In 1997, Derek Goh listed the company he founded, Serial System, on the Sesdaq board of the Singapore Exchange. For someone who had built up an electronics-distribution enterprise from scratch – growing it from a sole proprietorship into a multi-million dollar- listed entity in a decade – it must have seemed like a triumph of determination and entrepreneurial flair.
Yet, just a few years after that moment in the spotlight, the company would be plunged into chaos – beset by infighting, poor business decisions and trouble with regulators. The problems began when Goh handed the day-to-day running of the group to his top lieutenant and long-time friend, Eddie Chng, who became the CEO of Serial in September 1999.
Less than two years later, Serial reported an operating loss, and an ugly boardroom battle broke out between the two former navy buddies. The company racked up a $10-million loss in 2002, and Chng eventually resigned after a no-confidence vote from the board.
“It was not easy for me to build the company so it could list. We were the first Sesdaq company and also the first distributor to be included in the Straits Times Index.
“But, in 2001, we were kicked out,” he recalls ruefully. “I have learnt that there is no hurry to find a successor. You have to assess a person’s character (and) his behaviour. He must have integrity.”
When Goh finally regained control of Serial and assumed the chief-executive position in February 2001, the business had suffered what appeared to be irreparable damage. Apart from the financial loss, the company had lost the confidence of it suppliers, bankers and customers. There was no quick fix.
Goh embarked on a painful course of damage control – visiting each of the company’s stakeholders to convince them that the company would still be around in six months’ time, sometimes with nothing more than his word to go on.
“It was a total nightmare. I told myself to cool down, that whatever I needed to do, I had to focus. This is the company I founded and ‘die die’ it had to survive,” he says.
He pleaded with his bankers not to pull credit lines, assuring them of total transparency. To avoid being terminated by key suppliers, he boldly acquired rival distributors in other countries to keep his order volumes up. He shed non-core and loss-making businesses and returned the company to its distribution roots.
“DON’T BE TOO GREEDY OR YOU WILL BE MISERABLE, BECAUSE THE MARKET TURNS VERY FAST. YOU DON’T HAVE TO BE NO. 1 IN THE MARKET, AS LONG AS YOU ARE GROWING.”
EXECUTIVE CHAIRMAN AND GROUP CEO, SERIAL SYSTEM
His overhaul of Serial laid the groundwork for its stunning comeback. In 2003, Serial reported a profit of $3.2 million. Ten years later, it crossed the $1-billion mark for the first time, while profit was up 41 per cent to $14 million over the previous year. He expects to achieve US$5 billion (S$6.38 billion) in revenue within the next decade.
Knowing what the market needs is key to business growth. “You must know why people want to buy from you. There must be a reason why people support you, whether it’s convenience, your service or the product,” he says.
Despite the phenomenal success, Goh has never forgotten the dark days, when Serial System was on the verge of bankruptcy. The 52-year-old credits one person in particular for getting him through that extremely rough patch.
“(What I went through was) not the normal kind of pressure. The most important thing is that my wife was very understanding. If she had not stood behind me, I think I would have broken down.”