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Innovation and Modern Management in the Supalai Style
Many people have asked me why "Supalai" had the highest profit of 7.07 million baht in 2021 and such an outstanding average turnover from 2017 to 2021, especially profitability, compared to the top 10 listed real estate development companies. The net profit after taxes of Supalai was at averaged 22% compared to those of the top 10 companies which averaged 15% while the return on equity that Supalai achieved was 16%, compared to 13% for the top 10 companies.
How does Supalai manage this?
“Supalai” uses a dexterous, flexible management approach and opens up to a new, broader perspective without sticking to the old style. Thinking and creating using both scientific and artistic values always developing into something better while generating contracts with customers, displaying morals, good manners and using professional as well as international standards 9001:2015
The following table shows the compares different eras of management and the that of “Supalai” management that has been used since the day the company was established 20 years ago.
| Old Fashion Management | Modern Management | "Supalai"’s Post Modern Management |
| 1) It's the way it's been done in the past | 1) It's the way it's mostly done today | 1) A new, better way but only used by a small group of people. |
| 2) Uses the prediction method. No calculation or deep analysis | 2) Uses computational methods, mostly scientific analysis, for example 2+2=4 | 2) Uses a scientific approach but adjusts according to context while the result stays the same, e.g. 2+2=3+1 or 8 ÷2. |
| 3) Uses past experience mainly | 3) Using theories and case studies mainly | 3) Not adhering to theories nor based too much on experience but uses a contingency approach |
| 4) Emotions play a big part in decision-making | 4) Make decisions based on statistical data | 4) Make decisions based on more various factors such as psychology, sociology, time, manners, art, etc. |
| 5) Usually applicable to small businesses | 5) Usually applicable to medium-large businesses | 5) Applicable to businesses of all sizes, types, and branches |
| 6) An authoritative approach is often used. Ordering only from individuals | 6) Often use a democratic approach. Decisions may come from meetings, votes, questionnaires, opinions, etc. | 6) Choose the appropriate format to apply, based on better efficiency and effectiveness |
| 7) Not always planning ahead | 7) Planning ahead but often waste too much cost and time to plan, resulting in loss of opportunity, loss of interest, and subsequent negative consequences. | 7) Make necessary plans with reduced costs and time to lessen wasted opportunities, interest, and other things. |
| 8) Emphasize the highest return for shareholders regardless of whether it is illegal, such as tax fraud by making two sets of accounts. | 8) Emphasis on the return for shareholders and employees, but with little consideration for the impact on outsiders. Most companies focus only on making it legal, ignoring ethics, such as using superior power to kill small competitors, etc. | 8) Try to ethically satisfy all parties involved, such as shareholders, employees, customers, contractors, society. |
Next, let's take a look at some examples of modern management like "Supalai".
1. Project feasibility analysis
A feasibility analysis of land development projects is suitable for brand new projects, especially for very complicated projects. But it is not necessary for a project that repeats what has been done before, for example, the purchase of land from the original project at a lower cost. etc.
Yet, there are still many gaps in feasibility analysis principles, especially the information aspect which often uses past data for analysis, even if it will be used for future planning. They’re also time consuming and the information is obsolete if it's too detailed.
The not-too-detailed and quick analysis provides a better opportunity to buy beautiful pieces of land.
“Supalai '' is a land development company that includes suburb low-rise housing projects, high-rise condominium buildings in the heart of the city and projects in the provinces. Therefore, there is a wide variety of real and reliable accumulated data, which greatly reduces the time of feasibility analysis of the project. In addition, "Supalai" has developed a concise model as a one-page analysis of project investment, so it can analyze feasibility and investments in a short time which in turn can be used to analyze any project in less than an hour which allows us to make meticulous and less risky decisions.
2. Marketing
“Supalai” used to develop a price strategy by applying financial principles to help marketing by allowing customers to pay at five different paces (fast - slow) according to the affordability of each buyer, based on the present value and the bank's minimum loan interest rate available to the company. Customers are satisfied with the opportunity to choose more and buy more and the company has had great success with this strategy.
Due to the economic crisis in 1997, there was a trend in the real estate business to build before sale to ensure that customers buy what they see, together with lower interest rates and more stringent consumer protection and some companies had weak points that they didn’t want customers to see during construction.
“Supalai” has chosen the strategy to sell the completed house and made to order ones, but mostly sells nearly finished ones so customers can see the house during construction and have confidence that the houses will be completed as scheduled because there is not much construction left. In this case, the company can control costs, construction duration, and the agreement with the customers. There is a low risk to hold stock and more money is saved on interest expenses
Finished houses are available for customers who want to move in right away but if customers want to reserve a location that they like but they will move in at a later date, they can order a new one to be custom built.
3. Construction
“Supalai” hires “large”, “middle” and “small” contractors instead of hiring only “large” contractors because each type of contractor has different advantages and disadvantages. Most of the large contractors have higher capital, more tools, but the price is higher and less flexible than medium-small contractors who hold less capital, fewer tools but are more flexible and cheaper. Therefore, each type of contractor is responsible for the appropriate work. The company provides financial support to medium-small contractors by paying quickly and providing procurement of some building material and other things.
All contractors must work under the standard ISO 9001:2015 work control system and Supalai's Q.C. system to achieve the same standards.
4. Receivable Management
After the economic crisis in 1997, some of Supalai's customers were unable to receive the ownership transfer as stated in their contract. The company has implemented a flexible approach to minimize the impact on customers, namely:
1. Customers whose family members passed away or were seriously would receive a full refund of the down payment without penalty or any damages.
2. Customers whose family members had lost their jobs making it impossible to get a loan from the bank. The company would recommend canceling the original contract but holding the down payment until the situation improved allowing them to come back and complete the purchase.
3. Customers whose monthly income had decreased making it difficult to pay the full amount, the company would recommend moving to cheaper land plots or houses.
5. Insurance
Insurance is a business risk reduction. However, it depends on the suitability of the items to be insured and the value to be insured.
Some companies’ fire insurance covers the foundations and piles of buildings which are actually fireproof so there is no need for any fire insurance.
Some institutions consist of many small buildings which are built with fireproof materials. They are scattered in different areas. To save up, choose specific insurance for only parts that are at risk of fire.
6. Purchasing
“Supalai” has used a land acquisition method which is flexible for the purposes and needs of the sellers. For example, some sellers demand high prices but don't mind getting late payments. This may be a 1-4 year window. Some sellers want to get paid quickly but are willing to sell cheap. The company will make a quick transfer and pay in cash, making it easier to buy land.
7. Meeting
Nowadays, companies tend to have meetings to collaboratively solve problems, make decisions and deal with other issues. However often there are too many meetings, too many people, or insignificant issues causing wasted time, which is not worth the result, for example:
If a meeting of 30 people is scheduled for 3 hours, that is a total 90 man-hours, which is equal to one person working for 11 days.
Sometimes, a resolution at a meeting is reached by equal votes, one person per vote; however, each individual holds an unequal basis of knowledge and experience which can make the resolution deviate from what it should be.
One of the world's leading companies in Bangkok has up to 14 meeting rooms on different floors for about 300 employees while some companies have reduced the number of meeting rooms and consolidated them to the same floor. This reduces the cost of the location, equipment, and other things. This method may also be designed to be flexible and able open through and expand into a larger room as well.
The above example is a management approach which suggests that ‘Management on an ethical basis with good ethics does not reduce the profit of the company the way many people think’. On the other hand, it can be seen that management can always develop into something better if we do not stop and are ready to adapt and change without sticking to old theories or familiar routines. By doing this we will be able to endlessly create new management innovations without boundaries.
Prateep Tangmatitham
