“Houston, we have a problem . . . “

(Or why culture matters in problem-solving and execution)

Our OFWs continue to remit at levels that have been the primary driver of our domestic economy; local businesses are thriving and banks are lending and making money. Our foreign exchange reserves make the Central Bank Governor proud and he is doing a good job keeping prices stable. But of course, there is a debate whether we are in a recession yet. And that structurally we ought to be in for a fix especially given our deficits – if we were a publicly listed enterprise we would be restructuring . . .

That we should care that our exports are less than a third of Thailand’s – and their GDP per person is over 2.5 X more. The true test of performance is to benchmark against peers. Thailand is a good benchmark – their population size approximates ours. And measured against Thailand’s output (i.e., exports, GDP, and our alarming poverty rate) we are lagging behind; and in input as well – we are lagging in investments, both gross and foreign direct: “Houston, we have a problem!” (http://www.phrases.org.uk/meanings/188425.html)

Do we have a problem-solving culture, i.e., are we aggressively driving exports and aggressively attracting foreign direct investment? By either regional or western standards we are passive on both counts, i.e., uncompetitive? (Or why the foreign chambers and the World Bank are on our case – we can leverage their perspective instead of being defensive; and move the country forward in economic development?)

Economists have been figuring out where culture does/does not apply in economic development, e.g., Japan’s lost decade – which a Japanese central banker now describes as the outcome of a passive response to a crisis. Global businesses, on the other hand, have long experienced the impact of culture on problem-solving and execution. Says the new CEO of Proctor & Gamble: "My job is to be a globally effective leader, not just be an effective leader in my own country, in my own culture". (And see: http://www.nytimes.com/2009/06/11/business/11auto.html?ref=global-home re the insular culture at General Motors.)

Our inward-looking culture – that makes us less wired to global competitiveness – is reflected in many ways, e.g., imposing barriers against foreign ownership in schools, restricting professionals to practice in the country, continuing to seek protection in trade as spelled out in our foreign investment negative list, our dependence on OFW remittances, etc. (We surely can rationalize each one, but the test of the pudding is in the eating – benchmarking.)

If we’re outward- and forward-looking, on the other hand, we would be more dialed on product trends – beyond product obsolescence, for example. Product trends may not all materialize, but they spur creative product development – after retro and recycling, the new trend, for example, is upcycling. And it simply means, among other things, that denim may be fashionable again but in an upcycled presentation and so is the color white or the camouflage fatigue used by the military. And that the influence of our surroundings, i.e., nature – wood, rain even storm, etc. – will be strong on product ideas.

Specific to the 3 export areas we are looking at: electronics, agribusiness and BPOs – the mantra (transformation, not mere rhetoric) ought to be “higher value-added” given the contraction of the world economy and the imperative to be truly competitive. And that means: we need to move up from semi-conductors towards smart-phones, for instance; from farm produce to branded (beyond generic) snack food, for example; from supplying labor in our BPOs towards software development. But we can’t go it alone; we need global players to partner with. But above all, we need to problem-solve and execute.

(See: http://www.economist.com/businessfinance/displayStory.cfm?story_id=13832338 re development in smart-phones; see http://www.snackex.com/presentations_jun091.asp re the branded snack food & nuts industry)