other external to gain access to expertise, technology, partnerships and knowledge networks,” opined Professor Mahendhiran.

What’s Next?

This year is positioned as a year of change as the industry, the academia and the government all struggle to manage new levels of transformation and disruption.

“It is necessary to take a strategic approach in managing and leading this new wave by ensuring the readiness of universities, regulatory bodies and government agencies, coupling with the forces of technology and social innovation with a focus on sustainable growth,” said Professor Mahendhiran.

Universities and educational institutions are the fulcrum and pivot for enabling firms and nations to raise their innovative capacity and global competitiveness.

“They need to work closely in partnership with government agencies, regulators, industry, industry associations, community organisations, professional bodies and other stakeholders to develop a dynamic national innovation ecosystem that is agile to global shocks and is continuously evolving to a higher stage of development.

“If the educational institutions are not at the forefront of leading the technological revolution to power vibrant knowledge networks within an economy, socioeconomic development will fizzle out quickly; and globalisation will translate into ‘gobblelisation’ in this hyper-converged global economy,” said Professor Mahendhiran before concluding his keynote address.


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