Euphoria, in its exaggerated and unfounded high spirits stage, is not in complete touch with reality. From about 1994 through July 1997 Southeast and East Asia were about as euphoric as economies can get. It seemed there was no end to the market for assets in the form of cheap labor and land, governments vying for the favors of overseas investors, and bankers from Tokyo to Paris who were convinced the region was brushed with a magic money wand.

How easy the pedestal broke, how messy the pieces became. The straw that broke the camel’s back was an obscure stock trading opportunity in Thailand, whose unintended consequence was to blow down the entire Asian house of economic cards.

Western critics waggled their fingers at “Asian Values”, defined loosely as overinvesting in unproductive sectors like real estate, crony capitalism, family-dominated corporations with murky balance sheets, kleptocratic political leaders who protected investors in exchange for lucrative favors to family members, and the psychological effects of cultures based on rigidity, hierarchy, denial, and consensus.

During that same year many Asian political leaders waggled their fingers back, pointing to the World Bank’s inept financial prescriptions, rampant globalization, greedy financiers, too much investment in too little diversity, the West’s loose morals, and, in one political leader’s view, a cabal of Jewish financiers from New York.

For a year this went on, even as a handful of political leaders and business investors tried to settle the differences and fix things. Little noticed outside of professional management circles was a book entitled Asia's Best: The Myth & Reality of Asia's Most Successful Corporations by Michael Alan Hamlin. However, inside management circles it created waves. It was the first book to go beyond American and Japanese models of successful companies to look at less-noticed regional businesses.

His book shattered the myths about Asian’s "opaque" management ways and showed how certain Asia's best companies could stand up there with the world's best. His examples came from off-the-beaten-track locales: In his home-base country of the Philippines, he analyzed, among others, the Jollibee fast-food chain, Eastern Telecommunications Philippines, Inc., Manila Electric Company, Megalink Inc., National Steel Corporation, Petron Corporation, Philippine Appliance Corporation, San Miguel Corporation, and Philippine Business for Social Progress.

Hamlin dissected the common myths about Asian business and found the following: (a) Asia did not have a unique Asian management style suitable only for Asia; (b) that Asian companies tended to acquire technology by buying it rather than developing it through joint venture agreements or alliances; (c) innovation among Asian companies was awful and, "Basic research throughout Asia, despite rapid, sustained growth over two decades is virtually nonexistent"; and (d) successful Asian companies are "masters of nichemanship" rather than "sprawling conglomerates."

Given the economic collapse Southeast Asia was experiencing, his conclusion was a bitter pill:

"While productivity in Asia has been rising, very little purely Asian technology has accounted for the increase. As the region enters a new era of liberalization and intense competition, its reliance on Western technology and low value-added exports is dangerously high. Worse, not enough investment has been made in education and the development of research centers necessary to support the creation of indigenous, productivity-enhancing technology. Massive public and private investment in educational infrastructure will be required to sustain rapid growth in Southeast Asia."

Mr. Hamlin was not alone in the gloom department, but his assessment was dramatically different than that of the alpha-males of the guru pack Michael E. Porter, Gary Hamel, and C.K. Prahalad. They interpreted Asia’s problems in terms of poor use of resource availability (including labor), and opportunity. Mr. Hamlin, much closer to the action, interpreted Asia’s problems in terms of enhancing resourcefulness and focusing on profitability growth rather than market share growth.

During 1998 and 1999 the business press and economists as notable as Paul Krugman stated that unless Asia changed its business and political thinking in fundamental ways, the then-extant recovery would go belly-up the moment the next crisis came along. When it did, triggered by the burst of the dot.com bubble and sectorial recession in the USA, Asian producers yet again found themselves facing hard times. This time they were really hard: Singapore, that bastion of meritocracy and meticulous government planning, found it had built far too many “fab-lab” computer chip makers and far too little of the diversified electronics manufacturer that Taiwan was so good at. Japan dithered over its massive real-estate debt and flaky banking system (and is still doing so). Thailand’s top cronies talked a great story but didn’t make the substantive changes needed to charm ever-fussier investors. Malaysia spent vast amounts of the public retirement fund to richly award a handful of politically anointed favorite sons who also happened to be lousy businessmen.

During this same period Mr. Hamlin was analyzing events with the same astuteness he used in his “Asia’s Best” book. He distilled his latest thinking in The New Asian Corporation. What did he come with?

Mr. Hamlin makes a fairly good case that a “New Asian Corporation” has emerged as the positive side of the two economic crises that have hit the region. He cites three fundamental changes in Asian social and business thinking that make this possible:

1. The diminishing importance of guanxi (connections) in such things as obtaining government approvals of incentives, development plans, and permits. In the past guanxi were a way to shut out any but a few favored friends.
2. Most Asian governments now expect their domestic enterprises to get competitive or get out of business.
3. Newly aware and therefore empowered consumers demand much more from government and corporations than they were used to getting. When governments dismantled barriers to investment in key manufacturing and retail sectors, consumers no longer had to put up with high prices due to outmoded but politically connected big-business interests.

Asia is “Rising From the Ashes,” as Mr. Hamlin puts it, because eleven behavioral patterns have irrevocably changed:

1. Corporate culture is meritocratic; it puts a premium on and strategic thinking rather than hierarchy and seniority.
2. Shareholders are becoming internationally astute and more critical.
3. Productivity is based on management expertise rather than management seniority.
4. Tenure is based on contribution, which is tantamount to a new social contract.
5. Competence has replaced affirmative action thinking in which ethnicity took priority over knowledge and experience.
6. A younger generation with fresh ideas and international experience is rising into middle management levels.
7. Corporate strategy now focuses on key business processes and the development of new business models.
8. Strategy and focus are seen as vital engines of foresight and strength.
9. A constant search for new sources of profitability requires a strategy-led view of growth rather than the opportunistic approach of the past.
10. Markets are becoming customer-centered rather than monopoly-centered.
11. A sense of urgency and innovation crosses political and industrial boundaries.
12. Liberalization is forcing companies into new markets.
13. Businesses are identifying who their customers are and what they really want