Question

THE CIPUTRA GROUP: SHAPING THE CITY IN ASIA
“If you have the will, and the spirit, and you have confidence, you follow up with forecast, all will happen.” Mr. Ciputra
Mr. Ciputra, founder of the Ciputra Group, looked back on his long career as one of Indonesia’s most prominent entrepreneurs. As a developer in the real estate sector, he had provided modern and comfortable spaces for millions of Indonesians to live, recreate, shop and work. Ciputra’s courage, vision and expertise led to extraordinary successes in the 1990s. But the Ciputra Group also went through a particularly difficult period during the Asian Crisis of 1998, a crisis that exposed the vulnerabilities of the Ciputra Group’sbusiness model. Ciputra had felt relieved when the last debt restructuring agreement was signed in 2005.
Yet, right at the moment when the Ciputra Group was gearing up for a new era of growth, a globaleconomic crisis struck in late 2008. Ciputra, who was now 77 years old and planning to retire, was againforced to reassess the Ciputra Group’s strategy. He thought about the appropriate balance between his
many ideas for innovative real estate projects and the level of risk the company could manage. Theongoing transfer of leadership toward his children and children-in-law also required his attention. Howcould the business continue the tradition of entrepreneurship while also building a professionally managed
family business group? The Ciputra family needed to work out a comprehensive strategy to prepare thefamily business for the next decades.

AWAKENING THE SPIRIT OF ENTREPRENEURSHIP
His father passed away in prison in 1943,when Ciputra was only 12 years old. Ciputra, then a fatherless child, was raised in poverty, but he was ableto continue his schooling after the war. After completing high school, he subsequently went to the famousInstitute of Technology Bandung (ITB) in Java, where he studied architecture. His career would be onethat showed, as he himself explained, his “spirit of entrepreneurship.”
Because the allowance he received from his mother during his university days was not sufficient, he startedhis first venture as a student in 1957. He established an architecture consulting agency with two friends,Budi Brasali (who passed away in 2006) and Ismail Sofyan. After graduating in 1960, Ciputra decided that,rather than working as a consultant for others, he wanted to implement his own ideas as a developer.
Ciputraworked and subsequently became the chief executive officer of Pembangunan Jaya, a developer partly ownedby the Jakarta provincial government, where he stayed for 35 years and worked closely with several ofJakarta’s former governors. In this capacity, he shaped Jakarta, including building or renovating severalprominent markets, a recreation park and various housing projects.
Aside from this job, he and his friends also established the Metropolitan Group after graduation, whereCiputra became the president commissioner, a non-executive role in which he actively provided guidanceand facilitated the development of this expanding group. Other investors, such as the Salim Group, werealso involved in a subsidiary of the Metropolitan Group, which developed the first privately built satellitecity of Jakarta. The group also had investments abroad. In 2009, his long-term partner, Ismail Sofyan, wasstill playing an active role within the Metropolitan Group.
In the 1980s, the three friends, who had hitherto shared their projects, decided that they could now starttheir own groups once their children grew up. So, when Ciputra’s children graduated and returned fromtheir university studies overseas, Ciputra started his own family group, the Ciputra Group, in which his
children, children-in-law, wife and brother were active. The new Ciputra Group was created for hischildren, whom he hoped would grow as professionals and continue his entrepreneurial spirit in theproperty sector.
Ciputra was considered the pioneer of the Indonesian property sector, and was often credited and awardedfor his visionary ideas. One of his achievements was to think big. He could see opportunities where otherscould not. In the late 960s, while heading Pembangunan Jaya, he transformed a swampland, infested with
mosquitoes and monkeys, intothe now popular Jakarta seaside,Taman Impian Jaya Ancol, re-positioning Jakarta as a beach city.According to Ciputra: “Every problem is an opportunity. The more difficult the problem, the moreopportunity: that is entrepreneurship.”
When his colleagues were thinking mere buildings, he was thinking new towns. The development of entiresatellite cities, or new towns, was a business model that became one of the trademarks of Ciputra, althoughit was gradually copied by other players in the market. His first project, while still with Pembangunan Jaya,was a project called Bintaro Jaya. Since the 1960s, Jakarta, like many other Asian cities, witnessed a largeinflux of people from the rural areas
While infrastructure was often officially the task of the government, the latter frequentlylacked the skills or budget to actually construct and maintain it. Especially after 1985, a period ofderegulation in Indonesia, the government warmed up to the idea of using the private sector to develophousing and public infrastructure. It was in this vacuum that Ciputra saw commercial opportunities.
With a keen eye for promising new business models, Ciputra moved into these large-scale propertyprojects, and provided middle- and upper-class citizens with living conditions that the government couldnot provide.
TheCiputra Group targeted the upper middle class for its large-scale property projects, and offered services andfacilities beyond what other areas offered, including healthcare, security, maintained roads and greenery.
Middle-class Indonesians were willing to pay for much more pleasant and convenient living conditions.
Internally, the company sought to stimulate an entrepreneurial spirit. All employees — from directors toadministrative staff — were encouraged to develop their sales qualities, and one executive spoke highly ofCiputra’ssecretary, who had already sold several apartments. The group held competitions betweendifferent project teams, and the winning project teams would go abroad on trips together. Ciputra explainedthat all project staff would be rewarded: “Yes, until servants and security people go there. All go there.
One group went to Paris — the Citra Garden team — they chose where they wanted to go. We gave theman extra bonus of 3-8 months.” Ciputra liked to involve staff at all levels in projects, and he regularlyinteracted with younger staff members and stimulated them to express their views. All employees lookedup to Ciputra, and several insiders remarked that “he is so outstanding.”
NEW GENERATIONS
Ciputra had four children: the eldest two were daughters, and the youngest two male twins. Because heconsidered them all talented, the eldest two daughters with their spouses (respectively, Rina CiputraSastrawinata and BudiarsaSastrawinata; and Junita Ciputra and Harun Hajadi) each led one division of the
Ciputra Group, while the twins (Cakra and Candra Ciputra) led another. Budiarsa focused on theinternational projects, including the new town in Vietnam, and had built contacts with officials in thatcountry. Harun, amongst others, ran several large projects in Surabaya, another large city in Indonesia. Thetwins were mainly active in commercial buildings like offices in Jakarta. Although the official structure ofthe group and its listed companies did not reflect this, informally the projects were divided amongst thechildren, who were engaged in subtle competition.There were differences in style between the children. An executive of the Ciputra Group commented that“Candra is only involved in the strategy, not in the daily operations. Harun is involved in everything, he ismore in the details. He also has an architect background, so he is also involved in the design. Budiarsa is inthe middle. Candra is more interested in the financial aspects, such as the stock market.” The division led
by Rina and Budiarsa had become reluctant to borrow after the crisis, and tried to avoid this at all costs,instead choosing to work with partners who provided financing and land. Harun, however, thought that thismight be too conservative, and took a slightly different approach. As such, within one company, there wasa diversity of managerial styles and project preferences. One of the insiders remarked: “Are the subholdingsgoing to go on their own or is it one person that will succeed Ciputra?
Now was a good time to plan the strategy for the firm and for the family and to strengthen the business forthe coming decades. Whereas the group had been designed along the way by the founder, as it grew larger,a more systematic view of the progress of both the business and the family in different stages could supportits future development.

1. As a future leader :

a. What kind of changes do you think you need to do to yourself. Please start with awareness of reality where you are today including your self concept, values, attitude, behavior, trait, leadership style, influencing tactics, motivating and inspiring people

b. What kind leadership improvement you need to go through to be able to lead a company like Ciputra Group as a great CEO

Answer 1

Answer a.

I am a person who likes to get involved in details and take too much stress to handle all aspects of a work. This style of micro-management will not be viable when I run a large corporation. I will have to build trust with people and delegate them work so that I can direct the overall company whereas my trusted people can run the day-to-day operations. I need to learn to motivate people to achieve their best. I need to nurture people and help them achieve what they themselves could not achieve alone. Therefore, I would like to delegate tasks and involve people in the decision-making process. I would also need to empower people so that they can take risks and independent decisions without the fear of being reprimanded or without the need of taking my approval before every decision.

In addition, I often get overwhelmed while thinking the overall picture or the larger picture. I find it difficult to have a complete view. While leading a company, I need to have a clear view of the entire business and the position of the company in the entire industry. I need to be able to think strategically and be able to focus on the larger context in which the business is operating.

Answer. b.

Ciputra Group has been traditionally managed in a top-down way as Ciputra has acted as a charismatic leader to direct the business in his individualistic way. A new CEO can either maintain the status quo and run the business as it has been traditionally run or take a new management style to run the business as per his/her own style and the condition of the current market. The first approach might be detrimental to innovation and the company may fail to hold its market position. This is because changing market environment and competitive landscape make it inevitable for companies to be more flexible and adapt strategies to the current reality. However, when the new CEO wants to implement a new management style, people might create resistance. Change is not easily welcome by employees and other stakeholders. Therefore, the new CEO needs to learn effective change management, which needs clear direction setting, clear communication, building trust and confidence among people, etc.

In addition, the new CEO needs to be able to have a clear view of the market development and take a flexible approach to respond to the market changes.